Human Rights v Trade

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The Independent today (3rd October) reports that the Foreign Office is placing human rights below trade in its international efforts.

Sir Simon MacDonald, Permanent Secretary at the Foreign Office, said this to the Foreign Affairs Select Committee, chaired by Crispin Blunt – a Conservative MP. The outrage to this frank admission from those like Amnesty International is understandable but the news is not a surprise. The UK has a default mechanism – overseas trade at almost any costs. It is this default that has, at times, been tempered by those heading our foreign ministries (such as Robin Cook and his “ethical foreign policy” and Douglas Hague more recently) but over more than 200 years, Britain has pursued a trade policy which has been usually unyielding.

Mercantile Britain

From the 17th Century onwards, this island nation has pursued conquests and material gain in overseas territories that enabled a minor nation (by population) to erect a massive empire. It was a mixture of bravery, opportunism, single-mindedness and adventurism that took Britain throughout the world as searchers for new lands and the rewards that would come with them. Along with the supreme invention of the joint-stock company that somewhat de-risked such ventures, companies like the East India Company not just took advantage of these overseas territories but set themselves up as military governors of them. This company ruled India until as late as 1858 (after the rebellion of 1857).

From then on, British military might was handled directly by Government. Thus, the mercantile underpinning of our international trade, by then as much as the need to export the produce of the industrial revolution as the need for raw materials, was in place. This was an extrovert linkage between might and trade in the nineteenth century, now it is implicit. One of the worst examples of mercantilism were the Opium Wars in China where Britain fought to ensure that the sale of opium into China would continue.

20th Century Mercantilism

More recently and especially since the end of World War II, when British military might was used to vanquish an evil Nazi regime and almost bankrupted this country, Britain has used its ability to aid overseas trade more subtly. We have now ceased to follow the Palmerston gunboat diplomacy of the nineteenth century but our ability to promote trade along with military capability is still firmly in place.

For much of the twentieth century an example was the Defence Services Organisation (DSO) that promoted our arms exports throughout the world. This was an effective sales force for arms exports that retained the UK’s ability to remain in the top three or four internationally until very recently. Our embassies were (are?) and our military attaches in particular represented not just our Government but the companies that sought to trade in the countries where they were situated.

Alongside this, the UK has developed a record on human rights that is one of leadership on a world-wide scale. In the nineteenth century, our Gladstonian free trade mindset was tempered with a humanity in a section of the population that sought to restrain the might of an empire and restrict its natural tendency to the Benthamite utilitarianism that sought to consider overseas peoples as no more than collateral. While we may seek to measure natural resources in 2015 as “natural capital”, in the nineteenth century, even after we abolished slavery in Britain in 1809, we would still value people our dominions numerically as we would a piece of equipment.

Liberal Free Trade was built on this and while Tories (Conservatives) may have initially tried to stem the Free Trade tide (because of their natural affinity to those that ruled by their ownership of land), they became as fervent in their pursuit of capitalism and mercantilism until now they have adopted the mantle to themselves.

So, while this country spends 0.7% in overseas aid (and trumpets this, rightly, as an example of our desire to alleviate poverty and disease), in this progressively post-Industrial world (where all countries are now so interlinked by trade) we maintain an extraordinary linkage to many tax havens around the world that ensure that companies can reduce their tax burdens at the expense of much of the world’s poorest. London is itself a crucible of money laundering and Tax Justice Network assesses London and its affiliated tax havens in places such as the Cayman Islands, Jersey, British Virgin Islands and elsewhere, as the most secretive combined jurisdictions in the world. This is today’s example of the UK and its desire for financial trade above the rights of the poorest.

Trade vs Human Rights in the 21st Century

Since WWII, the UK has (as stated above) been at the forefront of much that is good in the development of human rights world-wide. Apart from our leadership in the establishment of UN and other basic norms for human rights, this country houses many NGOs that lead in this sector. This is now at risk.

Not only is the current government suggesting that we opt out of various human rights bodies (unable it seems to allow ourselves to be subject to best-case international norms), not only are we potentially removing ourselves from the historical capability of being a home for immigrants that are subject to terror in their own countries, but we are looking to enhance our ability to trade in nations that continue to abhor basic human rights in their own countries.

This is a pandering to economic welfare and materialism that has not been seen since the days of Bentham and the focus on such utilitarianism (then at the expense of the poor working class in this country but now internationalized) is a stark throwback to the default mechanism of our forbears – those who maybe knew they were wrong but had no experience to turn to.

