Wealth International, Limited

Offshore News Digest for Week of May 5, 2003


The Internal Revenue Service’s partial amnesty program for taxpayers who have been hiding money in offshore accounts netted more than 1,200 people and, based on a partial analysis, more than $50 million in uncollected taxes, the agency said.

The agency has brought court action against Visa International, MasterCard Inc. and others to obtain lists and records of holders of offshore cards. At one time, the agency thought there might be as many as 2 million Americans holding such cards, even though only 100,000 to 200,000 report having them. There were also some outside estimates that the government might be losing as much as $70 billion a year to offshore tax evasion.

While those numbers now seem to have been high, the IRS is pressing forward against promoters and others who have encouraged taxpayers to try these schemes. One condition of obtaining the amnesty was for the taxpayer to explain to the IRS how he or she got into an offshore scheme and identify the promoter.

More on this story here.


The right-wing Swiss People’s Party is maintaining a narrow lead over the other three main political parties, according to the latest poll for this year’s general election. With 25.3%, the People’s Party is still slightly ahead of the center-left Social Democrats. Compared with the previous poll conducted in March, the popularity of the Social Democrats remains unchanged at 24.2%.

More on this story here.


Liechtenstein is so small that the whole state can be hired for corporate events and the entire population is invited to drinks at the royal castle on the national holiday. The capital does not have a railway station, let alone an airport, and a nationwide tour takes just two hours.

And yet the handkerchief-sized country -- 15 miles long and less than 8 miles wide -- offers stunning views, breathtaking mountain hikes and absolute tranquility alongside exclusive stores, top-notch cultural attractions and gourmet cuisine.

The jewel in the crown is the Kunstmuseum (art museum), a sleek and airy creation which sends devotees of architecture and fine art alike into raptures. It contains a striking mix of modern artists such as Andy Warhol and Old Masters from the prince’s priceless collection.

More on this story here.


Plans to eliminate “unfair” tax competition in Europe by scrapping the national veto on tax will be proposed this month by Valery Giscard d’Estaing, the man drawing up a new EU treaty. His plan, designed to stop some EU members poaching inward investment and savings by setting very low tax rates, has the backing of most member states, including France and Germany.

The former French president believes that without reform, the EU single market will be distorted as countries embark on a damaging race to undercut each others’ company tax rates.

Britain was seen by many as a pioneer of tax competition in the 1980s, cutting corporation tax from 52%t to 35%, but Ireland today is the pace-setter with a rate of just 12.5%. Both countries say such competition is healthy. They have vowed to block Mr Giscard d’Estaing’s proposed treaty unless the national veto on tax reform is retained.

More on this story here.


The Maltese property market has enjoyed somewhat of a boom in the recent times and some of the Island’s estate agents attribute this to Malta’s closer links with the European Union. Figures published by the Maltese Ministry of Finance seem to substantiate this view. They reveal that in the previous year, some 465 permits were granted to non-residents to purchase property on the island (worth €75.8 million) against a figure of 168 permits worth €13.2 million in 1997.

Another factor has been a substantial reduction in stamp duty from 17% to 5% in recent times which has stimulated the domestic market. As a result of EU membership, Maltese citizens will now be permitted to purchase second homes once they have satisfied a five year residency requirement.

More on this story here.


Sharp increases in the Swiss currency have been a major concern to exporters and international firms who report in francs. However, the swift end to the war in Iraq has seen the franc slide. Global investors traditionally view Switzerlands currency as a safe haven during times of conflict.

The euro has risen in value above SFr1.51 for the first time in more than 18 months, clear of what many businesses regard as the crucial SFr1.50 pain threshold. However, Niklaus Blattner, vice-chairman of the bank’s three-member board, expressed concern that the US dollar to Swiss franc rate (SFr1.35) was still hurting exporters.

Switzerland’s economy remains severely restricted by the economic downturn in its key European and North American trading partners. In an attempt to boost growth, the SNB has eased monetary policy by setting record-low interest rates.

More on this story here.


The Swiss Federal Banking Commission has called for tougher surveillance and stricter measures to deal with abuse in the financial sector, including insider trading. It says existing laws governing financial dealings are outdated, too complicated and incomplete.

In a bid to modernize the existing system, the government in 2001 commissioned a panel of experts to assess the existing system of sanctions and to draw up a set of suggested amendments. The Commission has now proposed to that panel the creation of a set of new sanctions and procedures for investigating and disciplining institutions found to be in breach of financial law.

More on this story here.


JP Morgan Private Bank, the number one private bank in the US, has set its sights on dislodging UBS and Credit Suisse, the two biggest Swiss banks, from their dominant position in servicing Europe’s billionaires. The private bank, which has $211 billion in private client assets, believes many of the advantages that give Swiss banks a competitive edge in “offshore” banking, particularly secrecy, are not as powerful as they once were.

More on this story here.


