More Than 100 Universities and Colleges Included in Offshore Leaks Database(icij.org)
icij.org
More Than 100 Universities and Colleges Included in Offshore Leaks Database
https://www.icij.org/blog/2017/946/universities-colleges-offshore-leaks-database/
70 comments
These "leaks" are annoying. They just give you a page with virtually no information, just a chart showing some connection. Release everything. Don't insult my intelligence by deciding for me what to release.
I partially agree with the parent. Showing these "connections" without any context and detail is just infuriating and leads to click-bait headlines with no actual purpose served.
I don't think they are trying to insult anyone's intelligence though. They are just being careful with the data so that their sources are safe.
While safety is important, this reminds me of the story of the boy who cried wolf. If they keep doing this multiple times and there is no substantial info., people will stop paying attention when there is some real info. and demagogues will use this as evidence of fake news.
I don't think they are trying to insult anyone's intelligence though. They are just being careful with the data so that their sources are safe.
While safety is important, this reminds me of the story of the boy who cried wolf. If they keep doing this multiple times and there is no substantial info., people will stop paying attention when there is some real info. and demagogues will use this as evidence of fake news.
The problem is that incorporation documents are frequently only a small part of the story. It does allow you to correlate ownership, but unless you can actually show some kind of money movement into and out of accounts, it is difficult to show evidence of a particular crime.
Looked at one randomly, looks like some University fund is a shareholder (with over 200 other funds) of a Warburg Pincus fund (a private equity company).
I'm not exactly sure how that's a big deal, nothing there implies they avoid taxes or anything. (Maybe the fund they invest in does shady things, but it doesn't look like they have any kind of weird offshore setup)
I'm not exactly sure how that's a big deal, nothing there implies they avoid taxes or anything. (Maybe the fund they invest in does shady things, but it doesn't look like they have any kind of weird offshore setup)
Do you mean evade or avoid? Everyone avoids tax. Currently taxes on property transfers in the UK are 5% on property priced at £925,000 and 10% if priced at £925,001. I guess Joe Nonavoider sets the price at the latter figure?
> Everyone avoids tax.
No, not everyone. And not everyone evades or optimises tax either.
No, not everyone. And not everyone evades or optimises tax either.
It's hard to divert money when you're incorporated as a non-profit.
Most of these offshore tax shelters are not illegal. It's just shady that wealthy individuals and organizations can stash their millions and billions away from public scrutiny and avoid paying taxes on them.
It's particularly egregious in the case of ostensibly not-for-profit educational institutions.
It's particularly egregious in the case of ostensibly not-for-profit educational institutions.
Yes and no. These arrangements are often grounds for prosecution once they come to light. Just because moving money from A to B and from B to C is legal, it doesn't mean that going from A to C is still legal.
Tax authorities usually struggle to reconstruct the entire chain, so they don't prosecute... until somebody else does the job for them, and then they piggyback.
Tax authorities usually struggle to reconstruct the entire chain, so they don't prosecute... until somebody else does the job for them, and then they piggyback.
They're not really deciding for you what to release, since you have nothing to release.
Is your concern that their interpretation of the source material is inaccurate, or that you're being intentionally misled or occluded?
The ICIJ has been around for two decades, and their credibility is robust. I don't think they're likely to be making claims like this without access to substantial evidence.
Is your concern that their interpretation of the source material is inaccurate, or that you're being intentionally misled or occluded?
The ICIJ has been around for two decades, and their credibility is robust. I don't think they're likely to be making claims like this without access to substantial evidence.
It’s not that I distrust them, it’s just that I’m a lawyer, operations, and finance guy. The source documents would be extremely interesting to me. Instead I get a meaningless graph that tells me almost nothing. If there’s one thing I’ve learned in personal experiences with journalists is that they’re just that, journalists. They don’t have expertise in finance, law, or most anything complex. Let the data be open sourced and mined by actual experts.
93 media agencies working together to analyse some 13 million documents ... and you don't think they've employed one or two lawyers with domain expertise to assist?
While the documents may be interesting to you and others, they're not yours to disseminate. If the graph is meaningless to you, then you should ignore it.
I note that the Australian Tax Office published a press release [1] earlier this month around the Paradise Papers. Presumably other nation state revenue collection agencies have released similar, or at least have comparable expectations from this latest set of papers.
Reading between the lines, there's an expectation that a release of the entire set of source papers may reduce the efficacy of their efforts to recover these lost revenues. I concede that I may be optimistic in my interpretation and expectations here.
