Global tax dodgers exposed — Salon.com

Shared post from Salon.com can be seen here.

Global tax dodgers exposed

UPDATED: Tax havens of oligarchs, politicians and the wealthy unveiled by largest file leak ever

BY 

Updated, 12:15 p.m.: ICIJ pointed out that many of the world’s major banks – including UBS, Clariden and Deutsche Bank – have aggressively worked to provide their customers with secrecy-cloaked companies in the British Virgin Islands and other offshore hideaways:

Documents obtained by ICIJ show how two top Swiss banks, UBS and Clariden, worked with TrustNet to provide their customers with secrecy-shielded companies in the BVI and other offshore centers.

Clariden, owned by Credit Suisse, sought such high levels of confidentiality for some clients, the records show, that a TrustNet official described the bank’s request as “the Holy Grail” of offshore entities — a company so anonymous that police and regulators would be “met with a blank wall” if they tried to discover the owners’ identities.

Clariden declined to answer questions about its relationship with TrustNet.

“Because of Swiss banking secrecy laws, we are not allowed to provide any information about existing or supposed accountholders,” the bank said. “As a general rule, Credit Suisse and its related companies respect all the laws and regulations in the countries in which they are involved.”

A spokesperson for UBS said the bank applies “the highest international standards” to fight money laundering, and that TrustNet “is one of over 800 service providers globally which UBS clients choose to work with to provide for their wealth and succession planning needs. These service providers are also used by clients of other banks.”

Updated, 11: 40 a.m.: And here are some more notable individuals found by theGuardian/ICIJ investigation to be hiding funds in offshore accounts:

  • Jean-Jacques Augier, France’s François Hollande’s 2012 election campaign co-treasurer, launched a Caymans-based distributor in China with a 25 percent partner in a BVI company. Augier says his partner was Xi Shu, a Chinese businessman.
  • Mongolia’s former finance minister. Bayartsogt Sangajav set up “Legend Plus Capital Ltd” with a Swiss bank account, while he served as finance minister of the impoverished state from 2008 to 2012. He says it was “a mistake” not to declare it, and says “I probably should consider resigning from my position”.
  • The president of Azerbaijan and his family. A local construction magnate, Hassan Gozal, controls entities set up in the names of President Ilham Aliyev’s two daughters.
  • A senator’s husband in Canada. Lawyer Tony Merchant deposited more than US$800,000 into an offshore trust.
  • Spain’s wealthiest art collector, Baroness Carmen Thyssen-Bornemisza, a former beauty queen and widow of a Thyssen steel billionaire, who uses offshore entities to buy art.

Updated, 11: 20 a.m.: Nominee directors, military and intelligence links: As was original highlighted by the Guardian/ICIJ last year, a number of so-called nominee directors of companies registered in the British Virgin Islands (BVI) have connections to military or intelligence activities.

Notably Gamma Group — the firm that develops surveillance software that (as noted here) has been used by oppressive regimes against activists including in Bahrain — was found to have offshore funds in the BVI:

Louthean Nelson owns the Gamma Group, a controversial computer surveillance firmemploying ex-military personnel. It sells bugging technology to Middle East and south-east Asian governments.

Nelson owns a BVI offshore arm, Gamma Group International Ltd.

Martin Muench, who has a 15 per cent share in the company’s German subsidiary, said he was the group’s sole press spokesman, and told us: “Louthean Nelson is not associated with any company by the name of Gamma Group International Ltd. If by chance you are referring to any other Gamma company, then the explanation is the same for each and every one of them.”

After he was confronted with evidence obtained by the ICIJ/Guardian investigation, Muench changed his position. He told us: “You are absolutely right, apparently there is a Gamma Group International Ltd.”

The ICIJ also notes a “sham” director who is U.K.-based operative working to hide money for the Islamic Republic of Iran Shipping Line –  a firm the E.U., the U.N. and the U.S. have accused IRISL of aiding Iran’s nuclear-development program. Under the front name “Tamalaris Consolidated Limited,” the company registered in the BVI with the British-based operative named as director.

Updated, 10.50 a.m.: Sham directors: The Guardian, whose investigative journalists collaborated with ICIJ in the tax haven project, highlights a list of “sham directors” uncovered in the leaked files. These individuals “appear on official records as directors of companies while acting only on the instructions of its real owners, who stay invisible and off-the-books.”

Over 22,000 companies use this network of 0nly 28 sham directors — some with over 700 companies to their names with offshore account holdings. See here for a full table of these sham directors.

Original post: A trove of leaked documents 160 times the size of Wikileaks’ cache reveals the vast global web of tax havens in which the world’s wealthiest hide their fortunes. A 15-month investigation carried out by the International Consortium of Investigative Journalists, which involved dozens of reporters sifting through thousands of leaked files from offshore companies and trusts, highlights the dirty dealings between politicians and the mega-rich involved in tax evasion.

“The leaked files provide facts and figures — cash transfers, incorporation dates, links between companies and individuals — that illustrate how offshore financial secrecy has spread aggressively around the globe, allowing the wealthy and the well-connected to dodge taxes and fueling corruption and economic woes in rich and poor nations alike,” noted ICIJ on the investigation’s publication.

