Investigators of subprime crisis should look offshore

Dec 1, 2007

When there’s a financial crisis tied to lack of transparency, follow the culprits offshore. Evidence comes out now that this is true about the subprime debacle.

Reuters reports that a German bank is implementing accounting changes including consolidation of an offshore conduit whose soured investments triggered a government-led rescue. The offshore operation was set up to invest in subprime mortgages.

Pam Martens in Counterpunch points out that, Citigroup, is discovered to have stashed away over $80 billion of Byzantine securities off its balance sheet in secretive Cayman Islands vehicles with an impenetrable curtain around them.

Among those securities count subprimes. Citigroup has $55 billion of subprime exposure and in November said it would write down up to $11 billion in subprime losses. Goldman Sachs said that won’t be all, that the bank may have to write off $15 billion.

Robert Rubin gushes over Musharraf’s vision of democracy

Nov 3, 2007

Learning of General Pervez Musharraf‘s declaration of emergency rule (martial law) in Pakistan, I can‘t help but recall the gushing introduction of the general made by Citigroup honcho and Democratic financial eminence grise Robert Rubin when the dictator, who came to power in a military coup, spoke at the Sept 25, 2006 meeting of the Council on Foreign Relations. Robert

Rubin urged the audience to “understand a great deal more than those in our country tend to know about Pakistan, the Muslim world, the meaning of democracy in the context of countries very different from our own.”

Rubin‘s obsequious comments might be connected to the fact that Musharraf had appointed a top Citigroup official to be his finance minister, giving the bank privileged entrée into the country.

A question now for Robert Rubin: Just how do you fit martial law into your expansive meaning of democracy?

French Finance Minister not “sufficiently aware” of frigates case

Oct 23, 2007 – In the continuing saga of the Frigates of Taiwan, involving about $1 billion in bribes and kickbacks paid by the French company Thomson to win a bid on the sale of six war frigates to Taiwan in the early 90s, I asked French Finance Minister Christine Lagarde, at the Council on Foreign Relations yesterday, if she would continue the cover-up on a corruption case that could be the largest (known) in French history.

Madame Lagarde wasn’t sufficiently aware of the case that has been exhaustively reported by French print and broadcast media for more than a decade.

A Frenchman acting on principle

Sept 29, 2007

It‘s that time of the year when the UN General Assembly opens and heads of state and foreign ministers meet up at parties and quiet gatherings and even give a few public speeches around town. A popular stop is the Council on Foreign Relations, where anyone representing an establishment view is assured of a warm welcome. Bernard

French Foreign Minister Bernard Kouchner, famous as the founder of Médecins Sans Frontieres (actually he was one of 12 doctor and journalist founders), spoke at the Council on Tuesday. In his introduction Felix Rohatyn, the prominent investment banker, US ambassador to France in 1997-2000 and now an advisor to the chairman of Lehman Brothers, said, “There are very few people who act according to their principles. Bernard Kouchner acts on his principles, and that‘s a very rare virtue, especially in a politician.”

I was hopeful that Minister Kouchner, a Socialist who has joined a conservative government, would display these principles in his answer to my question about a corruption scandal that could be the French Watergate. However, the minister displayed the not-so-rare political attribute of solidarity with high-level officials who want to suppress evidence of corruption.

Offshore shell games threaten global financial system

Sept 17, 2007

There’s an astonishing article in the Washington Post’s Business Section (Risk. Now They See It. Now You Don’t. Sept 16, 2007)

The Post, which has never, ever, railed against tax havens, is now suggesting that their use to cheat tax authorities and investors threatens the entire global financial system. Of course, it doesn’t put it so starkly, but that’s the gist.

The Post says, Over the past few years, major banks figured out how to use conduits and structured investment vehicles to earn big fees while playing cute little games of tax and regulatory arbitrage and keeping it all pretty much hidden from investors.

Where does The Post think those off-balance-sheet investment vehicles are? Most of Enron’s were in Grand Cayman. The Post should connect the dots. Tax and regulatory arbitrage plus hidden plus off-balance-sheet investment vehicles = offshore.

Why did regulators tolerate the use of offshore? Because global tax evasion and avoidance of regulation is something corporations want. That’s what offshore secrecy is for. Now, will Congress act, in spite of corporate power, when there is a threat to the entire global financial system?

Tax dodging helps Murdoch buy the Journal

Aug 1, 2007

Where did Rupert Murdoch get $5 billion to buy up the Wall St. Journal? Beyond normal profits, his coffers were stuffed by dodging taxes in the U.S. and elsewhere. Some of that is your money!

The Economist, in 1999, investigated Murdoch’s corporate tax affairs and discovered that a collection of 800 offshore companies help him cut corporate taxes to 6%!

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.

Citigroup‘s Charles Prince: “Let‘s go back to the bad old days.”

April 10, 2007 –

The NY Times reports today that Charles Prince, CEO of Citigroup, is planning to cut the corporation‘s compliance staff. CitigroupReporter Eric Dash says it‘s “to keep the bank from getting bogged down” because “the compliance overhang has made it difficult to be competitive” and “unnecessarily slowed the company down.”

Translation: other banks are laundering profits or running scams to help clients cheat tax authorities and investors, and they make good money at it. Why shouldn‘t we?

Dash noted that Citigroup had beefed up its compliance staff after scandals, including its dealings with Enron. He skimps on details: that Citigroup set up offshore shell companies to help Enron cook the books.

Western critics: Khodorkovsky stole Yukos fair and square

March 28, 2007

Russia, through its energy company Rosneft, has started to recover the multibillion-dollar oil company YukosYukos that was stolen from it in the mid-90s. It is buying the assets in auctions. Indignant protests are heard from westerners.

Funny there was no indignation from western officials when Mikhail Khodorkovsky and other oligarchs, with the help of crooked President Boris Yeltsin, were appropriating Russian national oil and mineral wealth for kopeks on the ruble.

A Khodorkovsky company ran an auction at which a Khodorkovsky shell company won Yukos, paying $309 million for a controlling 78 percent. Months later, Yukos traded on the Russian stock exchange at a market capitalization of $6 billion.

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 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?

“Shady money” photography prize

March 2, 2007

A UK photographer just sent The Scoop this email about The Photographers Gallery in London. He says:

The Deutsche Borse Deutsche photography prize, formerly the Citibank photography prize, is perhaps the most prestigious and important photography prize and one of the most important art prizes. Those who win become name photographers/artists, and their work becomes literally over night very valuable, exchanging hands for many thousands of dollars.

With the women at Houston: feminism as national politics

  Lucy Komisar covered the women’s convention in Houston and wrote about it for The Nation, December 10, 1977. (text version is below)         WITH THE WOMEN AT HOUSTON: FEMINISM AS NATIONAL POLITICS LUCY KOMISAR The blue and green bunting, the state delegation signs, the three-cornered hats that said Free D.C., the […]

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