[1] https://www.ato.gov.au/Media-centre/Media-releases/ATO-state...
While the documents may be interesting to you and others, they're not yours to disseminate. If the graph is meaningless to you, then you should ignore it.
I note that the Australian Tax Office published a press release [1] earlier this month around the Paradise Papers. Presumably other nation state revenue collection agencies have released similar, or at least have comparable expectations from this latest set of papers.
Reading between the lines, there's an expectation that a release of the entire set of source papers may reduce the efficacy of their efforts to recover these lost revenues. I concede that I may be optimistic in my interpretation and expectations here.
[1] https://www.ato.gov.au/Media-centre/Media-releases/ATO-state...
What was that saying... "trust, but verify"; holds more than ever here.
> They don’t have expertise in finance, law, or most anything complex.
Do you know that?
Also, I certainly wouldn't agree that journalism isn't complex.
Do you know that?
Also, I certainly wouldn't agree that journalism isn't complex.
A journalist without domain expertise or the support of a domain expert without an agenda related to the subject-matter of the reporting is crippled in the same way a programmer without domain expertise or support of a domain expert is; journalism may, itself, be a complex domain (as programming is), but expertise in it does not provide relevant domain expertise in the domain that is the subject of reporting.
And it's absolutely the case that most journalists covering complex domains don't have an educational background in the domain, and in most domains the market doesn't really reward development of domain expertise (in political reporting, there's some pressure driving reporters to develop some expertise in electoral politics, but that's kind of exceptional, and isn't reflected in other domains, even the policy end of political reporting.)
And it's absolutely the case that most journalists covering complex domains don't have an educational background in the domain, and in most domains the market doesn't really reward development of domain expertise (in political reporting, there's some pressure driving reporters to develop some expertise in electoral politics, but that's kind of exceptional, and isn't reflected in other domains, even the policy end of political reporting.)
The GGP made claims about these journalists in particular; I don't see anything to back up those claims.
Also, I know people like to criticize journalists (despite having no domain expertise in journalism), but let's raise our standards to making well-supported, informative statements:
> A journalist without domain expertise or the support of a domain expert without an agenda related to the subject-matter of the reporting is crippled ...
A developer who is illiterate also is limited, but that isn't meaningful. It tells us nothing about any particular developer or about the population of developers.
> it's absolutely the case that most journalists covering complex domains don't have an educational background in the domain
That's a very broad statement, about every journalist who covers every "complex" domain. How many have backgrounds in what domains?
And it implies that lacking educational background means they don't understand the field they cover. Certainly that's not true. Many people I know lack an educational background in their professions; many Silicon Valley legends have no educational background. Some lawyers run large companies, including financial companies, despite lacking MBAs or any financial education. As I wrote in another HN post, Herbert Simon won a Nobel Prize in Economics, won a Turing Award, wrote the book on industrial organization, was a leader in cognitive psychology, and his educational background was political science.
A journalist who has covered finance for decades certainly has domain expertise.
Also, I know people like to criticize journalists (despite having no domain expertise in journalism), but let's raise our standards to making well-supported, informative statements:
> A journalist without domain expertise or the support of a domain expert without an agenda related to the subject-matter of the reporting is crippled ...
A developer who is illiterate also is limited, but that isn't meaningful. It tells us nothing about any particular developer or about the population of developers.
> it's absolutely the case that most journalists covering complex domains don't have an educational background in the domain
That's a very broad statement, about every journalist who covers every "complex" domain. How many have backgrounds in what domains?
And it implies that lacking educational background means they don't understand the field they cover. Certainly that's not true. Many people I know lack an educational background in their professions; many Silicon Valley legends have no educational background. Some lawyers run large companies, including financial companies, despite lacking MBAs or any financial education. As I wrote in another HN post, Herbert Simon won a Nobel Prize in Economics, won a Turing Award, wrote the book on industrial organization, was a leader in cognitive psychology, and his educational background was political science.
A journalist who has covered finance for decades certainly has domain expertise.
This is a lesson they learned from the cablegate: releasing a full stash of data is not going to get the public or even the journalists, interested.
I think part of the reason they do this is because there's massive amounts of unorganized data. This would make it both difficult for individuals to analyze, and would also pose a privacy risk to people and organizations.
This is the best you get: https://offshoreleaks.icij.org/pages/database
They don't release original documents, but still pretty good.
They don't release original documents, but still pretty good.
