Spiderweb Capitalism: How Global Elites Exploit Frontier Markets

by Kimberly Kay Hoang

Overview

A behind-the-scenes look at how the rich and powerful use offshore shell corporations to conceal their wealth and make themselves richer

In 2015, the anonymous leak of the Panama Papers brought to light millions of financial and legal documents exposing how the superrich hide their money using complex webs of offshore vehicles. Spiderweb Capitalism takes you inside this shadow economy, uncovering the mechanics behind the invisible, mundane networks of lawyers, accountants, company secretaries, and fixers who facilitate the illicit movement of wealth across borders and around the globe.

Kimberly Kay Hoang traveled more than 350,000 miles and conducted hundreds of in-depth interviews with private wealth managers, fund managers, entrepreneurs, C-suite executives, bankers, auditors, and other financial professionals. She traces the flow of capital from offshore funds in places like the Cayman Islands, Samoa, and Panama to special-purpose vehicles and holding companies in Singapore and Hong Kong, and how it finds its way into risky markets onshore in Vietnam and Myanmar. Hoang reveals the strategies behind spiderweb capitalism and examines the moral dilemmas of making money in legal, financial, and political gray zones.

Dazzlingly written, Spiderweb Capitalism sheds critical light on how global elites capitalize on risky frontier markets, and deepens our understanding of the paradoxical ways in which global economic growth is sustained through states where the line separating the legal from the corrupt is not always clear.

Product Details

ISBN-13:	9780691229119
Publisher:	Princeton University Press
Publication date:	09/06/2022
Pages:	288
Product dimensions:	6.12(w) x 9.25(h) x (d)

About the Author

Kimberly Kay Hoang is professor of sociology at the University of Chicago. She is the author of Dealing in Desire: Asian Ascendancy, Western Decline, and the Hidden Currencies of Global Sex Work.

Table of Contents

Acknowledgments vii

Prologue xi

Introduction: Spiderweb Capitalism 1

1 Social Spiders' Tangled Webs 22

2 Spinning New Investment Deals 54

3 Varieties of Corruption and Bribery 90

4 Tax Strategies of Global Elites 125

5 Impunity in Stealth Webs 148

6 Moral Dilemmas and Regimes of Justification 169

7 The Exit: Feast and Famine 187

Conclusion: Unraveling Chaotic and Tangled Webs 211

Methodological Appendix: The Gendered Paradox of Studying Elites 223

Notes 241

References 251

Index 261

What People are Saying About This

From the Publisher

“Kimberly Kay Hoang has done groundbreaking fieldwork shedding light on the complex web of offshore subsidiaries through which capital is channeled and protected in emerging markets. This book, which summarizes this work in a clear and engaging manner, is essential reading to understand global twenty-first-century capitalism.”—Gabriel Zucman, author of The Hidden Wealth of Nations

“In this groundbreaking and gripping book, Hoang invites us to walk into the spider’s parlor that is the universe of global high finance. Her piercing prose lays bare the intricate webs of dealings the superrich are free to weave, with secretions that dissolve the legal, moral, institutional, and sovereign boundaries trapping the rest of the world. A brave and powerful treatise on the making of twenty-first-century capital.”—Ching Kwan Lee, author of The Specter of Global China

Editorial Reviews

"A rich and fascinating account."

Administrative Science Quarterly

2022-07-13
A revealing look at how a secretive, often criminal element enables the rich to “make and protect not only their money, but also their reputations.”

Hoang, a professor of sociology at the University of Chicago, takes a deep dive into the everyday economics of “frontier markets,” places where investors make fortunes by greasing the palms of willing government officials and bankers. One such place is Vietnam, where, one wheeler-dealer told her, business students have to abandon their models as mere “bullshit” precisely because “there are too many unpredictable variables.” Instead, that source noted, an investor must be adept at “playing in the grey”—i.e., operating in the vast area that lies between legal and illegal economic activity and all too often strays into the criminal. The gray zone harbors a massive network of enablers and go-betweens who perform such essential tasks as laundering money and helping investors avoid paying taxes. The result is the titular “spiderweb capitalism,” in which “most capital accumulation takes off through a set of transactions that are often considered corrupt and dirty.” Of course, spiderwebs are designed to trap prey, and the prey in question are ordinary taxpayers and law-abiding citizens. Close to the center of the web are the ultrawealthy, surrounded by concentric rings of “fixers” who attend to their needs for a surprisingly small portion of the proceeds, selling themselves cheap. Often, these are financial insiders who do such useful things as disguising the location of their beneficiaries, since, as Hoang notes, “offshore funds and banks are less likely to do business with anyone who has a US mailing address or passport” because of comparatively stringent U.S. tax laws. In this well-written study, Hoang shows how inequality is a direct consequence of this spiderweb capitalism, which constitutes a zero-sum game in which drug cartels, organized crime, and the superrich are indistinguishable.

A work of true crime as much as scholarship, highly readable and maddening.

Kirkus Reviews

"Winner of the Alice Amsden Book Award, Society for the Advancement of Socio-Economics"

"Winner of the PROSE Award for Excellence in Social Sciences, Association of American Publishers"

Winner of the PROSE Award in Business, Finance, and Management, Association of American Publishers

"Winner of the Best Scholarly Book Award, Global and Transnational Section of the American Sociological Association"

"Winner of the Asia/Transnational Book Award, Asia and Asian America Section of the American Sociological Association"

From the Publisher

Kathleen Li warmly, effectively, and efficiently narrates Hoang's well-researched glimpse behind the proverbial curtain of the shadow economy that offers global elites opportunities to invest in risky frontier markets. While the content is revealing, at times shocking, Li's narration remains deliberate, measured, and unadorned. Those who have wondered about the use and purpose of offshore shell corporations to conceal and grow tax-free or tax-deferred wealth will enjoy this international excursion with the rich and superrich in emerging markets such as Vietnam, Singapore, and Myanmar. This is eye-opening material presented in a consistent manner. W.A.G. © AudioFile 2023, Portland, Maine

APRIL 2023 - AudioFile

Kathleen Li warmly, effectively, and efficiently narrates Hoang's well-researched glimpse behind the proverbial curtain of the shadow economy that offers global elites opportunities to invest in risky frontier markets. While the content is revealing, at times shocking, Li's narration remains deliberate, measured, and unadorned. Those who have wondered about the use and purpose of offshore shell corporations to conceal and grow tax-free or tax-deferred wealth will enjoy this international excursion with the rich and superrich in emerging markets such as Vietnam, Singapore, and Myanmar. This is eye-opening material presented in a consistent manner. W.A.G. © AudioFile 2023, Portland, Maine

APRIL 2023 - AudioFile