The trove of data — believed to be the largest leak in history — exposes some 120,000 letterbox entities, offshore accounts and other nefarious deals in more than 170 countries, alongside the names of 140,000 individuals alleged to have placed their money in known tax havens.

The investigation found high profile individuals from around the world — from oligarchs to the family members of dictators, to wealthy American financiers and professionals — engaged in efforts to dodge fiscal authorities. Individuals and groups found to be part of the tax evasion web include (via ICIJ):

  • Individuals and companies linked to Russia’s Magnitsky Affair, a tax fraud scandal that has strained U.S.-Russia relations and led to a ban on Americans adopting Russian orphans.
  • A Venezuelan deal maker accused of using offshore entities to bankroll a U.S.-based Ponzi scheme and funneling millions of dollars in bribes to a Venezuelan government official.
  • A corporate mogul who won billions of dollars in contracts amid Azerbaijani President Ilham Aliyev’s massive construction boom even as he served as a director of secrecy-shrouded offshore companies owned by the president’s daughters.
  • Indonesian billionaires with ties to the late dictator Suharto, who enriched a circle of elites during his decades in power.
  • The eldest daughter of the late dictator Ferdinand Marcos, Maria Imelda Marcos Manotoc, found to be a beneficiary of a British Virgin Islands (BVI) trust. (Philippine officials said they were eager to find out whether any assets in the trust are part of the estimated $5 billion her father amassed through corruption.)
  • The wife of Russia’s deputy prime minister, Igor Shuvalov, and two top executives with Gazprom, the Russian government-owned corporate behemoth that is the world’s largest extractor of natural gas, identified in offshore data.
  • Among nearly 4,000 American names is Denise Rich, a Grammy-nominated songwriter whose ex-husband was at the center of an American pardon scandal that erupted as President Bill Clinton left office.

We will continue to update this post once more details from the extensive tax evasion leaks emerge.

Natasha Lennard is an assistant news editor at Salon, covering non-electoral politics, general news and rabble-rousing. Follow her on Twitter @natashalennard, email nlennard@salon.com.

The US Government Hands OUR Money to the Banks Who Steal From Us

The US Government hands over OUR tax money to the banks who have driven us to this desperate economic situation that is hurting so many people.  This should cause serious concern.  Regardless of what you think of the Occupy movement, you should care that the government hands off your money to crooks, money that is supposed to be used for our schools, keeping our air and water clean, functional highway systems, and taking care of the needy.  There isn’t any money for any of these things because it has been given away to rich thieves.

See this transcript from the documentation proving these massive bailout transfers.  The original document can be seen here.

Federal Bailouts:  Money for Nothing
~ by Alan Grayson

I think it’s fair to say that Congressman Ron Paul and I are the parents of the GAO’s audit of the Federal Reserve. And I say that knowing full well that Dr. Paul has somewhat complicated views regarding gay marriage.

Anyway, one of our love children is a massive 251-page GAO report technocratically entitled “Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance.” It is almost as weighty as that 13-lb. baby born in Germany last week, named Jihad. It also is the first independent audit of the Federal Reserve in the Fed’s 99-year history.

Feel free to take a look at it yourself, it’s right here. It documents Wall Street bailouts by the Fed that dwarf the $700 billion TARP, and everything else you’ve heard about.

I wouldn’t want anyone to think that I’m dramatizing or amplifying what this GAO report says, so I’m just going to list some of my favorite parts, by page number.

Page 131 – The total lending for the Fed’s “broad-based emergency programs” was $16,115,000,000,000. That’s right, more than $16 trillion. The four largest recipients, Citigroup, Morgan Stanley, Merrill Lynch and Bank of America, received more than a trillion dollars each. The 5th largest recipient was Barclays PLC. The 8th was the Royal Bank of Scotland Group, PLC. The 9th was Deutsche Bank AG. The 10th was UBS AG. These four institutions each got between a quarter of a trillion and a trillion dollars. None of them is an American bank.

Pages 133 & 137 – Some of these “broad-based emergency program” loans were long-term, and some were short-term. But the “term-adjusted borrowing” was equivalent to a total of $1,139,000,000,000 more than one year. That’s more than $1 trillion out the door. Lending for these programs in fact peaked at more than $1 trillion.

Pages 135 & 196 – Sixty percent of the $738 billion “Commercial Paper Funding Facility” went to the subsidiaries of foreign banks. 36% of the $71 billion Term Asset-Backed Securities Loan Facility also went to subsidiaries of foreign banks.

Page 205 – Separate and apart from these “broad-based emergency program” loans were another $10,057,000,000,000 in “currency swaps.” In the “currency swaps,” the Fed handed dollars to foreign central banks, no strings attached, to fund bailouts in other countries. The Fed’s only “collateral” was a corresponding amount of foreign currency, which never left the Fed’s books (even to be deposited to earn interest), plus a promise to repay. But the Fed agreed to give back the foreign currency at the original exchange rate, even if the foreign currency appreciated in value during the period of the swap. These currency swaps and the “broad-based emergency program” loans, together, totaled more than $26 trillion. That’s almost $100,000 for every man, woman, and child in America. That’s an amount equal to more than seven years of federal spending — on the military, Social Security, Medicare, Medicaid, interest on the debt, and everything else. And around twice American’s total GNP.

