Something is rotten in the state of Denmark


Originally posted at on the Global Witness blog

A compelling new Danish drama does a stellar job at portraying some of the mechanisms of corruption that we at Global Witness are all too familiar with.

We’re big fans of the new Danish TV series Follow the Money. It’s a great piece of drama, but we’re also fascinated because it’s a case of fiction mirroring reality right now.

For anyone following our work, the script used in Follow the Money will be familiar. A small set of wealthy individuals use the secrecy afforded by offshore jurisdictions to hide and channel illicit funds at the expense of everyday people and investors.

It tells another important story, which often gets lost. Corruption isn’t something that just affects fragile states and dictatorships, it’s far closer to home than many Western governments like to admit. As our work has shown time and time again, Western companies, law firms and banks are key enablers for moving dirty cash around the world and covering up secret deals, and their governments could be doing much more to put a stop to it.

In fact Denmark seems like the perfect setting to make this point.

Number one in Transparency International’s Corruption Perceptions Index in 2015, Denmark does not suffer from the kind of grand corruption that plagues those at the bottom of the Index like Cambodia or Afghanistan. However, such is the structure of the global financial system today, Danish companies and citizens, like those in any other European country, can use networks of offshore subsidiaries to hide and launder illicit funds whilst retaining the veneer of corporate respectability that being based in a center of global finance affords.

Services offered in places like the British Virgin Islands and the Cayman Islands can be used to hide wealth from tax authorities, deceive law enforcement agencies and introduce huge levels of risk to unwitting investors. We’ve seen some these mechanisms at play in our recent investigations into the London property market and the acquisition of one of West Africa’s largest oil blocks.

The fictional, cut-throat energy firm at the heart of the plot, Energreen, uses a number of these ploys to devastating effect. Below are three of the top ways in which its activities mirror the companies we often investigate:

  • Anonymous shell companies are the currency of the corrupt - Energreen and its insider traders use a network of subsidiaries whose true owners are hidden in order to siphon off funds and fraudulently pump up the value of its own assets.

  • Secrecy jurisdictions and tax havens such as the British Virgin Islands and the Cayman Islands are conduits for illicit financial flows - The network of subsidiaries used by Energreen are often based in offshore secrecy jurisdictions deliberately obscuring critical information about the company from law enforcement, the public and investors.

  • Corruption affects us all - Energreen’s eventual collapse after it goes public leaves a huge range of investors exposed including pension funds used by everyday people.

As we wrote two weeks ago this is a problem that the UK can help to fix by taking action on the UK Territories. For our readers based in the UK, you can watch all 10 episodes of Follow the Money on BBC iPlayer.