At least US$21 trillion of unreported high net worth wealth was hidden in "secret tax havens" at the end of 2010, according to a new study from the Tax Justice Network.

At least US$21 trillion of unreported high net worth wealth was hidden in "secret tax havens" at the end of 2010, according to a new study from the Tax Justice Network, a group which campaigns against offshore centres. 

The study, The Price of Offshore Revisited, was authored by James Henry, a former chief economist at the consultancy McKinsey. Henry compiled data from the Bank of International Settlements, International Monetary Fund, World Bank, and national governments.

Put another way, the figure of $21 trillion is equivalent to the size of the US and Japanese economies combined, said Henry. Private wealth held offshore represents "a huge black hole in the world economy," Henry said. His study dealt only with financial wealth deposited in bank and investment accounts, and not other assets like property and yachts. He said he took "pains to err on the conservative side."

Private banks

He accused the private banking industry of conspiring to allow the super-rich to move money around the globe through an "industrious bevy of professional enablers in private banking, legal, accounting and investment industries."

He said the three private banks handling the most assets offshore are UBS, Credit Suisse and Goldman Sachs.

"It turns out that this offshore sector - which specialises in tax dodging - is basically designed and operated, not by the shady no-name banks in sultry islands, but by the world's largest private banks," he wrote.

At the end of 2010, the 50 leading private banks alone collectively managed more than US$12.1 trillion in cross-border invested assets for private clients, said the report.

He added: "The lost tax revenues implied by our estimates is huge. It is large enough to make a significant difference to the finances of many countries." From another angle, he said, this study is really good news. "The world has just located a huge pile of financial wealth that might be called upon to contribute to the solution of our most pressing global problems," he said.

The news comes as governments are increasingly looking to crack down on tax evasion to bolster their coffers, including embarking on national scapegoating campaigns. Comedian Jimmy Carr last month became the centre of a tax evasion furore stemming from his involvement in a Jersey-based accountancy arrangement. UK prime minister David Cameron called the situation "morally wrong", calling for tax loopholes to be closed, and Carr issued a public apology.

Several press reports later highlighted that Cameron and his Tory peers had themselves saved tax through using similar schemes.