! Embargoed*until*10h00BST,*Sunday*22*July*2012* ! Revealed:! global! super0rich! has! at! least! $21! trillion! hidden! in! secret!tax!havens! ! At! least! $21! trillion! of! unreported! private! financial! wealth! was! owned!by!wealthy!individuals!via!tax!havens!at!the!end!of!2010.!!This! sum! is! equivalent! to! the! size! of! the! United! States! and! Japanese! economies!combined.! ! There!may!be!as!much!as!$32!trillion!of!hidden!financial!assets!held! offshore! by! high! net! worth! individuals! (HNWIs),! according! to! our! report! The$ Price$ of$ Offshore$ Revisited1,$ which! is! thought! to! be! the! most!detailed!and! rigorous!study! ever!made!of!financial! assets! held! in!offshore!financial!centres!and!secrecy!structures.!! ! We!consider!these!numbers!to!be!conservative.!This!is!only!financial! wealth! and! excludes! a! welter! of! real! estate,! yachts! and! other! nonL financial!assets!owned!via!offshore!structures.! ! The!research!for!the!Tax!Justice!Network!(TJN)!by!former!McKinsey! &! Co! Chief! Economist! James! Henry! comes! amid! growing! concerns! about! an! enormous! and! growing! gulf! between! rich! and! poor! in! countries! around! the! globe.! Accompanying! this! research! is! another! study!by!TJN,!entitled!Inequality:$You$Don t$Know$the$Half$of$It,!which! demonstrates! that! all! studies! of! economic! inequality! to! date! have! failed! to! account! properly! for! this! missing! wealth.! It! concludes! that! inequality!is!far!worse!than!we!think.! ! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!! 1!All!the!documents!described!here!can!be!found!on!our!permanent!web!page,! here!http://www.taxjustice.net/cms/front_content.php?idcat=148!! ! 1! The$Price$of$Offshore$Revisited:$Press$Release$$ $19th$July$2012$ ! ! ! ! Henry! draws! on! data! from! the! World! Bank,! the! IMF,! the! United! Nations,! central! banks,! the! Bank! for! International! Settlements,! and! national! treasuries,! and! triangulates! his! results! against! data! reflecting! demand! for! reserve! currency! and! gold,! and! data! on! offshore!private!banking!studies!by!consulting!firms!and!others.! ! Other!main!findings!of!this!wideLranging!research!include:! ! o Our! analysis! finds! that! at! the! end! of! 2010! the! Top! 50! private! banks! alone! collectively! managed! more! than! $12.1! trillion! in! crossLborder!invested!assets!for!private!clients,!including!their! trusts! and! foundations.! This! is! up! from! $5.4! trillion! in! 2005,!! representing!an!average!annual!growth!rate!of!more!than!16%.!! ! o The! three!private! banks! handling! the! most! assets! offshore! on! behalf! of! the! global! superLrich! are! UBS,! Credit! Suisse! and! Goldman!Sachs.!The!top!ten!banks!alone!commanded!over!half! the!top!fifty s!asset!total! !an!increased!share!since!2005.!! ! o The!number!of!the!global!superLrich!who!have!amassed!a!$21! trillion! offshore! fortune! is! fewer! than! 10! million! people.! Of! these,!less!than!100,000!people!worldwide!own!$9.8!trillion!of! wealth!held!offshore.! ! o If! this! unreported! $21L32! trillion,! conservatively! estimated,! earned!a!modest!rate!of!return!of!just!3%,!and!that!income!was! taxed! at! just! 30%,! this! would! have! generated! income! tax! revenues!of!between!$190L280!bn! !roughly!twice!the!amount! OECD!countries!spend!on!all!overseas!development!assistance! around! the! world.! Inheritance,! capital! gains! and! other! taxes! would!boost!this!figure!considerably.! o For! our! focus! subgroup! of! 139! mostly! lowLmiddle! income! countries,! traditional! data! shows! aggregate! external! debts! of! $4.1!tn!at!the!end!of!2010.!But!take!their!foreign!reserves!and! unrecorded! offshore! private! wealth! into! account,! and! the! picture! reverses:! they! had! aggregate! net! debts! of! minus! US$10.1013.1!tn.!In!other!words,!these!countries!are!big!net! creditors,!not!debtors.!Unfortunately,!their!assets!are!held!by! a!few!wealthy!individuals,!while!their!debts!are!shouldered!by! their!ordinary!people!through!their!governments.!!! ! ! 