A Brave New (and Corrupt) World

A BRAVE NEW (AND CORRUPT) WORLD

By Emily Feng

I write this nearly a month after The International Consortium of Independent Journalists released an online feature revealing that nearly 22,000 clients from Hong Kong and mainland China had secretive offshore accounts and companies in the British Virgin Islands, a well-known as a tax haven. After months of international collaborative efforts trawling through an enormous cache of leaked documents, the ICIJ identified 16,000 of these clients. Among them, unsurprisingly, are many with ties to China’s business and governmental elite. The web of complicity extends to include major European bank like UBS, Credit Suisse and Deutsche Bank, which actively aided Chinese clients in hiding their dirty millions.

This kind of hard-hitting, labor-intensive journalism should be making huge waves in the media and policy worlds. So why hasn’t it gotten much attention?

A quick Google search reveals that the story was picked up by all the major online news outlets such as the Guardian, New York Times, and Washington Post, as well as some English-language overseas media in India and publications targeted towards overseas Chinese. Outside of a few small reports on minor European channels, no airtime seems to have been given to the offshore leaks story. Of course, the story was quickly blocked by censors in mainland China, with the Chinese Foreign Ministry spokesman dismissing the reporting as “hardly convincing.”

The potential significance of this story makes its actual, disappointing reception all the more mystifying. The reporting serves as confirmation that the state of corruption is actually much worse than we thought. The elaborate financial methods through which Chinese clients set up front companies in whose accounts they hid their capital, tax-free, suggests just to what extent tax evasion is a pervasive, institutionalized process. Moreover, the scope of complicity implicates not just bad Chinese businessmen and leaders, but implicates European institutions in not just turning a blind eye towards wrongdoing, but actually helping the bad guys do it.

Even disregarding their shocking content, the stories serve as a model for collaborative, investigative journalism in the digital age. The 2.5 million leaked documents (to put this size in perspective, that’s 160 times larger in memory space than the 2010 Wikileaks cache) were analyzed by reporters from more than 50 media organizations from all over the world. They had to overcome challenges posed by the sheer size of the leaked information, demonstrating a creativity and perseverance needed in journalism that has become increasingly data-driven.

Yet there has been disappointing little discussion about this piece of journalism. Perhaps that’s because we are already over-saturated by stories about what a dystopian place China is, and “Offshore Leaks” fits the trope a little too well. Like stories about air pollution, food poisoning, and political repression, “Offshore Leaks” is a story we have heard variations of before, beginning with Xi Jinping’s widely covered anti-corruption campaign (for which “Offshore Leaks” may ironically aid, having identified all the culprits for the Chinese government). I am reminded by the tepid public reaction to the December 26, 2001 Washington Post article that revealed horrific interrogation techniques being used on captured combatants and the revival of the CIA rendition program since September 11. It was not until 2005 that a follow-up article revealed the locations of CIA “black sites” that the public began paying attention. At the time in 2001, the reporting just seemed to recant what we already knew was probably happening. And so, like the ICIJ story, the Post’s story might elicit a cynical sigh and a shrug of the shoulders, but not much else.

Counterproductively, the international scope of the “Offshore Leaks” story probably also cushions China from much of the reader backlash; after all, it’s not just the Chinese who are evading taxes and laundering money anymore. The ICIJ reporting implicates a number of other countries Azerbaijan, Russia, Canada, Pakistan, Philippines, Thailand, and Mongolia, among others. The China story becomes less exceptional when put in the sobering context in which everyone is at least a little bit guilty.

This is not all to say the stories resulting from this particular leak have not resulted in any positive impact whatsoever. Wang Jun, the chief tax commissioner in mainland China was quoted as saying he would step up international cooperation to fight tax evasion, four days after the ICIJ story was published online. Financial business in the British Virgin Islands has dropped precipitously. Yet this all seems a bit superficial and smacks of conciliatory back-patting compared to the kind of public outrage ICIJ seemed to have expected when they published “Offshore Leaks.” Perhaps they were expecting too much in a world where the gross socioeconomic inequalities that rapidly emerged in the last four decades have been accepted as the new norm.

About the Author

Emily Feng is a Duke University junior majoring in Public Policy. She is currently working on a thesis about migrant education in China. Besides writing for the DEAN Digest, she is also president of DEAN, co-directs its China Leadership Summit, and writes for a number of campus publications and blogs. You can contact her at emily.z.feng@gmail.com