Bank Secrecy, Tax Evasion and the Cahuzac Scandal

This month was marked by a series of events hitting major tax havens: the Cyprus crisis that dismantled its banking (recycling) system, the report of the Washington-based International Consortium of Investigative Journalists that released data on thousand of offshore bank accounts and shell companies and most recently, Luxemburg, the last major stronghold of bank secrecy in the Euro zone, knuckling under pressure and agreeing to drop its privacy protection rules and reveal its foreign client lists.

It was hoped Austria would follow but so far it has resisted, with its Finance Minister Maria Fekter pointing to the UK as the European Union's biggest culprit, with, as she put it, "many money laundering centers and tax havens in its immediate legal remit", including the Channel Islands, Gibraltar, the Cayman Islands and the British Virgin Islands. Before dealing with Austria, Ms. Fekter seems to feel that the European Union should first treat Britain the way it treated Cyprus before granting it a €10 billion bailout.

Tax evasion costs Europe about € 1 trillion ($1.3 trillion) a year according to the European tax commissioner. That figure did not faze Ms. Fekter one bit. As far as she's concerned, Austria is sticking to bank secrecy, full stop.

Yet that figure is one thousand times the amount Cyprus is getting to be bailed out and about one hundred times what Greece is getting. If one could do away with tax evasion, it would seem all our problems would be (pretty much) solved. Herman Van Rompuy, the President of the European Council, wants to make one more push next month at a summit meeting of the Union's 27 leaders, calling on them to discuss the issue.

France would be most likely to agree. In case you missed it, this is one of the juiciest political scandals in years. The Socialist government's budget minister, Jérome Cahuzac, the man who was supposed to fight tax evasion, was caught red-handed with money secreted in Switzerland and Singapore - not just €600,000 as he had first claimed, but as he finally confessed last week, some €15 million, the result no doubt of getting paid cash for his medical services. It seems that before he entered political life, he was a former cardiologist-turned-plastic surgeon who specialized in hair transplants, clearly a juicy business or perhaps French males are particularly addicted to their thick manes and distraught to see them thin out...

What got everyone in France really angry was Cahuzac's repeated denials over a period of four months as accusations swirled around. This made of him a confirmed serial lier as he swore his innocence in Parliament, lied to Finance Minister Pierre Moscovici and President François Hollande. As a result, both Moscovici and Hollande have seen their image plummet, and Hollande worse of all: he now has the lowest popularity rating of any French President. L'Express has called him "Monsieur Faible", the weak man. Here's the video explaining why:

Strong words! Twitter got unleashed, the French media was universally relentless in condemning him: Cahuzac's resignation three weeks ago hardly placated the critics...

Perhaps that is what is most remarkable about this story: how long it has occupied the French headlines. With a final amusing twist I just learned yesterday watching France 24 which is often full of fun tidbits...if you click that link, you're in for a surprise of a different kind, but to stay on the subject here: according to the magazine Jeune Afrique Cahuzac has broad support from African politicians who cannot understand what the French are so upset about. Good Heavens, when you reach power, the first thing you do is open a secret account in Switzerland and start moving your funds over there, right? Your predecessor did that, your successor will too, any fool knows that!

Awe, shucks! How long will it take to clean up African politics?

Latest book published by Claude Nougat on Amazon:

Enhanced by Zemanta