In the Greed: More Is Never Enough chapter, we investigate the all-important role that greed plays in how we are hurting ourselves. As it turns out we are all greedy, it is just that some of us are better at it than others. I propose that beyond general and emotional forms of intelligence, there is FQ (financial quotient), representing a type of intelligence facilitating the acquisition of resources. Wealth has become concentrated in the hands of corporations and members of the financial elite, consisting of senior personnel of corporations, wealthy shareholders, and others with high financial intelligence. While this very small percentage of the populations is advancing in prosperity, suffering for the many is steadily increasing, such that a revolution is in the making, an event that will almost certainly target the financial elite. Consequently, the excessive wealth accumulation of this privileged few will ironically end up damaging them. The many faces of greed are covered including traditional crime, financial fraud, corruption, and individual and corporate activity. The frightening and prominent role of tax havens and the offshore shadow economy is revealed. Greed has become the new world religion transcending physical, political, and historic religious boundaries. The fascinating story of how greed evolved based on resource acquisition in a social context, deceit, and the power of hierarchies, is also described.


Tax havens are an essential feature of the shadow economy. Although the nature of tax havens is complicated at one level, it is simple at another—The purpose is always to minimize, or better yet eliminate taxes. There is a race to the bottom in terms of tax competition, so advanced now that there is really no need for a corporation (or a wealthy individual who can set up as an international business) to pay tax. Those in business are oriented to saving costs, and what better way than to avoid taxes, the most evil of all costs. To place a positive spin on this behavior, a favorite rationale is that we all should have the right to financial freedom. A fatal flaw with this argument is that no one, individual or corporate, earns money in isolation. There is always a societal context to the money earned. For example, the high-level drug dealer relies on users, growers, processors, street-level sellers, and enforcers. A fraudster must have victims and typically depends on accomplices, or at least the naïve who assist in the deception. Corporations must sell their services or products to people, and usually have employees. Hence, all money is made in a societal context and never in isolation. Giving back to that society for services provided, such as roads, waste removal, water, health care, and the like is a very important aspect of a social justice.

     So assuming that social justice is not a priority, or even a consideration, how can taxes be avoided or minimized? The starting point is to realize that all incorporated entities pay the taxes of the location they are registered in. Even if a corporation is registered in a first world country with higher taxes, subsidiary companies or shell companies can be set up where taxes are nil or low, reducing the overall tax burden. Another key issue is double taxation treaties, or more appropriately, “double non-taxation” treaties. These widespread treaties ensure that an incorporated entity cannot be taxed twice, so if the taxation (or lack thereof) occurs in a tax haven, it cannot take place elsewhere. If you are a wealthy individual who does international consulting work and set up your corporation in a tax haven, then you will be taxed at that rate, typically zero, and cannot be taxed anywhere else. Income earned by you that is drawn from your corporation might or might not be taxed, based on the country you reside in. The US ensures that any money made by individuals anywhere in the world is taxed, but other countries do not have this requirement. Taxation is of course only on money that you draw from your corporation as an employee. A holding company or asset protection trust might be set up where assets can be held with no or little tax, and no one will learn the identity of who owns the assets. These assets can be repatriated to your country without incurring tax. Luxembourg has 15,000 holding companies. Another way might be to purchase a plane, boat, or property, and make it a corporate expenditure such as a rental unit. You hopefully get the idea that incorporated entities can avoid or minimize taxes. The cost of incorporating in most tax havens is about $2,000-$3,000 US, with a maintenance cost of $1,000 per year. A favorite form of incorporation is the International Business Corporation (IBC).

     A common procedure is to register a company in a tax haven with no taxes, and preferably one with limited or no treaties regarding legal infringement. Two such treaties consist of: Tax Information Exchange Agreement (TIEA) with the US to of course exchange tax information, and the Mutual Legal Assistance Treaty (MLAT) to help law enforcement in criminal matters, but not tax evasion. If you are a US citizen and wish to evade taxes, tax havens who have signed a TIEA with your government are to be avoided, and if you are a criminal laundering money the MLAT ones are best to avoid. Tax Havens Today lists the countries that have signed these treaties. Banking services are available in these tax havens, and an interesting arrangement that is often utilized is the back-to-back loan. Basically it consists of the money in your offshore account being used as collateral for a loan. This makes a profit appear as a loan, and hence a debt. It is magic how such transformations occur in the shadow economy, but we are learning some of the magic tricks. If a person or corporation is not comfortable with the banks in the given offshore no or low tax haven, money can be shifted to a bank in say Switzerland. Swiss banking is top notch and there is great liquidity, meaning that cash assets cover all potential withdrawals. US banks are often not highly liquid. Half of all financial transactions in Switzerland involve another offshore jurisdiction.

