The Offshore Wrapper: a week in tax justice

Did Qatar bribe its way to host World Cup 2022?

The UK’s Sunday Times is filled with explosive allegations that Qatar bought the right to host the 2022 World Cup through a series of bribes to FIFA officials. The reports are based on a leak of a database to the paper.

Among the huge number of payments reported in The Sunday Times, are allegations reported a few months ago that a total of $1.6m has been paid to Jack Warner, the former FIFA Vice President from Trinidad and Tobago.

This should come of little surprise to anyone who has followed Jack’s career. See for example here, and here, here, here and here.

What is more surprising however is that that some of the payments made to Warner were deemed too hot even for the Cayman Islands.

The Sunday Times reports that after several attempts to transfer money had failed due to anti money laundering checks at US banks, an attempt was made to use accounts in the Cayman Islands. Even these were sent back (from a country which helped to launder billions of Mexican drugs money).

So how were the payments made? Eventually, the money was transferred on an invoice for “professional services”.

Of course, the idea that the only way in which Qatar could host the World Cup would be by buying off the decision makers will come as a shock to many.

The small country has a population of just 1.6m. The Qatari football team is currently ranked 95th in the world. There are no large stadiums to host the completion.

It doesn’t even have the workforce to build the stadia so has imported labour from South Asia. So poor are the working conditions that a documentary from ESPN estimated that 4,000 laborers will die building the infrastructure for the competition.

If all that wasn’t enough, the desert state sees temperatures of 50 degrees centigrade in the summer when the tournament is usually held.

The football loving Wrapper believes Qatar is unquestionably the best place to hold the world’s second most important sport event and has started ringing up its corporate friend’s to secure the best seats.

Brazil football fever – FIFA style

Amid suggestions of corrupt payments from the hosts of the 2022 World Cup, the Wrapper is keeping its eye firmly on the ball.

And reader, we have just stumbled on a startling fact:  the 2014 World Cup is due to start NEXT WEEK in Brazil!

And true to form, our friends at FIFA have again come under criticism for turning the World Cup into a giant mobile tax haven.

This is sadly standard practice for FIFA and the International Olympic Committee who insist that the host nations for these international sporting circuses give tax exemptions to them and their multinational “partners” during the event.

Signing away any hope of countries benefitting from hosting the World Cup was even a condition for countries bidding to host the 2018 and 2022 competitions. Conditions of course which FIFA tried to keep secret.

Christian Aid has estimated that £312m will be lost to the Brazilian Treasury from tax breaks to multinationals during the World Cup. A country which has a serious inequality and poverty problem.

Such a beautiful game, I’m sure you all agree.

Junck status: Luxembourg puts forward Tax Haven Candidate for the European Commission Presidency

As the dust settles on the results of the elections for the European parliament EU member governments begin the unenviable task of negotiating who will be the next president of the European Commission.

The European Commission sets the agenda for coordinated European action on cross border issues such as trade. In recent years the European Union has been making positive progress on countering illicit financial flows.

One of the front-runners is Jean Claude Juncker, the former prime minister for Luxembourg.

But Juncker is by no means the UK Prime Minister David Cameron’s preferred canditate. Cameron dislikes him for being a Euro-federalist at a time when the UK is gripped by anti-European sentiment.

But that isn’t Juncker’s most distressing quality. The former leader of tax haven Luxembourg once openly advocated filibustering European anti-money laundering directives and wanted discussions around finance policy to be held in secret.

If the tax haven candidate is successful in taking over the commission, expect further reform on illicit financial flows to be unveiled by the commission sometime around 2050.

India gets tough

India is showing itself to be a leader in attempts to crack down on tax evasion and dirty money. One of the first actions of the new Modi government was to set up a new special investigations team (SIT) to bring back black money from foreign banks.

The action looks serious, with the new minister for law, Ravi Shankar Prasad saying: “The highest level of financial, revenue and economic management of the country are members of the Special Investigation Team. This indicates the commitment of the new government of India . . ”

We await developments with interest.

Mining tycoon to sue George Soros and Global Witness

Israeli billionaire, Beny Steinmetz is set to sue George Soros, the hedge fund tycoon and renowned philanthropist, and anti-corruption campaigner group, Global Witness, reports Britain’s Sunday Times.

The case involves mining rights to the largest untapped iron ore deposits in the world located in Simandou region of Guinea. There are said to be several hundreds of billions of dollars of ore in Simandou.

Rio Tinto had originally been awarded the rights to exploit the deposits but the former president of Guinea took the rights off the mining giant and awarded them to Mr Steinmetz’s company, BSG Resources.

Now the new president of Guinea who was elected on an anti-corruption ticket has removed the rights from BSG Resources after setting up a commission to look into the deal. The commission claimed to have found gross irregularities in the way BSG was granted the rights. BSG claims it was part of a conspiracy coordinated by Global Witness and George Soros.

But much of the evidence came from the FBI – not Global Witness. In a sting operation, the FBI recorded Frederic Cilins, someone claiming to represent Steinmetz. Cilins allegedly offered Mamadie Toure, the wife the former leader of Guinea, millions of dollars if she handed over documents which are alleged to have incriminated Steinmetz. Cilins has pleaded guilty.

Steinmetz’s company is based in Guernsey but are controlled by trusts set up in Liechtenstein. Steinmetz himself lives in Switzerland.

This is a high stakes game, but one thing is for sure: The lawyers are going to win big.

New way to read your Wrapper: Get the TJN Apple app

The TJN app is now available on the Apple store. If you buy products from that global tax dodging tech giant why not get a bit of tax justice on it by downloading the TJN app? It is free, it features the Wrapper every week and it’s here.