The long debate that was supposed to produce a verdict this month on whether to push for the euro as Britain’s currency has instead lapsed into a contest over how much longer to postpone the final reckoning. Reaching a decision on the euro was never going to be easy because it is a freighted subject in Britain, extending well beyond economics to engage the politics of sovereignty and national identity. Some Britons dismiss this island nation’s traditional standoffish relationship with the Continent as dated, but many others consider it defining.

The issue has caused divisions within business, labor unions and political parties since Labor came to power in 1997 promising, as Prime Minister Tony Blair described it, to fulfill Britain’s destiny to be at the heart of Europe. It has also attracted public attention because it sets Mr. Blair at odds with his internal rival for influence over Britain’s future, Chancellor of the Exchequer Gordon Brown.

Britain, Denmark and Sweden are the only European Union countries that have not adopted euro notes and coins, and more than 300 million Europeans now use them as their national currency. The 12 countries that made them legal tender in January 2002 are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. Many of the 10 countries from Eastern and Southern Europe soon to enter the union are likely to want to join them.

Opponents of the euro point out that Britain, with its pound sterling, has more economic stability, lower inflation and less unemployment than the countries in the so-called eurozone.

More on this story here.

Britain and the euro: Five tests and a funeral. By the first Week of June, Gordon Brown, the chancellor of the exchequer, must announce the results of the most comprehensive study the Treasury has ever made of a single decision: whether or not Britain should join the euro. His answer will be: not yet. This will make it virtually impossible to join the euro before the next election, which will probably be in 2005.

At the study’s heart are five tests. Are business cycles and economic structures compatible so that Britain can live permanently with euro interest rates? If problems emerge is there sufficient flexibility to deal with them? Would joining the euro encourage investment? How would the City of London be affected if Britain joined the euro? And will joining the euro promote higher growth, stability and a lasting increase in jobs? Leaked reports suggest that four out of the five tests will be “failed”.

More on this story here.


WASHINGTON: The Bush administration and leading Senate Republicans sought to give the Central Intelligence Agency and the Pentagon far-reaching new powers to demand personal and financial records on people in the United States as part of foreign intelligence and terrorism operations, officials said.

The proposal would have given the C.I.A. and the military the authority to issue administrative subpoenas -- known as “national security letters” -- requiring Internet providers, credit card companies, libraries and a range of other organizations to produce materials like phone records, bank transactions and e-mail logs. That authority now rests largely with the Federal Bureau of Investigation, and the subpoenas do not require court approval.

The surprise proposal was tucked into a broader intelligence authorization bill now pending before Congress. After raising objections, Senator Dianne Feinstein of California and other Democrats succeeded in getting the provision pulled from the authorization bill, at least temporarily.

Democrats and civil liberties advocates said they were alarmed by the idea that the C.I.A. and the military could begin prying into Americans’ personal and financial records. They said that while the F.B.I. was subject to guidelines controlling what agents are allowed to do in the course of an investigation, the C.I.A. and the military appeared to have much freer reign. The F.B.I. also faces additional scrutiny if it tries to use such records in court, but officials said the proposal could give the C.I.A. and the military the power to gather such material without ever being subject to judicial oversight.

More on this story here.

Privacy villain of the week: senate backroom negotiators. More often than not, villains operate away from the light. Thus many deals of old were struck in the “cloakrooms” of the US Capitol, deals that would be frowned upon were they made in the light. Though the cloakrooms are outmoded in these days of instant communication, the behind-the-scenes dealing remains. This week we examine an attempted deal that should it ever come to fruition would represent a serious diminuntion of privacy and civil liberties for Americans.

More on this story here.


The government requested and won approval for the highest-ever number of special warrants last year for secret wiretaps and searches of suspected terrorists and spies, an increase of 31% over 2001, the Bush administration disclosed Thursday. Attorney General John Ashcroft revealed the figure in a mandatory, two-paragraph report to U.S. court officials.

Last year’s figure was the first to reflect an entire 12-month period under the Patriot Act, the law passed immediately after the Sept. 11 terror attacks that allows the FBI to use such warrants in investigations that are not mostly focused on foreign intelligence.

Operating with permission from a secretive U.S. court that meets regularly at Justice headquarters, the FBI has used such warrants to break into homes, offices, hotel rooms and automobiles, install hidden cameras, search luggage and eavesdrop on telephone conversations. Agents also have pried into safe deposit boxes, watched from afar with video cameras and binoculars and intercepted e-mails.

More on this story here.

Only one wiretap order requested by state and federal prosecutors last year was refused, the first time in four years courts had rejected such a request, government data showed. The rejected wiretap request was among 1,359 applications filed in state and federal courts last year for investigations other than terrorism.

Meanwhile, Attorney General John Ashcroft reported separately that antiterrorism investigators had a better score in 2002 despite one small hurdle, eventually winning all 1,228 applications for wiretaps and search warrants from the Foreign Intelligence Surveillance Act (FISA) Court.

