 Just a brief informal introduction up here. First to see how delighted we are to welcome Jack Blum, who is an old friend of the longstanding supporter of the Institute for Global Leadership as well, and is a well respected Washington lawyer, an expert on their white collar crime, and a really, really advocate for those victims of financial fraud. Jack spent many years working with the Senate Foreign Relations Committee and guiding them in that important issue. He's also served as a consultant for the UN UN agency, so he brings a wealth of experience today and we're looking for very much in what you have to say about this really pressing issue now about offshore financing and tackling that as the major solution to inequality. So welcome, we're delighted to have you with us. I'd like it to be back here on the Dutch campus. Actually, we're taking on some of the topics which are probably some of the most important topics that we're dealing with. Before I really talk about corruption, there's something I want to get out there to all of the students who are listening and to people with concerns with these issues. And that is the primary responsibility of all of us should be to accept reality, to look and hear and accept what we see and hear and then think about it. We're in a world where virtual reality, virtual whatever, people constructing alternative truths or alternative facts have become so much more that we sort of accept that this is where the world is going. The notion of metaverse horrifies me. What I want to see is reality first. I want to see people looking at the world as they are thinking about it as it is. I'm thinking about it as it is, brings several issues right to the fore. And in thinking about the issue of corruption, of inequality, part of the matter really is responsibility to the society and the larger global society. Fortunately, every culture, there's a coming of age, ceremony, churches have confirmations, synagogues have bombings, tribal societies around the world, various rights to bring people into the group and get people to be concerned about the group. There comes out a fact, real sense of social responsibility, a responsibility to the group and an understanding that if you do something that is against the common good, you stand to be made an outcase, you stand to be penalized one way or another, but certainly it's clearly understood you've done something wrong. Unfortunately, we have developed a world in which one group of people, people with resources and money have had the capacity to move into another world where there is no responsibility to anybody, only the responsibility it seems to make money or to develop a life and a lifestyle that removes you from the everyday concerns of other people or the everyday problems of other people. So what we've seen is stuff like the real estate page of the Friday Wall Street Journal which will have all of the houses for sale ranging from $20 million to $100 million to $150 million. How many acres would you like to buy a whole town? And with that, a kind of other worldly level of money and power that really puts people outside of the reach of normal life. They just don't experience life the same way. But even more important than the question of not experiencing life the same way is the very systematic ability to remove one's assets and one's legal responsibilities outside of the reach of courts, outside of the reach of police, outside of the reach of the normal things that keep people within bounds in this society. And this has been a world of offshore that is to say I can put my money somewhere where you can't find it, you can shoot me and I can get it. And if I behave badly, it won't matter because nobody can do anything to me as a result. So just to note, a perfect example is Bokal, India where a long time ago and most people don't even remember how long ago it was, a factory, Union Carbide factory released toxic chemicals and thousands of people were injured, killed. It was a mess. There was litigation. There was no question of the culpability of Union Carbide. There are still victims in Bokal waiting for compensation. It goes through a series of structures, particularly subsidiary corporations. All of this has gotten lost. There's nobody to go after. There's nobody to manage responsibility. Responsibility is put in a corporation that is a subsidiary, but after all you can't go from the subsidiary to the parent. And the question is why do we allow that kind of structure? A question I asked time and again is why should a corporation have 100 subsidiaries or more? Which is a routine kind of thing in the corporate world. You say to yourself, okay, there may be some kinds of reasons, but principally it's a break in any form of responsibility. Now this is also true in the area of taxation. Taxation is something that is the most essential way a society has a pain for the common good, the things that we all need to survive. And if you begin to break out the corporate structure in a way that moves pieces all over the place and there are only separate subsidiaries where tax returns are incomprehensible as a consequence, there is no real responsibility on the part of the corporation. And to make that tangible, I'll give you an example from the mind who owned a weekly newspaper in San Francisco. And he was put upon in a competitive situation where another newspaper team tried to put him out of business. He won a $20 million judgment, final decree in the California state courts. He then went to collect on this