In the EU, it’s tax haven for me and not for thee; Dubai’s terrifying new model for hiding money

Oliver Bullough


Hello, and welcome to Oligarchy. We are tracking how Covid-19 and the world’s response to it is affecting the super-rich — and what that means for power and politics.


It’s been widely reported that various European states — Denmark, Poland, France, Belgium — have blocked companies registered in tax havens from accessing their Covid-related bailout plans. If you don’t pay in during the good times, the reasoning goes, then you can’t take out in the bad. This is all well and good, of course, in that anything that forces the world’s oligarchs to stop freeloading on society by hiding their assets offshore is beneficial. 

  • It’s not nearly as good as it looks, however, and will probably achieve nothing.

The problem is that the European Union does not think any of its own members, or even any of its friends, are tax havens. So, the Netherlands, Ireland, Cyprus, Malta or Luxembourg – all of which would meet any rational test for places that help hide oligarchs’ secrets – don’t count. The United States doesn’t count either, despite some of its states – Nevada, Delaware, South Dakota – being even murkier than their EU counterparts.

These days, no one admits to being a tax haven, just like no one admits to being rich. One’s enemies run a tax haven, and deserve to be sanctioned; but one’s friends run an international financial center, and deserve to be encouraged. If the Europeans genuinely want to help, they need to set a standard definition of wrongdoing, and block any companies that meet it from accessing public cash, rather than relying on a politicized definition that makes no sense.

What could such a definition look like? Fortunately, the Tax Justice Network is well ahead of us. It came up with a five-step plan back in April, with clear conditions that companies would have to meet by the end of the year if they want public funds. Those tests are similar to those put forward by the Fair Tax Mark

If any government ministers are reading this, implementing either of those plans in full would be far more effective than a token ban that affects almost nobody, so please take them seriously. 

Why is this important?

  • A think tank working for the Polish government has estimated that the EU loses more than 170 billion Euros a year to tax havens. That’s not enough to fill the hole left by Covid-19, but it’s a pretty good start.
  • And the British accountant Richard Murphy thinks that’s a massive underestimate. By his calculation, European states could be losing more than a trillion Euros a year to the kind of aggressive tax dodging tricks employed by the world’s wealthiest people and companies. That is the kind of money that could employ a lot of nurses, build a lot of wind turbines, and completely transform society.


If you’re looking at this and shaking your head, saying to yourself that we need revolutionary political momentum to take down the oligarchs, not technocratic tinkering at the margins, then of course you might be right. But don’t dismiss tinkering out of hand. After the last crisis (which seemed extremely bad at the time, but which now looks more like an hors d’oeuvre for this one), governments agreed to exchange information with each other about citizens’ assets, in the hope of uncovering hidden money.

Almost 100 countries exchanged data last year, and they uncovered fully 10 trillion Euros of hidden cash. That’s ten million million Euros. It’s an insane amount of wealth. With that kind of money, you could buy outright all of the 10 biggest companies in the world, and still have a third of it left. “Automatic exchange of information is a game changer,” OECD Secretary-General Angel Gurría said at the end of last month. “Countries are going to raise much needed revenue, especially critical now in light of the current Covid-19 crisis, while moving closer to a world where there is nowhere left to hide.”


The Carnegie Endowment for International Peace has produced a ground-breaking and must-read new report on Dubai, one of a new and frankly rather terrifying breed of tax haven. Tax havens have traditionally been small, open and democratic – think of places like Jersey, or Luxembourg – which can be squeezed out of business with a sustained combination of diplomatic muscle, and domestic political anger. 

Dubai, the report reveals, has none of those vulnerabilities. It is an autocracy, with no domestic politics to worry about, and diplomatic pressure is minimal, thanks to the Emirates’ close friendship with major Western countries, in a region where they have fewer allies than they’d like. Other tax havens have been forced out of business, but Dubai has boomed, becoming a magnet for much of the world’s murkiest money and people, as well as for dodgy diamonds and gold, and is impossible to influence in the old ways. 

  • “Emirati leaders and the international community continue to turn a blind eye to the problematic behaviours, administrative loopholes, and weak enforcement practices that make Dubai a globally attractive destination for dirty money,” the report’s authors, Jodi Vittori and Matthew Page, note.


Thanks to the looming recession, and the increasing prevalence of renewable energy sources, oil and gas companies have been reducing the value of their assets. This is alarming for the kind of old school oligarch – Vladimir Putin in Russia, the Obiangs in Equatorial Guinea, almost everyone in Venezuela’s ruling elite, etc. – that relied on fossil fuels for their wealth. If they can’t dig their wealth out of the ground any more, what can they do? 

Luckily for them, it appears they can still dig it out of the ground.

Electric cars are the transport mode of the future, but the batteries that power them rely on cobalt, much of which comes from Congo, where miners and politicians have long been profiting at the expense of the people who actually have to do the digging. The oligarchs are not having it all their own way, however. 

Last week, the American lawyer Terry Collingsworth updated a court case he has brought against some of the biggest companies in the United States – including Apple, Tesla, Dell, Microsoft and Alphabet – for failing to secure the safety of 13 children maimed or killed while digging cobalt out of the ground.

Court cases in Western countries (like this one in France) have previously proved very successful in forcing oligarchs to behave better, and hopefully the Collingsworth case will force the cobalt kings to share a bit more of their wealth, and look after their workers. One company has already agreed to stop buying from mines that employ the most exploited workers. 

The second largest source of cobalt is Russia, so President Putin should still have some money to spend if the oil stops flowing. It looks like he’s going to be president for another 16 years anyway, so he’ll have plenty of time to try.


I’ve been enjoying the new Suspicious Transaction Report podcast, from London’s Royal United Services Institute (RUSI) think tank. It has lots of great insight into shell companies, the art market, sanctions, and more. It’s a must-listen – particularly for anyone who thinks this newsletter isn’t quite geeky enough.

See you next Wednesday,