Inter Press Service (IPS), May 8, 2009
MIAMI BEACH – Jeffrey Owens, the tax “point person” of the Organisation for Economic Cooperation and Development (OECD), was stung by activist critics of the OECD standards under which countries will be put on a tax haven blacklist and targeted for sanctions.
The blacklist was announced last month at the London meeting of the G20, which said in a communiqué that it would “take action against non-cooperative jurisdictions, including tax havens…to deploy sanctions to protect our public finances and financial systems.”
Key civil society criticisms are that the OECD standards require bilateral agreements for information on request, not automatic multilateral tax information exchange; that they call for only 12 such agreements to be signed by each tax haven; and that getting off the blacklist entails only promises, which have not been kept by tax havens in the past.
Inter Press Service (IPS), April 30, 2009
MIAMI BEACH — The U.S. Internal Revenue Service (IRS) is hitting pay dirt with a novel legal tactic designed to catch tax evaders. And it’s going to use it to force international banks to give up the names of tax cheats.
It’s called the “John Doe” summons. Using “John Doe” means the IRS doesn’t know the names of the suspected tax evaders.
So it sends a summons to a bank or credit card company that says, “Give us the names and account information of all your U.S. clients with secret offshore accounts.”
Daniel Reeves, an IRS agent in charge of the tax agency’s offshore compliance initiative, afforded an unusual look into the broad swath of projects that seek tax-cheating “John Doe’s” every place from accounts of the giant Swiss bank UBS to the records of Pay Pal.
Inter Press Service (IPS), March 29, 2009 –
This could be the moment when a fatal blow is delivered to the world’s tax havens. Or it could be another largely cosmetic change that allows offshore financial centres such as Switzerland, the Cayman Islands and Liechtenstein to deflect attacks on the system by sacrificing the few tax miscreants that governments catch in their nets.
Decisions at the G20 government leaders meeting in London Apr. 2 will set the direction.
Offshore centres, worried what may happen in London, are falling all over themselves promising to cooperate with the major powers on the trail of tax cheats. But the holes in the tax havens’ promises are as big as those in Switzerland’s famous cheese.
Many believe that automatic exchange of information is the only really effective way to end pandemic tax evasion. Some very good proposals are made in a leaked French paper which is linked to the full story.
How food-service providers like Sodexo bilk millions from taxpayers and customers
In These Times, March 2009 –
The Investigative Fund at the Nation Institute provided generous support for this article.
At the end of the 2006 school year, children’s nutrition advocate Dorothy Brayley had a disturbing conversation with a local dairy representative. He had come to her office to discuss participation in the summer trade show of food providers she runs as director of Kids First Rhode Island.
At the time, the state’s schools were buying 100,000 containers of milk each week. The salesman for Garelick Farms, New England’s largest dairy, told Brayley that Sodexo—a food and facility management corporation that managed most of the state’s school lunch programs—was paying Garelick more than competitors in order to get a bigger rebate.
That’s just a taste of the hundreds of millions of dollars of “rebates”—or kickbacks from suppliers—that Sodexo, a $20 billion-a-year global leader in the food and facility management industry, has taken while operating cafeterias and other facilities for schools, hospitals, universities, government agencies, the military and private companies across the country, according to evidence provided by whistleblowers and internal company documents.
Feb 11, 2009 –
The U.S. government might finally get a powerful tool against offshore tax evasion by mega-wealthy individuals and corporations. The worst most miscreants face now is negotiated pay-ups years after they are caught.
A bill introduced last week by Senators Patrick Leahy (D-Vermont) and Chuck Grassley (R-Iowa) would make tax evasion using international transfers a criminal money-laundering offense.
The law aims at cases in which money passes through tax havens. It targets not just the evaded taxes, but any money that is part of the scam.
Inter Press Service (IPS), Jan 19, 2009 –
U.S. senators at Timothy Geithner’s confirmation hearing for Treasury Secretary Wednesday may want to ask him about a failure to act that is costing the U.S. a lot more than the amount he evaded on taxes.
The Federal Reserve Bank of New York, which he has led since 2003, conducts the operations on Wall Street of the Federal Reserve in Washington, the country’s central bank.