judgment. And it turned out the people he went against had done a variety of things to structure their affairs so that there was nothing that could be done to collect the judgment. They had a string of subsidiary, pardon me, subsidiary corporations. They had moved assets far and wide. But more importantly, assets that were within reach were mortgaged to the Hilt. And as a result, the mortgage had primary claim on the very assets that put them this judgment. Now, he wound up with a $20 million judgment called their judgment being forced to settle for about $2.5 million, which is really not justice as justice was attended to be. Now, there is, believe it or not, a section of the American Bar Association, of which I'm ashamed to say I don't remember, that specializes in what they call asset protection, which is to say, how do I keep assets from winding up in the hands of somebody I've entered? I find that to be completely inconsistent with the oath that every attorney is supposed to take when they become a member of the Bar, which is an oath to help uphold the law and to uphold and enforce you're an officer of the court, the judgments of the court. This is a section that's devoted to the reverse. So, there are people who very consciously use this kind of structuring to make sure that they don't have a responsibility to the society they're in. And this is civil. It goes to banners, let's say, in matrimonial matters. A wealthy guy wants to dump a wife and not pay for it. The money goes offshore. Now to talk for a minute about the offshore structures, takes us into this world of secrecy and havens. And we're talking now about countries that lend their legal systems and their sovereignty to people who simply want to opt out of the responsibilities of their own society. But that, it turns out, is something that is remarkable and it's over. The secrecy laws of many of these jurisdictions were written by lawyers in New York, or lawyers in London. The British are at the center of an awful lot of this offshore stuff. And each time they take what appears to be forward to controlling it, it turns out it's a step backwards. So, for example, they have companies down in the UK. And the parliament passed a law that said we really have to have a disclosure system to find out who the beneficial ownership of corporations registered in the UK. Who is the beneficial owner? And at last count, according to last week's Guardian newspaper, there were 230,000 corporations that were still completely anonymous despite the law because nothing had been done to enforce. And then there are the structures that allow one corporation to be owned by another corporation. But not only that, they have, as its directors, other corporations to have officers who are other corporations. And you say, well, where's the responsibility for anything? In theory, in corporate law, the board of directors has a responsibility to manage the corporation and manage its affairs for the benefit of shareholders. And that means directors are supposed to be looking at what the corporation does and make sure that it's appropriate and vote and decide, is this an okay thing for the management of the company to be doing? In case after case after case, nothing like that occurs. What happens is a corporation is set up. It has corporate directors who are other corporations. It has corporate managers who are other corporations. There are no records in the country where the corporation is incorporated, other than the certificate of incorporation. So if you go there, there's nobody to go after, nobody to change. That lack of any kind of managerial responsibility for what a corporation does says to me it's not really a corporation. But for reasons I have yet to have explained to me, you bring up the subject of, well, we should be saying, let's say the United States, that we will not recognize a corporation as real if it comes from a jurisdiction that doesn't require genuine participation, board decision making in the life. People are recoiling horror. You're going to undermine the financial system. Well, this is a system that I believe should be undermined because that notion of responsibility is key to having any sense of social justice or key to making corporations behave properly. If everybody believes that we can get away with it and nothing's going to happen, it's clear to me that everything bad will happen and people will pay for it. The essence of all criminal law enforcement is deterrence. That is, somebody has to get punished for other people to see that happen and other people to come to the belief that maybe it won't be a good idea to do this bad thing. We have a system where corporations can pretty well do anything beyond by anybody and there's no penalty for it. Deterrence is shot and everything is fair game. That should not be the way we affairs of the world are managed. And then there's a question of how do we know that what I'm saying is the reality of how the world is working? We've had a series of disclosures and I'm now talking about really major disclosures of bad behavior by financial institutions, by individual corporations, and by individuals that should put us on notice that this is very serious stuff. Let's go back to one of the first big disclosures and client of mine, a man named Henry Keever, took the bank records of LGT Bank in Liechtenstein. Liechtenstein is a country that's a geographic accident that has a population of about 35,000 people that's tucked into the side of a mountain in Austria. Hard to get to but