“Isn’t it amazing?” scoffed New York defense lawyer Gerald Lefcourt, a past president of the National Association of Criminal Defense Lawyers, who said he defended some 50 cases involving wiretaps. Mr. Lefcourt found it “unbelievable” that any application was denied and said some prosecutors shopped for judges when applying for warrants. “In most jurisdictions, there are no rules. They go to the judges they know will sign them.”

More on this story here.


Charges against Lynne Stewart, a New York human-rights lawyer, strike at the heart of the U.S. Constitution’s Sixth Amendment guarantee that all people accused of a crime are entitled to effective representation by an attorney. Courts have long held that attorney-client confidentiality is essential to that right; without the ability to speak freely about what they have, and have not, done, defendants are severely impaired from learning their legal status and options, and attorneys cannot mount the best defense. But Stewart’s case has broader implications. In the future, attorneys will be less willing to represent clients like Sheikh Omar Abdel Rahman, who is serving a life sentence in connection with the first World Trade Center bombing in 1993 and who Stewart represented as a member of his court-appointed defense team.

Since Stewart’s indictment, Ashcroft has gone further, declaring noncitizens, and later, U.S. citizens as well, “enemy noncombatants” so as to hold them indefinitely without charges, denying access to any attorney at all. Whether or not the “enemy noncombatant” ruse is eventually ruled unconstitutional, Stewart’s case risks setting a precedent that could literally destroy an accused terrorist’s right to counsel -- while allowing the government to choose who qualifies as a “terrorist”.

Ashcroft’s provisions, announced and implemented without public notice or comment less than three weeks after 9/11 allow the monitoring of attorney-client conversations without a court order or supervision or even the suspicion of criminal behavior by the attorney, if the client is accused of terrorism. The regulation allows surveillance “to the extent determined to be reasonably necessary for the purpose of deterring future acts of violence or terrorism.” The Department of Justice alone does the determining. Among other things, such monitoring allows the government complete access to everything the defense knows and every strategy the defense plans.

Lynne Stewart is a guinea pig -- a chance for the Bush administration to see how far it can push its evisceration of the Bill of Rights. The attack on attorney representation is only one of a staggering number of its post-9/11 assaults on the Constitution, but it is one of the most important.

More on this story here.


Using magnetic resonance imaging machines that detect the ebb and flow of brain activity, researchers have become so good at peering into the workings of the human mind that their work is raising a new and deeply personal ethical concern: brain privacy.

One study of white students found that although they expressed no conscious racism, the seat of fear in their brains still fired up more when they looked at unfamiliar black faces than at unfamiliar white faces. Another recent imaging study reported that certain parts of the brain work harder when a person is lying than when telling the truth, raising the prospect of a brain-based lie detector. A marketing research company is already starting to use the machines to gauge consumers’ unconscious preferences by looking at the pattern of brain activity as they respond to products or messages.

Brain-scanning is too new and imperfect to have engendered real-life tales of invasion of brain privacy, but controversy is easy to imagine. What if a court, a potential employer, or a suspicious spouse wants to scan an individual’s brain for telltale signs of something she would prefer not be known or something the individual may not even know about himself?

More on this story here.


The American Civil Liberties Union of Nevada has been joined by publishing groups and the American Library Association in protesting an order by a federal judge that restricts tax critic Irwin Schiff from selling one of his books, The Federal Mafia. A brief filed in U.S. District Court Thursday by the ACLU states that the order is a prior restraint, but attorneys for the tax division of the Department of Justice say that parts of the book are commercial speech and not protected by the First Amendment.

Schiff, 75, is under investigation by the IRS on allegations that he and his associates conduct seminars and sell materials designed to help customers evade federal taxes. The Federal Mafia rails against the tax system, but also contains a section that the government alleges provides step-by-step instructions for filling out income tax returns falsely, listing no income and no tax due.

Joining the ACLU and the American Library Association in the brief are the Association of American Publishers, the American Booksellers Foundation for Free Expression, the Freedom to Read Foundation and the Pen American Center, an association of over 2,600 literary writers.

More on this story here.


While errors in the Transportation Security Administration’s “no-fly” list have famously raised the ire of innocent air travelers misidentified as terrorists, it is far from the only government watch list in use. In a report released last week, the General Accounting Office, Congress’ investigative arm, counted no fewer than 12 different government databases cataloging purportedly dangerous people, maintained by nine different federal agencies and accessed by 50 others -- a tangled web of largely incompatible systems that the GAO would like to see merged into one.

Consolidating the watch lists would benefit national security, investigators conclude. Some of the government agencies involved agreed with the GAO that more sharing of data should occur, but seem less eager to create a single Super Watch List.

More on this story here.