The New York Fed under Geithner’s presidency has failed to stop massive naked short selling of U.S. Treasury bonds that threatens the stability of the market and sale of the bonds.
Ironically, the scam, enabled by a lack of regulation at the behest of Wall Street brokerage houses, makes it more expensive for the U.S. to bail out those same financial institutions.
Inter Press Service (IPS), Dec 22, 2008
The financial crisis has the U.S. swirling with charges about the immoral greed of some corporate executives who recklessly bet their companies’ futures to line their own pockets. The popular fix for this international calamity stops at the nation’s borders: decouple top-line salaries and bonuses from stock prices and institute more transparency and regulation.
However, last month, the Vatican, in a groundbreaking statement, linked the financial crisis to a much deeper problem largely ignored in discussions of the crisis here. It underlined the need to consider carefully “the hidden but crucial role of the offshore financial system in light of the emergence of the global financial crisis”.
The Vatican now gets it, but U.S. corporations don’t. The U.S.-based multinationals that signed on to yet another ethics pledge included General Electric, The Hartford, Pepsi, Wal-Mart, Accenture, Dell, and United Airlines. Their ethics, according to their pledge, does not include rejecting the use of the offshore system to evade regulation as well as taxes.
Inter Press Service (IPS), July 18, 2008
It sounded like the plot of an action thriller. A U.S. Senate subcommittee held hearings Thursday on how UBS/Switzerland, the world’s largest private bank, and LGT (Liechtenstein Global Trust), owned by the royal family of that micro-tax-haven state, organised complex tax evasion schemes for U.S. clients, and used spy-type tactics to avoid being detected.
LGT bankers allegedly used code names and public phones instead of making calls that could be traced. UBS agents carried encrypted laptops and business cards that didn’t mention they were in the “wealth management” division. According to testimony and records, both banks took care to disguise their activities because moving and hiding the money of tax evaders and other criminals is very lucrative, bringing hundreds of millions of dollars in profits.
Condé Nast Portfolio, July 16, 2008
Code names, secretive European royalty, encrypted computers. A spy novel? Nope. Nope. It’s how two European banks helped rich Americans duck the taxman, a Senate probe found.
The Newport regatta has always drawn America’s moneyed class, and the Art Basel show in Miami is hot on the nouveau riche circuit—making both glitzy venues ideal for financial giants to prospect for new clients.
But UBS, one of the world’s largest banks, had another goal in mind when it shelled out money for the UBS Regatta Cup in Newport or the Art Basel Art Fair in Miami, or performances in major U.S. cities by the UBS Vervier Orchestra.
March 26, 2008
Lawrence Summers spoke at the Council on Foreign Relations last week and was a bit uncomfortable about my question regarding Clinton administration anti-money-laundering policy.
I pointed out that Treasury Secretary Robert Rubin (who happens to be one of the Council’s co-chairs) had not acted against money-laundering because he didn’t want to stop the free flow of cash into the US – in effect, into Wall Street. But when Summers succeeded Rubin in the job, he had taken action.
The facts are important because Rubin is poised to move into a Democratic administration — especially if Clinton wins — as a high-level Wall Street influential.
Speech to conference on “Taming the Giant Corporation,” organized by Ralph Nader and The Center for Study of Responsive Law, Washington DC, June 8, 2007
The tax haven racket is the biggest scam in the world. It’s run by the international banks with the cooperation of the world’s financial powers for the benefit of corporations and the mega-rich. This talk is about strategy, but first you have to know the target, and most Americans, including progressive activist Americans, don’t know what I’m going to tell you. And that’s part of the problem.
Between 1996 and 2000, of U.S. and multi-national corporations operating in the United States, with assets of at least $250 million or sales of at least $50 million, nearly two-thirds paid no U.S. income tax. Over 90 percent reported owing taxes of under 5 percent. One year, six in ten paid less than a million.
This is the dirty little secret of globalization: the end of controls on capital flows and the expansion of the tax haven system from 25 years ago to where it has more than doubled to about 70 tax havens.
The system is a major reason for the growing inequality in the U.S. and between the West and the developing worlds.
The system has given the big banks and corporations and the super-rich mountains of hidden cash they use to control our political systems.
Is Citibank Spain a tax cheat?
