September 2004 Archives

By Duncan Campbell -

Billions of pounds, enough to pay for the entire primary health and education needs of the world's developing countries, are being siphoned off through offshore companies and tax havens, according to a body formed to expose the offenders.

Aid organisations are alarmed that money which should be used for building the infrastructure of the poorest countries is being hidden in havens by corrupt politicians and multinationals exploiting tax loopholes. Offshore companies are being formed at the rate of about 150,000 a year. While in the 70s there were just 25 tax havens, there are at least 63 now, about half of them British protectorates or former colonies. Tax avoidance in Britain alone is estimated at between £25bn and £85bn.

South African banking group Nedcor has sold off its offshore fund administration and management business in the Isle of Man to HSBC-owned Bank of Bermuda (IoM) for £2,55 million.

It will also receive a pre-sale dividend of £1,375 million, resulting in a net profit of about £1 million after costs.

Nedcor said the sale was part of its strategy of reviewing all non-core businesses within the group.

The business administers 50 funds with around £1.2 billion of assets under administration and employs 17 staff.

By John Curran -

ATLANTIC CITY, N.J. - An Internet casino operator said it is offering Donald Trump $400 million for a stake in his ailing casino company.

Casino Fortune, a Trinidad-based company, said Tuesday it has approached Trump about replacing DLJ Merchant Banking Partners, whose plans for a bailout of Trump Hotels & Casino Resorts Inc. fell through last week.

By Leroy Baker -

According to the findings of a study conducted by pressure group Citizens for Tax Justice, 82 of America’s largest corporations avoided paying federal income tax for at least one year during the first three years of President George W. Bush’s presidency.

The CTJ’s report, undertaken in conjunction with the Institute on Taxation and Economic Policy (ITEP), examined the 275 profitable Fortune 500 companies with total profits of $1.1 trillion from 2001 through 2003. One-third of these supposedly paid no or federal income tax for at least one of those years.

The Justice Department is putting residents of the U.S. Virgin Islands on notice: if you are only pretending to live there to take advantage of a special tax rate, the gravy train may be over.

The special tax rate that basically amounts to just 3.5 percent of income has been a lure to those looking to get out from under heavy mainland taxes. However, the tax was designed by Congress to aid the 30 percent of Virgin Island residents who were living below the poverty level in 1999, the New York Times reported.

Detractors say the islands' economic development program has lacked definition from the outset.

By Sarah Left -

Once every four years, America offers its expats the chance to be loved, even to be heroes. Usually no one cares about those of us who live abroad. The US state department isn't even sure how many of us are scattered around the world: somewhere around 6 or 7 million, including dependents, is the best guess - 6 or 7 million pariahs who have shunned 24-hour grocery stores, acres of sky, real football and unlimited refills of weak coffee. If we aren't in the military, our patriotism is in question. But then an election rolls round and politicians suddenly want to hear from us. Specifically, they want us to send cheques. They also want to sign us up to vote, potentially catapulting them into office over the objections of local folk who know better.

By Daniel Thomas -

Internet banking is one of the most successful applications on the web, with customers routinely using it to manage their personal finances.

But for large businesses, online banking has often failed to provide all the applications major corporates need, including integration with enterprise software and foreign exchange trading. Security has also been a major concern.

MIAMI, Sept. 21 /PRNewswire/ -- A trader who was responsible for one of the most notorious crimes in the history of global finance will make his United States speaking debut next month.
British national Nick Leeson made international headlines in 1995 after he ran up $1.3 billion in losses from unauthorized trading in Singapore.

His illegal trading caused the collapse of his 233-year-old employer, Barings Bank; led to a six-and-half-year prison sentence; and spawned a movie starring actor Ewan McGregor.

Now, after being released from jail, Leeson is ready to explain for the first time to a North American audience how he managed to conceal his losses from his bosses for so long.

by Douglas McLeod -

SACRAMENTO, Calif.—The alleged architect of a long-running offshore insurance fraud is awaiting extradition from Canada after his arrest in Toronto on a U.S. warrant leveling conspiracy, mail fraud and money laundering charges.