The United States and United Kingdom are restricting the basic financial rights of offshore jurisdictions, a top bank official has charged. Responding to petitions filed by the US IRS that Leadenhall Bank & Trust Company’s clients used offshore accounts or credit cards to avoid paying millions of dollars in taxes, William Jennings, Managing Director of the institution, maintained that Leadenhall has not been contacted by the IRS over the tax-collection issue.

“We have not been contacted by the IRS or any other government agency,” Mr Jennings insisted. “People from all over the world, not just the United States, have accounts in jurisdictions outside their home countries, and for many reasons, which have nothing to do with mitigation of taxes.”

More on this story here.


Out of 2 million alleged tax scofflaws 1,257 confess.

More on this story here (Subscribers only).


Congressional Republicans are considering slashing taxes for this year on corporate cash held overseas, to encourage big U.S. multinationals to bring home as much as $300 billion in offshore profits to help stimulate business investment in the U.S., Tuesday’s Wall Street Journal reported.

The move, which could be added to the Senate’s tax-cut bill or other legislation, would trim the 2003 U.S. tax rate on repatriated earnings from some foreign operations to 5.25% from the current 35%. It is intended to attract money away from controversial offshore tax havens -- where some companies park funds for years -- by creating a temporary tax haven at home.

More on this story here.


US citizens living abroad can currently get a tax waiver of up to $80,000 of income, while couples can get a break on $160,000 annually. If US media is to be believed, Republicans are keen on taking away this tax break.

More on this story here.


The FATF session’s agenda will include draft amendments to the organization’s 40 recommendations on ways to counter money laundering. One of the amendments calls for expanding the number of agencies authorized to report suspicious financial operations.

More on this story here.


Guernsey’s early decision to choose the withholding tax option over exchange of information under the EU savings tax directive has complicated Jersey’s decision making process on the issue, which has yet to decide the most suitable option to take.

Policy and Resources president Senator Frank Walker said that making the wrong decision on the matter could cause business to transfer from one island to another to take advantage of the more favorable regime. Another factor to be considered is the potential change in systems large firms will have to undertake to be compliant with new rules.

More on this story here.


Isle of Man Chief Minister Richard Corkill, accompanied by chief secretary Mary Williams, visited the Swiss capital last week where talks were held with the Swiss authorities on European issues such as the Savings Tax Directive, and developments involving the OECD.

Corkill told the IoM Online that the visit proved to be a useful two way exercise, and would be very helpful in aiding the Island’s decision making process with regards to the exchange of information or withholding tax options in relation to the EU tax directive.

More on this story here.


Foreign aid to the Pacific islands should be suspended, or at least radically overhauled, to rectify the economic problems facing small, unstable nations, according to an independent study published by the Centre for Independent Studies, an Australasian public policy think-tank.

The Pacific islands have received $50 billion in aid since 1970, with Australia the largest donor. But because aid flows were not earned income, they created economic “rents” that distort economies and added to the region’s difficulties, said Helen Hughes of the Centre. “(Aid) can be spent on projects and programs of the recipient’s choosing -- on consumption rather than investment. Because they bias an economy against the private sector, they undercut employment and growth and lead to corruption.”

More on this story here.


Just six short months ago the Republican party won a stunning victory in the 2002 election, increasing its majority in the House of Representatives and retaking the Senate. With Republicans controlling both Congress and the White House for the first time in fifty years, many assumed legislators would push a socially and fiscally conservative agenda.

The supposedly conservative Congress overwhelmingly passed a foreign aid bill that could have come straight from the desk of the most liberal Democrat. The legislation sends $15 billion of your tax dollars to Africa, ostensibly to fight AIDS by distributing condoms, providing sex education, and funding abortion providers. Needless to say the bill gives money to some very questionable organizations and programs, and will undoubtedly pad the bank accounts of some of the worst governments in the world.

House leadership, often characterized in the mainstream press as far-right wing, actively promoted and praised the bill. A Republican press release after the vote gushed that “This bill is a moral crusade... to save a continent from the Great Plague of our age.” So much for the socially conservative agenda of the GOP! Opposition to the bill was minimal, although 40 Republicans did cast principled votes against it.

The United States has sent billions and billions of dollars overseas for decades to do fine-sounding things like “building democracy,” “fighting drugs,” and “ending poverty.” Yet decades later we are told that in every category these problems have actually gotten worse.

More on this story here.


BAGHDAD: In the hours before American bombs began falling on the Iraqi capital, one of President Saddam Hussein’s sons and a close adviser carried off nearly $1 billion in cash from the country’s Central Bank, according to American and Iraqi officials here.

The removal of the money, which would amount to one of the largest bank robberies in history, was performed under the direct orders of Mr. Hussein, according to an Iraqi official with knowledge of the incident. The seizure of the money was confirmed by a United States Treasury official assigned to work with Iraqi financial officers here to rebuild the country’s banking and financial system.