Now, we have no such excuses. The desire to trade unabashed world-wide and not concern ourselves with the dire consequences of the countries with which we trade points to a shallow materialism that is in danger of throwing aside all that so many have worked for so many years. That this country, one of the world’s richest, should consider that the problems faced by those in the countries with which we do business are not of any concern to us is not just wrong but a short-termist mistake.

George Osborne’s recent visit to China is a good example of this. He is not just a head of finance but a senior Cabinet Minister that goes with the blessing of the Government. He left China with the endorsement of the Chinese government as voiced through their newspapers for not overstating human rights issues. Apparently, the UK cares less about people than about profits or increasing our GDP.

So, Mr MacDonald’s statement before the Foreign Affairs Select Committee is no surprise but it is a statement that will have chilling effects. It states that we are giving up our responsibilities on the back of a desire to enrich ourselves at the expense of those outside the UK that suffer oppression and poverty. While we maintain out 0.7% (although some of that is being deflected into defence spending) much of that, in effect, buys us more ability to sell products and services.

Robin Cook did not last long in office as a result of his ethical foreign policy beliefs. We no longer even hint that this remains our aim but the lesser aim of maintaining human rights and challenging those that do not follow our example is now not just under threat but clearly is seen as history. It may be that quantity of life is the belief of this government (and the defocusing on climate change is another example) rather than quality of life and the desire to lead lives that are worth living. We do have average levels of material wealth in this country that are envied in many countries and much that our democracy and ability to live relatively freely within out nation that propels many to want to live here.

Yet, in a global economy, it appears that materialism is now the only objective as we go back in time to the nineteenth century. This time, we have no excuses. Human rights as enshrined in the United Nations Declaration of Human Rights are essential components of how we should not just run our own country but how we should see the world.

On December 10, 1948 the General Assembly of the United Nations adopted and proclaimed the Universal Declaration of Human Rights the full text of which appears in the following pages. Following this historic act the Assembly called upon all Member countries to publicize the text of the Declaration and “to cause it to be disseminated, displayed, read and expounded principally in schools and other educational institutions, without distinction based on the political status of countries or territories.”

 

PREAMBLE

  • Whereas recognition of the inherent dignity and of the equal and inalienable rights of all members of the human family is the foundation of freedom, justice and peace in the world, 
Whereas disregard and contempt for human rights have resulted in barbarous acts which have outraged the conscience of mankind, and the advent of a world in which human beings shall enjoy freedom of speech and belief and freedom from fear and want has been proclaimed as the highest aspiration of the common people, 
Whereas it is essential, if man is not to be compelled to have recourse, as a last resort, to rebellion against tyranny and oppression, that human rights should be protected by the rule of law, 
Whereas it is essential to promote the development of friendly relations between nations, 
Whereas the peoples of the United Nations have in the Charter reaffirmed their faith in fundamental human rights, in the dignity and worth of the human person and in the equal rights of men and women and have determined to promote social progress and better standards of life in larger freedom, 
Whereas Member States have pledged themselves to achieve, in co-operation with the United Nations, the promotion of universal respect for and observance of human rights and fundamental freedoms, 
Whereas a common understanding of these rights and freedoms is of the greatest importance for the full realization of this pledge,

 

Now, Therefore THE GENERAL ASSEMBLY proclaims THIS UNIVERSAL DECLARATION OF HUMAN RIGHTS as a common standard of achievement for all peoples and all nations, to the end that every individual and every organ of society, keeping this Declaration constantly in mind, shall strive by teaching and education to promote respect for these rights and freedoms and by progressive measures, national and international, to secure their universal and effective recognition and observance, both among the peoples of Member States themselves and among the peoples of territories under their jurisdiction.

Article 1.

  • All human beings are born free and equal in dignity and rights.They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood.

Article 2.

  • Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. Furthermore, no distinction shall be made on the basis of the political, jurisdictional or international status of the country or territory to which a person belongs, whether it be independent, trust, non-self-governing or under any other limitation of sovereignty.

Article 3.

  • Everyone has the right to life, liberty and security of person.

Article 4.

  • No one shall be held in slavery or servitude; slavery and the slave trade shall be prohibited in all their forms.

Article 5.

  • No one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment.

Article 6.

  • Everyone has the right to recognition everywhere as a person before the law.

