Following the latest round of revelations made by the International Consortium of Investigative Journalists, there’s been a discernible toning down of the calls for resignations and general banishment of persons who have interests in offshore jurisdictions.

Now this may be due to the fact that people have moved on. Maybe they find Eurovision more entertaining than the tangled web of accounts and companies in secrecy jurisdictions. Or maybe they’re taken aback to learn that a number of Maltese financial intermediaries and consultants are directing their clients towards tax havens.

Of course, everybody goes around saying it’s perfectly in order and that it’s tax avoidance and not tax evasion, which makes it perfectly okay (Although what’s in a name? As former British Chancellor of the Exchequer Denis Healey succintly put it, “the difference between tax avoidance and tax evasion is the thickness of a prison wall”).

They tell us that there are ever so many legitimate reasons why people would want to stash large amounts of money beyond the taxman’s reach, by means of confusing tax structures in an array of secrecy jurisdictions. It’s “wealth management”, we are told. Or the minimisation of the tax burden. Or a way of safeguarding one’s income from unstable governments or fiscal Draculas.

All very plausible of course, and everybody is innocent until proved guilty and all that. We are supposed to dismiss the fact that in a great number of cases, the people resorting to these offshore havens are funnelling massive amounts of ill-gotten gains and proceeds of crime and that they are concealing their assets from the law and from creditors.

These are just a few of the cautious disclaimers being bandied about at the moment by people working in the financial services industry. I think that we should take a long, hard look at ourselves and the kind of services we offer and the type of business we welcome to our country.

To question the underpinnings of the financial services industry... is simply not done. It’s considered to be as unpatriotic as not rooting for Ira in Eurovision

We make a big deal of Malta’s apparently flourishing financial services industry and take pains to insist that Malta is not an offshore jurisdiction. There’s even a cross-party consensus that criticism of this sector is a no-go area. It’s a bit of a sacred cow around here.

To question the underpinnings of the financial services industry, ethical practice within it and whether it is effectively regulated, is simply not done. It’s considered to be as unpatriotic as not rooting for Ira in Eurovision.

We seem to have succumbed to this form of group-think where any questioning or scrutiny of the financial services sector is frowned upon. The automatic response to queries about this sector is that it’s a main source of revenue for the country (incidentally the same thing which is said of the unsustainable construction industry) and that without it, the economy may very well crumble.

If we are going to accept this explanation without delving deeper into the true nature of the industry, we should merely give up the pretence of being shocked at the fact that money is being funnelled to and via Malta for unethical purposes. The cash cow has become a sacred cow and we seem to be fine with that.

• Treasure Islands by Nicholas Shaxson is a riveting book about “tax havens and the men who stole the world”. It dispels the myth about tax havens being exotic, palm-fringed islands in the middle of nowhere, and shows how quite a few supposedly “onshore” jurisdictions actually facilitate and attract offshore business.

The City of London and some states in America are prime examples of this. Malta gets a mention too. Shaxson says that one way to spot a secrecy jurisdiction is to look for whether its financial services industry is very large compared to the size of the local economy. The International Monetary Fund used this criterion in 2007 to finger Britain, correctly, as an offshore jurisdiction.

Does that ring any bells? If that doesn’t – what about the author’s more lighthearted telltale description of a tax haven as a place where spokespeople periodically claim “we are not a tax haven”, and strenuously work to discredit critics who, they claim, are using “outdated media stereotypes” that do not correspond to objective reality. That definitely sounds familiar.

Read this book if you want to know more about the very blurred distinction between onshore and offshore jurisdictions and why – in the words of millionairess Leona Hemsley – “Taxes are for the little people”.

cl.bon@nextgen.net.mt

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