The sheer volume of the cash was so great -- some $900 million in American $100 bills and as much as $100 million worth of euros -- that three tractor-trailers were needed to cart it off, the Iraqi official said. It took a team of workers two hours to load up the cash. Their work was completed before employees of the downtown Baghdad bank arrived for work.

More on this story here.


Those who believe that globalisation throttles democracy, gouges the poor and fouls the environment are bound to regard today’s mostly open markets for international capital as evil. However, this does not prove that unimpeded flows of capital are a good thing. The capital market has vindicated its critics and embarrassed its would-be defenders too often of late. It has been responsible for, or at least deeply implicated in, some very costly economic breakdowns. Perhaps the anti-globalists are on to something.

Trade is good. But even the most enthusiastic advocate of economic integration may be starting to wonder whether unimpeded flows of capital are quite such a blessing. Economic principles suggest that they should be. Economics relies heavily on the idea that wider opportunities make people better off -- or at least that they do not make them worse off. Whatever else trade does, it widens opportunities.

Essentially the same logic applies to international finance. Just as a closed economy can consume only what it produces, it can invest only what it saves -- no more, no less. Trade in capital makes it possible for countries to separate their saving and investment choices.

So how can you be worse off if you are given choices you did not have before, without being obliged to take them up? The answer is that you may make choices you come to regret.

More on this story here.


The dollar continued its slide against the euro and the yen on Monday, as new data indicated that the foreign appetite for United States stocks and bonds was slowing. Recent data from the Treasury showed that net purchases of United States stocks and bonds by foreigners slowed to $23.8 billion in February, the third consecutive monthly drop in foreign purchases. The decline in February was 31.2%. It came after an 8.1% decline in January and a 46.1% fall in December.

“The dollar is suffering from a two-prong situation,” said David Puth, global head of foreign exchange and commodities at J. P. Morgan. First, he said, the United States’ current account deficit has grown to about $500 billion with the rest of the world, and the flow of investment from abroad has to continue to cover that gap. So the slowing of that flow hurts the dollar. Second, interest rates in the United States are low, and higher yields abroad are attracting investors away from the dollar.

More on this story here.


Thanks to his late owner, a wealthy widow, Tinker, a former stray, now lives in some splendor in his own house, valued at $560,000, and dines on fish bought from his $160,000 trust fund. The will of Margaret Layne, 89, published in The Times newspaper on Tuesday, named Tinker as the beneficiary of a large chunk of her estate, including her house in Harrow, northwest London.

When he dies, the estate will pass to the trustees, Layne’s former neighbors, Ann and Eugene Wheatley, who deliver Tinker’s food and milk each day. Wheatley said recent stock market falls had hit Tinker’s trust fund but “there’s a limit to what you can spend it on.”

More on this story here.


Since December, the government has collected reams of personal info on foreign students, visitors, workers, and people who want to live in the U.S. To date, the public has no clear idea about how the information will be used, who will have access to it, and what will happen to it when it is no longer needed.

More on this story here.

The INS estimated there were seven million unauthorized foreigners in the US in January 2000, twice the 3.5 million estimate for 1990. Some 13.5 million foreigners are estimated to have arrived in the 1990s, and eight million of these 1990s arrivals were living in the US legally in 2000, suggesting 5.5 million unauthorized residents who arrived in the 1990s. An additional 1.5 million unauthorized foreigners are estimated to have arrived in the US before 1990 and were living in the US in 2000, for a total seven million.

About 4.8 million or 70% of the unauthorized were Mexicans, up from two million, 58%, in 1990. More than 100,000 unauthorized foreigners from El Salvador, Guatemala, Colombia, Honduras, China and Ecuador, were living in the US in 2000. California had the most unauthorized foreigners, 2.2 million or a third of the total, so that almost 7% of California residents were unauthorized.

More on this story here.


PARIS: Setting aside differences over the Iraq war to cooperate against terrorism and crime, the United States and France agreed today to lead a high-level international study of how to use new, biologically based technologies to prevent forgeries of passports and other travel documents.

The United States and France will co-chair a high-level working group of the Group of Eight industrialized countries to develop so-called biometric technologies, which typically use fingerprints, iris scans or facial recognition software to confirm identities and ensure that documents are valid.

French Interior Minister Nicolas Sarkozy predicted that all passports and other travel documents will have a biometric element within five years.

More on this story here.


The French government gave members of Saddam Hussein’s regime passports that would allow them to enter Europe and escape the coalition’s hunt for top Iraqi officials, The Washington Times reported Tuesday. U.S. intelligence officials told the Times that an unknown number of Iraqi regime members were given French passports by French officials in Syria. The report could not be independently confirmed.

Nathalie Loiseau, a spokeswoman for the French Embassy in Washington, told the Times that French authorities had not issued any visas or passports to Iraqi regime officials since the beginning of Operation Iraqi Freedom. “France formally denies this type of allegation, which is not only contrary to reality but is intended to discredit our nation,” she said. “It is certainly time for rumors of this type -- totally unfounded and a dishonor to those who spread them -- to stop.”

