I never thought I‘d hear those words, certainly not at the Council on Foreign Relations. Gov. Bill Richardson of New Mexico spoke at a Council lunch today. The subject was immigration. Before the talk, several people, including this reporter, stopped at the speaker’s table to chat. I was standing there when Maurice Tempelsman approached Richardson. The Governor greeted him and said, “Where‘s Mobutu!”
Well, that was a conversation stopper! Tempelsman, a very very rich man, and a generous donor, frequently gets a place of honor at the Council head table, though not today. Nobody raises the question of how he got his money.
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.
It‘s not just about buying or selling sex. It’s also about money laundering. New York Governor Eliot Spitzer’s downfall began with an investigation by the Internal Revenue Service. That‘s because when people move money for illicit purposes, they try to disguise the flows. And US banks are required to report suspicious transfers to the Treasury Department.
The IRS gets involved, because those transfers could be effected to hide income from taxes. So it responded to bank reports of suspicious transfers by Spitzer, who was paying thousands of dollars for call girl services. The money was being sent to QAT consulting, a shell company owned by the Emperor‘s Club V.I.P. prostitution ring.
Then the FBI joined the United States Internal Revenue Service-Criminal Investigative Division, looking into what appeared to be at first possible government corruption but then turned out to be payments to an organization running prostitution. And also laundering money in the United States and Europe.
I chatted for a few minutes with Italian President Giorgio Napolitano after he spoke this morning at a Council on Foreign Relations breakfast. He agreed that there is a problem posed by offshore financial centers and pointed to concern in Europe reflected in a recent joint letter on the subject by the UK, France and Germany.
Napolitano is an extraordinary man who served nearly 40 years in the Italian parliament and was a leader of the Italian Communist Party, the PCI, helping to move it out of the Stalinist camp to social democracy.
Richard Gardner, US ambassador to Italy 1977 to 81, who presided over the meeting, told me that he had tried to persuade Henry Kissinger that Napolitano was a social democrat. Gardner said that Kissinger never could grasp that.
When there’s a financial crisis tied to lack of transparency, follow the culprits offshore. Evidence comes out now that this is true about the subprime debacle.
Reuters reports that a German bank is implementing accounting changes including consolidation of an offshore conduit whose soured investments triggered a government-led rescue. The offshore operation was set up to invest in subprime mortgages.
Pam Martens in Counterpunch points out that, Citigroup, is discovered to have stashed away over $80 billion of Byzantine securities off its balance sheet in secretive Cayman Islands vehicles with an impenetrable curtain around them.
Among those securities count subprimes. Citigroup has $55 billion of subprime exposure and in November said it would write down up to $11 billion in subprime losses. Goldman Sachs said that won’t be all, that the bank may have to write off $15 billion.
Learning of General Pervez Musharraf‘s declaration of emergency rule (martial law) in Pakistan, I can‘t help but recall the gushing introduction of the general made by Citigroup honcho and Democratic financial eminence grise Robert Rubin when the dictator, who came to power in a military coup, spoke at the Sept 25, 2006 meeting of the Council on Foreign Relations.
Rubin urged the audience to “understand a great deal more than those in our country tend to know about Pakistan, the Muslim world, the meaning of democracy in the context of countries very different from our own.”
Oct 23, 2007 – In the continuing saga of the Frigates of Taiwan, involving about $1 billion in bribes and kickbacks paid by the French company Thomson to win a bid on the sale of six war frigates to Taiwan in the early 90s, I asked French Finance Minister Christine Lagarde, at the Council on Foreign Relations yesterday, if she would continue the cover-up on a corruption case that could be the largest (known) in French history.
Madame Lagarde wasn’t sufficiently aware of the case that has been exhaustively reported by French print and broadcast media for more than a decade.
It‘s that time of the year when the UN General Assembly opens and heads of state and foreign ministers meet up at parties and quiet gatherings and even give a few public speeches around town. A popular stop is the Council on Foreign Relations, where anyone representing an establishment view is assured of a warm welcome.
French Foreign Minister Bernard Kouchner, famous as the founder of Médecins Sans Frontieres (actually he was one of 12 doctor and journalist founders), spoke at the Council on Tuesday. In his introduction Felix Rohatyn, the prominent investment banker, US ambassador to France in 1997-2000 and now an advisor to the chairman of Lehman Brothers, said, “There are very few people who act according to their principles. Bernard Kouchner acts on his principles, and that‘s a very rare virtue, especially in a politician.”
I was hopeful that Minister Kouchner, a Socialist who has joined a conservative government, would display these principles in his answer to my question about a corruption scandal that could be the French Watergate. However, the minister displayed the not-so-rare political attribute of solidarity with high-level officials who want to suppress evidence of corruption.
