Reports & analysis by award-winning investigative journalist Lucy Komisar “”

Posts tagged with the keyword: ‘offshore’

Russian Deputy PM says 1,000 Russian banks are money-launderers

Russian Deputy PM says 1,000 Russian banks are money-launderers

April 4, 2011 –

Sergey Ivanov, the Russian deputy prime minister, spoke at a Council on Foreign Relations lunch today. I asked if he thought the U.S. and Russia should get together to put a stop to offshore tax evasion. He smiled and agreed that the two countries need to deal with the international offshore system. That was something to consider in the future. And then he said, “There are more than 1,000 banks in Russia. They are not banks but launderers.”

Shells, Shams and Corporate Scams

Shells, Shams and Corporate Scams

The American Interest, Jan-Feb 2011 (online Dec 9, 2010)

Corporate secrecy, which involves hiding the identities of company owners from tax and other legal authorities, is itself no secret. It is well known that offshore banking centers such as Switzerland, Liechtenstein and the Cayman Islands have for many years enabled fraudsters all over the world to carry out scams, launder illicit profits, stash stolen loot and hide money from tax authorities.

What most people do not know, however, is that there is a vast and growing American offshore. Foreign crooks prize states such as Nevada, Wyoming and especially Delaware for state laws that don’t require them to list owners or even company officials when a new company is formed. Corporate interests and the Obama administration are blocking congressional efforts to change that.

China blocks international crackdown on offshore, says European Commission President Barroso

China blocks international crackdown on offshore, says European Commission President Barroso

Sept 27, 2010 –

China is the major international power blocking a global solution to the offshore bank and secrecy problem. It is doing so because of its own secrecy jurisdiction, Hong Kong, says José Manuel Barroso, the president of the European Commission.

He said some countries hadn’t been reacting positively to efforts to change the system , to establish a level playing field.

After the meeting, I asked him why the major financial powers hadn’t been able to achieve a solution. He said the problem was “China, because of Hong Kong.”

A Lingering Problem for IDT — CEO admits company official met with Aristide on contract

A Lingering Problem for IDT — CEO admits company official met with Aristide on contract

Barron’s, Sept 20, 2010 –

Scoop summary: Howard Jonas, CEO of U.S. telecom IDT, in an interview with Lucy Komisar, acknowledges for the first time that then Haiti President Jean-Bertrand Aristide in 2003 met with an IDT official during discussions about a contract to pay Haiti Teleco for calls from U.S. customers. That contract included agreement for IDT to send payments to a shell company in the offshore Turks and Caicos Islands. Jonas said IDT got an “ethics letter” from a law firm clearing the deal, but the lawyer said in a memo filed with the court, published here for the first time, that he simply told IDT to do “due diligence.” IDT signed the contract the next day.

A former IDT official, who objected to the deal, was fired and is suing the company; trial is set for Nov 9th. The Justice Department and Securities and Exchange Commission are investigating violation of the Foreign Corrupt Practices Act. Jonas’s revelations are likely to have a major impact in the trial and investigations.

Lucy accepts trophy for Loeb award

Lucy accepts trophy for Loeb award

June 30, 2010 – Last night I accepted a Gerald Loeb award trophy for the Allen Stanford investigation. The Loeb awards are the highest honors in U.S. financial journalism. I and my colleagues, Miami Herald reporters Michael Sallah and Rob Barry, won in the category of “medium & small newspapers.” The prize submission was entitled “Keys to the Kingdom: How State Regulators Enabled a $7 Billion Ponzi Scheme.”

IDT’s Voodoo Economics: Inside Justice Dept’s probe of telecom bribes in Haiti

IDT’s Voodoo Economics: Inside Justice Dept’s probe of telecom bribes in Haiti

The Big Money, March 11, 2010

When the devastating earthquake hit Haiti in January, IDT, the New Jersey-based global phone company, moved fast to help.