     So far then taxes have been avoided, secure banking arranged that can amongst other things make a profit look like a debt, and assets protected in a holding company or asset protection trust. Is that all that tax havens and the shadow economy can provide? Actually, there is a lot more. Offshore insurance companies can insure your business for a very attractive rate. What happens if you need to manufacture or warehouse something? Special economic zones exist where there are no labor standards, minimal pay for long hours of work, no environmental regulations, and no taxes. In 1975 there were only 79 of these special economic zones, but the number increased to 2,600 by 2006. Products likely have to be shipped if manufactured or warehoused in special economic zones. Flags of convenience for shipping vessels become very important. Nations such as Panama and Malta are ideal to register ships in, because there are no or minimal taxes, and no standards worth mentioning for the boat or crew. It would seem that pretty much everything has been covered so far, but could still there be more? Yes, there certainly is.

     Beyond offshore entities funding themselves from offshore banks, in certain circumstances investment funds are required, and this often comes from so-called hedge funds. These funds are restricted to a limited number of investors and the entrance amount is huge. Being so small in regards to the number of contributors there are far fewer regulations, making them a favorite vehicle for fraudsters and those operating in the shadow economy. Legal, although of questionable ethics, these hedge funds are commonly based in the offshore world where the capital can be applied to fund all sorts of enterprises, including those in the “grey” zone. In the event that truly illegal and highly immoral enterprises are required, like crushing strikes or labor unrest in third world countries where first world corporations extract resources, then there are still other strategies—These enterprises can be funded from secret accounts and holding company money in the offshore world.

     Additional illegal or highly dubious practices that also occur include: Price transfers whereby a company sells its own products to itself at cost through its offshore subsidiary, so that the profit is recorded in its offshore accounts, meaning no or little tax; false insurance payments on alleged product defects concealed offshore; fake lawsuits; transfers of funds from illegal to legal entities with no apparent connection; false winnings from casinos; concealment of dirty money in stock exchange transactions; false loans secured by dirty money through offshore shell corporations. Indeed very high financial intelligence (FQ)! The tax havens of Cayman Islands and Turks and Caicos housed about 800 shell companies used by Enron to conceal its losses. So fraud and related criminal activity is facilitated and maintained by these offshore tax havens.

     Readers might be wondering why the transactions, accounts, corporate entities, holding companies etc., cannot be identified in this day and age of advanced electronic communication. Here enters the story of the two major “black box” clearing houses, Clearstream and Euroclear, set up in jurisdictions that ensure banking secrecy-Luxembourg and Belgium, respectively. These clearing houses record international banking transactions in an encoded fashion. Funds can be transferred from one bank account to another in complete confidentiality, enabling money from all sources to be mixed. The record does not appear in any public account, and the system is both legally and technically protected. A decade ago Clearstream recorded annual transactions of $65 trillion. A hundred countries are involved many of them tax havens. So there is no need to worry about nomadic money being traced. In one court case involving illegal activity, the judge was able to secure records of a transaction that took 5 minutes to complete after 10 years of effort. Secrecy is further facilitated by legitimate states not requiring companies to prepare balance sheets distinguishing amongst its various components. “Consolidated” balance sheets list only overall profits making it impossible to see what use of tax havens they engage in.

     Okay, maybe some very wealthy individuals and businesses utilize the shadow economy, but it cannot be too widespread, right? Wrong, dead wrong! Grand Cayman alone has 14,000 companies registered, 450 banks, and 270 insurance companies, more than one financial institution per resident! This small island has more deposits from US citizens than are held in California banks. Numerous locations throughout the world serve as tax havens, a thorough list with contacts and attributes is found in the book, Tax Havens Today. Beyond the impressive array of features covered so far there are some fascinating additional perks, such as the possibility of buying citizenship with a valid passport in the Caribbean tax havens of Dominica and St. Kitts & Nevis. This is a useful feature if you are from the US and prepared to renounce your citizenship. Some tax havens, such as Cook Islands and Belize, are particularly great for asset protection offering hard to penetrate asset protection trusts. Interestingly, the excessively litigious nature of the United States, fueled by an excessive number of lawyers, does provide an understandable aspect to asset protection in select instances.

     Many believe that it is only small tropical paradises that house offshore tax havens. This perception is once again completely wrong. Although authorities in the US seem to be on the attack against tax havens, it appears to be a matter of selective focus, as one of the biggest tax havens in the world is the onshore offshore entity of Delaware. Represented by Vice-President Joseph Biden in the Senate for 36 years, Delaware houses 850,000 corporations, including more than 50% of all US publicly traded companies, and 63% of Fortune 500 companies. Not bad compared to a population of 800,000 residents. Secrecy is guaranteed, such that public authorities are not aware of business activities or the state of accounts, as long as the company is not publicly traded. Advantages include, no corporate taxes, anonymity of directors and shareholders, fast incorporation (a day or so), and cost effective to both open and maintain. Approximately $5 trillion in undeclared funds are in Delaware accounts, and Americans have about $1.6 trillion hidden from US tax authorities in Delaware. Other impressive tax havens include the City of London, where 40% of the world’s offshore money converges and finds protection, and Hong Kong linked to China.