My mother is not so dumb. I’m visiting her today, and showed an economic analysis of the looting in Egypt by Gamal Mubarak and his cronies to her. The reaction:
That’s terrible. Those bloodsuckers. No wonder he didn’t want to leave. He wanted to make sure his money was safe first.
Turns out she was spot on. As I know by virtue of having read Nicholas Shaxson’s Treasure Islands (out in the UK, due to be published here in April) on tax havens, the world of “offshore” banking is vastly larger and more untouchable than most people realize. He describes in considerable detail about how buffers are built in so that funds become untraceable, and have further protections (as in if the authorities walk in to shut down a banking operation, the money can be moved through rapidly through several banking centers so it cannot be found, much the less seized).
And the de facto offshore banking protectorates of the US and the UK appear to be the state of the art. As George Monbiot observed:
Shaxson shows how the world’s tax havens have not, as the OECD claims, been eliminated, but legitimised; how the City of London is itself a giant tax haven, which passes much of its business through its subsidiary havens in British dependencies, overseas territories and former colonies; how its operations mesh with and are often indistinguishable from the laundering of the proceeds of crime; and how the Corporation of the City of London in effect dictates to the government, while remaining exempt from democratic control. If Hosni Mubarak has passed his alleged $70bn through British banks, the Egyptians won’t see a piastre of it.
The Telegraph confirms that Mubarak used his last days in office to secure his ill gotten gains:
The former Egyptian president is accused of amassing a fortune of more than £3 billion – although some suggest it could be as much as £40 billion – during his 30 years in power. It is claimed his wealth was tied up in foreign banks, investments, bullion and properties in London, New York, Paris and Beverly Hills.
In the knowledge his downfall was imminent, Mr Mubarak is understood to have attempted to place his assets out of reach of potential investigators.
On Friday night Swiss authorities announced they were freezing any assets Mubarak and his family may hold in the country’s banks while pressure was growing for the UK to do the same. Mr Mubarak has strong connections to London and it is thought many millions of pounds are stashed in the UK.
But a senior Western intelligence source claimed that Mubarak had begun moving his fortune in recent weeks.
“We’re aware of some urgent conversations within the Mubarak family about how to save these assets,” said the source, “And we think their financial advisers have moved some of the money around. If he had real money in Zurich, it may be gone by now.”…
Reports emanating from Egypt claim that Mubarak had accounts with the Swiss bank UBS as well as with HBOS, now part of Lloyds Banking Group, which is 41 per cent owned by the British Government. But it is understood that Lloyds bank officials have so far found no evidence Mubarak had secret accounts with them….
Intelligence sources indicate that the Mubarak fortune may be most easily traced via the business dealings of Gamal Mubarak, 47.
My impression is that it takes a wee bit of planning to have funds be difficult to trace; it appears the Mubaraks were either naive or lazy (anyone reading about the US rows with Switzerland over tax evasion would know that Swiss banks are not impenitrable). But it may also wind up serving them to have lost a lot of their fortune in transit. If the authorities nab a few billion, plus all the tangible assets like houses, they can declare victory and try to cover up the fact that a great deal was lost.
However, the Mubaraks’ brazen plundering of Egypt, in combination with the publication of Shaxson’s book, may lead to pressure to rein in these faceless, powerful banks. The genie is no doubt too far out of the bottle to end them, but any measures that reduce their scope and reach would be salutary.