Global economies have lost several trillions to offshore tax havens

MULTI-TRILLION dollars of illegal cash have leaked from nations and landed in offshore tax havens. These outflows have been one of the reasons for below-par economic performance. Global authorities have carried out only limited measures to counter the corruption, even though illegal outflows have contributed to impoverishment of several emerging countries.

The amounts are staggering. Gabriel Zucman, assistant professor of economics at University of California, Berkeley, estimates that 8 per cent of the world's financial wealth - or US$7.6 trillion (S$10.4 trillion) - was held in tax havens in 2014. Companies registered offshore also owned an estimated US$2 trillion in real estate, equities, gold, art, jewellery, yachts and other items. Today, four years on, money transfers and soaring equity, real estate and other asset prices could easily raise the total value of those assets to US$12 to US$15 trillion.

A sizeable proportion of the financial wealth gravitating to the Cayman Islands, Panama, Switzerland, Liechtenstein, Channel Islands and Asia originally came from Russia, China, the Middle East, Africa, Central and South America. Two newly published books show how the leakage of this money has damaged the productivity of economies and contributed to financial booms and busts.