boy, a lot of money finds its way there because it's specialty is setting up shell companies, trusts, and the like so that nobody can track the money and certainly nobody can collect tax. What he had were all the trust company records and what the trust company record showed was that wealthy individuals and families had set up trusts, the trust and turn owned corporations and the upshot of all of that was that the money was pretty well unfracable and untaxed. All of that was laid out in Senate hearings. Everybody said, oh my God, we've got to do things. It turned out that yes, here and there as a result governments collected quite a bit of tax money. In fact, all of these disclosures by understanding is roughly four and a half billion dollars and otherwise lost tax money was collected. The biggest collections came from German citizens who found Liechtenstein to be very convenient. It's very close to the Botenzei and in a very favorable geographical position if you want to drive there and set something up to cheat. And there were characters in Liechtenstein who had come to attention previously. There was one lawyer, Dr. Dr. I'll remember his name in a minute, who was a trustee of all these different trusts and was the expert, Dr. Dr. Bobbler. He was the expert in setting up trusts that would conceal their wealth and allow you to go off without paying taxes and avoid estate taxes if you died. The problem was a lot of really stupid people who went to Botliner set up these trusts and they worked as long as a person was alive but when the person died his heirs didn't know that there was a trustee in Liechtenstein and of course who then was the beneficiary, Dr. Botliner. This kind of stuff is what you get when you have a world of offshore where there's no responsibility, no ability to really make sure that property is someone's property that it's properly put to use, that it follows the rules. We've got a real problem. But then we went from that disclosure to a series of other disclosures. Thousands of people who had hidden accounts of UBS and this was a result of an IRS undertaking to get the names of Americans who had hidden money offshore. Because it was IRS and because it was only Americans we can only guess how much money came from other countries and particularly developing countries to be said in Switzerland in a situation where again nobody would know where they are, nobody would know where it came from or how it was obtained. From UBS the next disclosure was the so-called LuxLeaks where there were disclosures about how corporations were being set up through Luxembourg in a way that completely enabled them to avoid taxing Europe and the United States and around the world. We move then on to the Panama Papers and a wonderful moving story in our old script called Wanderman where you can see a woman who purports to be the managing director of several thousand corporations running down the street to avoid the camera. It is beyond preposterous. They set up thousands of shell companies and they had a woman who didn't know what the companies were who presumed to be their chief executive. Good luck. Again, all set up by people who wanted to avoid the responsibility of being in a society where if they do something wrong or they have to pay tax they'll escape. Things really began to be clear in that case because there were numbers of officials government officials who were coming out of the third world and who had stolen large amounts of money from their own countries and figured this was a pretty good way of hiding the money. But the disclosures kept coming. We had the Paradise Papers. This was Bermuda and again corporations figuring out how to reach what Senator Levin at 1.12 a holy grail of tax planning pay tax nowhere. And Bermuda had that worked out to a fair deal. Then we move on to the most recent sets of disclosures for the Wanda Papers. This was Angola and the ruling family in Angola purported we a democracy but not hardly. Kept its money in a way and passed the money on to the daughter of the then president through a series of corporations that took essentially all of the great oil risk into the country and moved from offshore to Europe and to be invested for profit by the daughter of the president. Now it would be one thing if Angola were a country that was prospering because there was oil and this money was being used to take care of the people of Angola. But if you look at the standards that are set in terms of human development and the markers of what a society offers its people Angola was here dead bottom worldwide with horrible figures on infant mortality, horrible figures on death rates and mortality from different diseases that no running water, no sewage systems, no anything except for the one city of Wanda where the cost of living was higher than the cost of living in Paris. And I was at a meeting of prosecutors from Africa and the Pacific region and met a young woman who was a prosecutor in Angola and she was regaling me with what a wonderful place Angola had become and she was dressed in Paris fashions I mean really well dressed and well turned out and well spoken clearly a woman of considerable means but her entire presence and her role as a prosecutor underscored to me how incredible the disparity between wealth and poverty in that country had become and how a system had become entrenched to move that wealth out of the country for the benefit of a very few people and I think that she had things that she might have prosecuted that weren't being prosecuted