Article 7.

  • All are equal before the law and are entitled without any discrimination to equal protection of the law. All are entitled to equal protection against any discrimination in violation of this Declaration and against any incitement to such discrimination.

Article 8.

  • Everyone has the right to an effective remedy by the competent national tribunals for acts violating the fundamental rights granted him by the constitution or by law.

Article 9.

  • No one shall be subjected to arbitrary arrest, detention or exile.

Article 10.

  • Everyone is entitled in full equality to a fair and public hearing by an independent and impartial tribunal, in the determination of his rights and obligations and of any criminal charge against him.

Article 11.

  • (1) Everyone charged with a penal offence has the right to be presumed innocent until proved guilty according to law in a public trial at which he has had all the guarantees necessary for his defence.
(2) No one shall be held guilty of any penal offence on account of any act or omission which did not constitute a penal offence, under national or international law, at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the penal offence was committed.

Article 12.

  • No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.

Article 13.

  • (1) Everyone has the right to freedom of movement and residence within the borders of each state.
(2) Everyone has the right to leave any country, including his own, and to return to his country.

Article 14.

  • (1) Everyone has the right to seek and to enjoy in other countries asylum from persecution.
(2) This right may not be invoked in the case of prosecutions genuinely arising from non-political crimes or from acts contrary to the purposes and principles of the United Nations.

Article 15.

  • (1) Everyone has the right to a nationality.
(2) No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.

Article 16.

  • (1) Men and women of full age, without any limitation due to race, nationality or religion, have the right to marry and to found a family. They are entitled to equal rights as to marriage, during marriage and at its dissolution.
(2) Marriage shall be entered into only with the free and full consent of the intending spouses.
(3) The family is the natural and fundamental group unit of society and is entitled to protection by society and the State.

Article 17.

  • (1) Everyone has the right to own property alone as well as in association with others.
(2) No one shall be arbitrarily deprived of his property.

Article 18.

  • Everyone has the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief, and freedom, either alone or in community with others and in public or private, to manifest his religion or belief in teaching, practice, worship and observance.

Article 19.

  • Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.

Article 20.

  • (1) Everyone has the right to freedom of peaceful assembly and association.
(2) No one may be compelled to belong to an association.

Article 21.

  • (1) Everyone has the right to take part in the government of his country, directly or through freely chosen representatives.
(2) Everyone has the right of equal access to public service in his country.
(3) The will of the people shall be the basis of the authority of government; this will shall be expressed in periodic and genuine elections which shall be by universal and equal suffrage and shall be held by secret vote or by equivalent free voting procedures.

Article 22.

  • Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international co-operation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.

Article 23.

  • (1) Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.
(2) Everyone, without any discrimination, has the right to equal pay for equal work.
(3) Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.
(4) Everyone has the right to form and to join trade unions for the protection of his interests.

Article 24.

  • Everyone has the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay.

Article 25.

  • (1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
(2) Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection.

Article 26.

  • (1) Everyone has the right to education. Education shall be free, at least in the elementary and fundamental stages. Elementary education shall be compulsory. Technical and professional education shall be made generally available and higher education shall be equally accessible to all on the basis of merit.
(2) Education shall be directed to the full development of the human personality and to the strengthening of respect for human rights and fundamental freedoms. It shall promote understanding, tolerance and friendship among all nations, racial or religious groups, and shall further the activities of the United Nations for the maintenance of peace.
(3) Parents have a prior right to choose the kind of education that shall be given to their children.

Article 27.

  • (1) Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific advancement and its benefits.
(2) Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.

Article 28.

  • Everyone is entitled to a social and international order in which the rights and freedoms set forth in this Declaration can be fully realized.

Article 29.

  • (1) Everyone has duties to the community in which alone the free and full development of his personality is possible.
(2) In the exercise of his rights and freedoms, everyone shall be subject only to such limitations as are determined by law solely for the purpose of securing due recognition and respect for the rights and freedoms of others and of meeting the just requirements of morality, public order and the general welfare in a democratic society.
(3) These rights and freedoms may in no case be exercised contrary to the purposes and principles of the United Nations.

Article 30.

  • Nothing in this Declaration may be interpreted as implying for any State, group or person any right to engage in any activity or to perform any act aimed at the destruction of any of the rights and freedoms set forth herein.Human Rights

And Quiet Flows the Money (Apologies to Sholokhov and the Don)

We have recently heard how HSBC have been guilty of extraordinary money laundering that allowed the corrupt and the criminals to export “their” money around the world with impunity.

