In Offshore, William Brittain-Catlin uses a detailed study of the Cayman Islands to effectively show the cost of offshore tax havens. If you've ever wanted to know the ins-and-outs of corporate tax shelters, this book provides a detailed explanation. Brittain-Catlin's analyses of the multinational uses of these tax havens vividly illustrate how the road to corporate ruin, economic collapse, and huge profits run through places like the Cayman Islands. In fact, there is an entire international system that allows companies to hide both profits and losses.

Of course, tax havens exist in the United States. As Brittain-Catlin points out, many companies incorporate in Delaware to take advantage of the state's corporate tax breaks. This is the first step in funneling profits through tax-free zones in the Caribbean, effectively placing that money outside government regulation. In fact, Brittain-Catlin argues that governments have become the "servant of stateless capital" because they do little to rein in the problem. Instead, according to some estimates, as much as $7 trillion worldwide is stashed in offshore accounts.

Historically, the Cayman Islands' economy depended on the sea and products such as rope. However, when banks and corporations began looking for places to park profits outside the reach of national governments, places like the Cayman Islands became popular. Their governments, eager to attract business, were often willing to pass laws that benefited international capital, such as secrecy laws and laws that abolished corporate and personal income taxes. In some cases, governments even let the corporations write the laws.

According to Brittain-Catlin, these tax havens allow corporations to, in effect, game the system. If, for example, a US company is hiding its profits offshore, not only does this decrease its tax burden, it may also make it eligible for special government loans and grants it could not receive it corporate accounting were transparent. "The modus operandi for the corporation is to pass the cost of its losses onshore onto society and its taxpayers, while the corporation runs off with the profit and parks it offshore." An example of this is Rotterdam-based Mittal Steel, the largest steel company in the world. Government loans and grants helped build the company, yet it uses offshore holding companies in places like the Antilles to reduce its tax liability.

In addition, many individuals have used the Cayman Islands both as a tax shelter and as a way to finance projects. For example, both Osama Bin Laden and Oliver North used the Cayman Islands to funnel money.

The Cayman Islands are implicated is some of the largest financial scandals in recent history. The Italian company Parmalat, a giant in the food industry that was forced into bankruptcy after defaulting on a bond, initially hid its debts through a complex systems of offshore holdings, and in fact, fabricated a $5 billion account at a Cayman Island bank to make it look as if it were profitable.

Enron hid money in over 600 offshore partnerships in the Cayman Islands created by raising funds from its overvalued stock. Since the extent of Enron's monetary shell game was unknown before its collapse, it gave the appearance of being a profitable, well-run company, rather than the debt-ridden corporation it had become. When it went belly up, it was the rank-and-file employees, who knew nothing about these shenanigans, who paid the price of Enron's collapse with the loss of jobs and pensions.

Of course, the larger question posed by the book is what can be done about this offshore system. Many legitimate businesses hide their money outside their home countries, and in this regard, the United States is no exception. Estimates are that as much as $630 billion in untaxed earnings is parked offshore by US companies, including many of the Fortune 500, such as IBM, Citigroup, and Wal-Mart.

Unfortunately, Brittain-Catlin provides few solutions. He argues that legislative efforts are, and will continue to be, largely ineffective because of the influence these corporations have over politicians. Additionally, he argues that the ability to do what one wants with one's money is perceived as a right in capitalist countriesÑa perversion of nineteenth-century philosophical beliefs that the individual's moral autonomy was the only thing that stood between society and an uncaring state. Unless citizens, governments, and corporations are willing to rethink and restructure a financial system that decouples earning money and accountability, offshore accounting is, unfortunately, here to stay.