Wednesday, July 30, 2008

International news - July 30

** Also see our permanent list of past story summaries; and Offshore Watch for more stories. **

Democratic Republic of Congo Lost $15.5 Billion in Capital Flight Since 1980, According to Global Financial Integrity Report
July 24 (GFI) – The Democratic Republic of Congo (DRC) lost an estimated $15.5 billion due to capital flight from 1980 to 2006, according to a new report from Global Financial Integrity (GFI), a program of the Center for International Policy. The report was prepared using data from the International Monetary Fund and World Bank and represents the most up-to-date figures for illicit capital outflow from the DRC.

18,857 firms: one registered address. Ugland House goes to Washington.
Jul 25 (TJN) - The U.S. Government Accountability Office states that Ugland House, George Town, Cayman Islands, whose sole tenant is the law firm Maples & Calder, is now the registered office of 18,857 distinct legal entities. Featuring TJN senior adviser Jack Blum, whose testimony can be see here.

Sub-prime - a crisis in journalism?
Jul 25 (TJN) - In an important article, independent journalist Paul Lashmar, has explored how newspapers and other media covered the developments in the financial markets which led up to the sub-prime crisis in 2007.

Swiss lawyer urges governments to help tax evaders "come clean"
Jul 24 (TJN) - Philip Marcovici, partner in Zurich of one of the largest international law firms, stresses that “[wealth] owners need to understand that non-compliance with tax laws is simply not an option in today’s environment. Breaking the law carries criminal, financial and reputational risks”.

The challenge offshore banking poses
Jul 25 (Tax Research UK) - James Henry has written an amazing article in the US magazine The Nation regarding the US Senate hearings on UBS and LGT. It’s lengthy, and I recommend it in full, but I select some elements here. Read the full story here (recommended)

Tesco tax avoidance schemes can form part of libel case, judge rules
July 30 (Guardian) – A judge ruled that details of elaborate offshore corporation tax avoidance schemes operated by Tesco using partnerships and holding companies in Switzerland and Luxembourg were allowed to be introduced into evidence in a libel case the supermarket chain is bringing against the Guardian. Tesco must decide by September 15 whether to accept the Guardian's offer of an apology and damages.

France flags OECD tax meeting after evasion probe
July 30 (Reuters) - France and Germany want OECD countries to meet in October to boost the struggle against tax evasion after an international scandal centred on Liechtenstein, French Budget Minister Eric Woerth said.

New deal offered on tax haven cash
Jul 27 (Times) - Investors who have stashed money in tax havens in Europe and the Channel Islands are to be asked to give themselves up to HM Revenue & Customs in exchange for reduced penalties, in a move designed to flush out those with secret savings in offshore bank accounts ahead of legal moves by the Revenue to force 117 foreign and UK institutions to disclose customers’ details.

The great offshore riddle: keeping the taxman at bay
Jul 27 (Times) - With offshore account-holders coming under attack from HM Revenue & Customs, which is now hoping to flush out Britons with billions of pounds hidden overseas, here is a handy guide to the safe way to save offshore.

Editorial: The noose gets tighter
Jul 22 (Cayman Net News) - Two reports last week, one by Reuters and the other in Time magazine, must have raised the consternation level on the part of offshore bankers everywhere.

Tax haven probe targets rich Britons
Jul 21 (FT) - About 300 wealthy Britons who secretly salted away more than £1bn ($2bn, €1.26bn) in the tax haven of Liechtenstein are facing investigation and possible criminal prosecution by the UK tax authorities.

Tax answers for the nonplussed non-doms
Jul 28 (FT) - After more rewrites than a Hollywood script, the new rules for individuals not domiciled in the United Kingdom are now in their final form. David Kilshaw of accountants KPMG reviews the position and assesses what it means for taxpayers.

Tax tourists and the crown prince of thieves
Jul 26 (Sydney Morning Herald) - Adele Horin muses on tax evasion, theft, and the importance of honest work, such as driving taxis.

Alaska Senator Is Indicted on Corruption Charges
Jul 30 (NYT) - Senator Ted Stevens of Alaska, the longest-serving Republican senator in United States history and a figure of great influence in Washington as well as in his home state, has been indicted on federal corruption charges.

Executive Refuses to Answer Tax Haven Questions
Jul 26 (Reuters) — The group managing director of the Westfield Group, a major shopping mall group based in Australia, refused on Friday to answer questions before a Senate subcommittee investigating international tax havens.