2! The$Price$of$Offshore$Revisited:$Press$Release$$ $19th$July$2012$ ! ! James!S.! Henry,! TJN! Senior! Adviser! and! main! researcher! for! The* Price*of*Offshore*Revisited,!said:!! ! This!new!report!focuses!our!attention!on!a!huge! black!hole ! in!the! world!economy!that! has!never! before! been!measured! !! private! offshore! wealth,! and! the! vast! amounts! of! untaxed! income! that! it! produces.! ! ! This! at! a! time! when! governments! around!the! world!are!starved! for! resources,! and!we!are! more! conscious!than!ever!of!the!costs!of!economic!!inequality. !! ! Using!several!independent!estimation!methods,!and!the!most! comprehensive!data!set!ever!assembled,!we!have!been!able!to! triangulate! on! the! size! and! growth! of! this! black! hole.! Despite! taking! pains! to! err! on! the! conservative! side,! the! results! are! astonishing. !!! ! First,! this! hidden! offshore! sector! is! large! enough! to! make! a! significant! difference! to! all! of! our! conventional! measures! of! inequality. !! ! Since! most! of! missing! financial!wealth!belongs! to! a! tiny!elite,! the! impact! is! staggering.! For! most! countries,! global! financial! inequality! is! not! only! much! greater! than! we! suspected,! but! it! has!been!growing!much!faster. ! ! Second,!the!lost!tax!revenue!implied!by!our!estimates!is!huge.! It! is! large! enough! to! make! a! significant! difference! to! the! finances! of! many! countries,! especially! developing! countries! that!are!now!struggling!to! replace! lost!aid!dollars!and!pay! for! climate! change.! ! Indeed,! once! we! take! these! hidden! offshore! assets! and! the! earnings! they! produce! into! account,! many! erstwhile! debtor!countries !are!in!fact!revealed!to!be!wealthy.! But!the!problem!is,!their!wealth!is!now!offshore,!in!the!hands!of! their! own! elites! and! their! private! bankers.! Indeed,! the! developing!world!as!a!whole!has!been!a!significant!CREDITOR! of! the! developed! world! for! more! than! a! decade.! ! That! means! this! is! really! a! tax! justice! problem,! not! simply! a! debt ! problem. !! ! Third,!it!turns!out!that!this!offshore!sector! !which!specializes! in! tax! dodging! L! is! basically! designed! and! operated,! not! by! shady! noLname! banks! located! in! sultry! islands,! but! by! the! 3! The$Price$of$Offshore$Revisited:$Press$Release$$ $19th$July$2012$ ! ! world s!largest!private!banks,!law!firms,!and!accounting!firms,! headquartered! in! First! World! capitals! like! London,! New! York,! and! Geneva.! Our! detailed! analysis! of! these! banks! shows! that! the! leaders! are! the! very! same! ones! that! have! figured! so! prominently!in!government!bailouts!and!other!recent!financial! chicanery.!! ! Fourth,!!given!all!this,!it!is!scandalous!that!official!institutions! like!the!Bank!for!International!Settlements,!the!IMF,!the!World! Bank,!the!OECD,!and!the!G20,!as!well!as!leading!central!banks,!! have! devoted! so! little! research! to! this! sector.! ! This! scandal! is! made!worse!by!the!fact!that!they!already!have!much!of!the!data! needed! to! estimate! this! sector! more! carefully.! For! reasons! of! their!own,!they!have!tolerated!the!growth!of!the!offshore!sector! for! far! too! long,! out! of! sight.! It! is! time! for! them! to! live! up! to! their!promises,!and!work!with!us!on!concrete!policies!to!get!it! under!control.! ! From!another!angle,!this!study!is!really!good!news.!!The!world! has! just! located! a! huge! pile! of! financial! wealth! that! might! be! called!upon!to!contribute!to!the!solution!of!our!most!pressing! global! problems.! We! have! an! opportunity! to! think! not! only! about!how!to!prevent!some!of!the!abuses!that!have!led!to!it,!but! also! to! think! about! how! best! to! make! use! of! the! untaxed! earnings!that!it!generates. !! !! ! For!more!information!about!this!report,!please!contact:! ! 1.! ! James! S.! Henry,! TJN! Senior! Adviser/! Main! researcher! for! this! report,!United!States.!! Email:!!jhenry@sagharbor.com! Office:!(001)!631!725!5202!!!US!Mobile:!(001)!516!721!1452!! ! 2.!John!Christensen,!director,!Tax!Justice!Network,!United!Kingdom! Email:!john@taxjustice.net!!!!Mobile:!(00!44)!7979!868302! !! 3.!Nick!Mathiason,!Bureau!for!Investigative!Journalism! Email:!nickmathiason@tbij.com!Mobile:!(00!44)!77!99!348!619! ! ! ! 4! The$Price$of$Offshore$Revisited:$Press$Release$$ $19th$July$2012$ ! ! Key!Tables! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 5! The$Price$of$Offshore$Revisited:$Press$Release$$ $19th$July$2012$ ! . . A gr! - i 2 I The Price 0f0j]sh0re Revisited: Press Release - 1 2012