We are also told by the Tax Justice Network that tax havens contain over $21 trillion of funds – much of that the result of money laundering, all of it hidden from sight.

Money flows around the world in amounts that make ordinary people dizzy – yet, governments are scared to remedy the essential problem that the “hear no evil, see no evil, speak no evil” banks and the laws that allow tax havens permit: at best, a gross distortion of the economic well-being of the vast majority (99.5% or more) of us that don’t work the system; at worst, a criminal shadow state that has the power to dictate our lives because of its financial muscle.

HSBC – dark deception

US Senator Carl Levin called HSBC misdeeds “stunningly unacceptable”. The broad acceptance that money can flow around the banking system no matter where it comes from and no matter where it is going strikes at the heart of a system mired in 19th Century but caught up in the plundering of the 21st.

Mexican drug cartels have (amongst many others) been able to syphon billions of dollars of their income (derived through murder and extortion and leading to the deaths of thousands, the misery of hundreds of thousands and the cost of those nations where demand for their drugs exist) as if they were the local car rental firm.

Regulators (see: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9413299/HSBC-money-laundering-where-was-the-regulator.html) were inept at …regulating. The laws were broken time and time again and there is no question that HSBC’s guilt is equivalent to a conspiracy to flout the legal system.

As the Senate investigation found, between 2007 and 2008 there was around $7bn moved from Mexico into the US via HSBC. Mexican authorities pointed out to regulators and the bank that this was highly suspicious but no action was taken.

Above this, banks in Saudi Arabia and Bangladesh were provided with accounts despite their alleged terrorist connections.

This deception by the banks – where they know all the problems that being found out would cause – cannot be deemed to be a simple error of judgment. The dark deception practiced by HSBC goes to the very core of not just banking but the whole way nations work. HSBC has torn at the very heart of natural justice and ethics by thinking that the banking system is, somehow, not part of the world. The flow of money to them is something else – not the prime culprit and with no one hurt by their deceitful acts. They are, of course, completely wrong!

Banks’ dark deception is the same deception as any launderer of stolen goods. While we prosecute the small criminals, the huge criminal acts are allowed to escape. This costs us all. How?

Money flowing out of control

Without the ability to transfer their huge “wealth”, drug traffickers, corrupt politicians, the mafia and the rest would not be able to use that “wealth”. If an Angolan politician (and I use that country as an example advisedly) wants to gain any benefit from the oil wealth generated and passed into his or her bank account in Angola, the money has to be transferred to another country – somewhere that money can be invested or to buy goods (like mansions or yachts) that effectively launders that money. When Denis Christel Sassou-N’Guesso, the son of the President of the Congo, was shown by Global Witness in 2007 to have spent $35,000 on designer goods and other items (and went to court with them and lost), it may have seemed trivial – even to someone who earns much less than that a year from his “job” in his country. When he failed to pay his court costs, I had to pursue him into France (I was working with Global Witness at the time) and we found his expensive apartments in Paris and threatened him with bailiffs. He paid up!

But, how did he get his money out from a country where the vast majority is completely impoverished – under $2 a day income?

Through the banks, of course. Banks that are supposed to take account of PEP’s – politically exposed persons – and run checks on them to ensure that the money is obtained properly.

So, money flows without barriers around the world – banks appear oblivious to the terrors that their inactions cause.

Dark regulation – FATF

Of course, our guardians are supposed to be the regulators – people and systems entrusted by the “free world” to guard us against the corruption of the banking system.

Under the framework of the Financial Action Task Force – FATF (see:  http://www.fatf-gafi.org/pages/aboutus/) we are supposed to be provided with safety.

FATF’s objectives are stated as:

The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions.  The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.  The FATF is therefore a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.

It is up to each country to develop its own safeguards and laws, but the system is failing. FATF make recommendations and while they have in recent years opened themselves up to more scrutiny and NGO participation, they are slow to act as any centralized, world organization can be.

If FATF was working, then the HSBC’s “stunningly unacceptable” inactions would not have occurred.

In each country, the laws and practices are separately developed. The US regulation of HSBC has been found to be appalling.  The Office of the Comptroller of the Currency (OCC) had 50 investigations into HSBC between 2005 and 2010 in areas of anti-money laundering and found 80 problem areas. However, in not one of those cases did it require any major changes to take place. This laissez-faire attitude to such a serious problem again strikes at the heart of governance – banking and nation.