Bank memos raise questions about Lowys' dealings
Jul 24 (The Age) – Billionare Frank Lowy and his sons used the cloak of secrecy provided by a Liechtenstein bank to buy shares in the Westfield Group on behalf of the family in 1997, according to an internal bank memo obtained by a US Senate committee.

Working Paper No. 08/185: Rising Income Inequality: Technology, or Trade and Financial Globalization?
Summary: We examine the relationship between trade and financial globalization and the rise in inequality in most countries in recent decades. Whereas trade globalization is associated with a reduction in inequality, financial globalization-and foreign direct investment in particular-is associated with an increase.

Nigeria: NNPC Rejects Tax Exemption for NLNG Contractors
18 July (Leadership Nigeria) - The House of Representatives Committee on Gas has expressed deep concern over the attitude of Nigerian Agip Oil Company Limited (NAOC) for its poor response to the efforts to amend the Nigeria Liquefied Natural Gas (NLNG) fiscal incentives, guarantees and assurances Act by the House.

Rwanda: Paying Taxes for Economic Independence
18 July - AllAfrica - President Paul Kagame has urged tax payers to be more compliant, as it is the only way for Rwanda to be economically independent. Kagame was speaking at the 7th Taxpayers' Day, during which Rwanda Revenue Authority (RRA) also celebrated its 10th anniversary.

Senators Score IRS for Failing To Pursue Offshore Tax Havens
Jul 25 (NY Sun) - The Senate Finance Committee is pressing the Internal Revenue Service to escalate its policing of offshore accounts for instances of tax evasion. During a hearing yesterday, senators Kerry and Conrad, in particular, criticized the IRS for not doing more to investigate such funds.

IMF set to end offshore 'stigma'
July 14 (FT) - The distinction between "offshore" and "onshore" financial centres has been dropped by the International Monetary Fund, in a victory for more than 40 small countries that complained they had been unfairly stigmatised in the fight against financial crime.

Tax consultations to be launched
Jul 28 (FT) - The government will today launch three consultations designed to improve the tax status of UK investment funds. The moves were first flagged in the budget in March in response to complaints from the industry that some tax rules set it at a disadvantage to funds based in Luxembourg and Ireland.

Siemens enters crunch week in bribery scandal
Jul 27 (FT) - The legal battles surrounding Siemens’ long-running €1.3bn ($2bn) bribery scandal reach a critical point this week with the first court verdict expected on Monday and the engineering group’s supervisory board expected to decide on Tuesday whether to sue former managers for damages.

Fannie’s and Freddie’s free lunch
Jul 24 (FT) - Much has been made in recent years of private/public partnerships. The US government is about to embark on another example of such a partnership, in which the private sector takes the profits and the public sector bears the risk. The proposed bail-out of Fannie Mae and Freddie Mac entails the socialisation of risk – with all the long-term adverse implications for moral hazard – from an administration supposedly committed to free-market principles.

A winning formula for the next UK election
July 24 (The First Post ) - Under Mrs Thatcher and her New Labour acolytes, the British public were generally persuaded by the package of right-wing economics and left-wing cultural politics. Now, what looks like emerging as the next popular political formula is a just economic order coupled with the re-moralisation of society. Whichever party can recognise and respond to this new political landscape will dictate the future and win the next election.

We must break the prism of corporate interests
July 24 (Guardian) - Reform of financial regulations is to be carried out by the City elites who profit from their current laxity

How to stop erosion of our tax base
July 24 (FT) – A letter on the “anger and alarm” from British-based multinationals concerning Treasury proposals for corporate taxation from Lord Wallace of Saltaire.

Sub prime – a crisis in journalism?
July 18 (Press Gazette) - “With Enron and WorldCom their problems were in the company accounts if you knew where to look. But the composition of CDOs were known to a handful of people and do not appear in company accounts. They are a secret and impossible to crack without a whistleblower.”

Internet shopping: Cheap DVDs coming soon to your HMV - via a nifty legal loophole and an offshore tax haven
July 19 (Guardian) - HMV is extending to its high-street stores a controversial VAT-avoidance scheme that it currently operates solely through the group's website, which is based offshore. The move will offer shoppers discounts and free delivery on out-of-stock titles, at the expense of Treasury coffers.

Copper mining in Zambia: The developmental legacy of privatisation
July (Institute for Security Studies) - This paper discusses the impact of copper mining on local communities and the contestations over control of and access to mineral wealth. It provides a background to mining in Zambia up to 2000, reviews the ‘resource curse’ theory in relation to Zambia and critically assesses the performance of the copper mining industry after privatisation. Finally, the paper discusses the impact of large-scale mining on local communities.

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