Two U.S. lawsuits charge that former Haitian President Jean-Bertrand Aristide and his associates accepted hundreds of thousands of dollars in kickbacks from politically connected U.S. telecom companies.
Lawsuits filed this Fall challenge the former priest‘s image of political purity and raise claims that both he and U.S. corporate executives scammed illegal profits off the hemisphere‘s poorest population.
In one suit, a fired executive charged his former employer, the U.S. telecom IDT (Newark, NJ), with corruption, defamation, and intimidation under the New Jersey anti-racketeering law. In the second, the government of Haiti contends that IDT, Fusion (New York, NY) and several other North American telecoms violated the federal RICO anti-racketeering statute. Both suits allege that Aristide, now in exile in South Africa, and his associates, took kickbacks.
Add former Haitian president Jean-Bertrand Aristide to the long list of corrupt and repressive officials who have used Western banks and companies and offshore tax havens to plunder their countries and launder the stolen money.
Aristide and his associates looted government coffers, wrote checks to front companies for nonexistent purchases, padded invoices to get kickbacks from vendors, secretly owned companies that cheated Haiti of taxes, and laundered the money they stole through shell companies and secret bank accounts set up in the United States and the offshore tax havens of Turks and Caicos and the British Virgin Islands.
Nearly $20 million has been documented as stolen between 2001, when Aristide took office as president for the second time, and 2004, when he fled or was forced out of the country according to varying accounts.
In the space of four or five years, Halliburton, the international oil services and construction conglomerate that is under attack for overcharging and underperforming in Iraq, has gone from reporting 70 or 80 offshore subsidiaries in its annual SEC filing to just two, both in the Cayman Islands. Offshore networks had become a central part of Halliburton’s management and financial strategy. When current United States Vice President Dick Cheney was CEO of Halliburton from 1995 to 2000, the company’s offshore subsidiaries increased from nine to 44. By the year 2001, that had nearly doubled. Now most of them have gone missing!
In mid-May a Moscow court will issue a verdict in the trial of Mikhail Khodorkovsky, the figure behind Yukos Oil, who was once known as Russia’s richest man. Khodorkovsky, who a few years ago was worth more than $15 billion, is on trial for fraud and tax evasion, much of it made possible through the use of offshore shell companies.
Khodorkovsky has been in prison since 2003, when he was charged with embezzlement and for rigging a privatization auction of the petrochemical company, Apatit. Some critics argue that Khodorkovsky is being held up as a symbol of Russia’s ruling class of exorbitantly wealthy businessmen, and that his trial is politically motivated.
But Western corporations and, by extension, the Western media may in fact be equally motivated to obscure the facts and make Khodorkovsky into a capitalist martyr.
In December of 2004, there was a horrific fire in a Buenos Aires disco called the Cromagnon Republic. Three rock fans shot off flares that set fire to the ceiling and engulfed the overcrowded discotheque in flames and smoke. In the rush to get out, 200 people were killed and 700 injured, most from trampling and smoke inhalation. The main entrance had been wired shut, and some of the emergency exits were locked, blocking escape.
In the days that followed, thousands of the victims’ parents and friends marched in the streets and demanded justice. A judge started proceedings for manslaughter and froze $20 million belonging to the owner, Omar Chaban. However, investigators soon discovered that Chaban appeared in no official disco documents; he was just the administrator. The legal owners of the property and the disco company were offshore shell corporations registered in the tax haven of Uruguay, the neighboring country. The listed owner of the enterprise was a Uruguayan straw man in his 70s who had no money.
The debate about cutting taxes for corporations and the wealthy is a false one. The issue is not whether transnational corporations and the very rich benefit from tax cuts, but that many of them walk away from all taxes. A General Accounting Office report found that between 1996 and 2000, 61 percent of all U.S. companies paid zero federal taxes. They accomplish this primarily through profit laundering, a phrase that ought to be on the lips of every social critic.
Maurice Hank Greenberg, one of the world‘s richest men, and head of AIG, one of the world‘s largest financial companies, was forced to resign this week as prosecutors closed in on him and the company.
Given his economic and political power, the fall of Maurice Hank Greenberg, the 59th richest man in America and CEO of the American International Group (AIG), the world’s second-largest financial conglomerate (after Citigroup), is stunning.
How insurance companies are aiding tax evasion by over-charging in America and shipping the money to offshore firms.
Terry Mills was working in Wilmington, DE, for J. Montgomery, one of the largest insurance agencies in the region, when in 1993 he was called in to get to the bottom of a messy insurance problem. Little did he know that he would uncover a story – as yet unreported – about tax evasion through offshore firms, but with a twist. The scheme Mills came across seemed to be taking place with the aid of AIG, a major U.S. insurance giant.