This then means that the Compliance management system within the bank was flawed and unable to resist the calls to make money. Compliance officers are weak and under pressure from the moneymaking machine that is the bank. The fact that David Bagley (HSBC’s Head of Compliance) resigned from his role is no surprise – who knows that he will remain in HSBC in a different role????

So, failure at international level (FATF); failure at national level (OCC); failure at HSBC (Bagley) – the whole system is designed to fail and meets that objective.

Darker than dark – islands of tax heaven

If that was all, it would be bad enough, but it gets so much worse. The Tax Justice Network reports that $21 trillion is held in tax havens. Anyone who had read Nicholas Shaxson’s excellent book – Treasure Islands (http://www.amazon.co.uk/Treasure-Islands-Havens-Stole-World/dp/0099541726/ref=sr_1_2?ie=UTF8&qid=1342962917&sr=8-2) will be familiar with how dark and dangerous the world’s elicit affair with tax havens is. $21 trillion of unseen “wealth” is stored away from taxation and from sight.

The USA and UK are especially complicit in this as the UK has its own tax havens in London, Jersey, Guernsey and its protectorates in places like the Cayman Islands. Because it supposedly provides wealth to important people who influence our affairs, successive UK governments have been scared to interfere. Recently, as much to do with the involvement of the Liberal Democrats in government as anything, small steps have been started to end many tax avoidance schemes and the use of moral judgment has entered our language. This is causing such a fuss that the good citizens of Jersey are threatening to break off from the UK – horror of horrors. It is but a small start.

The USA is not exempt from blame as Shaxson shows so well. Delaware – the Blue Sky State – makes its money from tax evasion. Offices in Delaware are home to hundreds of companies located there for tax reasons.

This costs us (the 99.5% who don’t have the opportunity to avoid tax in this way) a fortune. We end up with higher VAT, higher social security, higher income tax, corporation tax, inheritance tax and other sales taxes as a result.

As reported in the Guardian yesterday concerning the $21 trillion

This gargantuan sum is difficult to comprehend, but it becomes more understandable at a parochial level. According to an earlier report by the PCS union, the Tax Justice Network and War on Want, the use of tax havens costs the UK taxpayer at least £16bn a year, double the annual budget of the Department for International Development.

The River of Hades around the world

The confluence of the HSBC horrors combined with the system of tax havens that operate is of a worldwide network of money flows that are outside the law and jurisdictions. While we berate the investment banks for their sub-prime disasters of 2007 and for Diamond’s culture problems at Barclays, the basic banking systems are at fault in a worse way.

For, it is basic banking on which we trust to get money from one account to another. Nat West’s recent debacle in the UK, when its IT systems went haywire, shows what can happen when the basic system goes wrong.

How much worse it is when the basic system of banking and our international management of that system and to where we allow money to flow is completely abhorrent – it is a very dirty hell-hole that allows bad money to flow wherever it wants and to wherever it wants. The international banks are not just bystanders in this – they are culpable and implicit in crime, in corruption and in impoverishing millions (and making all of us poorer).

Banks have had a very bad press but in the 21st Century as digital technology rules our lives, it is too easy for banks and their staff to evade controls.

What should be done?

FATF should have teeth and should be allowed to go beyond recommendation to sanctions.

National governments should ensure that their OCC equivalents are given the means (financially, technically and with highly skilled and well-paid management) to do the job.

Compliance Managers in banks should have complete independence from their senior management and be subject to independent audit (outside the main financial audit and by different audit firms). Independence means that they should report to compliance board which, in banks, should have independence from the main Board and include only non-execs.

Tax havens should be outlawed – tax should be payable where profits are made and any scheme set up to avoid tax should be illegal. We have made a very small start in the UK- but only a tiny one. The moral crusade which happens at a time of worldwide recession is the time to get this in motion so that money can no longer flow illicitly and quietly.

Good Global Citizenship and Tax Havens

Barclays was cornered this week in the UK by Her Majesty’s Revenue and Customs into paying back around £500 million for entering into a tax avoidance scheme – despite signing up to a Government scheme not to do such things. Bob Diamond now looks foolish after his vow to make Barclays a good citizen.

