Claiming that much of this money is "undisclosed and under-taxed," Oxfam estimates that "tax havens contributed to annual revenue losses for developing countries of at least US$50 billion" (it means milliard). Oxfam claims that this is "roughly equivalent to annual aid flows to developing countries. And this estimate was a conservative one."

Oxfam claim that there are three major ways that "offshore centres undermine the capacity of poor countries to finance sustainable development."

First, says Oxfam, is through tax competition and escape. Oxfam alleges that it is a bad thing that corporate tax rates in developing countries have reduced from the typical OECD level of 30-35% to around 20%. It is difficult to see why this argument should have any validity. Oxfam produce no evidence to suggest that lower tax rates discourage inward investment. Inward investment is surely the way forward, so long as it does not result in exploitation. After all, as Oxfam's own television advertising says (in paraphrase) "give a man a fish and you feed him for a day; teach him to become a fisherman and you feed him and his family for ever."

Second, says Oxfam, is that "the offshore system has contributed to the rising incidence of financial crises." Oxfam produce no evidence to support this argument. Indeed, it draws non-sequiter conclusions from unrelated facts saying that "havens and OFCs are used by foreign exchange traders as well as globally active private financial institutions, such as banks and investment funds that use them as booking centres for short term and speculative investment in developing and transition economies." "Routing investment via the offshore system can be used to avoid regulation" and " Currency instability and rapid surges and reversals of capital flows around the world became defining features of the global financial system during the 1990s." are seemingly the reasons for " the crises in Mexico in 1995, and more recently in East Asia." As evidence, in its June 2000 paper, Oxfam cites the formation of an "offshore" jurisdiction in Thailand - and that unhedged and speculative investments caused liquidity problems in the Thai banking sector.

It is difficult to see how the offshore world can be blamed for the collapse of the Peso or of the widespread recession in the Far East. Whilst international currency movements undoubtedly contributed to both, they were not the central cause and in any event the "offshore jurisdictions" were only a part of the wider international currency movements. The complaints could just as easily be pointed at other financial markets such as New York, London and Frankfurt.

Third, says Oxfam is that " the offshore world provides a safe haven for the proceeds of political corruption, illicit arms dealing, illegal diamond trafficking, and the global drugs trade." Yes, that is true. As it is true of every financial centre - remember that this paper was published at the height of the revelations about Abacha money going through London and Switzerland - and the paper makes particular mention of Abacha yet, largely, fails to recognise the nonsense of alleging fault by "the offshore world" whilst not mentioning the supposed onshore world.

The paper nails its colours to the mast by referring to the OECD's "crack down on harmful tax competition" and the Financial Stability Forum "looking at the impact of the offshore system on global financial stability." Yet, in one sentence, it does recognise that "the issue of financial havens goes beyond the activity of small island states to 'onshore' activity in major economies such as the City of London and New York." It is unfortunate that the remainder of the paper simply parrots the various intergovernmental bodies' self-corroborating reports instead of making a balanced analysis.

Indeed, the June 2000 paper quotes as its bibliography a remarkably restrictive list of sources, and several of those are not the most up-to-date sources.

Oxfam seems to be wanting tax harmonisation and to enhance investigatory powers in tax investigations.

It supports an international convention to facilitate the recovery and repatriation of funds illegally appropriate from national treasuries of poor countries, claiming that bank secrecy laws in Europe prevents the recovery of looted funds. Again, this does not represent the truth of the situation - Abacha funds have been frozen around Europe. The problem is not primarily bank secrecy, but the difficulty in identifying movement of funds, often within the original country, until long after the money has gone. Oxfam clearly has no comprehension of the problems facing domestic investigators in trying to undo years of laundering within a corrupt financial system under the control of a dictator.

Oxfam supports the taxation of multi-nationals on a global unitary basis. It opposes transfer pricing, and recommends a tax distribution based upon where the economic activity takes place - based upon the value of assets, sales or employment. This idea is a talking point and has no substance. For example, a factory worker in some textile factories in China earns around UK£1,000 per annum. A local lawyer earns around UK£5,000 per annum. Relative to local expenditure, that is appropriate remuneration (this is not always the case and WMLR deplores exploitation, as we have said before) yet a partner in a City of London law firm would expect to bill UK£1000 before morning coffee on Monday. Even a newly qualified solicitor in the City expects an annual salary of around UK£50,000 and on Wall Street the rates are higher still. So, on Oxfam's basis - if sales were considered, taxation revenues generated by an international law firm would be 10 times higher in London than in China. WMLR thinks that is back to front.

What about taxation based on the number of staff in each location? International law firms have representative offices in China - they maintain hundreds of times more people in London or the USA than in China. Even Australian law firms, which by comparison to the giant UK and US firms are minnows, have dozens more times as many lawyers in Australia than in China. So, on Oxfam's basis of taxation if assessed on employment, the international firm would pay hundreds of times more tax in London or the USA than in China. Again, this seems back to front to WMLR.

