May 2004 Archives

By Lilla Zuill

An Oregon-based currency trader has been indicted on numerous counts of mail fraud, wire fraud and money laundering after allegations that his company swindled investors and funnelled funds, that should have been invested, through numerous offshore bank accounts – some in Bermuda.

A news report from Oregon Live.com last Thursday reported that a federal grand jury in Portland had charged the head of now-defunct Orion International, Russell Cline, with 39 charges after he allegedly misled investors with false promises that their money would be invested in foreign currency trades netting them returns of up to 200 percent a year. Others associated with the company have also been charged.

By Denis Kleinfeld

The other day my mother stopped in at the Gap store to buy a pair of jeans and top for my daughter as a gift. I think she spent something like USD29 for the jeans and the top was on sale for USD21. At dinner that night my mother and I were discussing various current political topics. One of the things she mentioned was how terrible it was that American workers were losing their jobs to foreign manufacturing companies. I inquired, of course, as to whether she enjoyed buying clothes at the Gap store so inexpensively or would she prefer paying substantially more money to have the good feeling that they were made by workers in the United States.

By The Associated Press

WASHINGTON -- A federal judge ordered the law firm Jenkens & Gilchrist to release names of tax shelter investors to the IRS, which believes taxpayers used abusive shelters sold or organized in the firm's Chicago office to shield at least $2.4 billion from federal income taxes.

The order, issued by Judge James B. Moran of the U.S. District Court, Northern District of Illinois, follows a separate court decision ordering accounting giant KPMG to release the names of its tax shelter investors to the Internal Revenue Service.

In both cases, judges rejected claims that revealing the investors' identities to the IRS would violate confidentiality privileges between attorneys and their clients.

By Jane Bussey

TAX EVASION

A federal judge threw the book at Marc M. Harris on Friday, calling the one-time poster boy for offshore financing the ''go-to man'' in a money-laundering and tax-evasion scheme and sentencing him to 17 years in prison and $26 million in restitution and fines.

Harris' attorney, Joaquin N. Fernandez, argued repeatedly against the lengthy prison term during the sentencing hearing, claiming his client was receiving harsher punishment for hiding the proceeds of a Freon gas smuggling scheme than the father-son team sentenced for the original crime.

By Lucy Sherriff

The biometric enrolement process which will underpin the UK ID card scheme went on trial in Scotland today. Home Office minister Des Browne launched the pilot at the Glasgow DVLA (Driver and Vehicle Licencing Authority) office.

Volunteers will have their iris scans, finger prints and facial biometrics recorded as part of the passport service trial, and will be issued with a demonstration smartcard containing all their details.

The trial will assess the practicalities involved in the enrolement process, how long will it take, how much will it cost, how many people won't be able to register and for what reasons, etc.

By Siyabonga Mkhwanazi

An offshore account that went from $125 000 (about R800 000) to $397 (about R2 700) in three months might hold clues to the motive for the mysterious murder of a Johannesburg teacher.

Brian Currin, 49, a senior mathematics teacher at St John's private school in Houghton, was shot once in the head before his body was burned beyond recognition in March 2002.

The Johannesburg High Court heard that Currin was murdered after he had questioned Michael Montgomery, 36, about the huge sums of money that had been siphoned off his offshore investment account.

By John Waggoner and Christine Dugas, USA TODAY

If mutual fund executives think investors are ready to forgive and forget the trading irregularities and other indiscretions that have battered their companies for the past nine months, they had better think again.

"The time for blind faith is over," says Mary Audette, who works for a financial services company in Minneapolis. Audette, 48, says she used to think she could relax and feel confident about her mutual fund investments. "The same way I would delegate my health care to my doctor, I delegated my investments to a fund manager. I've changed. I watch things more closely."

BRUSSELS (AFP) - European Union and Swiss leaders adopted a long-awaited deal on offshore tax fraud that will in return see the Alpine state join the bloc's passport-free zone.

The accord to tax secret bank accounts held in Switzerland by EU residents will be initialled by the end of this month and signed in August, Swiss President Joseph Deiss told a news conference.

