News & Events

Just the FACTs: December 22, 2016

Happy Holidays!

Welcome to our “Just the FACTs” newsletter, which aims to highlight pertinent news stories and information related to our goals of curtailing offshore tax haven abuses, increasing the transparency of company ownership, and curbing the laundering of illicit money through the financial system.

Send feedback or items for future newsletters to Jacob Wills at

State of Play

2016 is coming to an end.  This year has certainly been an eventful one—we have witnessed  several document leaks revealing the closely guarded secrets of the offshore world, and a divisive election where the issue of tax avoidance and offshore loopholes were highlighted by both campaigns.

In April, the Panama Papers gave us 14.5 million documents exposing the offshore dealings of the ultra-wealthy, transnational criminals, multinational companies, and even world leaders.  One question often asked when the documents were released “where are the Americans?” the answer simply is that Americans don’t need to go abroad to set up anonymous shell companies.  It is, unfortunately, much easier for Americans to set them up onshore—in states like Nevada, Wyoming, and Delaware.

As divisive as the election was, the offshore world and the preference (perceived or otherwise) given to the elite were central to both campaigns.  Tax haven abuse is an issue that clearly concerns a majority of Americans.  A recent report by U.S. PIRG, titled “Picking Up the Tab 2016: Small Businesses Bear the Burden for Offshore Tax Havens,” shows us why we should be concerned.  The study estimates that multinational companies dodge $147 billion in combined federal and state taxes annually through offshore tax haven loopholes, shifting that burden instead onto small businesses and individual taxpayers.

A blog from FACT’s Jacob Wills highlights the stark findings of the report.  Titled “Tax Haven Abuse: The Burden of the Middle Class” the blog points out that businesses in Delaware—a state linked to the panama papers and other leaks—are actually the hardest hit of any other state (only business in the District of Columbia are hit harder).  Each small business owner in Delaware can expect to pay an additional $6,520.98 per year to cover the cost of offshore tax avoidance.  Nationwide, the average small business can expect to pay $5,128 to make up for the revenue lost to offshore tax avoidance.

With this kind of burden, it’s no secret why Americans want to see an end to a tax system that disproportionately benefits multinational companies over domestic businesses and individuals.  Now, as 2016 comes to an end, the question is what are the real changes we will see in 2017.  FACT’s Gary Kalman points out some of the challenges we face in a recent blog.  His conclusion: we cannot ignore the growing threats at home or the devastation abroad.

From the FACT Coalition and Its Partners


Tax Haven Abuse: The Burden of the Middle Class

FACT Coalition, December 21, 2016

By Jacob Wills

Much of the analysis of the 2016 election reflects on a middle class that feels overburdened.  While the economy has certainly improved since the recession, one thing has gotten worse that may be partially to blame—offshore tax haven abuse.  A new report from U.S. PIRG Education Fund finds that multinational companies dodge an estimated $147 billion in federal and state taxes annually through offshore tax haven loopholes, shifting that burden instead onto small businesses and individual taxpayers.  Titled “Picking Up the Tab 2016: Small Businesses Bear the Burden for Offshore Tax Havens,” the study estimates that each small business, on average, owes $5,186 more on its annual tax bill to collectively make up for the federal and state corporate tax revenue lost to offshore tax havens.

Read the full blog
Read the report from the U.S. PIRG Ed. Fund.

Dear Republican Congress: Forget Border Adjustments, Fix the Worldwide System

Oxfam, December 22, 2016

By Didier Jacobs

If there is one undeniable message coming out of the Presidential election, it is that people want to drain the swamp of interest groups rigging the rules to line their pockets. Corporate tax dodging – with its armies of accountants and lawyers gaming the system to shift the tax burden from big business to small business and from the wealthy to the middle class – is at the deep end of the swamp.

It is the battleground Republicans have chosen for their first year of undivided government. And to make good on their promises to improve the economic situation of working class Americans, they must kill corporate tax dodging for good here and now.

Read the full blog.