If transparency is good, then these reporters should be more transparent with the information they have. That's not too much to ask. Doling it out like this isn't very helpful.
offshore leaks database: https://offshoreleaks.icij.org/
I don't really understand the premise of these articles.
If an organization is working within the legal confines of the relevant tax systems, exactly what are they guilty of? Being the best possible stewards of their donations?
If an organization is working within the legal confines of the relevant tax systems, exactly what are they guilty of? Being the best possible stewards of their donations?
Universities are supposed to be morally upright. Even if they can't be prosecuted for this, it's still news that they're cheating.
Additionally, I think there's a really important difference between following the law and being a moral person (or a moral university, or a moral corporation). The law might approximate our conception of morality, but it doesn't cover it completely. There is an enormous grey area of activity that is legal, immoral, and newsworthy.
As an aside, perhaps one reason why there are so many "young people disenchanted with democracy" is your attitude: that a never-ending war between lawyers (looking for loopholes) and lawmakers (who should, in theory, be closing loopholes) is a feature. If that's a feature of democracy then maybe we should take another look at our options.
(I don't really feel that way. Well, sometimes I do, but on average I think democracy is the best we're going to get).
Additionally, I think there's a really important difference between following the law and being a moral person (or a moral university, or a moral corporation). The law might approximate our conception of morality, but it doesn't cover it completely. There is an enormous grey area of activity that is legal, immoral, and newsworthy.
As an aside, perhaps one reason why there are so many "young people disenchanted with democracy" is your attitude: that a never-ending war between lawyers (looking for loopholes) and lawmakers (who should, in theory, be closing loopholes) is a feature. If that's a feature of democracy then maybe we should take another look at our options.
(I don't really feel that way. Well, sometimes I do, but on average I think democracy is the best we're going to get).
Which moral argument are you subscribed to here again?
Did you read the article? The ICIJ notices that these are registered as charities in the states which means they are tax exempt except when the come across things that trigger UBIT. UBIT is an automatic 40% tax. University endowments are able to invest everywhere tax free, except when some debt financed transactions trigger UBIT for all tax exempt shareholders.
UBIT wasn't created to ensnare university endowments in scenarios where founders and board members of independent companies happened to get an exit through debt financing.
This is a circumstance where you adapt. Avoid that misapplication of tax by registering a business in another country and investing in the same thing through it.
Did you read the article? The ICIJ notices that these are registered as charities in the states which means they are tax exempt except when the come across things that trigger UBIT. UBIT is an automatic 40% tax. University endowments are able to invest everywhere tax free, except when some debt financed transactions trigger UBIT for all tax exempt shareholders.
UBIT wasn't created to ensnare university endowments in scenarios where founders and board members of independent companies happened to get an exit through debt financing.
This is a circumstance where you adapt. Avoid that misapplication of tax by registering a business in another country and investing in the same thing through it.
This raises another question. Is paying taxes inherently moral? Everywhere I look I see tax money being squandered with little to show for it.
If it is so moral what they are doing, why don't they make the whole thing public by themselves. Its not like Universities need to hide anything (sorry for that paraphrase), they are public figures.
The thing is that we as a society have decided that we impose taxes in order to fund common things like protection, infrastructure etc. If now certain members of this society decide they do not want to pay their share anymore, they can say that publicly and we can all decide whether it is for the public good or not (and in the latter case, they can decide whether they want to leave the society in consequence). But what they are currently doing now is hiding that they do not contribute their share to our common good anymore and yes, that is amoral. Its acceptable (and anyones right) to have an opinion (about taxes) but I can expect you to be honest about it.
The thing is that we as a society have decided that we impose taxes in order to fund common things like protection, infrastructure etc. If now certain members of this society decide they do not want to pay their share anymore, they can say that publicly and we can all decide whether it is for the public good or not (and in the latter case, they can decide whether they want to leave the society in consequence). But what they are currently doing now is hiding that they do not contribute their share to our common good anymore and yes, that is amoral. Its acceptable (and anyones right) to have an opinion (about taxes) but I can expect you to be honest about it.
I agree it's amoral but I'm not sure it's immoral.
In America maybe. In Germany and other parts of Europe, tax money is not infrequently well spent.
If an organization is working within the legal confines of the relevant tax systems, exactly what are they guilty of?
It's a philosophical point about the sort of society you want to live in: one were most people do the right thing most of the time, just because it's the right thing, or one in which everyone must be continuously and intrusively monitored and regulated.