which in part explains her prosperity. That's only one of the many examples of characters around the world who use their system to loot their countries and we've had far too many looted countries. It's happened in Latin America again and again it's happened well another example of looting a country Brazil and there we've had a terrible series of scandals about the amounts of money that were paid by the Odebrecht engineering company to get jobs around the world and Odebrecht first and foremost looted its own country Brazil by overcharging and getting very favorable arrangements with the offshore oil sector in Brazil and in the construction of the Olympic stadium and all of the other things that went with it all of these things have become public and the question I pose is where is the action against this offshore system at what point do people be held responsible for what they're doing and at what point do we say enough is enough we will not recognize companies that don't have real-world directives we will not deal or allow our people to deal with companies whose beneficial ownership is secret we will not accept the proposition that it's okay for Russians to put money into British elections and to use London as a place to invest in real estate and God knows what else without questioning where the money came from or whose money it was and particularly without questioning well what's going on in Russia how are the average people benefitting or not from all of this money that's turning up in London one suspects the average Russian is not benefitting and we can see that when people begin to raise those questions and ask what's really going on here they wind up targets of poisoning and whatever else Mr. Putin decides to do to them and this is a country where Mr. Putin's libelinus friend is alleged to have made two billion dollars somehow magically that he has offshore one suspects it's not all his money and that some of this is in fact for the benefit of Vladimir Putin of course that's a detail we don't really need to go into to understand what's wrong with the system and what has to be changed now I will say that within the last few days we've had indications of the administration of the Biden administration understands the seriousness of the issue and seems to be prepared to begin to take action but this is not going to be an easy business and it's going to take a long time to sort out we've been wrestling with this for at least 35-40 years and had some understanding of how it has operated and how the money has filtered up to the top leaving a whole lot of people at the bottom in terrible trouble there is an argument and this I'm not here going to comment on the human rights aspect of it but China has been a place where one of the same sort of thing has happened and there are things going on in the Chinese economy that are really almost scary this business of the property and the debt racked up by property companies and the monies that the people who own those companies have made what's happened to that money and then how is this whole system piled up debt going to be dealt with it's a huge part of the Chinese government and I think the government is cracking down on a lot of it the question is going to be done totally destroying the human rights of the people involved because if you understand but you can't solve this problem by simply saying well you're a bad guy and we're putting you up against the wall and shooting you there has to be some kind of honest due process and analysis so that further complicates a notion of simple solutions but we have to deal with this set of problems and I'm looking at it from the point of view of equality I'm looking at it from the point of view of developing a society that has a certain degree of justice to it where people are able to get the goods and services that they are entitled to if their government worked and the money wasn't being stolen I'm looking at it from the point of view of the wives and husbands say oh I'm broke and the money's all offshore and entangled in all of this are all sorts of crooks and criminals and people like Thoughtliner sort of disappear with the money but this is a world that's fixated on money and not responsibility that the society people live in not on what can I do to use the words of John Kennedy do for my country instead of what my country can do for me how do we get that notion of I'm in this maximized box and get out of here without anybody catching me we've got to change that that's it got to change the way that works I've got a lot about this for a bit what I'd like to do is open it up to questions if you have questions we'll take it from there anybody I have a small audience but please so yeah I know that you have a long career in terms of corruption what do you think is the most important thing the thing that you're most proud of that you've done to help fight corruption also like I guess with tax evasion well the biggest corruption case that I was ever involved in was Lockheed Aircraft overseas projects Lockheed Aircraft hired a Japanese war criminal a guy who had been in charge of censing all of the things that had been stolen by the Japanese army in Japan in World War II and he was their agent and he paid then Prime Minister Tanaka a couple of hundred million in Japanese yen in cash to get the Japanese to buy the then Lockheed L1011 Aircraft it took ten years but Tanaka actually went to jail and that was called in Japan the Shokun the great shock the society couldn't believe it because it's a