New Internationalist, Aug 2006
With help from a whistleblower, I followed the money trail through the offshore operations of Citigroup, the world’s biggest bank, and discovered that Spanish bankers handling their client’s offshore accounts were getting commissions via an internal accounting system instead of on the regular books.
It is the same internal system that Citigroup used in the 1970s to compensate currency traders in Paris, London, Frankfurt and elsewhere who “booked” trades in the tax haven Nassau, the Bahamas. They were exposed by an insider, were investigated by the SEC and Congress, and had to pay millions in back taxes. Is this happening again?
Hound-Dogs, March 2004
(Same title but not same article as in Dissent 2003)
This is a story about a massive money-laundering operation run by the world’s biggest banks. It hides behind the “eyes-glazing over” technicalities of the international financial system. But it could be one of the biggest illicit money-moving operations anyone has ever seen. And it’s allowed to exist by the financial regulators who answer to Western governments.
In these days of global markets, individuals and companies may be buying stocks, bonds or derivatives from a seller who is Clearstreamhalfway across the world. Clearstream, based in Luxembourg, is one of two international clearinghouses that keep track of the “paperwork” for the transactions.
In These Times, Oct 22, 2001
Offshore banking has helped Citibank clients hide millions.
Citibank Citibankis leading a fight by American banks to gut the anti-moneylaundering laws currently being considered in Congress—laws that could significantly change the way banks do business for their wealthiest clients.
Citibank is seeking an exception to a proposed ban on doing business with shell banks, which have no physical presence and are situated “virtually” in offshore zones to avoid taxes and regulations. The banks are used to hide and launder perhaps billions of dollars a year.
Earth Times News Service, May 18, 2001
In the first salvo of an international effort to disable the system of shell companies used widely by criminals, corrupt officials, and tax cheats, the OECD Council of Ministers on May 10th adopted a report on what countries should do to pierce shell company secrecy. Called “Misuse of Corporate Vehicles for Illicit Purposes,” it is part of a campaign by the world’s financial powers against the illicit offshore bank and corporate secrecy system. It was written by OECD Steering Group on Corporate Governance made up of experts from member countries’ finance and securities ministries.
Earth Times News Service, May 14, 2001
PARIS — OECD Secretary General Donald Johnston says he is pleased about the OECD commitment to try to stop companies from its own member states from bribing public officials in other countries. But, he added, that effort needs to be extended to cover bribery of corporate officials as well.
The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions entered into force in February 1999. It commits 34 signatory countries, including all the world’s biggest economies, to adopt common rules to punish companies and individuals who engage in bribery.
Pacific News Service, Dec 20, 2000
Criminals — drug dealers or dictators — with embarrassing amounts of cash on hand, or corporations trying to avoid taxation, often use false fronts in poor countries to “launder” the funds. Major U.S. banks are heavily involved in this unsavory business, so banker Robert Rubin Robert Rubinmay face some interesting questions from the other members of a UN panel intended to help debtor nations.
There is more than a little irony in the appointment of Robert Rubin, a chairman of Citibank, to a United Nations panel which is supposed to propose methods for helping poor countries.
eCountries.com, Dec 15, 2000
The net around money launderers may be getting a bit tighter, with a new treaty signed in Palermo under the auspices of the UN. It’s a step in the right direction, but a lot remains to be done to effectively combat what has become a global plague.
For more than a decade, the international community has been wrestling with the issue of what to do about the worldwide bank secrecy system that allows drug traffickers, fraudulent business operators and tax cheats to flourish.
Earth Times News Service, May 7, 2000
Two far-reaching and potentially controversial anti-money laundering measures would require professionals such as lawyers and accountants to file the same sort of suspicious transaction reports that banks do and would extend “know your customer” rules to include the owners of companies. The Council of Europe has already proposed the first. US authorities have not acted on either.
Earth Times News Service, Oct 31, 1999
The dangers of international money laundering are massively magnified by electronic transfers and the new electronic cash. “The really big challenge that’s coming, that’s arrived, is electronic cash,” said Thomas Roche, Deputy General Counsel of the Federal Reserve Bank of New York. “That’s going to present really daunting challenges. There’s always been an audit trail in credit cards and checks.