Canadian authorities earlier this month apprehended a man who has used the alias Robert Lewis Brown for a decade to operate the allegedly fraudulent Tri-Continental Exchange Ltd. of St. Vincent & the Grenadines.

By Jonathan Fahey -

Among the many things that surprised Michael Jordan when he arrived at troubled tech giant EDS last year was a deep and puzzling irony: EDS invented the business of outsourcing, overhauling other firms' computer systems and running them far more efficiently, yet its own internal network was a haphazard and disjointed mess. "My PC remote access--I've never seen anything that bad," Jordan, 68, says.

It was indicative of the state of the entire $20 billion company--chaotic and diffuse. "It was a holding company. It was 2,000 separate companies with a financial overlay to it." Big accounts were called on by up to 22 different EDS departments. The firm was losing big deals to competitors because it couldn't price them right and was entering into contracts that couldn't possibly turn a profit. "To say I was shocked would be a mild understatement," Jordan says.

The following is the full text of an open letter from Mr Timothy Adam
Chief Executive, Cable & Wireless(Cayman Islands) Ltd.

Grand Cayman urgently needs military intervention to restore and to preserve law and order. This needs to happen TODAY.

No doubt US authorities are already aware of the widespread looting that has occurred. I have heard sporadic attempts at looting continue to occur. I got caught in traffic right beside a site where police had shot several times at a looter and had detained him, and there was a near riot - a very volatile situation to which police responded promptly with heavy assault weapon teams.

NEW YORK (Reuters) - U.S. corporations are increasingly shifting billions of dollars in profits to tax havens, far away from Uncle Sam and the Internal Revenue Service, according to a study of federal data from 1999 to 2002.

The study, done by Tax Analysts, a nonprofit organization, said the profits of U.S. corporations' foreign subsidiaries in 18 tax havens rose from $88 billion to $149 billion in 2002. Total profits of U.S. foreign subsidiaries worldwide stood at $255 billion in 2002. According to the Commerce Department, total nonforeign corporate profits in 2002 were $716.8 billion.

by Amanda Banks -

The Anguilla financial services industry will be spotlighted this week at the Asia Offshore 2004 Conference, a four-day event hosted by the Asia Pacific Offshore Institute (APOI) which commences in Shanghai today.

At this year’s conference, themed 'A Brave New World – Investing into and Keeping Abreast with the Offshore Financial World,' Anguilla will be represented by, among others, Ms. Pam Webster, partner with Anguilla based law firm Webster Dyrud Mitchell and President of the Anguilla Financial Services Association (AFSA), the body responsible for promoting Anguilla’s offshore sector.

PINAR DEL RIO, Cuba (AP) — Whipping winds and walloping waves lashed western Cuba and the communist country's tobacco-growing region Monday, as Hurricane Ivan strengthened to a Category 5 storm — the most powerful — and barreled along on a new course toward the U.S. Gulf Coast. The slow-moving storm, carrying 160 mph winds, has killed at least 68 people in the Caribbean and Venezuela and could hit the Florida Panhandle, Louisiana or Mississippi by Wednesday. (Related item: Track the storm)

Ivan swirled toward cropland that produces Cuba's famed cigars, a region still recovering from the effects last month of Hurricane Charley. About 1.3 million Cubans were evacuated from particularly vulnerable areas.

by Glen Shapiro -

A Dallas, Texas court has ordered that the settlor of a Bahamas trust, John Eulich, should pay a fine of US$5,000 a day until he complies with a court order to supply trust documents to the Internal Revenue Service. After 30 days, the daily fine will increase to US$10,000.

When the IRS served a formal request for documents from the trust, Mr Eulich refused to provide the documents and claimed that he had no control over the trust and had exhausted his powers to try to get the documents. Judge Sam A Lindsay of the District Court disagreed, holding that the Settlor could still attempt to get the documents from the trust by appointing new administrators and by filing a lawsuit in the Bahamas. At any rate, the Court stated, it was not going to recognize the Settlor’s “impossibility defense” because the impossibility was self-created, i.e., the Settlor’s own drafting caused the impossibility.