Oxfam Ranks World’s Worst Corporate Tax Havens

Oxfam, December 11, 2016

Bermuda, the Netherlands, Ireland, and Luxembourg are among the world’s worst corporate tax havens, and they will remain unimpeded by reforms proposed by President-elect Trump and Speaker Ryan, according to new Oxfam research published today. Oxfam warned that the radical tax reforms proposed by President-elect Donald Trump and House Speaker Paul Ryan are a blueprint for greater economic inequality around the world.

The report ‘Tax Battles,’ reveals how the top tax havens are starving poor and rich countries out of billions of dollars needed to tackle poverty and inequality. Oxfam has also combed through the tax proposals released by the Trump campaign and Speaker of the House Paul Ryan to assess their impact on economic inequality and corporate tax abuse.

Read the full press release
Read the full report
The Guardian’s article

Corporate Welfare Won’t Create Jobs

The New York Times (Americans for Tax Fairness), December 12, 2016

By Frank Clemente

Companies like United Technologies are delighted to receive handouts like Mr. Trump’s proposed tax giveaway that independent analysts say will cost about $6.2 trillion in lost federal revenues over a decade, and which mostly benefits large corporations and the wealthy. But lowering corporate taxes won’t prompt firms to create American jobs. Instead, we need to close a major tax loophole that actually creates an incentive for multinationals to shift jobs offshore, even as it substantially lowers taxes for them.

That loophole, known as deferral, lets corporations avoid paying any United States taxes on their offshore profits until they are brought back here. That’s why, according to a recent survey by tax researchers, Fortune 500 companies are holding nearly $2.5 trillion in profits that are booked offshore, mostly in tax havens, on which no United States taxes have been paid.

Read the full article

For Rich Countries Only: A Global Map of Multinationals’ Tax Avoidance

Tax Justice Network, December 8, 2016

The introduction of a key policy tool against multinational companies’ tax avoidance has been handled so badly that developing countries are now exposed to worse inequalities. In a new report, we call for immediate changes to limit the damage done.

In 2003, the Tax Justice Network outlined an important new policy for transparency of multinational companies. This proposal, developed with the accountant Prof. Richard Murphy, required public reporting on multinationals’ economic activity, profits and tax paid. Crucially, this information is to be broken down for each country or jurisdiction, in order to reveal any misalignments between the location of real activity, and where profits are ultimately declared. As outlined, this public country-by-country reporting (CBCR) would enable a dramatic shift in the accountability of both multinationals and tax jurisdictions.

Read the full blog

Crackdown on Tax Havens, for Some

Financial Transparency Coalition, December 7, 2016

By Christian Freymeyer

There’s an in-depth piece published today in the Financial Times that examines the upcoming implementation of the OECD’s Common Reporting Standard (CRS) for the automatic exchange of financial information. This new standard would allow countries to share information regularly on each other’s citizens who may be hiding money illegally abroad. For example, France will provide Germany with information on German citizens who have money in French banks, and in return, France will receive information on its citizens stashing money in Germany.

Since its inception, the exchange has has been billed as a blow to tax havens around the world, and to banking secrecy and illicit financial flows as a whole. And in many respects, the exchange system seems to have had impacts, even before it has become operational.

Read the full blog


Incorporation Transparency

“Welcome to My World” — My Trip to Panama

FACT Coalition, December 9, 2016

On International Anti-Corruption Day, We Must Better Understand the Extent to Which Corruption Harms Individual Lives and Entire Communities

By Gary Kalman

Last week, I attended the International Anti-Corruption Conference held in Panama City (an irony not lost on anyone). Riding the bus to the convention center, I spoke with an anti-corruption advocate from Guatemala.  She was eager to hear about the impact of the U.S. election on our work and what it means for American engagement in multilateral discussions on transparency and anti-corruption initiatives.

We discussed the large and multiple conflicts between the incoming President’s public responsibilities and his private business interests.  I mentioned a recent article about how a banking lobby already moved their events for the coming year to one of Trump’s Washington area hotels, presumably to curry favor.  Another article detailed a leasing agreement between the federal government and Trump enterprises, effectively making the incoming President his own landlord.  Not even in office, and the list of conflicts of interest and potential conflicts is long.

