lifestyle leader

The list is produced by a group called the Tax Justice Network, an independent organization set up by the British Parliament that is unaffiliated with any political party. The list is not as comprehensive as the Corruption Perceptions Index (it only includes 60 countries), but it nevertheless provides an interesting comparison.

Take, for example, the top 15 countries on each list. Countries like Switzerland, Hong Kong, the Netherlands, Luxembourg and Singapore rank among both the least corrupt and the most secretive. At one level this makes perfect sense: why would you entrust your hard-earned, tax-avoiding millions to a country with a reputation for corruption? You want your funds to have both privacy and security.

On the other hand, although lack of corruption is generally a good thing, these countries should not be perceived to be bathing in the light of the Heavens when it comes to financial matters. To the extent that high levels of financial secrecy are facilitating huge sums of money to be transferred away from countries that might actually need them, these financial havens are merely the other half of an equation that permits corruption to rob growing economies of valuable resources.

Another thing which is worth noting on this list is entry #1 and entry #5.
Entry #5 is only interesting because the UK actually receives a good rating on financial secrecy overall. However, because the City of London deals with such huge sums of money, the risks are necessarily higher and the country gets pushed up the list. Sort of put things in perspective.

Now for entry #1: crowning off the financial secrecy index is none other than the United States of America, or more specifically: Delaware.

Apparently, Delaware is such a popular destination for foreign investment because it doesn't tax profits earned outside of the state (and how much money can you make in a state of roughly 800,000 people anyway?) and it does not require companies to be physically present in the state.

Best of all, the state doesn't establish the beneficial ownership information (i.e. the people who actually own the thing) when incorporating the company. The defense offered in the article I link to above is that no other U.S. state establishes beneficial ownership, so why should Delaware? Well when one of the people setting up shell companies in your state is a Russian who happens to be one of the world's largest arms dealers, you may consider adopting this fundamental banking practice. Idiots.

So next time you hear Sarkozy, Brown, or any other Western leader foaming at the mouth as they rant and rave about tax havens prior to a G20 summit, keep this list in mind.