In October, New York Attorney General Eliot Spitzer filed suit against the world‘s largest insurance broker, Marsh, accusing it of rigging bids and receiving kickbacks in order to defraud clients such as other corporations, city governments, school districts and individuals of billions of dollars through inflated premiums.
“Greedy trial lawyers were the usual excuse for premium increases. Now we know that greedy corporations also have a starring role, Spitzer said, accusing several insurance companies as co-conspirators in making phony or inflated bids and paying kickbacks to the brokerage to get business.
Nov 2004 – Insurance giant AIG, run by powerful international financial player Maurice Hank Greenberg, has used offshore structures in Barbados and Bermuda to circumvent or violate U.S. state laws regarding reinsurance in a way that based on evidence about one crooked client, allows them to evade taxes.
As a senator, John Kerry was a tenacious investigator and exposed BCCI, an international criminal bank, and its murderous clients. The experience should serve him well in dealing with the international threats we face today.
When Phil Gramm came out of the Tavern on the Green one recent August morning, his disposition turned edgy. The former Texas Senator the long-time banking committee chair is now a vice chairman of the Swiss financial corporation UBS. He’d just passed some pleasant hours hobnobbing with comrades in the money trade, all lured to New York by the chance to make profitable connections during the Republican Convention. But Gramm wasn’t keen on talking to waiting journalists, certainly not to the CorpWatch team.
Robert Rubin seemed quite at ease sitting next to Teresa Heinz Kerry at the Fleet Center in Boston, home to the Democratic Convention in July. The Clinton Treasury Secretary, former senior partner at the investment company Goldman Sachs, is now chairman of the executive committee of Citigroup. There was no chance of journalists bearding him in the candidate’s box – at least none who would ask uncomfortable questions.
When none other than President George W. Bush announces that the real rich dodge taxes, is that an inadvertent flash of honesty about the shady secrets of offshore shell companies and tax shelters? The administration is tying itself up in knots to dodge the significance of his statement.
The real rich dodge taxes and small business owners pay the burden. Does that sound like a radical-liberal denunciation of privilege by candidate John Kerry?
Guess again. It‘s a pronouncement by President Bush.
Three U.S professors, analyzing import and export transactions between Russia and the U.S., have found that phony prices led to as much as $8.92 billion in capital flight from Russia to the U.S. in 1995-1999.
Even with calculations providing the most conservative estimate, at least $1.86 billion illegally left Russia during that period. Assuming a 25 percent average tax rate, the lower figure would mean nearly half a billion dollars in illegal tax evasion, and the higher one more than $2 billion in taxes lost, just in trade involving the U.S.
A detailed analysis of Saddam Hussein‘s secret money-laundering techniques shows here for the first time how he used the same offshore money launderers as Osama bin Laden. That covert money network, based in the tax havens of Switzerland, Liechtenstein, Panama and Nassau, helped bankroll the war machines of both Iraq and al-Qaida.
More than 1,000 pages of confidential corporate, bank and legal documents show how the network functioned. The papers come from court cases filed in several European countries, from corporate records, from investigations by Italian police, from a report of the Kroll international investigative agency, and from private sources. The documents are the basis of further investigations coordinated in Europe by the prosecutor of Milan.
As states and municipalities reel from service cutbacks caused by lower tax earnings, big corporations pay virtually no taxes on huge profits. They do it though elaborate “shell” games.
Were you stunned by the revelation, days before your taxes are due, that nearly two-thirds of companies operating in America reported owing no taxes from 1996 through 2000? That over 90 percent of large corporations — with at least $250 million in assets or $50 million in gross receipts — reported owing taxes of only under 5 percent?
Alexei Golubovich, longtime partner of Mikhail Khodorkovsky, is the target of legal action in Switzerland by his former associate Yelena Collongues-Popova and is being investigated by a Geneva judge on her charge of forgery.
Golubovich has not been indicted by Russian prosecutors, though they are interested in talking to the former Yukos finance director who has reportedly fled to London. However, he could be indicted by the Swiss.
Collongues-Popova, who for half a dozen years ran some 30 offshore companies for Golubovich, got a court order in Switzerland that froze $4.2 million she says represents loans he owes a company she owns. Swiss investigative magistrate, Claude Wenger, is looking into her criminal complaint that Golubovich forged her signature to avoid paying the loans.
Two ex-bankers on Wednesday, Nov. 26, filed a criminal complaint with the Swiss attorney general against Mikhail Khodorkovsky, Platon Lebedev, and Alexei Golubovich, accusing them of money laundering and support for a criminal organization.
The Russia Journal has obtained a copy of the report. The Journal asked Yukos press office to comment on the charge but no comments were received.