Here in England the Queen is implicated in the Paradise Papers. Now technically the Queen doesn't need to pay taxes at all, but even so, she still feels the need to cheat the system anyway. Given that the Head of State, (supposably) appointed by God as a role model for us all to rule by divine right doesn't see any need to contribute towards the NHS, schools, roads, police, the defence of the realm, etc, exactly what moral authority does anyone have to tell anyone to contribute their fair share? "A fish rots from the head down" is the saying, for good reason.
To apply this to universities they're basically saying if you can find a means to cheat in your exams that we haven't specifically banned, you can use it. Whereas I think most people would expect universities to be opposed to all cheating and also to educate their students that cheating is wrong...
It's a philosophical point about the sort of society you want to live in: one were most people do the right thing most of the time, just because it's the right thing, or one in which everyone must be continuously and intrusively monitored and regulated.
Here in England the Queen is implicated in the Paradise Papers. Now technically the Queen doesn't need to pay taxes at all, but even so, she still feels the need to cheat the system anyway. Given that the Head of State, (supposably) appointed by God as a role model for us all to rule by divine right doesn't see any need to contribute towards the NHS, schools, roads, police, the defence of the realm, etc, exactly what moral authority does anyone have to tell anyone to contribute their fair share? "A fish rots from the head down" is the saying, for good reason.
To apply this to universities they're basically saying if you can find a means to cheat in your exams that we haven't specifically banned, you can use it. Whereas I think most people would expect universities to be opposed to all cheating and also to educate their students that cheating is wrong...
Legality isn't the standard of behavior; it's just a minimum. Someone once said right here on HN: "Never forget, the holocaust was legal, slavery was legal, segregation was legal. If you use the state as a metric for ethics you'll end up disappointed." (It was so good, I wrote it down.)
This behavior isn't mass murder or oppression, but failing to pay your share of your communities/nation's bills - which puts more burden on your neighbors / fellow citizens - isn't acceptable to me. 'I can get away with it in court' isn't a good excuse.
This behavior isn't mass murder or oppression, but failing to pay your share of your communities/nation's bills - which puts more burden on your neighbors / fellow citizens - isn't acceptable to me. 'I can get away with it in court' isn't a good excuse.
Because the legality is set up so that it's only those who have a lot of money who can do this.
This is the problem.
I am all for not paying more taxes than necessary but it should be the same for everyone not just for the few with money to pay the lawyers and pay the fees.
This is the problem.
I am all for not paying more taxes than necessary but it should be the same for everyone not just for the few with money to pay the lawyers and pay the fees.
Wouldn't that be an argument against the legislature, or perhaps lobbyists, rather than against the nonprofits stuck with the law?
>Because the legality is set up so that it's only those who have a lot of money who can do this.
The middle class can very well benefit from offshoring. It may not be for everyone, but it certainly isn’t only a thing for rich people.
The middle class can very well benefit from offshoring. It may not be for everyone, but it certainly isn’t only a thing for rich people.
It mostly is as you need to pay for lawyers or understand how to construct things.
It's not for the middle class. Upper middle class sure but not average middle class and it doesn't change the fact that it's not equal for all.
It's not for the middle class. Upper middle class sure but not average middle class and it doesn't change the fact that it's not equal for all.
It's not a problem to me. If I have spent 30 years loosing blood, sweet and tears to gain advantage in an unfair world, I am going to defend that advantage.
Your view is unrealistic because you don't want that advantage, forget about doing anything to get it, and pretend people who have the advantage can be tamed. Like turning lions into deer.
Never going to happen.
Your view is unrealistic because you don't want that advantage, forget about doing anything to get it, and pretend people who have the advantage can be tamed. Like turning lions into deer.
Never going to happen.
I am not sure what view you referring to. I am not talking about what is realistic I am answering the parent.
For some reason, the top link for Stanford goes directly to the Stanford Marching Bands homepage. A band known more for satirical themes rather than music.
Can someone explain to me why Universities, which are mostly non-taxable entities, would use offshore banking?
"The only time university endowments pay taxes is when they invest in debt-financed financial firms such as private equity funds and hedge funds. These investments are considered a business activity unrelated to their tax-exempt missions."
Somehow that part of the article didn't click for me. The NYT article linked in the following sentence does a great job of explaining why they are being taxed if you don't have a finance background.
Yeah I think ICIJ's outrage-bait here is a swing and a miss.
UBIT 40% tax on charities was not created to hit university endowments. This is a reason to use an offshore entity.