More on this story here.


NEW DELHI: The Union cabinet is likely to decide grant of dual citizenship to Indian expatriates living in seven countries at its meeting on Tuesday. The seven countries include the US, the UK, Canada, Australia and Hong Kong. They have been chosen as these countries themselves grant such facility to their citizens living abroad.

Persons holding dual citizenship will not have voting right and cannot stand for public office in India. They will, however, have all other rights that Indian citizens enjoy.

More on this story here.


The Bahamas has committed to bilateral negotiations for exchange of information in criminal matters by January 1, 2004, and for exchange of information in civil matters by January 1, 2006, Attorney General Alfred Sears said.

The Bahamas, he said, remains committed to international cooperation as “a responsible and significant” player in the international trade arena. However, he said, to avoid flights of services to competitors, the OECD, in order to achieve its objective of curtailing “harmful tax practices,” must apply the same standards to its own members. “Any TIEA that will affect The Bahamas will result from bilateral negotiations.”

More on this story here.

New financial services legislation on the cards for Bahamas. The Bahamian parliament intends to further review the provisions of the International Business Companies Act when it next meets, according to Minister of Financial Services and Investments Allyson Maynard Gibson. The number of firms relocating from the Bahamas to other jurisdictions in the region is said to be causing the government some concern.

Warning the Bahamas Institute of Financial Services that tough times may lay ahead, Maynard-Gibson told the bankers: “We must re-tool, re-train, and re-invent our products and ourselves. We must be competitive both in price and services. We must recapture the charm and diligent work ethic for which we were once known.”

More on this story here.


Trust and company businesses in Jersey should brace themselves for a perceptible increase in requests from the UK Inland Revenue in the near future, warned KPMG tax partner John Riva. The warning comes at a time when mainland tax authorities are showing an increasing interest in their residents’ banking activities in the Channel Islands. Last month, the Bank of Ireland wrote to around 400 customers with accounts at its Jersey branch warning that the Revenue Commissioners will be looking into their accounts in June to ascertain whether they have evaded Irish taxes.

More on this story here.


Inland Revenue said it had no idea how much tax revenue was lost as a result of wealthy New Zealanders becoming tax exiles -- and the Treasury admitted nothing was being done to encourage the rich to stay. Eleven of the best-known business leaders who have become “tax gypsies” have a combined worth of at least $2.1 billion, based on the valuations in last year’s National Business Review “Rich List”.

London is the destination for some of New Zealand’s most successful people. UK authorities have decided a tax haven makes sense, allowing wealthy migrants to live there for up to 18 years as de facto residents taxed only on UK-sourced income.

More on this story here.


Australian companies operating overseas stand to save hundreds of millions of dollars as part of a package to lighten Australia’s labyrinthine international tax system. The changes will be part of Federal Treasurer Peter Costello’s wide-sweeping tax cuts, to be handed down in his eighth budget next Tuesday. The changes will mostly exempt taxpayers from local rules when they are subject to comparable rules overseas.

The reforms will encourage Australians to invest in foreign-based investment funds and encourage foreigners who have assets in foreign superannuation funds to bring their skills to Australia.

More on this story here.


South African taxpayers working abroad and no longer filing tax returns in their home country may not be entitled to take part in the SARS (South African Revenue Service) Exchange Control Amnesty, some tax experts have warned. Although those who work for foreign corporations overseas remain South African residents for income tax purposes, they are not required to file a tax return at home, and this could prevent them for applying for amnesty protection, according to Geoff Kroon, a tax partner at Deloitte and Touche.

More on this story here.


The public face of Bacardi is the mischievous dancing cat in the ads. The private face is a secretive, family controlled empire that has been accused of plotting to undermine the Castro regime in Cuba and of fuelling a transatlantic trade war. Now, the deeply divided family has approved a motion that could eventually lift the lid on Bacardi: for the first time in its 141-year history, outsiders may soon be allowed to buy shares in the world’s biggest rum producer.

Two classes of shares will be issued: one for Bacardi family members and another for the rest. The former are likely to carry 10 times the votes of the latter, a measure designed to ensure the 600 or so family members never lose ultimate control. For the last decade -- which has seen the emergence of Bacardi as a global force in the world spirits market with operations in 170 countries -- those 600 individuals have owned a lucrative ticket.

More on this story here.


Florida is a leading location for people who illegally dodge taxes with offshore accounts, suggests a recent IRS effort to promote confessions. Although its population ranks only fourth among the states, Florida was the top location for people who acknowledged having offshore bank accounts to dodge Uncle Sam.

More on this story here.


GENEVA: The World Trade Organization has given the go-ahead for the European Union to impose a record $4 billion in annual trade sanctions against the United States. Wednesday’s decision is the last hurdle for the EU in its long-running dispute with the U.S. over tax breaks for multinational companies.

