How to Hide $400 Million, by Nicholas Confessore. An interesting story about a woman being divorced by a wealthy businessman. She was skeptical of his declaration of net worth of only a few million dollars, and found a huge new world. Good read.
But even as she was finding out that there was much, much more …
… her family’s fortune was vanishing into an almost impenetrable array of shell companies, bank accounts and trusts, part of a worldwide financial system catering exclusively to the very wealthy.
In recent decades, this system has become astonishingly effective at “offshoring” wealth — detaching assets, through complex layers of ownership and legal planning, from their actual owners, often by hiding them in another country. Created by lawyers, accountants and private bankers and operating out of a global archipelago of European principalities, former British colonies and Asian city-states, the system has one main purpose: to make the richest people in the world appear to own as little as possible. …
In any given year, trillions of dollars sit safely in the offshore financial world, effectively stateless, protected by legions of well-compensated defenders and a tangle of laws deliberately designed to impede creditors and tax collectors. …
She eventually settled on a Florida divorce lawyer:
One day last year, we caught up over drinks at a Palm Beach hotel. Potter was easy to spot: In a town of pastels and prints, he still favored charcoal suits and crisp white shirts. All around us was the chatter of lithe women and their expensively tailored, somewhat older male companions — inhabitants of a world at once ostentatious and opaque. …
She had $90,000 in the bank, not enough for a protracted legal battle. But she also had cellphone pictures of documents concerning something called a Cook Islands asset-protection trust …
Even finding the assets was nearly impossible:
The Cook trust was a bad sign. … And trusts organized in the Cook Islands, a self-governing state associated with New Zealand, are particularly difficult to investigate. Cook courts typically do not recognize American court orders, including divorce judgments. To sue a Cook trust, you have to actually fly to the Cook Islands, in the middle of the South Pacific, roughly 6,000 miles southwest of Florida. “It’s like Switzerland used to be, but squared,” Fisher told me. Once assets were hidden inside a Cook trust, he had learned, it was almost impossible to get them out. …
For Pursglove and her husband, as for many members of the global 1 percent, “residency” was an elusive and easily manipulated concept. Pursglove was a British citizen with a United States green card who now lived in Boca Raton. Oesterlund was a citizen of Finland who had also obtained a passport from Dominica. They had homes in at least four countries and spent a year living on their yacht.
A tenth of the world’s money (about US$220 trillion) is in this offshore hidden system:
James S. Henry, a former chief economist at McKinsey, calls the offshore financial world the “economic equivalent of an astrophysical black hole,” holding at least $21 trillion of the world’s financial wealth, more than the gross domestic product of the United States.
This darkness shields the tax-averse businessman and the criminal alike. Dictators use the offshore system to loot their own countries. Drug lords use it to launder money.