But it must then be ratified by the Swiss parliament and perhaps pass a referendum, he said, endangering the EU's target of January to implement is new tax rules agreed after nearly a decade of talks.

by Sol Biderman

Sao Paulo in Brazil has one of the lowest costs of living in the world (see below for some examples)…and, because of preservation laws, enjoys some of the most beautiful beaches in the world too. Here are my favorites:

Praia Pernambuco, a soft powdery sand beach fringed by coconuts, is only one hour on the superhighway from the best hospitals and restaurants in South America. Six months ago, a four-bedroom house here in good condition on a half-acre lot beside a country club was sold for $44,000.

By Ellen Hoffman

Before you decide when to quit working, check out these rules that could make or break your future finances -- and lifestyle

Ask people what the retirement age is, and they'll probably say 65. That concept stems from the original Social Security law, passed in 1935, which anointed age 65 as the age at which a worker could receive his or her "full" or "normal" retirement benefit. Yet the reality is quite different. Since 1985, more than half of Social Security recipients have started collecting their benefit at age 62. The average age at which people are starting to receive benefits has remained steady, at around 63½.

By Thomas Catan

How does a small-town lawyer from Sunderland become the money-man of choice for one of the largest companies in Russia? He works hard, wins their confidence and excels at creating shell companies to hide their oil millions around the globe. This was the world of Stephen Curtis until he lost his nerve and, not long after that, his life.

On the evening of March 3 this year, a British lawyer named Stephen Curtis climbed aboard his brand new Agusta 109E helicopter and manoeuvred his hefty frame into the passenger cabin's rear left seat.

by Jaikumar Vijayan

Proposed legislation in Congress could have some important privacy and security implications for companies outsourcing work to offshore destinations.
The bill (S1232), called the Safeguarding Americans From Exporting Identification Data Act (SAFE-ID), was introduced by Sen. Hillary Rodham Clinton (D-N.Y.) last month.

It has been referred to the Senate Committee on Commerce, Science and Transportation.

Calls to Sen. Clinton's office seeking comment weren't returned, so it's unclear whether a hearing on the bill has been scheduled or whether a companion bill has been introduced in the House.

Lawmakers in the Bahamas last week passed a key piece of legislation known as the Segregated Accounts Companies Bill which will be useful in the insurance and investment fund sectors.

Investment in a segregated accounts company allows a creditor or shareholder's investment to be insulated from creditors of the larger overall company, and marks a major step forward in enhancing the competitiveness of the jurisdiction’s offshore business sector.

Attorney General Alfred Sears explained during the passage of the bill that the new legislation would enhance the effectiveness of the Investment Funds Act, passed by Parliament in December 2003, which covers all aspects of the application, administration and supervision of funds, setting boundaries for acceptable practices.

Leading London-based independent trading firm Mac Futures has significantly expanded its presence in the jurisdiction of Gibraltar with the May 6 opening of a new 100-desk trading facility by Chief Minister Peter Caruana.

Mac Holdings opened its office in Gibraltar in April 2001 with just four traders, although rapid expansion in the meantime has seen this grow to thirty. As a result, the Gibraltar operation now commands a significant presence in terms of volume on futures exchanges, which includes direct access to Liffe and Eurex exchanges, and accounts for up to 25% of trading on certain contracts.

by Mike Godfrey

The IRS and the US Treasury Department on Thursday issued guidance to clarify that capital gain dividends received from a mutual fund in 2004 will be taxed at the new, lower capital gain rates enacted last year.

"Last year the President's Jobs and Growth Tax Relief Reconciliation Act of 2003 lowered the capital gains rates on dividends," explained Acting Assistant Secretary for Tax Policy Greg Jenner, adding that:

"These lower rates mean taxpayers will have more money to invest, save for their children's education or buy a home."

By Greg Griffin

Does the United States encourage companies to expand their operations abroad and hire foreign workers?

Some corporate tax experts think so, and their concerns have gained a powerful voice in Democratic presidential candidate John Kerry.