The European Commission, the EU’s executive arm, on Wednesday gave the U.S. until the autumn to change its tax laws or face punitive duties on up to 95 categories of products. The duties -- some as high as 100% -- could be slapped on U.S. products ranging from iron and steel, machinery, meat and vegetables, fur and textiles, wood, dairy, electronics and sound systems.

More on this story here.


The dollar remained under pressure on the foreign exchange markets on Wednesday, falling against the yen in the aftermath of the Federal Reserve’s signal about the risks of deflation. Economists said that by giving an implicit warning about the risk of deflation, the Fed had reduced the attraction of dollar assets at a time when the US was already struggling to attract money to fund its current account deficit.

The White House said on Wednesday it was monitoring the Fed’s views on deflation but declined to give its own assessment of the risks. Ari Fleischer, White House spokesman, said: “The Fed issued a report yesterday. They did not use that word [deflation] per se. But they did address that concern.” He added that the administration’s “strong dolla”q policy was unchanged.

More on this story here.


When the author of best-selling exposé Fast Food Nation turned his sights on America’s underground economy, he found a mountain of government hypocrisy among all the pot and porn. In Reefer Madness, his second book, author Eric Schlosser broadens his target from fast food and takes a swipe at what he sees as the river of moral and economic contradictions that run through America’s so-called “free market” economy.

“The free market ideology is a myth,” said Schlosser. “The government is intervening all the time in the market, but on whose behalf? Is it protecting somebody who wants to smoke marijuana in their home, a migrant worker forced to live in a cave, or, more likely, a multi-national corporation drilling for oil?” he said in a recent interview in London.

In his new book, Schlosser investigates three pillars of the American underground, marijuana, the traffic in illegal immigrants and pornography, and asks why some private pleasures are strongly punished while public crimes can pass unnoticed.

“The average convicted killer spends 11 years in prison in the United States and 110,000 people are killed every year by alcohol, but the punishment for possessing even a small amount of marijuana can be life in prison. At a time of so-called ‘Orange and Red’ terror alerts, the government is using scarce law enforcement resources to round up people making bongs and roach clips and thousands are in prison for marijuana offences,” he said.

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The U.S. Department of Treasury, the Financial Crimes Enforcement Network, and seven federal financial institutions have just released final guidelines on § 326 of the USA Patriot Act, which establish minimum requirements that financial institutions must meet in verifying the identity of new customers. Financial institutions have until October 1, 2003 to come into full compliance. Fortunately, certain software products are coming to the marketplace that are designed to reduce annual losses related to identity fraud in the financial services industry and to provide alternatives to help financial institutions comply with the § 326 guidelines.

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The WorldCompliance home page promotes a couple of their products. “FraudCheck” allows one to check for known or suspected terrorists from many governmental black lists (OFAC, FBI, Bank of England, to name but a few). Furthermore it gives one access to information on nearly 500,000 individuals or legal entities featured in regulatory warnings, court cases or investigative articles. This data is compiled from more than 200 international data sources, such as regulatory and enforcement agencies around the globe.

“PEPCheck” allows one to identify more than 45,000 “Politically Exposed Persons” in over 220 countries. PEPCheck contains the names of current and former senior officials of governments, senior officials of major parties and senior officials in military positions. (The Patriot Act explicitly requests enhanced due diligence if the client is considered to be a Politically Exposed Person/Senior Political Figure.)

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PATERSON, New Jersey: Librarians across the country are rising up against the USA Patriot Act (search), shredding records and making other attempts to thwart the legal framework in the war on terror. Librarian Cindy Czesak is in the vanguard of the rebellion at the Paterson Public Library in Paterson, N.J., a densely-populated Middle Eastern community.

The FBI came to Czesak after Sept. 11 looking for information on two of the hijackers who reportedly had used library computers. The library complied with the federal subpoenas, but Czesak and some of her colleagues are now leery of the act. FBI agents also seized two computers from a Delray Beach, Florida, library because they thought some of the Sept. 11 hijackers used public computers there to communicate.

“The Patriot Act definitely scares me because we see it being carried to the nth degree,” Czesak said.

Across the country, citizen councils have been passing resolutions opposing what they consider to be the most infringing aspects of the law on people’s civil liberties. The Alameda County Library Advisory Commission in California recently approved a resolution supporting a bill spearheaded by Rep. Bernie Sanders, Independent-Vermont, that would protect library users’ personal information and library records obtained through new government surveillance laws.

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A Latino legal analyst said a series of anti-terror measures under consideration in the U.S. Congress, known as Patriot Act II, would enable the Justice Department to deport, deny legal residence and even strip the citizenship of immigrants, with virtually no oversight or checks on this power.

