Storm In A BVI Teacup

If you remember a couple of weeks ago, the Internet was rocked – for a total of about one or two days – by a wave of leaks from the ICIJ about the identities of offshore account holders in the British Virgin Islands. What juicy revelations did we have about the henchmen of the kleptocratic Putin regime?

Other high profile names identified in the offshore data include the wife of Russia’s deputy prime minister, Igor Shuvalov, and two top executives with Gazprom, the Russian government-owned corporate behemoth that is the world’s largest extractor of natural gas.

Shuvalov’s wife and the Gazprom officials had stakes in BVI companies, documents show. All three declined comment.

So that comes to one Minister who has always been open about the wealth which he made in the 1990’s as a law firm manager and then multiplied by leaving it in a blind trust invested into the Russian stockmarket; and a couple of top executives at one of the world’s biggest companies, are the two most prominent names that have been dredged up.

Rather underwhelming, TBH.

Incidentally, in most countries there is nothing particularly illegal about having offshore bank accounts. Morally questionable? Perhaps. For some, yes. And I can understand why countries like Germany (mistakenly, IMO) might not want to contribute to bailing out alleged tax havens like Cyprus, or why the US demands Switzerland reveal the identities of Swiss secret bank account holders to the IRS.

But is keeping money offshore illegal? No, it isn’t. Not in the US, not in Russia, not practically anywhere else. Not in any country that supports the principle of basically free movements of capital. Now if said money is suspected to have been laundered or otherwise acquired illegally then yes, investigations can follow. But the past few years of pressed government budgets have seen the big countries lean heavily on alleged tax shelters to reveal more information about their clients so it is arguably a much smaller problem than it was, say, a decade ago.

The non-illegal nature of offshore banking is the reason why Romney isn’t being prosecuted for his $250 million stash in the Cayman Islands, and why revelations that many wealthy Germans keep bank accounts in Panama has led to a lot of media noise but no legal proceedings. Is it because Germany is a kleptocracy in which the elites corruptly protect their own? To ask the question is to mock it.

But funnily enough whenever it comes to Russia even otherwise neoliberal or even Randian commentators start frothing at the mouth and demanding populist, Bolshevik reprisals against any Russian – that is, if he isn’t opposed to Putin – with money abroad.


  1. As someone who is not an admirer of tax havens, I agree with all of this.

    The simple fact is that there is nothing illegal in most jurisdictions about placing money in a tax haven and to label someone corrupt or a criminal simply for doing so is completely wrong. Here by the way is a comment Shuvalov is reported to have made, which whilst it is not specifically about tax havens also makes the point that simply because someone is rich and successful in business that does not mean that individual is corrupt or a criminal.

    Having said this, I am personally surprised at how little of the money in the British Virgin Islands turned out to have a Russian connection whilst I think the Europeans have quietly accepted that the stories of vast sums of laundered Russian money sloshing around in Cyprus have turned out to be a myth. It seems to me that western conception of wealthy Russians is still one that is based on the actions of a tiny number of very rich oligarchs in the 1990s and is now completely wrong and out of date.

  2. PvMikhail says:

    Does Romney have a 250 BILLION stash? He must be easily the richest on the planet ;?