The former bankers have requested the federal officials in Switzerland to open an investigation into the charges and to search the records of the Swiss offices of Menatep SA, Menatep Finances SA and Valmet (in liquidation) and of Bank Leu related to investigate claims of fraud against the Russian company Avisma and money laundering by Menatep in Switzerland.
The charges against key shareholders in Yukos are enormous and very varied in scope. The Yukos tale is a long, complex and controversial one, requiring lengthy and painstaking substantiation. Public interest in the Yukos controversy is very high.
However charges and counter charges, mostly of a political nature, are being flung so wildly about in the media that The Russia Journal believes it essential at this stage to focus on the evidence in the accusations against Mikhail Khodorkovsky and his partners. His innocence of the charges that have been filed against him must be presumed until a competent trial is held.
Those who support his innocence of the charges are invited to review and comment on this, the first in a Russia Journal series on the case against him and others in Menatep Group.
A business group headed by Russia’s richest man, Mikhail Khodorkovsky, who was arrested in October for allegedly defrauding the state of $1 billion, stashed money in offshore centers, including Switzerland, Luxembourg, the British Virgin Islands, the Seychelles, Panama and the Bahamas, according to Yelena Collongues-Popova, who worked for one of Khodorkovsky‘s associates. Lucy Komisar, a New York investigative reporter, interviewed Collongues- Popova. This is her story.
PARIS — A French woman of Russian origin, with thousands of papers related to the Menatep business group and its offshore banking and dealings over the past decade, has been providing information to Russian prosecutors who are building a case against oil tycoon Mikhail Khodorkovsky, the richest man in Russia, who was arrested in October for tax evasion.
She says she set up numerous offshore companies and bank accounts in the Caribbean and Europe to help the Menatep group cheat Russian company shareholders and tax authorities. Her registered agent in the Caribbean was Icaza Gonzalez Ruiz and Aleman in the British Virgin Islands and Bahamas, against which she now has a legal action. She says she used Bank Leu (Bahamas), a subsidiary of Bank Leu, Geneva, to deposit funds in fiduciary accounts to have the benefit of withholding tax exemptions.
It hasn‘t been reported in the U.S. press – until here, now – but Milan, Italy’s chief prosecutor has obtained thousands of documents that show how for more than 20 years Saddam Hussein used the Western bank and corporate secrecy system to launder bribes skimmed from oil revenues to pay his security forces and buy Western arms during international embargoes.
The key countries – whose governments openly allow these money-laundering systems to exist – were Switzerland, Liechtenstein, Panama and Nassau. Corporate registrations and bank accounts there use straw men and secrecy rules to cover up true owners of companies and accounts.
In November 1932, deputy Fabien Albertin took the floor of the National Assembly in Paris to denounce tax evasion by eminent French personalities-politicians, judges, industrialists, church dignitaries, and directors of newspapers-who were hiding their money in Switzerland.
The minister of finance knows very well that for ten years, the concern of all his predecessors has been to track down this fraud . . . he declared. However, till now, the information one has gotten has been extremely vague. When documents arrive, they are formless notebooks in which holders of accounts are represented only as numbers. Employees of the banks don’t know the names of account holders. These names are known only to the director of the bank, who the clients forbid to correspond with them, so anxious are they to preserve anonymity.
AT A TIME WHEN THE INTEGRITY of global accounting firms is being questioned, the U.S. Securities and Exchange Commission (SEC) and Justice Department are looking into charges that KPMG Zurich, a division of the international audit company, helped Credit Suisse hide hundreds of millions of dollars looted by the late Philippine dictator Ferdinand Marcos.
American officials fear that Belarus is the middleman for Russian weapons sales to Iraq, according to last week’s Newsweek. The magazine noted that Leonid Kozik, a Belarus official who visited Iraq last fall, is on the board of a Russian-Belarussian company that markets weapons from those countries.
Iraq is subject to a U.N. arms embargo. If Iraq is getting Russian weapons through Belarus — either with the approval of Russian officials or via corrupt private firms — it refocuses attention on the destabilizing impact of the criminalization of the Russian state and the uncontrolled expansion of the world’s arms bazaar. Both developments have been largely ignored by Washington, with failure to confront Russian corruption a legacy of the Clinton administration and refusal to deal with weapons sales a result of the longtime political influence of arms-makers.
Trade unions, workers‘ pension funds and state officials are taking the lead in a campaign to prevent companies from reincorporating in Bermuda and other tax havens”and to bring back those who‘ve already gone.
Arguing that offshore registrations allow corporations to evade taxes, reduce shareholder rights and threaten the security of investments, the AFL-CIO, individual unions and pension funds such as California‘s Public Employees Retirement System (CalPERS) are filing shareholder resolutions and going to court against companies that move their paper headquarters offshore, where corrupt corporate executives have an easier time cooking the books.
