March 23, 2014 by AK
Nicholas Shaxson says almost everything I feel I’ve wanted to say, and much more, about the London-centered offshore network and its side effects. In the first section of his long, well-structured article, Shaxson surveys responses to Ben Judah’s recent NYT piece, London’s Laundry Business. He briefly recaps the City’s ancient history and explains how it rebounded after WWII, making itself useful to Wall Street, the Soviets and various rogue nations and oligarchs as the spider of an offshore cobweb. He goes on to lay out the implications of this opaque network for global finance and security.
To be fair, those English-law offshore jurisdictions can make life much easier for businesses from countries with rotten legal systems and corrupt state institutions, like Russia. Using a BVI vehicle to structure a deal is a sign of rationality, not corruption – generally speaking. As Jim__L replied to me in the comments, “Yeah, that’s the problem here — sometimes, there are good reasons to escape what the Government says are ‘the responsibilities that come with living in a particular society’.”
But the system has been abused too much. However great its benefits to the business communities in emerging markets, the cost of its secrecy has become unbearable.