"If a company is torn between creating jobs here or overseas, we now have a tax code that tells you to go overseas," Kerry said recently in Detroit during a speech outlining his tax plan. "That's crazy. And if I am president, it will end."

by Murray N. Rothbard

Inflationary Fiat Paper

For nearly a half-century the United States and the rest of the world have experienced an unprecedented continuous and severe inflation. It has dawned on an increasing number of economists that the fact that over the same half-century the world has been on an equally unprecedented fiat paper standard is no mere coincidence. Never have the world's moneys been so long cut off from their metallic roots. During the century of the gold standard from the end of the Napoleonic wars until World War I, on the other hand, prices generally fell year after year, except for such brief wartime interludes as the Civil War.[1] During wartime, the central governments engaged in massive expansion of the money supply to finance the war effort. In peacetime, on the other hand, monetary expansion was small compared to the outpouring of goods and services attendant upon rapid industrial and economic development. Prices, therefore, were normally allowed to fall. The enormous expenditures of World War I forced all the warring governments to go off the gold standard,[2] and unwillingness to return to a genuine gold standard eventually led to a radical shift to fiat paper money during the financial crisis of 1931-33.

By Adrian Chiles
I've spent the past six months making a programme with an absolutely obvious conclusion: how rich are the Royals? The answer, ladies and gentlemen, is - wait for it - very rich indeed. Surprised? No, nor me. So, why did we bother asking?

Funnily enough that was the question implicit in the tone of the Palace officials we dealt with: why are you bothering? That, and what business is it of yours how rich the Royals are?

Well, surely it is all of our business how rich the royals are. I'm no expert on constitutional matters but my understanding is that it boils down to this: the Royals are only royal because we, the electorate, allow it to be so. In which case we surely have a right to know how much they are worth?

By Dix Sandbeck

It is ironic that one of the key features of modern globalized capitalism, offshore banking, was invented by some obscure comrades in charge of managing the foreign reserves of the old Soviet Union. During the early Cold War years, they were apprehensive about depositing their accidental dollar holdings in U.S. banks where they risked being frozen if a political confrontation arose. The solution the comrades came up with was to deposit the dollars in London. While they were at it, why not open their own bank in what was still the banking center of the world? In this way, the Russians ended up having a bank in London, mainly dealing in “red” dollar deposits and lending.

For big U.S. corporations a dollar is always green, no matter where it comes from. They quickly saw the advantage of having access to dollars outside of the U.S. where the banking system at the time was strictly regulated. Nor did it take long for British banks to realize that the Russian comrades in their midst had hit on a significant financial innovation. They hurriedly followed in their footsteps and started to open departments specializing in unregulated dollar deposits and lending. Offshore banking as a wider phenomenon was born.

Skype co-founder Niklas Zennstrom explains why he believes "at some point the Internet will carry the majority of communication".

Niklas Zennstrom is a big believer in the power of peer-to-peer networks. The creator of the KaZaA file-swapping software that became the bane of the music industry, Zennstrom is now trying to apply P2P principles to voice communications. In August, Zennstrom and KaZaA co-founder Janus Friis released Skype, a P2P voice program that to date has logged 5.2 million downloads. While it remains a gnat on the back of the $200 billion global telecom industry, Skype provides a model of how P2P software could replace the expensive and cumbersome infrastructure of public phone networks.

BusinessWeek Online Technology Editor Alex Salkever interviewed Zennstrom on Jan. 5 to get his view of where the voice-over-Internet-protocol (VoIP) movement is headed and where Skype fits in. Following are edited excerpts from that conversation:

By Nick Easen for CNN

Some business travelers spend so much time in a hotel, they might as well put down a deposit and buy the room they are staying in -- it could prove more economical.

And now the chance exists. A new property concept is available in London that allows executives who regularly visit the city to buy a hotel room.

Businesses and potential guests can then stay up to 52 nights a year when they visit the UK capital on short trips.

by Mary Swire

According to the US-based think tank the Milken Institute, Hong Kong occupies the top spot on its 2004 Capital Access Index.

The index, which measures the openness and efficiency of the world’s capital markets, revealed Hong Kong to be the most “mature” market in the world. The other countries occupying the list's top five were the Netherlands, the United Kingdom, Singapore and Switzerland.

The United States, meanwhile dropped three places to sixth, and China improved by one place to 32nd.