Friday, April 5, 2013

A Leak or a Tsunami?

Scandal epicenter?

A news story that has been flooding the global media in the last day is the report that the British Virgin Islands(BVI)  – the world’s most popular tax haven - has sprung a massive leak.  Millions of emails providing details of thousands of wealthy individuals who may have stashed trillions of dollars away in anonymous bank accounts has been surreptitiously provided to a US-based organization of journalists – the International Consortium of Investigative Journalists. The ICIJ will be digging into this treasure trove of data and revealing its findings in the coming weeks.

The results could be globally seismic, both politically and economically. Certainly, there will be a drop-off in the use of the BVI as an offshore banking center. Secondly, the revelation of the extent of hidden fortune will be hugely embarrassing to wealthy and powerful people across the world, including the current French President. Thirdly, the Greater China region will experience more than its shares of scandal and intrigue. According to reports, the “majority” of names on the leaked list are from China, Hong Kong and Taiwan and relate to investments into China. The repercussions for China’s leadership could be meaningful, particularly given Xi Jinping’s focus on exposing corruption and reigning in the privileges of the elite. It is precisely this type of international media focus that has been known to spur the China Communist Party into dramatic action in the past. Stay tuned for the deluge.

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