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

Posts tagged with the keyword: ‘tax evasion’

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.”

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.”

The Wall Street ICEcapade

The Wall Street ICEcapade

The American Interest, July-Aug 2010 (online May 18, 2010) –

As I write this, the U.S. Senate is debating a major financial reform bill in which the credit default swap, a kind of derivative, plays a significant part. An amendment to that bill, proposed by Senators Carl Levin (D-MI) and Jeff Merkley (D-OR), would ban banks from proprietary trading. There are a lot of high-rolling bankers who do not want that amendment to pass, because it will mess up their plans to repatriate foreign profits into the United States, untaxed, by trading in derivatives on their own accounts. The clearinghouse ICE Trust U.S. forms a central part of these plans.

What is ICE Trust U.S., and who owns it? ICE US Holding Co., which was established in 2008 as the parent of ICE Trust U.S., is located in the Cayman Islands. Yet none of the owners of ICE US Holding Co. are based in the Caymans. Among the owners of the Cayman’s company are Citigroup, Goldman Sachs, J.P. Morgan, Merrill Lynch and Morgan Stanley, which are headquartered in New York. Bank of America, which now owns Merrill Lynch, is based in Charlotte, North Carolina.

Q&A: Tax Havens, Bank Secrecy, and Tricks

Q&A: Tax Havens, Bank Secrecy, and Tricks

Inter Press Service (IPS), July 14, 2009 – At a recent conference in Miami organised by Offshore Alert, a specialised media organisation focused on financial crime, IPS sat down with veteran investigator Bob Roach to discuss the hurdles facing regulators trying to crack down on tax havens, which cost the U.S. alone an estimated 100 billion dollars annually.

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.

Tax Havens in Spotlight at G20 Meet

Tax Havens in Spotlight at G20 Meet

Inter Press Service (IPS), March 29, 2009 –

This could be the moment when a fatal blow is delivered to the world’s tax havens. Or it could be another largely cosmetic change that allows offshore financial centres such as Switzerland, the Cayman Islands and Liechtenstein to deflect attacks on the system by sacrificing the few tax miscreants that governments catch in their nets.

Decisions at the G20 government leaders meeting in London Apr. 2 will set the direction.

Offshore centres, worried what may happen in London, are falling all over themselves promising to cooperate with the major powers on the trail of tax cheats. But the holes in the tax havens’ promises are as big as those in Switzerland’s famous cheese.

Many believe that automatic exchange of information is the only really effective way to end pandemic tax evasion. Some very good proposals are made in a leaked French paper which is linked to the full story.

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.

Bono the tax dodger wants others’ taxes spent on Africa

Bono the tax dodger wants others’ taxes spent on Africa

May 16, 2007

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

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.

How Tax Cheats Are Using Your Money to Fund Politicians

How Tax Cheats Are Using Your Money to Fund Politicians

AlterNet – April 17, 2007

When it comes to tax cheats, the government has been vocal about catching the little guys but doesn’t spotlight the big-time frauds, like Swift Boat financier Sam WylySam Wyly (shown here), who happens to be a top-tier Republican contributor.

Wyly cheated the U.S. of at least $300 million in taxes. The money that paid for the “Swift Boat” campaign was your money!

But Wyly was not only the financier of the scam to discredit John Kerry during the 2004 presidential campaign. He and his brother were George W. Bush’s ninth greatest career contributors, “Bush Pioneers,” who collected $100,000 for the 2000 and 2004 presidential campaigns. They also funded other leading Republicans. Sam Wyly, since 1997 has given Republicans more than $1 million and his brother Charles and wife have donated more than $1.3 million. That’s your money!

Wyly did his cheating through an offshore scheme that hid $1 billion in family profits via Isle of Man “shell companies” that existed only on paper, were registered under front men to hide the Wylys’ names, and were used to carry out transactions and launder money. And that’s only the hidden income that was found. The Dallas mogul, with a $1 billion admitted net worth, may be guilty of the biggest personal tax fraud in U.S. history.

Offshore Scorecard: NY Times gets the headline wrong

Offshore Scorecard: NY Times gets the headline wrong

March 25, 2007

Swiss travel the world to help mega-rich evade taxes

The NY Times headline yesterday said, “Discreet Swiss Banks Now Offering Sophisticated Investment Vehicles.” Swiss flag 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?

Watch for Congressional action on tax evasion

Watch for Congressional action on tax evasion

Feb 2, 2007

There is movement on the Hill to go after tax shelters and enforcement against tax cheats. Capitol Dome

With acute budget pressures, the time is ripe.

The Democrats are in a box. They have promised to eliminate the deficit, not raise taxes, to expand health care and more for Americans. Nobody is going to press for tax increases. The only place to find cash is the tax gap, to figure out how to go after the corporations and people who cheat. Members of Congress are actively talking about the problem.

Legislation is coming out of the Senate. Senator Carl Levin is pushing the idea of criminalizing the proceeds of tax evasion, which would be remarkable. The House Banking Committee will have bills. There is likely to be something out of Finance and Ways and Means.

Citigroup: a culture and history of tax evasion

Citigroup: a culture and history of tax evasion

This report describes and details a history of tax evasion by the world’s largest
financial conglomerate, Citigroup. Going back decades, it is a story of
repeated, aggressive tax evasion for itself and clients, depriving governments
and therefore citizens of huge amounts of funds and carried out with relative
impunity.

Profit Laundering and Tax Evasion: The Dirty Little Secret of Financial Globalization

Profit Laundering and Tax Evasion: The Dirty Little Secret of Financial Globalization

Dissent Magazine, Spring 2005

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.

How Big Business Evades Taxes

How Big Business Evades Taxes

Pacific News Service, April 9, 2004

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?