For many years, it has been “OK” for companies and high income earners to shield their earnings behind tax avoidance schemes. Since the introduction of welfare states across the world, companies and individuals have sought to minimize the tax that society needs to work through the system. They have systematically sought to challenge the efforts of democracies to manage the tax base. In some countries like Greece, there has been a tacit buy-in by Governments (and those in Government with their fingers in the till) to allow tax to go unpaid. This leads inexorably to financial chaos and, as we now see in Greece, to progressive civil strife and poverty. This is what has happened in Africa for so long – the wealthy shield their income from the State (who are paid off to look away).

In those countries which do make a real effort to collect taxes, the best tax avoidance comes through the use of tax havens and the real killer for economic equity is the way the world accepts tax havens as a reasonable and acceptable part of our global economy.

David Cameron and many others talk a lot about fairness: the fairness that makes bankers bonuses almost a criminal offence. But, this is two-faced. While George Osborne says that the HMRC will work towards killing off general tax avoidance schemes, we have in our midst a main centre of tax avoidance – the City of London.

Nicholas Shaxson wrote brilliantly in his book “Treasure Islands” about the tax havens that bedevil the world of finance and economics. Tax havens distort, they do not equalize.  Tax havens provide the wealthy (individuals and corporates) alongside the wealthy criminals and wealthy terrorists with the ability to shield themselves from legitimate taxation. Providing a legitimacy to tax havens (and allowing them to proliferate worldwide – even shielding them as the UK does the Cayman Islands and elsewhere) creates massive market distortions and inequalities. Legitimate and democratic tax collection is continuously stymied by the tax havens – just a step from the wealth-grabbing in Angola or the tax avoidance mentality that is Greece.

Taxation is a central plank of democratic society.  While the Tea Party and similar libertarians might rage against central government tax and tax collections as a scourge of society, we know that society is centred on a democratic ideal of the wealthy properly financing the society on which it depends to provide a basic source of welfare to the poor and sick, for defence, for infrastructure. Society is more than just the wealthy and privileged creating an elite life. Angola is a good example of how fortunate elites manipulate the wealth of a nation to appropriate its total wealth and Sonangol (its so-called publicly owned oil company – really commanded by its country’s leadership who reap its financial benefits) has been built to achieve the grabbing of oil and energy wealth from the citizens.

The nations that democratically elect their leaders (and, it is to be hoped the new rich of China and Brazil and others) should take heed to the dangers posed by the examples of the wealth grabbers in the energy-rich nations. It is here, in the UK (City of London, Jersey), the USA (such as the state of Delaware) as well as the better known haunts of the Dutch Antilles or the Cayman Islands, where huge financial flows (from the legitimate wealthy alongside the illegitimate) travel in order to reduce the legitimate tax take of the countries in which the wealth is created. Tax havens are wealth destroyers.

Wealth is destroyed by tax havens because they eat away at the main body of a nation – its mass of people, its true wealth creators. Education and education systems suffer dramatically because taxation is unavailable to finance schools. Health systems suffer for the same reasons – in the UK, where we have moved vast sums to the NHS in the last Government, cut-backs are now biting as the tax take is diminished along with economic growth. In poorer countries, the wealth shift is much more dramatic.

Ambassador Nancy Soderberg (appointed by President Obama earlier this year) was in London this week to campaign for Argentina to live up to its duties in economic areas. She mentioned its lack of adherence to the Financial Action Task Force  (FATF) requirements for responsible national supervision of illegal financing – Argentina was placed on FATF’s grey list over corruption issues. But, FATF and other international bodies have failed to oversee a sustained reduction in how financial flows travel the world and to institute a level of good citizenship on a worldwide scale amongst our companies and wealthy individuals.

While steps have been taken to reduce terrorist financing and, to a much smaller extent, the benefits of illegal drug trafficking and gambling and prostitution, very minor shifts have been made in (a) defining what global good citizenship means (b) reducing tax havens and the financial flows through them.

The G20 states from time to time that tax havens are to be reduced in scope but the battle against them has hardly started. Tax avoidance on a grand scale is as bad as grand corruption (maybe bigger in scale): two sides of the same coin. Good global citizenship requires a new definition to be made – where a global consensus is sought to reduce hugely the ability of companies and individuals to create their wealth in one place and move it offshore to save tax. This simple example of good global citizenship is a cornerstone to increasing wealth creation on a wider scale. It is not socialism but realism and pragmatism. It is good citizenship.