Economic Integrity in UWC Funding


by Jeppe Damberg and Jesper Damberg
17th March, 2018


This week, United World College Red Cross Nordic had the honour of welcoming one of its biggest sponsors through many years: Leif O. Hoegh. The Hoegh family owns the international shipping firm Leif Hoegh & Co. founded in 1927. Worth millions of pounds, the Hoegh family uses some of their wealth for philanthropic purposes, including funding projects at UWCRCN. Without Hoegh’s donations the foundation year program, in which students with a weak academic background are offered a third year at UWCRCN, would not have become a reality. Similarly, the building in which we host our annual shows, exams, parties, and charity auctions would not be here for us to use if it was not for the generosity of the Hoegh family. When visiting, Leif O. Hoegh offered an informative talk on Norway’s rise from being one of Europe’s poorest countries to being the richest as of today. With his economics degree from Cambridge and MBA from Harvard, Hoegh stood not only as an example of philanthropic generosity but also academic excellence. In the macroeconomic context of our times, however, the economic integrity of the money that we receive as a UWC from the Hoegh family appears controversial and raises several questions on what type of funding we should accept as a organization that aims to further a sustainable future.
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According to studies made by economist Gabriel Zucman presented in his book “The Hidden Wealth of Nations: The Scourge of Tax Havens”, a web of tax havens – a term that defines a country or area where taxes are levied at an extraordinarily low rate – around the world holds almost a tenth of the world’s financial wealth. Evasion by the super-rich has pushed trillions of dollars out of governments’ reach. Many modern economists such as famous French economist Thomas Piketty, argue that only by prising open the secrets of the offshore centres can politicians rescue their debt-ridden economies and reverse the tide of rising inequality. [1] In 2016, the Panama Papers – 11.5 million leaked documents that detailed financial client information for more than 214,488 offshore entities and caused much controversy as it revealed high profile individuals’ tax evasion schemes in 2015 – revealed that the Hoegh family had made use of the Panamanian law firm Mossack Fonseca to set up so-called ‘post-box’ firms in the British Virgin Islands, 20 of which were still active by 2016. [2] Moreover, Leif Hoegh & Co, the family’s holding firm through which it holds ownership over Leif Hoegh LNG and Leif Hoegh Autoliners, is registered in the tax haven of Bermuda.[3] While none of the aforementioned practices are illegal per se, in the economic context of our times where tax evasion by capital rich individuals and large multinational companies exacerbate the inequality plaguing the high-income world,[4] it seems that schemes like that applied by the Hoegh family and other wealthy individuals are not in line with the UWC mission of creating a sustainable future. If that was not enough, only half a year ago Hoegh Autoliners settled a cartel suit with the Department of Justice in the USA. As a result, a public apology was issued, and it was agreed for Hoegh Autoliners to pay 21 million USD in fines.[5]
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When Leif O. Hoegh visited and held a presentation for the students at UWC Red Cross Nordic this week, Jesper Damberg, writer for the Flying Dutchman, seized the opportunity to question Mr Hoegh on his tax practices during the subsequent Q&A session. Leif O. Hoegh was surprised by the question itself, and could not deny the use of Mossack Fonseca and the registration of Leif Hoegh & Co, the family’s holding firm, in Bermuda. 
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Now, the question remains whether our movement should act upon this information. Arguably, by receiving funding from individuals and firms whose economic practises are not in line with the UWC mission of a sustainable future damages our integrity as a serious organization. On the contrary, it is also possible to argue that our movement should not care where philanthropic money comes from as it is not our responsibility to police individual’s economic practices. However, as we chose to ignore the source of our funding we signal that macroeconomically unsustainable acts, such as tax haven schemes, can be excused if the benefits are given to organisations that aim to promote a better tomorrow. It is the opinion of this paper, that if we fail to address the economic integrity of our funding, our silence is, in a sense, bought, and we will have failed to acknowledge that tax evasion does have detrimental effects on the societies that we teach our students to have a positive impact on.


References

[1] Houlder, Vanessa. “The Hidden Wealth of Nations: The Scourge of Tax Havens, by Gabriel Zucman.” Financial Times. October 2, 2015. Accessed March/April, 2018. https://www.ft.com/content/10f42a56-6830-11e5-97d0-1456a776a4f5

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[2] The International Consortium of Investigative Journalists. “Offshore Activities by Leif Hoegh.” Offshore Leaks Database. April 15, 2015. Accessed March 18, 2018. https://offshoreleaks.icij.org/nodes/13004676
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[3]The International Consortium of Investigative Journalists. “Offshore Activities by Leif Hoegh.” Offshore Leaks Database. April 15, 2015. Accessed March 18, 2018. https://offshoreleaks.icij.org/nodes/13004676
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[4]Fowler, Naomi. “Inequality and the Broken Economy Demonstrated in One Graph.” TaxJustice.net. August 8, 2017. Accessed March 17, 2018. https://www.taxjustice.net/2017/08/08/inequality-broken-economy-demonstrated-one-graphc.
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[5] Office of Public Affairs. “Norwegian Company Agrees to Plead Guilty to Price Fixing on Ocean Shipping Services for Cars and Trucks.” www.justice.gov. September 27, 2017. Accessed March 17, 2018. https://www.justice.gov/opa/pr/norwegian-company-agrees-plead-guilty-price-fixing-ocean-shipping-services-cars-and-trucks.

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