Read the full blog

 Panama Papers Amnesia Causing Headaches in EU

Financial Transparency Coalition, December 19, 2016

By Financial Transparency Coalition & European Network on Debt & Development

It was just nine months ago that countless business leaders, politicians and celebrities found themselves answering awkward questions about why their names appeared in leaked documents from Mossack Fonseca, a company known for setting up offshore business structures.

The leaks, which became known as the Panama Papers, gave a firsthand look at the murky world of offshore corporate structures, and the companies that help set them up. The investigation would be the catalyst for countless government probes, and even helped topple a government.

Read the full blog

 No Easy Task: Quantifying Illicit Financial Flows

Financial Transparency Coalition, December 14, 2016

Illicit financial flows are constantly in flux, and our understanding of them keeps evolving. Estimating just how much money is lost through corruption, tax evasion, money laundering, and tax avoidance can be a difficult task. But understanding what estimates are out there, and what they mean, shouldn’t be.

This is why we’re launching No Easy Task: Quantifying Illicit Financial Flows, an infographic that presents the most compelling efforts to measure illicit flows in one easy to follow visual. The researchers estimate different aspects of illicit flows using different methods, but they share the same conclusion: financial secrecy has turned illicit flows into a thriving business.

Read the full blog

Is Corruption Defined Solely Within the Boundaries of What is Legal?

Global Witness, December 9, 2016

By Nick Hildyard and Xavier Sol

Is corruption defined solely within the boundaries of what is legal? Is the deterioration of our democratic societies limited to officially acknowledged crimes such as bribes, money laundering and fraud? The answer is no, according to our latest report “Corrupt but legal” published this week.

Tracing back the history of the concept of corruption, the analysis challenges the standard view of corruption as we know it. It  sheds light instead on lawful, routine, accepted practices that constitute the bread and butter of our economic system, but represent nonetheless the decay of democratic politics as promoting the anti-social gain of a few. In this context, the authors suggest to reclaim the words “corruption” and “corrupt” in a broadened sense, closer to the original meaning of “morally unsound, rotten, infected”.
Read the full blog

Issues in the News

Incorporation Transparency

Trump’s Pick for Commerce Secretary Shares a Business Circle with Putin Associates

McClatchy Newspapers, December 20, 2016

By Kevin G. Hall

Billionaire investor Wilbur Ross, tapped by President-elect Donald Trump to serve as his commerce secretary, has been the top shareholder in a Cypriot bank with deep Russian ties and investors who made their fortunes under Russian President Vladimir Putin.

There’s no indication of any questionable behavior by Ross, but his partners in the bank are sure to attract scrutiny during his Senate confirmation hearing and underscore the financial orbit around Putin that intersects with figures in Trump’s campaign and administration.

Read the full article

Shell Companies: Helping Assad’s War

Süddeutsche Zeitung (Undated)

By Frederik Obermaier and Bastian Obermayer

The men were loading potatoes onto a truck when barrels suddenly started falling from the sky. The earth shook and boulders flew through the air as a wall of dust took shape. Some of the men threw themselves to the ground, while others sought refuge in a shed. Then came the explosions: thousands of tiny pieces of metal shot through the air, piercing everything in their path.

The events of this 2012 September day in Marea, a town close to Aleppo, are emblematic of everyday life in the Syrian war – a bloodbath that has seen the army of Syrian president Bashar Al-Assad fighting against several Islamist factions, but also against the country’s population. Since the start of the war, the Syrian air force has dropped thousands of barrel bombs: simple oil barrels filled with concrete, explosives, nails, and scrap metal. The aim has been to kill as many people as possible.

Read the full article

House Task Force Offers Recommendations on Fighting Terror Financing

ABA Banking Journal, December 20, 2016

By Michael Kavanagh, Thomas Wilson, and Franz Wild

A bipartisan House Financial Services Committee task force today released a report on combating the financing of terror. In the course of its yearlong investigation, the task force identified several “highly critical vulnerabilities” in the U.S.’ ability to stop the flow of funds to terrorist organizations, including federal information sharing and inter-agency coordination.