very rigid structured society everybody goes along with the boss this was one time when the whole thing broke open and people began to realize well gee the boss has really done something wrong and we have to do something to change that now I'm not arguing about permanently changed the way the Japanese business I will say though but it provided a totally new approach for a whole generation of younger Japanese politicians who began to be able to ask the questions and do what they had to there have been some other things that I've been involved in this kind of problem the bribery problems I've been involved in Africa particularly looking into the money that disappeared in the case of Sonny Abacha in Nigeria Sonny Abacha died and left behind a legacy of a missing six or so billion dollars we learned later as the case moved on that what Abacha would do would be simply pick up the phone call the Nigerian central bank and say transfer X millions from the state accounts of the central bank to my account or my account in Switzerland or my account in Switzerland that case has taken forever to resolve and of the six billion probably two has been recovered and that goes down as one of the most remarkable and successful efforts of recovery in this business the problem with the efforts to recover them is that it is very expensive and takes too long because we now have to go fight these different jurisdictions each one having a different claim and meeting different lawyers and different people to fight the fight so to give you an example of how crazy the Abacha recovery became there was a trail that led to Liechtenstein the country that as you may gather I'm not terribly enamored of I call the ruler who's an absolute monarch and crook and he kind of says there's not much change about me but that's all fine what was going on was there were a number of corporations that were set up in Liechtenstein that had the money and it was clear because the record showed the money had been transferred to these corporations and the last one I went to talk to their chief and he money laundering person was well I came to give the money back to the Nigerians and the answer I got was well under our law you're required to have a proven criminal conviction that leads to the predicate offense for money laundering and if you've got that conviction and can show the relationship of the crime will give the money back so the question I then asked was well you understand that under the common law system there couldn't have been a criminal conviction because Sonny Abacha died and when you die under the common law system end of the case you can't sue or arrest or prosecute a dead person so why are you guys hanging on to the money and the answer of course was that each of those Liechtenstein enemies were represented by a Liechtenstein lawyer and every time the case went to court yes you weren't legal things so this is part of the story of the complexity of these issues similarly I got involved in the case of the Philippines and Marcos and here I had a client who had records that showed where Marcos had sent money and what Brian said to me all I want out of this is a reward of 5% of whatever the government likes is illegal things if you give me 5% of what you collect I'll turn over the records so I flew to Manila I met with the people in Manila who were supposedly in charge of recovering the money the meetings appeared to go pretty well yeah we're interested why don't you well we'll talk to our people and get back to you in a couple of days and rearrange see what can be done so I wait for the telephone call I go back to meet with them and they say well it's a deal but only on one condition you take the case on contingent fee so you're meant I am essentially a sole practitioner I was at a very small law firm but the cost of retaining lawyers in four or five separate jurisdictions of trying then to prove the provenance of the money and then actually get a court judgement those jurisdictions enabling me to take the money would have bankrupted me and they knew it so the fact that they weren't willing to put forward a dime to go after the about 600 million that my clients records had told me there was zero interest in recovering the money that is another part of that when I was working through the UN I proposed putting together an international system of civil law civil lawyers who were on the civil side down the criminal side to go after the money that had been stolen because my thesis was that you cannot permit dictators and plutocrats and autocrats to keep the proceeds that they've stolen so this notion that had gone on in American diplomacy for a while which is you were on our side during the Cold War you were a good guy Ergo we let you steal whatever you wanted but times have changed and we really would like to have the country go Democratic so why don't you just retire and we'll let you take your money and your toys and go off into a happy retire but we did that with quite a few folks including baby got two volume the Amin from the Gondom who spent his retirement in Saudi Arabia there are just a number of retirees who are not told don't worry nobody will get your box my thesis is the way to keep the next guy from stealing whatever he can as a head of state is to go after the money of the last guy who stole and I wasn't able to get anywhere with that for a whole series of reasons most of which were I thought pretty ridiculous it's a whole other subject that I could spend probably not for a while that was a long answer