It announced it was setting up calling stations at hotels and other sites so Haitians could use its Internet calling-service to reach family and friends around the world. It cut rates on its U.S. prepaid calling-card to 2 cents a minute to Haiti (at least for 12 days), donated 4,000 $2-prepaid calling-cards to Haitian community groups in New York and Florida, and said it would give some proceeds from prepaid calls to Haitian Red Cross relief.

Such a warm, fuzzy response from a U.S. corporation often wins plaudits, though, of course, IDT has a business interest in the impoverished island. In 2005, in its latest publicly available figures, the company reported $4 million in profits from $17 million in revenues for routing calls there.

CORRUPTION: U.S. banks abetting corrupt regimes, probe finds

CORRUPTION: U.S. banks abetting corrupt regimes, probe finds

Inter Press Service (IPS), Feb 3, 2010 –

The global bank HSBC may be running offshore accounts for central banks. According to a U.S. Senate investigation, an HSBC subsidiary in London called HSBC Equator Bank had a sister bank in the Bahamas.

According to an internal e-mail, the bank told HSBC USA it had been providing offshore accounts to central banks for 20 years, because the banks wanted to avoid “Mareva” injunctions, legally enforceable orders to freeze funds.

OECD Tax Havens Deal Falls Short, Critics Say

OECD Tax Havens Deal Falls Short, Critics Say

Inter Press Service (IPS), May 8, 2009
– 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.

IRS on the Track of Tax-Cheating “John Does”

IRS on the Track of Tax-Cheating “John Does”

Inter Press Service (IPS), April 30, 2009 – 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.

Offshore tax cheating could become criminal money-laundering offense

Offshore tax cheating could become criminal money-laundering offense

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.

Exclusive: How One Fund’s Profits Ended Up in the Caymans

<em>Exclusive</em>: How One Fund’s Profits Ended Up in the Caymans

Inter Press Service (IPS), Feb 5, 2009 –

President Barack Obama said he would crack down on firms that use offshore centres to evade taxes. He could begin with a New York subsidiary of one of the world’s largest private banks, which used a Cayman Islands company to shift its profits.
Julius Baer logo
Why would a New York investment fund manager run operations through an office in the Caymans? “This type of structure is for optimising taxes,” explained Max Obrist, a Cayman Islands official of the global Julius Baer Group (Zurich).

He told IPS that “generating” the income where a company was actually based, “you would pay much more taxes”. Obrist was describing a company shifting claimed earnings to tax havens to evade home taxes. He allegedly helped Julius Baer Investment Management (JBIM) New York do just that.

Swiss bank’s crafty strategy shows how difficult it is to clamp down on tax havens

Evening Standard (London), Jan 6, 2009

Gordon Brown and Barack Obama are both promising to crack down on the use of offshore tax havens. But putting those tough words into practice is another matter.

One of the world’s biggest private wealth management groups circulates funds via offices in the Cayman Islands, claiming they take major investment decisions — when the main work is apparently carried out in London.

With offices in London and across the globe, Swiss-based Julius Baer banking group invests over $300 billion (£208 billion) in assets on behalf of institutions and wealthy individuals. Profits in 2007 were more than $1.1 billion.

In London, one of its units was known as Julius Baer Investors or Julius Baer Investment Management (JBIM) until a management buyout in 2007. It was renamed Augustus Asset Managers, is based in Bevis Marks in the City, and is still 10% owned by Julius Baer.

From London, Augustus controls assets of $12 billion but claims its profits are generated elsewhere, offshore at a Cayman Islands Baer subsidiary called Baer Select Management.

Why? Simple, really. “If you would generate all the income in London, you would pay much more taxes,” acknowledged Max Obrist, a Cayman Islands executive of Julius Baer.

Crisis Pits Vatican Against Offshore Bankers

Crisis Pits Vatican Against Offshore Bankers

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.Vatican shield

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.

Corruption: Laundromat Royale

<em>Corruption</em>: Laundromat Royale

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.

Closing Down the Tax Haven Racket

Closing Down the Tax Haven Racket

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.