Review by Bill Doughty
In the previous Navy Reads review of the novel Punk’s Force, the key villain is a man named Wolfe. He’s a character with virtually no character –– willing to obliterate an aircraft carrier, destroy the U.S. Navy, and end world peace in order to profit personally and hide his treasures of gold and crypto offshore. And he had a powerful assistant to help him.
Punk Force’s Wolfe is a fictional caricature of some of the very real ultra-rich people who stash their wealth in offshore financial institutions. They hide their riches primarily to evade paying taxes and avoid other laws. And they have plenty of quiet professionals to assist them.
The ultra-rich who employ such tactics are sometimes business leaders, drug dealers, power movers in governments, or heads of state themselves. They then control the small nations or states, including the local military, to protect their assets. The blood-sucking result: local poverty, a spread of corruption and crime, and gross inequality that spreads like a contagion. Vampires creating vampires –– with more haves and have-nots and less democracy.
Brooke Harrington sticks her neck out to investigate the secretive world of offshore finance in her fascinating exposé “Offshore: Stealth Wealth and the New Colonialism” (W.W. Norton & Co. 2024). Harrington describes how she gets close to the wealth managers who help the ultra-rich hide their money and gets them to share stories and techniques.
Immersing herself in their world, she discovers this secret (and achilles heel) of the ultra-wealthy: “Their dependence on hired help at all levels.” Harrington embedded herself in the hidden underworld of the professionals who facilitate the transfer and security of offshore funds: “the trustees, private bankers, tax advisers, and other members of the wealth management team that virtually all of the very rich employ.”
Rather than coming across like a boring financial treatise, her book is accessible, insightful, and even suspenseful. It’s no surprise that some offshore financial drama has been featured in movies and documentaries portraying real-life massive scandals.
At least 140 politicians were charged in tax evasion schemes; Lionel Messi, by the way, avoided prison by paying a large fine, according to Harrington.
In Offshore, Harrington presents a provocative history of how tax-evasion schemes evolved from the time of Pliny and ancient Rome through the Ottoman Empire and into feudal and colonial times and now in the era of cryptocurrency, kleptocracy, and massive pockets of wealth inequality.
In fact, widespread offshore financing can be directly traced to imperialism of earlier centuries. Most nests of hidden funds are located in previous British colonies. What drives some very rich people to hide their wealth is the same motive that drove rich nations to use military force to take what wasn’t theirs, often in the name of religion (Crusades) or racism (slavery). Their actions were and are antithetical to both democracy and capitalism. It’s anticapitalist because it “hides from true market fluctuations and investment risks of a free market.”
Today, many tax evaders “see themselves as deserving exemption from the rules that bind the rest of us as members of society,” Harrington writes. She cites Nobel laureate and libertarian Friedrich von Hayek, who “argued that capitalism could survive only in an environment where honesty, fairness, and respect for private property were enforced by social norms and laws. In contrast, the value proposition of offshore finance depends on unfairness and dishonesty.”
In a discussion with Jon Stewart on Comedy Central’s The Daily Show, Harrington discusses what she calls the “broligarchy” and how some patriarchal billionaires pay for access to those in power, including all three branches of government in order to get more tax breaks for themselves, less regulations on their actions, and more accumulation of money and power.
“Yet, true to form, Musk used aggressive wealth management techniques in order to pay little or no tax for years, while vehemently opposing any legislation that might require billionaires to pay their fair share,” Harrington says. “For many elites like him, freedom mostly means the liberty to not be taxed.”
“This isn't just an American phenomenon. Worldwide, these elites— including dozens of current and former heads of state, as well as business leaders-are united by their contempt for and brazen defiance of democratic governance. The offshore financial system connects them in a shared project to escape constraints on their economic and political power. Moreover, the scores of presidents, monarchs, and ministers named in the Panama, Paradise, and Pandora Papers have abandoned the notion of national interest: by placing billions in unpaid taxes, stolen foreign aid, and the proceeds of crime into secret offshore structures, they enriched themselves at the expense of their countries. This includes not just anti-corruption campaigners, like Czechia's Andrej Babis and Kenya's Uhuru Kenyatta, but trusted figureheads like the late Queen Elizabeth II of England. Though elites like these may not know one another personally, their uses of offshore position them in a shared space of opposition to legal, political, and economic equity. They create a political problem in democratic societies, where governance depends on legitimacy and the consent of the governed. Such political systems can't function when impunity becomes the ultimate status symbol. Elite lawlessness is a premodern privilege, incompatible with the principle of equality before the law.
“Thus, government and corporate leaders who appear in the offshore leaks should be understood not just as corrupt people who got caught: they are elites in revolt, engaged in a political project of refusing obligation to the societies that allowed them to become wealthy and powerful. Elite exceptionalism has always been the animating principle of the offshore world, but until recently, overt proclamations of impunity were rare. The price of social and political prominence onshore included an obligation to simulate respect for ideals such as the common good and equality before the law. Offshore secrecy changed that, permitting an ethos of radical impunity to flourish and justify itself through its own surging wealth and power. Elites now openly refuse any obligation to the societies that allowed them to become wealthy and powerful: instead, they express radically anti-democratic and anti-egalitarian positions, without fear of sanction. For example, in a 2009 autobiographical essay titled 'The Education of a Libertarian,' Thiel wrote that American women getting the vote ruined democracy and capitalism alike.”
Other oligarchs are aligned not only with misogyny but also with white supremacy, Christian nationalism, and various forms of racialized oppression and violence. In general, they are environment exploiters not protectors. They are friendly with autocracy and against those freedoms in the Constitution they find inconvenient.
So forget about the First Amendment and other constitutional protections. Harrington notes that a common theme among authoritarian tax evaders is also “persecution of journalists who ask uncomfortable questions.”
But asking questions, uncovering facts, and demanding transparency is not a problem; instead, that’s the solution. Incentivizing and rewarding wealth managers to be honest –– and holding the aides and assistants accountable –– is the way to curtail the hiding of dirty money.
As an example, the original agreement with Iran to limit its nuclear program under the Obama administration led to “restricting the ruling regime’s access to legal-financial experts, so that the country’s leadership ‘could not access its foreign exchange assets held abroad,’ according to a Congressional Research Service report.” That resulted in Iranian leaders returning to diplomatic negotiations.
Setting up rules for financial managers has also proven successful in the recent past. After Putin’s Russian invasion of democratic Ukraine, the world’s leading offshore financial centers and many wealth managers showed solidarity in shutting down Russian oligarchs and enforcing related sanctions and legal initiatives.
“Legal change is necessary but experience shows that it won’t suffice as the sole or primary response to the offshore crisis,” Harrington writes. “Rather, I put my hope in changing social norms. Attitudes about right and wrong shift much more quickly than laws.” In other words, ethics, morals, and core values of honor, courage and commitment of “We the People.”
Could public sentiment shift to stigmatize the vampiric ‘broligarchy’ and their use of offshore finance? “If there’s any chance of that, the first step is crating awareness of the problem: That’s one reason I wrote this book.” Her bet is on the side of good versus evil. Stigmatizing the enterprises and going after the go-betweens is the way to success.
But…
As discussed in the previous Navy Reads review, the authors of Punk’s Force created a tireless personal aide to the villain Wolfe. The assistant was available 24/7, almost always had the precise information to help Wolfe carry out his evil schemes, and seemed immune to incentives to do right or punishment if it did wrong.
Wolfe’s assistant was artificial Intelligence.