The EU’s flimsy tax-haven blacklist just got flimsier

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. 


Regular readers of this newsletter will know I have strong opinions about the European Union’s blacklist of tax havens. It’s supposedly a tool to stop other countries from stealing each others’ tax revenues. In reality, it is almost entirely a list of places so insignificant that the EU doesn’t mind offending them. 

There is an occasional offshore jurisdiction doing something naughty, which gives the impression the EU is actually doing something while business continues as usual. 

Or there was. The Cayman Islands (a British Overseas Territory which was at the top of the Tax Justice Network’s Financial Secrecy Index this year, with a rating of “exceptionally secretive”) has been removed from the list. It was added in the spring, supposedly because of some technical concerns about its rules governing Collective Investment Funds and, having addressed those concerns, has now been removed.

That means – as of October 6, 2020 – the EU’s blacklist of tax havens contains not a single significant tax haven.

  • “Twelve jurisdictions remain on the list of non-cooperative jurisdictions: American Samoa, Anguilla, Barbados, Fiji, Guam, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, the US Virgin Islands and Vanuatu,” said a European Council press release. 

Several commentators suggested to me in the spring that the real reason for Cayman’s inclusion on the list had nothing to do with Collective Investment Funds, but was instead a shot across London’s bows in advance of the EU’s negotiations over the terms of Britain’s trading relationship with the bloc. I have no idea if that is really the case, but it is certainly interesting that Anguilla — another British offshore center in the Caribbean, though one not nearly as significant as Cayman — should have been added to the list, just as Cayman dropped off it. If I was a European diplomat, and I wanted to focus British minds about the perils of being excluded from the EU market, I’d be keeping the pressure on its offshore financial centers. 

Be that as it may be, my existing concerns with the whole concept of the tax haven blacklist remains. Of the surviving blacklisted jurisdictions, only Panama ranks anywhere near the top of the Financial Secrecy Index, at 15th. That’s quite high, but lower than three EU member states (Luxembourg, the Netherlands, and Germany) as well as several other major Western countries, not least the United States, Switzerland, Great Britain and Japan. 

  • “Tax havens deprive rich and poor countries of hundreds of billions in lost revenue every year – money that is needed more than ever during the Covid-19 pandemic. Yet instead of holding them to account the EU is allowing the most aggressive countries to be delisted,” said Chiara Putaturo, Oxfam’s EU Tax Policy Advisor.

The EU’s list will only get taken seriously when it starts to include countries that could fight back, and which it might hurt the EU to stop doing business with. In the meantime, the world’s kleptocrats, tax evaders and profit-shifting corporations aren’t going to worry very much about having to route their transactions away from Palau and Fiji, while this hypocritical exercise grinds on for another six months.


All the excitement around the FinCEN leaks over the last two weeks stopped me from getting to the interim report from the United Nations’ High Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda (FACTI). 

Being a U.N. body, its publication – like its name – is dense, impenetrable and slightly unsatisfactory, but there are some interesting nuggets in there, if you can be bothered to sift through the gravel.

The 2030 agenda was an agreement signed five years ago to make things better for everyone by the end of this decade. The FACTI panel was created in response to the fact that kleptocracy, tax-dodging and epidemic financial crime are all ensuring that the world is moving in precisely the wrong direction, and to try to come up with some ideas to turn that around. It won’t publish its full report until next year, but this interim document gives us some ideas of its thinking. Its summary at the very least is worth a read.

It calls for more international recognition of the harm that dirty money does, agreement on what needs to be done, the quicker return of stolen money to its true owners, and the involvement of civil society organizations in the work. This is all for the good, and undoubtedly this is the kind of high-level international forum we need to push change along.

  • “Illicit transactions contribute to public distrust and political discontent. Governments are less able to invest in public goods and sustainable development, thus also undermining their ability to respect, protect and fulfil human rights. The resource drain also threatens equity, fairness and justice,” the report states.


  • “Those that benefit from these transactions are typically the elite, whether through disproportionate ownership of multinational enterprises and thus the beneficiary of tax avoidance, the hiding of offshore wealth or laundering of the proceeds of corruption,” it continues.

That “elite” includes not just kleptocrats from emerging nations, but also the rich nations that end up as the beneficiaries of kleptocrats’ funds: the lawyers, accountants and politicians that move those funds, and the multinational companies that dodge the taxes that — if paid — might help achieve some of the 2030 goals. 

The main obstacle for the panel to overcome therefore is the question of how to persuade that elite to voluntarily abandon a highly profitable business, just because that business is ruining the lives of billions of people. They’ve got until February, and I’m sure we all wish them luck.


There’s good news for lawyers in Delaware, since they’re going to be paid to thrash out whether LVMH – the French company owned by centibillionaire Bernard Arnault – can be forced to honor the terms it agreed to last November to buy Tiffany’s for $16 billion. 

We don’t know what the court will decide, but the existence of the case has highlighted how Covid-19 has grievously harmed the business model of the luxury goods sector. 

According to LVMH, Tiffany’s is no longer anything like as attractive a proposition as it was last year pre-Covid, which is worrying for other companies. If such a legendary brand is struggling, where does that leave the rest?  The luxury goods market is predicted to contract by between a fifth and a third this year. China’s earlier recovery from the Covid-19 pandemic means that the country’s affluent have an even greater importance to the luxury industry than before.

  • “Every brand has to ask themselves: ‘Is what we are doing relevant to Chinese consumers? Is our brand proposition, assortment relevant to Chinese consumers?’,” asked Daniel Langer, CEO of luxury strategy firm Équité and professor of luxury strategy at Pepperdine University in California.

Speaking for my own brand engagement strategy, I am clearly behind the curve. I didn’t even know it was possible to be a professor of luxury strategy. Apparently, Daniel Langer’s aim is “to create extreme value for the next generation of leaders in the luxury industry.”


On Thursday, October 8, at 6pm London time, I’m chairing an online event at the Frontline Club to discuss why Britain is so central to global kleptocracy, and why British governments have historically been so bad at doing anything about it. Panelists are Tom Burgis, whose new book Kleptopia, I mentioned a few weeks ago; Misha Glenny, author of the legendary McMafia, which became the TV show; and Anneliese Dodds, a member of the British parliament and shadow chancellor of the exchequer (finance minister). Sign up, it’ll be very interesting.

See you next Wednesday,