The Wealth Hoarders. Chuck Collins
the European Union both require banks to report suspicious activities and transactions. But, unlike the European Union, the US does not impose the same requirements on accounting, legal, and consulting firms. The Luanda Leaks provide a clear rationale for expanded oversight of the Wealth Defense Industry. In February 2020, Portugal froze all of Isabel dos Santos’ bank accounts in the country, at the request of Angola, in the hope of someday recovering some of the looted funds after due process.6 Angola has revised their estimate of embezzled funds upward from their initial claim of $1 billion to more than $5 billion.
Dos Santos continues to plead her innocence, calling the investigation a “witch hunt.” She has hired a London-based PR firm headed by Rory Godson, a former Goldman Sachs executive, known as Rupert Murdoch’s “man in Dublin.”7 Together with a robust legal team, dos Santos has gone on the counter-attack, accusing the International Consortium of Investigative Journalists of faking documents as part of a “coordinated political attack” by the Angolan government.8 In the meantime, Alexandrino and his family can look across the lagoon at Areia Branca, the sandbar where they used to have a two-story home.
Notes
1 1. Juliette Garside and Jason Burke, “‘It’s All Gone:’ Community Bulldozed at Site of Isabel dos Santos ‘Masterplan,’” Guardian, January 20, 2020. https://www.theguardian.com/world/2020/jan/20/fishing-community-bulldozed-isabel-dos-santos-masterplan-luanda-leaks-angola
2 2. “Man Behind Football Expose Revealed as Source of dos Santos Leak,” Guardian, January 27, 2020. https://www.theguardian.com/world/2020/jan/27/football-whistleblower-rui-pinto-behind-isabel-dos-santos-leaks-luanda-leaks
3 3. An interview with Brooke Harrington, “Agents of Inequality: How Wealth Managers to the Super-Rich Undermine Society and What We Can Do About It,” The Nation, June 21, 2017.
4 4. Michael Forsythe, Kyra Gurney, Scilla Alecci, and Ben Hallman, “How US Firms Helped Africa’s Richest Woman Exploit Her Country’s Wealth,” New York Times, January 19, 2020. https://www.nytimes.com/2020/01/19/world/africa/isabel-dos-santos-angola.html
5 5. Larry Elliott, Graeme Wearden, and Juliette Garside, “Heads Could Roll at PwC over Isabel dos Santos Links, says Chairman,” Guardian, January 21, 2020. https://www.theguardian.com/world/2020/jan/21/heads-could-roll-pwc-isabel-dos-santos-links-chairman-luanda-leaks
6 6. Juliette Garside, “Portugal Freezes Bank Accounts of Isabel dos Santos after Angolan Request,” Guardian, February 11, 2020. https://www.theguardian.com/business/2020/feb/11/portugal-freezes-bank-accounts-of-isabel-dos-santos-after-angolan-request
7 7. Ian Guider, “Rory Godson: ‘You Tend Not to Work With People Who You Don’t Like,” Business Post, June 21, 2020. https://www.businesspost.ie/profiles-interview/rory-godson-you-tend-not-to-work-with-people-who-you-dont-like-but-youve-got-to-remember-that-the-client-is-right-1de035938
8 8. AFP, “Angola’s Probe of dos Santos ‘Improper and Unfair’: Lawyer,” EWN-Eyewitness News, June 5, 2020. https://ewn.co.za/2020/06/08/angola-s-probe-of-dos-santos-improper-and-unfair-lawyer; “Rory Godson and the Princess,” The Phoenix, June 18, 2020 https://www.thephoenix.ie/article/rory-godson-and-the-princess/
Introduction
A family office in 1983 ensures that Dee’s dynastically wealthy New England family will remain wealthy for another century. They deploy “perfectly legal” mechanisms such as trusts to avoid estate taxes.
A Florida man named Joseph Rensin defrauds tens of thousands of working-class customers, but continues to live a luxurious lifestyle with his wealth protected in trusts based in the Cook Islands.
Isabel dos Santos, the wealthiest woman in Africa, plunders billions in wealth that rightfully belongs to the people of Angola and shifts it into offshore accounts.
The common thread in these three stories is the Wealth Defense Industry. None of these arrangements would have succeeded without a militia of tax attorneys, wealth managers, accountants, trust lawyers, and other advisors, that protect the interests of a narrow set of individuals and families against the wider community interest. The gatekeepers of these systems within “the Industry” will take umbrage that these disparate activities are lumped together. There is a difference, they will argue, between the money laundering depicted on Narcos or Ozark and the trust lawyer, sitting in a glass office tower, crafting an asset protection trust. They will argue that all their systems are legal and that they are obeying the law.
Yes, there are differences. But what these three stories – Dee, Blue Hippo, and Angola – have in common is a system of morally bankrupt wealth hiding that has mushroomed into a massive industry.
In April 2016, the Panama Papers were released to the world, a massive leak of 11.5 million documents, including the records of 214,000 offshore companies along with names of their real or “beneficial owners,” including passport scans. As journalist Luke Harding observed, a system “hidden in plain sight was revealed.”
The secret offshore industry – centered in tax havens like the British Virgin Islands – was not, as had been previously thought, a minor part of our economic system. Rather it was the system … The rich, it turned out, had exited from the messy business of tax long ago.1
A segment of this industry has written the laws, warped the rules, and created the loopholes. Joining with thousands of others they are now engaged in the morally suspect practice of helping their clients avoid taxes and other ethical responsibilities. Most practitioners look the other way, collect large fees, and repeat stories to justify their behavior and livelihoods. Perhaps these are good people caught up in a morally bad system.
Tom Keatinge, the director of the Centre for Financial Crime and Security Studies at the UK-based Royal United Services Institute, writes in the Guardian that banks are doing a better job ferreting out money laundering but are subverted by other players in the Wealth Defense Industry.
As banks build their defenses, an equally committed army of accountants, lawyers, consultants, and advisors works to subvert those defenses. They use every tool of financial engineering to hide ownership and obfuscate payments, ensuring that deniability is plausible and that the trail followed by any investigator will be fiendishly complex.
There remain other obstacles to overcome: shortcomings in national and international regulations, governments’ woeful underinvestment in their response to illicit finance, and a lack of transparency concerning company ownership. This means that, until there is a revolution in how we tackle illicit finance, the sharp minds that enable the theft of national wealth will remain one step ahead of any would-be regulators.2
The human cost of allowing the current system of professional enablers is very high, as we will discuss in Chapter 1. The ability of nations to build their economies, tax citizens, and make public