As emerging economies in Eastern Europe, Latin America and Asia continue to mature, financial firms - including Citigroup, General Electric and major European banks - are stepping up efforts to bring retail banking services to developing nations.

These firms, watching the erosion of U.S. and European banking profit margins, are increasingly willing to face the risks of setting up retail operations, such as offering checking and savings accounts and credit cards, in new markets. These initiatives, if successful, can provide a foot in the door for future growth, according to Wharton professors and banking executives.

Latin America's largest economic powerhouses, Mexico and Brazil, are enjoying a real estate revival that neither country has seen in years. Big-picture economic fundamentals, politics and recent laws welcoming foreign investment are helping to trigger building sprees in residential and commercial properties, observers say. As Rogerio Basso, a Miami-based Latin America specialist for Ernst & Young's hospitality and real estate advisory service, puts it: "There are good expectations for growth in both countries."

The region's boomlet follows lows of 2001, when regional real estate prices dropped 25%, with office space reporting the sharpest falls. Reasons for the slide varied. In Mexico, there was considerable fallout from the terrorist attacks in the U.S. In Brazil and Chile, markets suffered the effects of Argentina's lingering recession.

Hong Kong’s financial regulator, the Securities and Futures Commission is to review the regulation of hedge funds with a view to relaxing certain rules governing the sales of funds to investors, it has emerged.

The SFC is said to be currently considering changes to a number of key rules, including an expansion of the number of jurisdictions in which fund managers and advisors must be licensed.

Existing SFC rules stipulate that advisors and managers must be registered and based in Australia, France, Germany, Ireland, Hong Kong, Luxembourg, the United Kingdom or the United States. A hedge fund must also have at least two investment executives with a minimum five years' hedge fund experience each.

By Phillip Morton -

A new investment product has been launched by the UK-based Barclays Bank that enables small investors to match hedge returns with a stake of as little as £3,000 ($5,340).

The Protected FTSE Hedge Fund Plan, available through the Woolwich, part of the Barclays Group, aims to track the performance of the FTSE Hedge Fund Index launched earlier in the summer.

By Andrew Ragouzeos -

"If you don't know how it's being used, you don't know if it's being abused," says ACLU of Connecticut executive director Theresa Younger, criticizing the lack of checks and balances she sees in the USA PATRIOT Act.

"It's essential that people trust their government to some extent. Let's face it, without the PATRIOT Act, law enforcement still has a lot of invasive tools in its arsenal. But I think that the necessary safeguards are in place that really mandate that we use the act correctly," counters U.S. Attorney for Connecticut Kevin O'Connor.

By Tarek Al-Issawi -

DUBAI, United Arab Emirates - Osama bin Laden's operatives still use this freewheeling city as a logistical hub three years after more than half the Sept. 11 hijackers flew directly from Dubai to the United States in the final preparatory stages for the attack.

The recent arrest of an alleged top al-Qaida combat coach is the latest sign that suspected members of the terrorist organization are among those who take advantage of travel rules that allow easy entry. Citizens of neighboring Gulf states such as Saudi Arabia can come to Dubai without visas, which other nationalities can get at the country's ports of entry.

By Kevin G. Hall -

SANTIAGO, Chile - Investigative Judge Sergio Munoz, who's looking into sources of former Chilean strongman Augusto Pinochet's millions, may well determine whether one of Latin America's once most feared dictators dies a convict.

"I don't feel any weight on me," said Munoz, 47, a professorial man up against some of his country's most aggressive lawyers. "I will do everything to make clear all the facts. You can be sure of that."

Tax investigation specialists at Grant Thornton are urging all companies with connections to offshore tax havens to review all relevant transactions in the light of a new Inland Revenue crackdown on cross-border tax fraud.

Gary Ashford, senior tax investigations manager, said: "We are aware the Revenue has recently set about reviewing the files of all companies and individuals with offshore connections as part of a national initiative.