Page 201 – Here again, these “swaps” were of varying length, but on Dec. 4, 2008, there were $588,000,000,000 outstanding. That’s almost $2,000 for every American. All sent to foreign countries. That’s more than twenty times as much as our foreign aid budget.

Page 129 – In October 2008, the Fed gave $60,000,000,000 to the Swiss National Bank with the specific understanding that the money would be used to bail out UBS, a Swiss bank. Not an American bank. A Swiss bank.

Pages 3 & 4 – In addition to the “broad-based programs,” and in addition to the “currency swaps,” there have been hundreds of billions of dollars in Fed loans called “assistance to individual institutions.” This has included Bear Stearns, AIG, Citigroup, Bank of America, and “some primary dealers.” The Fed decided unilaterally who received this “assistance,” and who didn’t.

Pages 101 & 173 – You may have heard somewhere that these were riskless transactions, where the Fed always had enough collateral to avoid losses. Not true. The “Maiden Lane I” bailout fund was in the hole for almost two years.

Page 4 – You also may have heard somewhere that all this money was paid back. Not true. The GAO lists five Fed bailout programs that still have amounts outstanding, including $909,000,000,000 (just under a trillion dollars) for the Fed’s Agency Mortgage-Backed Securities Purchase Program alone. That’s almost $3,000 for every American.

Page 126 – In contemporaneous documents, the Fed apparently did not even take a stab at explaining why it helped some banks (like Goldman Sachs and Morgan Stanley) and not others. After the fact, the Fed referred vaguely to “strains in the financial markets,” “transitional credit,” and the Fed’s all-time favorite rationale for everything it does, “increasing liquidity.”

81 different places in the GAO report – The Fed applied nothing even resembling a consistent policy toward valuing the assets that it acquired. Sometimes it asked its counterparty to take a “haircut” (discount), sometimes it didn’t. Having read the whole report, I see no rhyme or reason to those decisions, with billions upon billions of dollars at stake.

Page 2 – As massive as these enumerated Fed bailouts were, there were yet more. The GAO did not even endeavor to analyze the Fed’s discount window lending, or its single-tranche term repurchase agreements.

Pages 13 & 14 – And the Fed wasn’t the only one bailing out Wall Street, of course. On top of what the Fed did, there was the $700,000,000,000 TARP program authorized by Congress (which I voted against). The Federal Deposit Insurance Corp. (FDIC) also provided a federal guarantee for $600,000,000,000 in bonds issued by Wall Street.

There is one thing that I’d like to add to this, which isn’t in the GAO’s report. All this is something new, very new. For the first 96 years of the Fed’s existence, the Fed’s primary market activities were to buy or sell U.S. Treasury bonds (to change the money supply), and to lend at the “discount window.” Neither of these activities permitted the Fed to play favorites. But the programs that the GAO audited are fundamentally different. They allowed the Fed to choose winners and losers.

So what does all this mean? Here are some short observations:

(1) In the case of TARP, at least The People’s representatives got a vote. In the case of the Fed’s bailouts, which were roughly 20 times as substantial, there was never any vote. Unelected functionaries, with all sorts of ties to Wall Street, handed out trillions of dollars to Wall Street. That’s now how a democracy should function, or even can function.

(2) The notion that this was all without risk, just because the Fed can keep printing money, is both laughable and cryable (if that were a word). Leaving aside the example of Germany’s hyperinflation in 1923, we have the more recent examples of Iceland (75% of GNP gone when the central bank took over three failed banks) and Ireland (100% of GNP gone when the central bank tried to rescue property firms).

(3) In the same way that American troops cannot act as police officers for the world, our central bank cannot act as piggy bank for the world. If the European Central Bank wants to bail out UBS, fine. But there is no reason why our money should be involved in that.

(4) For the Fed to pick and choose among aid recipients, and then pick and choose who takes a “haircut” and who doesn’t, is both corporate welfare and socialism. The Fed is a central bank, not a barber shop.

(5) The main, if not the sole, qualification for getting help from the Fed was to have lost huge amounts of money. The Fed bailouts rewarded failure, and penalized success. (If you don’t believe me, ask Jamie Dimon at JP Morgan.) The Fed helped the losers to squander and destroy even more capital.

(6) During all the time that the Fed was stuffing money into the pockets of failed banks, many Americans couldn’t borrow a dime for a home, a car, or anything else. If the Fed had extended $26 trillion in credit to the American people instead of Wall Street, would there be 24 million Americans today who can’t find a full-time job?

And here’s what bothers me most about all this: it can happen again. I’ve called the GAO report a bailout autopsy. But it’s an autopsy of the undead.

Courage,

Alan Grayson

Corporate Tax Dodgers

Go to this link to sign a petition to congress requesting that they stop all corporate tax havens.  I doubt they will care (I’m a cynic in that regard), but hey, it can’t hurt, right?