“The report… will serve as a guide for the next Congress in crafting legislation to thwart terrorist groups from carrying out their vicious global operations,” said task force Chairman Mike Fitzpatrick (R-Pa.). “Combating terror financing is a significant and often overlooked component of our national security strategy. This report signals to the next Congress and Treasury Department that we must continually evaluate and improve our response toward international terror and criminal financing.”

Read the full article
Read the report.

With His Family’s Fortune at Stake, President Kabila Digs In

Bloomberg, December 15, 2016

By Michael Kavanagh, Thomas Wilson, and Franz Wild

In his only public speech this year, Joseph Kabila, president of the Democratic Republic of Congo, was defiant about his refusal to hand over power when his final term ends on Dec. 19. “I cannot allow the republic to be taken hostage by a fringe of the political class,” he told parliament last month as members cheered.

His presidency had brought peace and economic growth to Congo, the 45-year-old said, outlining reforms he’d made in telecommunications, mining, energy and banking. What he didn’t say is how some of his own family members are among the biggest beneficiaries of those changes—including his sister Jaynet and brother Zoe, who both listened from the front row as elected members of parliament.

Read the full article

Odebrecht and Braskem Plead Guilty and Agree to Pay at Least $3.5 Billion in Global Penalties to Resolve Largest Foreign Bribery Case in History

U.S. Dept. of Justice, December 21, 2016

Odebrecht S.A. (Odebrecht), a global construction conglomerate based in Brazil, and Braskem S.A. (Braskem), a Brazilian petrochemical company, pleaded guilty today and agreed to pay a combined total penalty of at least $3.5 billion to resolve charges with authorities in the United States, Brazil and Switzerland arising out of their schemes to pay hundreds of millions of dollars in bribes to government officials around the world.

Deputy Assistant Attorney General Sung-Hee Suh of the Justice Department’s Criminal Division, U.S. Attorney Robert L. Capers of the Eastern District of New York, Assistant Director Stephen Richardson of the FBI’s Criminal Investigative Division and Assistant Director in Charge William F. Sweeney of the FBI’s New York Field Office made the announcement.

Read the full article


House GOP to Press Ahead With Business-Tax Plan Criticized by Importers

The Wall Street Journal, December 16, 2016

By Richard Rubin

House Republicans plan to press ahead with a business-tax plan that has drawn criticism from retailers, refiners and other importers, the chairman of the tax-writing House Ways and Means Committee said on Friday.

“This is a key part of our built-for-growth tax code. It’s going to stay,” Rep. Kevin Brady (R., Texas) said on C-SPAN’s “Newsmakers,” to be aired this weekend. “Because tax reform affects everyone differently and industries differently, we want to listen to and find solutions with those who rely a lot on imported goods.”

Read the full article

Ireland And Apple Ready Their Appeals Against The EU Commission’s $14 Billion Tax Decision

Forbes, December 19, 2016

By Tim Worstall

This is all going to take years to work its way through the system but we’ve a hugely important economic point at stake here. The corporate taxation system within the European Union was deliberately constructed in order to place downward pressure on corporate taxation rates. For corporate taxation is, in an economic sense, a bad tax. It would be better for us all to raise the necessary revenue in a different manner. Thus the EU system within the Single Market was set up so that any company anywhere inside the EU could sell to anyone and everyone across the EU. And, crucially, profits made from that activity were to be levied where that company was located. And in the absence of a permanent establishment in a country that’s just where the head office is.

Read the full article

Global Tax Reports Could Lead to Single Return: Koskinen

Bloomberg BNA, December 13, 2016

By Alex M. Parker

New initiatives to increase cooperation between tax administrators and identify tax avoidance better could eventually lead to a single, global tax return for corporations, IRS Commissioner John Koskinen said.

“As you move towards more cooperation with tax administrators trying to look at where double taxation is, when you move towards volumes of information being exchanged in a more transparent global economy, it isn’t a long step to say, from the standpoint of corporations, you could end up with a single tax return,” Koskinen told Bloomberg BNA Dec. 13.

Read the full article