Taken together, the proposed reforms will “radically accelerate” the removal of undocumented immigrants and permanent U.S. residents, and limit their ability to mount a defense, according to Juan Jose Gutierrez, coordinator of the immigrant rights group Movimiento Latino USA, writing in the Sunday, April 13 edition of Los Angeles Spanish-language daily La Opinion.

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Sixty-seven years ago, the Supreme Court reviewed a case involving a confession coerced by torture from a black defendant in Mississippi. The deputy sheriff who presided over the interrogation admitted that the defendant had been whipped, “but not too much for a Negro”. The Supreme Court rejected that reasoning and held that the due process prohibition on coerced confessions applies equally to all detainees, no matter what their race.

Last week the Supreme Court resurrected a due process double standard, ruling that incarcerating people without any individualized showing of need was not too much for an alien. By a 5 to 4 vote, the court for the first time upheld a law authorizing the preventive detention of individuals on a categorical basis. It did so by insisting that the constitutional guarantee of due process means something different for a noncitizen than for a citizen, thus reneging on its own statement 50 years earlier that the due process clause does not “acknowledge any distinction between citizens and resident aliens”.

Since September 11 the government has for the most part not asked the citizenry to make that difficult choice, but instead has offered to sacrifice the liberties of foreign nationals -- especially Arab and Muslim foreign nationals -- for the security of the rest of us. That is an easy political choice, as foreign nationals cannot vote. But precisely for that reason, it is the court’s obligation to resist such double standards. Yet last week’s decision openly endorses double standards discriminating against the nation’s most vulnerable population. History shows that what the government does to foreign nationals in the name of national security eventually gets extended to U.S. citizens.

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The Computer Assisted Passenger Prescreening System II (CAPPS II) would only use basic passenger information to verify identity and then determine risk, which is presented in a score and its corresponding color: red, yellow or green. The information would not be shared beyond TSA officials or necessary law enforcement, and the information will be destroyed after the passenger has traveled, TSA Administrator Adm. James Loy told Congress.

CAPPS II is expected to reduce random searches, confusion among people with names that match those on watch lists, and what some people call racial and gender profiling, Loy said. Currently, 15% of airline travelers undergo additional security screening, and the new system is intended to reduce that number, he said.

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Leaders of two much-criticized projects that privacy advocates fear will collect massive amounts of data on U.S. residents defended those initiatives before Congress, saying their scope will be much more limited than opponents fear.

James Loy, director of the Transportation Security Administration (TSA), and Anthony Tether, director of the Defense Advanced Research Projects Agency (DARPA), countered concerns, saying that neither the TSA’s proposed Computer Assisted Passenger Prescreening System (CAPPS II) nor DARPA’s Total Information Awareness (TIA) research project would house new volumes of data that could be later used to check up on U.S. citizens.

Asked how DARPA would ensure that any information about U.S. residents caught in TIA’s net would be correct, Tether said that is up to agencies like the FBI to decide. “At DARPA, we develop the tools,” he said. “We don’t collect any data. We’re not the people who collect data; we’re the people who supply the analytical tools to the people who collect the data.”

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Be warned: law, once a shield of the innocent, is now a weapon in the hands of government. Conservatives generally ignore such warnings, feeling that criticism of the criminal justice system plays into the hands of criminals.

Accidents and civil offenses have been criminalized, and the prohibitions against crimes without intent, retroactive law, and self-incrimination have been removed. Even the attorney-client privilege is being eroded. Conservatives are not alarmed by these developments. They continue to support sweeping definitions of criminal liability and harsher penalties.

Prosecutors have been granted wide discretion by social welfare regulation, which criminalizes behavior that bears no relationship to moral wrongs (such as murder) which traditionally defined criminal acts. Today Americans draw prison sentences for unknowingly violating vague regulations, the meanings of which are interpreted by the regulatory police who enforce the regulations.

The fact that law is interpreted and enforced by unelected regulatory authorities violates the requirement of our political system that law must be accountable to the people. Law, which once served a concept of justice, has been replaced by a tyranny that answers only to the conscience of prosecutors.

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The most absurd aspect of the entirely rhetorical “war” on terrorism is that people from rich industrialised countries would be forced to buy new “smart” passports while people from undeveloped countries -- where most terrorists come from -- will presumably not.

In a speech, Oliver Letwin, shadow home secretary, bemoans the way bureaucracy penalises the innocent or vulnerable while the guilty are untouched. Mary Martin, an American-born grandmother who has lived in Britain for 54 of her 56 years, was nearly deported because the Home Office wanted to be seen to be doing something about asylum.

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Belgians wishing to travel to the US after 16 May on a non-electronic passport must apply for a non-immigrant visa costing €100, announced the American Embassy in Brussels Wednesday. New Belgian passports, which can be read electronically, will be exempt from the prerequisite, but the thousands who hold an older version will face the charge.

A sharp upturn in the number of people applying for the new version of the passport is expected in the wake of the announcement.

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