There’s an astonishing article in the Washington Post’s Business Section (Risk. Now They See It. Now You Don’t.Sept 16, 2007)
The Post, which has never, ever, railed against tax havens, is now suggesting that their use to cheat tax authorities and investors threatens the entire global financial system. Of course, it doesn’t put it so starkly, but that’s the gist.
The Post says, Over the past few years, major banks figured out how to use conduits and structured investment vehicles to earn big fees while playing cute little games of tax and regulatory arbitrage and keeping it all pretty much hidden from investors.
Where does The Post think those off-balance-sheet investment vehiclesare?Most of Enron’s were in Grand Cayman. The Post should connect the dots. Tax and regulatory arbitrage plus hidden plus off-balance-sheet investment vehicles = offshore.
Why did regulators tolerate the use of offshore? Because global tax evasion and avoidance of regulation is something corporations want. That’s what offshore secrecy is for. Now, will Congress act, in spite of corporate power, when there is a threat to the entire global financial system?
Where did Rupert Murdoch get $5 billion to buy up the Wall St. Journal? Beyond normal profits, his coffers were stuffed by dodging taxes in the U.S. and elsewhere. Some of that is your money!
The Economist, in 1999, investigated Murdoch’s corporate tax affairs and discovered that a collection of 800 offshore companies help him cut corporate taxes to 6%!
Paul Hewson, known as Bono, the rock star, is complaining that the seven wealthy nations in the G-7 which had promised to double aid to the developing world by 2010, are more than half behind target. The countries are the United States, Britain, Canada, France, Germany, Italy, and Japan.
Bono‘s protest might be taken more seriously if he and his U2 band were not participating in the system that deprives developing countries of far more than western aid – much of which has to be repaid.
Bono is a tax dodger. As a result of a change in Irish law that limits the tax exemption for artists and musicians to a punitive $625,450, Bono’s U2 has moved its music publishing company registration to the Netherlands, where the tax on its multi-million dollar income will be about 5 percent. To dodge taxes on non-royalty income, Bono‘s company has used offshore nominees.
The NY Times reports today that Charles Prince, CEO of Citigroup, is planning to cut the corporation‘s compliance staff. Reporter Eric Dash says it‘s “to keep the bank from getting bogged down” because “the compliance overhang has made it difficult to be competitive” and “unnecessarily slowed the company down.”
Translation: other banks are laundering profits or running scams to help clients cheat tax authorities and investors, and they make good money at it. Why shouldn‘t we?
Dash noted that Citigroup had beefed up its compliance staff after scandals, including its dealings with Enron. He skimps on details: that Citigroup set up offshore shell companies to help Enron cook the books.
Russia, through its energy company Rosneft, has started to recover the multibillion-dollar oil company Yukos that was stolen from it in the mid-90s. It is buying the assets in auctions. Indignant protests are heard from westerners.
Funny there was no indignation from western officials when Mikhail Khodorkovsky and other oligarchs, with the help of crooked President Boris Yeltsin, were appropriating Russian national oil and mineral wealth for kopeks on the ruble.
A Khodorkovsky company ran an auction at which a Khodorkovsky shell company won Yukos, paying $309 million for a controlling 78 percent. Months later, Yukos traded on the Russian stock exchange at a market capitalization of $6 billion.
Swiss travel the world to help mega-rich evade taxes
The NY Times headline yesterday said, “Discreet Swiss Banks Now Offering Sophisticated Investment Vehicles.” Further down, the story noted that Geneva has becomes an “aggressive haven for the global elite.” And, “Now the Swiss can be found throughout the world, selling more sophisticated investment vehicles to attract high-net-worth individuals, mostly multimillionaires.”
So what is the real story about? The headline should have been, “Discreet Swiss travel the world to help the mega-rich evade taxes.”
How else has bank-secrecy Switzerland, with only 7.5 million people, become the third-largest asset manager in the world, after the United States and Britain, with global banking assets under management of $5.5 trillion?
A UK photographer just sent The Scoop this email about The Photographers Gallery in London. He says:
The Deutsche Borse photography prize, formerly the Citibank photography prize, is perhaps the most prestigious and important photography prize and one of the most important art prizes. Those who win become name photographers/artists, and their work becomes literally over night very valuable, exchanging hands for many thousands of dollars.
Lucy Komisar covered the women’s convention in Houston and wrote about it for The Nation, December 10, 1977. (text version is below) WITH THE WOMEN AT HOUSTON: FEMINISM AS NATIONAL POLITICS LUCY KOMISAR The blue and green bunting, the state delegation signs, the three-cornered hats that said Free D.C., the […]