UBIT 40% tax on charities was not created to hit university endowments. This is a reason to use an offshore entity.
UBIT 40% tax on charities was not created to hit university endowments
So you're saying we can all simply pick and choose which laws were created with us in mind?
So you're saying we can all simply pick and choose which laws were created with us in mind?
obviously you can, not sure what the argument here is.
In addition to the sibling comment there’s also been some disclosures regarding investments in industries that could plausibly get universities bad press — such as coal mines.
Given the current cost of coal relative to renewable sources that seems like the exact sort of poor investment that the public or interested parties should know about so it can be rectified.
This article provides little context or analysis. This article from the NYTimes provides a better jumping off point on this same topic (colleges and universities mentioned in the paradise papers) and is better at making clear what the potential ethical problems are.
https://www.nytimes.com/2017/11/08/world/universities-offsho...
https://www.nytimes.com/2017/11/08/world/universities-offsho...
I don't see Caltech or MIT. Interesting.
I don't see Europe. Where are they hiding their money?
I don't think European universities tend to have large funds that they could evade taxes on, since they are usually funded by taxes.
Oxford is represented. In continental Europe, most universities are actually state-run or entirely state-funded, so there is no issue. The industrialist approach to educational institutions is very anglo-saxon.
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You can incorporate in Delaware to allow shareholders from any US state avoid double taxation. You incorporate (mostly funds) in zero tax countries to allow worldwide investors avoid double taxation. A shareholder of an "offshore" corporation often still pays the taxes in their home country.
There's certainly a lot of abuse, but there are valid reasons to own offshore stock.
There's certainly a lot of abuse, but there are valid reasons to own offshore stock.
"You can incorporate in Delaware to allow shareholders from any US state avoid double taxation" - could you please expand on it? Are you talking about corporate tax + dividends tax, or about something else when saying "double taxation"?
I'm not the person you are asking, but I think it means a US shareholder in a US company being taxed both by the state the company is incorporated in, and the state the shareholder resides in. There are a lot of state taxes that Delaware doesn't charge at all, or can be avoided. It's almost like Delaware is a discount seller of corporate residency. Charge a low price and make it up on volume. Smart strategy by the states/countries with the political will to do it.
If you live in a state where you are taxed on your investment earnings, you might feel "double-taxed" if those earnings were already taxed at the corporate level.
If you live in a state where you are taxed on your investment earnings, you might feel "double-taxed" if those earnings were already taxed at the corporate level.
ah.. that sounds like tripple-taxing then. 1) Federal Corporate Income Tax, 2) Incorporation state income tax, 3) State of shareholder residency taxing income (and then shareholder spending money to buy things and pay sales tax.. - 4?)
Funds with international investors often incorporate in a place like the Caymans. If the fund was incorporated in the US, a UK investor "deal with" US+UK tax, even if they don't visit or do business in the US.
The UK's offenders:
* Oxford
* Cambridge
* The University of Law Employee Benefit Trust
* Oxford
* Cambridge
* The University of Law Employee Benefit Trust
Cambridge, FWIW, seems to be mostly individual colleges rather than the University itself. Given the size (and presumably diversity) of their endowment assets[0], I don't find this much of a surprise.
[0] e.g. Trinity ~£1bn per https://www.trin.cam.ac.uk/alumni/giving-to-trinity/annual-r..., Gonville and Caius ~£150m per https://www.cai.cam.ac.uk/alumni/campaign-brochure/the-endow...
[0] e.g. Trinity ~£1bn per https://www.trin.cam.ac.uk/alumni/giving-to-trinity/annual-r..., Gonville and Caius ~£150m per https://www.cai.cam.ac.uk/alumni/campaign-brochure/the-endow...
I'm guessing these are just the ones that got caught. I would be surprised if the London Universities e.g. Imperial, LSE would miss out on doing similar things with their funds.
It is very presumptuous to say offender.
Which moral argument do you think they are undermining, and what proof do you have of that?
A registered entity in a Caribbean nation is just as benign as a registered entity in a United State.
Which moral argument do you think they are undermining, and what proof do you have of that?
A registered entity in a Caribbean nation is just as benign as a registered entity in a United State.
At this stage it's the companies that don't do offshore tax avoidance that deserve front page news...
Surprising to see University of Toronto there too. I was expecting only US ones for some reason.
Why was it surprising? https://www.theguardian.com/news/2017/nov/05/justin-trudeau-...