to a short question Jack trust I want to thank you for coming to IGL today making such an interesting presentation it's always a pleasure to have you join us I guess a few comments that I have that I'm curious about one with the advancement of technology today it would appear to me that the identification the tracking and the pursuit of these types of criminal activities would be easier to accomplish do you have any comment on that that's one question and also somewhat related to it when I was reading Shay's book it dawned on me just this issue of Bitcoin today I'm wondering what your comments are as it relates to Bitcoin the two are somewhat related in terms of these two issues the first question that is can't we track the money well turns out that in fact as a result of these disclosures we have tracked a lot of this money and thank you this destination its margin has been on the front page of the Washington Post the Guardian the New York Times we've been around the block with us the point is that not much has changed the point is that when the Panama Papers were disclosed it took the IRS four years to bring the first case against people who had been disclosed to the Panama Papers there were all sorts of hurdles there were hurdles of trying to get information through the government of Panama through non-working mutual legal assistance treaties all sorts of roadblocks institutional troubles of one kind or another internal external not having people prosecutors and civil lawyers trained in how to do this all of that conspires so that even if there's disclosure given the way the structure is set up it's so difficult to maneuver through you never quite get there and as a result what we get is a kind of rear guard action when and if there's been this big disclosure of just how bad it was so now there's getting an effort to get back some of the money that was taken out of the angola I hope I live long enough to see a result this is the kind of serious business and it goes into the structure of the local legal system if there is such a thing as a system it goes into the will of governments to take it on multiple political considerations suddenly show up and then it's just plain corruption in the countries where there is some responsibility and there is something resembling a legal system so for example I was just recently in the UK where it turns out the Conservative Member of Parliament was acting as a lobbyist for the British Virgin Islands a notorious tax haven at the same time he was a Member of Parliament and the parliamentary ethics for the regime said he had violated the rules and Boris Johnson came in and told the party let's pack this guy up and it wasn't fair excuse me now why is that going on well in the UK there is a concierge whose job it is to find over rich people and persuade them to invest in London real estate invest in London period the British government has turned itself inside out to welcome big money from outside the largest single contributors to the Conservative Party the largest single contributor a couple from Russia who have purchased residents in the UK which you can do and once you have done that you can contribute to political parties so guess what the Conservatives how does one overcome that piece of this corrupt system so it turns out there are problems on all sides and it's a multifaceted problem and one that we're going to have to come to briskness because the consequences those people in the mud in a gala but people in equatorial gaming these are all human beings who deserve something better than to have their wealth international resources and everything else stolen from them and put to the benefit of a very small group so well anything more and it's not on the inequality issues I think is also the primary team of this event and everything you talk about touches on inequality in a big way but there's a lot of excitement right now and there's a picket book which everybody has picked up on but do those statistics include all this money offshore in terms of that or government statistics or is the offshore money missing from the statistics and therefore the inequality worse and so what is how much of that is out there missing if it is missing well the answer is money isn't really missing the offshore money it turns out which is in New York, London in a nice bank account but in the name of an offshore bank an offshore corporation or whatever normally coming from whatever the country is that the money seems to be belonging to the real information about what's going on in this international arena is held by the bank for international settlements in Basel and international settlements is a bankers central bank and it collects in great detail information from every country about capital movements and the numbers that we would really need to complete the picture I dare say that you could get America's nuclear secrets or the secrets of the latest Russian submarine more easily and you'd ever get the numbers out of the bank for international settlements on how much money is in the offshore system and I think one of the great pressure points and one of the things that has been least explored is forcing that issue making the US Federal Reserve put the heat on the bank and the settlements to release the information so we can all see just how bad this is and how concentrated that wealth is so with that, thank you all for your attention and to those of you on camera I'm sorry we couldn't have more of a conversation but it's a pleasure to be here thank you