Oxford, Cambridge and more than 100 US universities and colleges have been linked to secret offshore funds in the Paradise Papers revelation last week.
The files, named after the idyllic profiles of where most of these funds are at, is a global investigation by the International Consortium of Investigative Journalists and 94 media partners into what the world’s most powerful people and companies are doing in offshore havens. Using 13.4 million leaked files from two offshore service providers and 19 tax havens’ company registers, the probe exposed where and how the world’s elite hide their immense wealth.
Names revealed thus far include the likes of the Queen of England, F1 world champion Lewis Hamilton and sports giant Nike.
— ICIJ (@ICIJorg) November 5, 2017
As for universities, Oxbridge was revealed to have channelled millions of pounds into private equity partnerships based in the notorious tax haven of the Cayman Islands, including a joint venture to develop oil exploration and deep-sea drilling, according to The Guardian.
US universities with combined endowments of more than US$500 billion, made similar investments in carbon-polluting industries – those named in the intel include 12 major universities and colleges and Ivy League institutions Princeton, Columbia and the University of Pennsylvania.
For media outlets, this is big news. But for the common citizen, it can be hard to find how tax evasions relate to their real-world concerns.
For college students in their academic shelters, the links grow even more tenuous. So why should the average university student care about these leaks?
The short answer is the leaks reflect “a much bigger problem that affects us all and not least students looking to make their way in life” according to Craig Smith, INSEAD’s Chaired Professor of Ethics and Social Responsibility.
While much of what offshore law firms do are technically legal according to the letter of the law, students should worry about what all these means.
In an email to Study International, Smith wrote:
“The Paradise Papers provide yet further evidence of the ever-increasing inequality in society and how that is perpetuated.”
He’s not making this up. Global inequality between individuals and countries have increased steadily year and after year to dangerous levels today.
The world’s richest individuals – i.e. those who own over US$100,000 in assets – make up only 8.1 percent of the world’s population but they own 84.6 percent of global wealth (this is a conservative estimate – there may be more stored away in other tax havens).
In the US, the gap between the rich and everyone else, has been on the rise markedly, by every major statistical measure, for some 30 years, according to Inequality.org, a project of the Institute for Policy Studies.
— Pew Research Fact Tank (@FactTank) August 25, 2017
Closer to campus, students in the US and UK face astronomical debts upon graduating, stopping them from buying homes, medical care and saving for retirement.
It’s a tale of contrast with the trillions of dollars lying in the secret jurisdictions around the world, taxes on which could have gone to government coffers to offer better social security to these graduates. In other words, students are getting shafted.
Hypocrisy and transparency
Hypocrisy is another matter. Many leading US universities pride themselves in playing key roles in the fight against climate change.
Northeastern University (NU) in Boston calls itself a “leader in sustainability practices” and even invested US$25 million of its endowment in clean energy and renewables. At the same time, the Paradise Papers revealed NU made investments in an offshore hedge fund that has pumped billions into oil and shale gas exploration and production.
To DivestNu, a student coalition of NU student groups campaigning for a fossil-fuel-free campus, this confirms NU’s approach to sustainability is critically flawed.
DivestNU’s organiser said to The Guardian: “Northeastern has an opportunity to be a leader in how it uses its endowment for impactful, socially responsible investments. But the way things are now, the values of our investments are out of alignment with the values of our teaching.”
Northeastern says its offshore investments are “limited”, used to diversify its portfolio for maximum returns so as to further its “educational and research mission”.
The exposé on Oxbridge and what they have been doing with both their endowments – which collectively amount up to £10 billion – cast a light on something we’ve long taken for granted at our universities: Transparency, particularly when it comes to their financial records.
Oxford’s student body has repeatedly asked the prestigious institution to not invest in or accept money from sources it does not approve of, according to Tom Barringer, VP C&C Sabbatical officer at Oxford Student Union.
Speaking to OxStu: “The launch of these papers show the importance of transparency around university and college investments, including divestment from all fossil fuels (not just coal and tar sands) and the use of offshore funds.”
Transparency lets the public hold these institutions accountable as well, as both Oxford and Cambridge are public institutions that receive public money, according to Prem Sikka, an emeritus professor in accounting at the University of Essex.
“All the Caymans offer is secrecy and tax avoidance. There is nothing else there. It’s not as if this is a place actively engaged in advancing science, research or human knowledge,” Sikka said to The Guardian.
“We need to know what they are doing with the cash. There are issues of corporate social responsibility.”