Pistorius granted bail, but when are the rich a flight risk?

It's easier for a millionaire to disappear than anyone else, but it still isn't a walk in the park.

Paralympian Oscar Pistorius was yesterday granted bail until his trial for the murder of his girlfriend, Reeva Steenkamp, but some fear he's a flight risk.

If Pistorius decided to jump bail, what would he have to do next, Spear's wondered? The wealthy have a history of trying to flee justice, and so we sent Oliver Thring to investigate how to disappear:

Flight has a long and inglorious history, of course, for men in trouble. Lord Lucan vanished in 1974, his blood-stained car found abandoned at an English ferry port shortly after his children’s nanny had been bludgeoned to death. Asil Nadir spent seventeen years in Northern Cyprus evading prosecution in the British courts for the theft of at least £34 million from Polly Peck.

And just last June the Brazilian-born industrialist Guma Aguiar, who had been embroiled in a billion-dollar business dispute, disappeared from his yacht. His wife claims he may be hiding in the Netherlands, but she and his mother are now scrapping over his $100 million fortune nonetheless.

Reading Thring's piece, it doesn't seem very likely Pistorius would succeed in going underground — he wouldn't be able to use any emails, or use a credit card, and he'd have to throw away all of his electronic devices, for a start.

Oliver Crofton is the director of technology security firm Vigilante Bespoke. ‘It’s nigh-on impossible to have an existence where you aren’t tracked or traced by technology,’ he says. John McAfee’s precise location in Guatemala, for example, was determined by the GPS co-ordinates embedded in a photo taken of him then posted online.

‘If the person really wanted to hide,’ says Crofton, ‘they’d need to change their name and chuck every device they had in the river. They couldn’t even open any emails, and they certainly couldn’t use a credit card — just a suitcase full of dollars.’ Crofton believes that people who flee their country without trying to stay hidden are ‘relying on people losing interest in them because tracing them, and their money, might get a bit complicated. I don’t think that’s a particularly failsafe plan.’

And it would require forward planning: he might want to try and gain citizenship for a country that won't seek to extradite him. Unless he can make a suitcase full of dollars last a lifetime, there would be the problem of trying to set up a complex enough financial structure to hide his money away.

‘I would always ask a prospective client why he wanted to hide his assets,’ says Bharat Pindoria of Pindoria Solicitors, who specialises in asset protection. (Pindoria emphasises that his firm ‘does not do asset protection to help criminals’.) ‘If the client said he’d ballsed up and might be in trouble, we wouldn’t be able to advise him, but if he lied and said it was to move abroad or because he had better opportunities elsewhere, that would be a different matter.’ For an unscrupulous person, then, another lie here is no trouble.

The best way to store stolen money or property is to transfer ownership offshore, adding as many degrees of remove as possible. ‘There would be no bank account in your name,’ says Pindoria. ‘You’re in Panama and you have power of attorney to withdraw money from a company in Mauritius, which might have a bank account in the Dutch Antilles. The Mauritius company is owned by a Belize company, which is owned by a Dutch Antilles trust.’

All of this, of course, would require expert legal advice — at a time when Pistorius might just struggle to find a lawyer.

Even if he did manage to disappear, just as the world's media is focussed on him, the psychological trauma of a lifetime spent hiding might just be too much to bear, and the stress could exacerbate any borderline personality disorder, or underlying psychological problems, he might have.

As Oliver Thring learned, many have tried, but not many have succeeded in disappearing.

An earlier version of this piece was posted on Spear's.

The hands of South African Olympic sprinter Oscar Pistorius are pictured as he appeared at the Magistrate Court in Pretoria on February 22, 2013. Photograph: Getty Images

Sophie McBain is a freelance writer based in Cairo. She was previously an assistant editor at the New Statesman.

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.