What about taxing on values of assets? London law firms spend millions of pounds on offices, some of which they own, and on computers, libraries and in developing "knowledge capital." In China, at least in the beginning, they probably operate out of a hotel suite with a laptop and a mobile phone. Even later, they will move into serviced offices and then maybe take a lease on premises for perhaps 20 people - and that will be one if the biggest offices for an overseas firm. So, once again, the taxation revenues for London would be massively more paid to London than to China.

No, the Oxfam plan actually supports the wealthy nations at the expense of the poor - and is entirely consistent with the tax harmonisation arguments raised by the wealthy countries for their own benefits. It ignores the simple truth that poor countries are generally rich in two things - land and labour. So long as people are paid a reasonable amount for a reasonable amount of work, relative to local cost of living, how can it be anything but a good thing to take work to them? Surely the idea of taking workers to the work has been a demonstrable cause of exploitation over the past three hundred years, and continuing with trafficking at one end of the scale and schemes for temporary work/residence permits at the other?

To demonstrate its support for the OECD etc. position, Oxfam thinks there is merit in the creation of a global tax authority to ensure that national tax systems do not have negative global implications. In short, Oxfam wants everyone to sign up to the OECD letter referred to elsewhere in this issue.

Where Oxfam has put some meritorious original thought into its paper (which is a simplification of its June 2000 paper called " Tax Havens: Releasing The Hidden Billions For Poverty Eradication") is in relation to debt. Pointing out that the total Abacha money being chased around the world exceeds Nigeria's external debt (making no mention of domestic mismanagement as a contributory factor in the creation of Nigeria's problems), it recommends that there should be an automatic procedure to assess repayments, in effect allowing a country to enter into something akin to the Chapter 11 of the US Bankruptcy Code. This is a sensible provision but omits to consider how management of the procedure can be operated in relation to a country where corruption and theft of money from the national treasury are rife. The World Bank, on the other hand, has produced papers in which this issue is a factor.

The Oxfam paper is, for the most part, a vapid re-hashing of the arguments made by the OECD and its family and is opportunistic, simply trying to jump on a passing bandwagon without first considering where it is going.

Rather like the money.

In its accounts for the year ending April 2000, the introduction by Lord Joffe is proud that Oxfam GB (a member of Oxfam international which is based in the Netherlands) has raised GBP124.1m, has around half a million regular contributors through donations although the Treasurer's report says that this was a marginal reduction as against the previous year. But that money has not come from the sources that you might expect.

The treasurer says that GBP100m was spent in direct charitable expenditure - and that there was an excess of expenditure over income of GBP1.7m. So, GBP326m went in non-charitable expenditure.

Oxfam has a cash pile (or money held in matched assets) - there are general reserves of GBP15m, hypothecated funds of GBP29.9m, restricted funds of GBP1.6m, and designated funds of around GBP40m. Cash at bank or in hand is almost GBP70.5m.
However, of the income items in the accounts, the famous shops produced around GBP8m on sales of around GBP43m, which arose from donated goods.

More surprisingly, GBP29.5m (approx.) came from UK government, EU and UN grants and other agencies gave grants of a little over GBP25m. Oxfam spent in excess of GBP13m in fundraising and publicity - and in doing so raised just under GBP57m from donations and gifts in kind.

It spent just under GBP8m in "information, campaigning and education" and GBP20m in "programme development and support." This means, according to the accounts, the cost of field offices and of providing support for the international programme - and a little over GBP12.5m went in staff costs alone in this area. Management and administration of the charity cost GBP3.4m - of which around GBP2.5m went in staff costs. 5 members of staff were paid over GBP50,000 pa.

Note 27 to the accounts shows a table of direct charitable expenditure - and the total that was spent on institutional development and social organisation, information/lobbying and education/legal aid (GBP22,163,000 exceeded the total spent on health and nutrition and agriculture (GBP20,0748,000) and only just falling short of water supply and sanitation (GBP23,760,000).

Income generation/production cost GBP3,435,000.

WMLR does not suggest that Oxfam is doing anything wrong. It does some very good work.

But if you see an advert on TV or in a magazine, you are made to feel guilty be heart rending images of children. It is instructive to realise that the money that Oxfam collects as a result of those appeals just about pays its administration charges and the costs of its campaigning.

The GBP52,031m that it distributes into those areas that the adverts promote (health & nutrition, water supply & sanitation, agriculture, shelter, logistics support) comes from grants, mainly from governments or government-funded bodies which total GBP54.5m. And government grants come from taxes.

Oxfam might think the offshore world has no legitimate purpose. But what is Oxfam doing apart from distributing state or other grant aid? And, apart from a large volunteer force, providing paid employment for approx. 3500 people in the UK in order to do it?

Now that the British Government has an office to deal with precisely the sort of assistance that OXFAM was originally formed to deal with, one has to question whether there is any need for a charity to act as a channel for government money.

Instead of seeking a global tax system, Oxfam should, perhaps, be seeking a global aid system into which aid can be channelled. Remember that the British Public, chided into making gifts to assist those afflicted by national disasters, gave Oxfam GBP57m. And at the end of the accounting period, there was more than that in Oxfam's bank.

The Oxfam accounts are at www.oxfam.org.uk