Wealth International, Limited

Offshore News Digest for Week of September 1, 2003


All of the loving favorable press surrounding Google’s fifth anniversary is just too perfect, too sweet, too “Gosh, how wonderful”. This cloying, worshipping, fawning fountain of positive press is way too good to be true. Google’s PR people have put in overtime working Jedi Mind Tricks on the mainstream media. For that, I bow to them, and admire their cunning. Don’t get me wrong, I use Google without a second thought, have the Google tool bar installed both at home and work, and will likely buy the O’Reilly book that tells me how to game Google’s rankings. (And the fact people can game Google to raise their listings in the search engine should be a telling point, hmmm?)

But consider for a moment the unbridled power Google has at its fingertips if it does not like this column.

More on this story here.


It seems that net-based anonymity services are only anonymous until someone really wants to know who you are. After a recent “technical outage”, the popular anonymiser service AN.ON’s Java Anonymous Proxy software reappeared with a few new feature built in: The new version of the JAP client software included text like “Loading Crime Detection Data”. It emerged that AN.ON had been ordered by a court order to log accesses to a particular web site (and also ordered not to tell their users). Since then, the monitoring function has been disabled again by order of a higher court, with only one single access to the relevant web site having been logged. The AN.ON project has been waiting for the courts to finish deliberating about the legality of the original court order.

It seems, however, that the officers of the Bundeskriminalamt (Federal Criminal Investigation Office) got tired of waiting for the courts to make up their minds. They obtained a search warrant and raided the private home of the Director of Systems Architecture at the Computer Science Department of the University of Dresden. He handed over the record in order to avoid, as he put it, “more large-scale damage” that would be caused by having the Computer Science department itself (home of AN.ON) searched.

More on this story here.


In comparison with developed countries, the Republic is still in its infancy as a nation and democracy, although firmly rooted, is still, in relative terms, a sapling. The Republic of Panama separated from Colombia in 1903 after having chosen to become a part of it 82 years earlier in 1821 at the end of Spanish rule rather than join the union of Central American provinces. The choice at that time is revealing because Panama has often displayed a reluctance to be assumed to be an integral part of Central America. Panama has had its setbacks, successes and excesses and there is no doubt that much remains to be improved, but it is also true that much has been improved. What Panama must wrestle with -- and in this it is not alone -- is the ever-present jaundiced perceptions which it must try not to unintentionally reinforce whenever it can.

More on this story here.


A senior official with the Shanghai bourse has slammed the idea of Hong Kong becoming a yuan offshore centre as “mindless and dangerous”. Fang Xinghai, vice-general manager of the Shanghai stock exchange, says such a course would make cross-border money laundering much easier and could even see the yuan usurp the Hong Kong dollar as the Hong Kong’s major currency.

The harsh criticism is seen by analysts as a reflection of Shanghai’s worry that the move would damage its efforts to become a regional financial hub, and of its discontent with perceived Beijing favoritism towards Hong Kong.

More on this story here.

Former Bank of England official encourages talk of a renminbi peg for Hong Kong dollar.

Despite massive financial reserves of US$112 billion which can easily withstand current deficits, Hong Kong is subject to periodical fits of nervousness over the local dollar’s peg to the US dollar, which has remained in place for more than 20 years. The government routinely dismisses any talk of ditching the dollar -- but the Hong Kong’s growing financial integration into mainland China raises the prospect of a switch to a renminbi (yuan) peg at some time in the future.

Now Charles Goodhart has told the South China Morning Post in an interview this week that while he also believes the peg is not in any danger from the mounting budget deficit, he sees a switch to a renminbi peg as a future possibility. A member of the team that set up the dollar peg 20 years ago, Mr Goodhart said: “I think the choice is either a renminbi peg or a dollar peg.”

More on this story here.


Uncertainty over how the Indian Supreme Court will decide on the Mauritius route to investing in India may have put a damper on its use, but that is not necessarily a bad thing. This route was aimed at encouraging foreign direct investment without double taxation, but has been controversially exploited to route hot money into the Indian market and to re-route domestic money via Mauritius-based shell companies.

The political blessing to such exploitation was obvious when the Joint Parliamentary Committee failed to demand a crackdown on OCBs and an inquiry into their beneficial ownership. Instead, OCBs were merely disallowed from investing in the capital market. And this is another reason for the Mauritius route losing some of its charm. But the Mauritius loophole is by no means closed. Some access products offered by foreign investment advisors are instruments such as participatory notes, which provide an entry to investors, who are otherwise not eligible to invest in the Indian capital market.

More on this story here.


Switzerland’s position as a financial center is the main focus of debate at a gathering of expatriate Swiss that begins on Friday. The 81st congress of the Organisation of the Swiss Abroad (OSA) also serves as a platform for other issues concerning Swiss expatriates. For this year’s congress the focus will be on Switzerland’s position as an international financial center.

More on this story here.

Whether for love, adventure or career -- the reasons that Swiss leave home are many.

Around 600,000 Swiss already live abroad and 20 of them are portrayed in a new book. The 20 depicted in Philipp Dreyer’s new German-language book, Über den Tellerrand hinaus (“Over the edge of the plate”), vary in age between 10 and 96 but all have some kind of connection with Switzerland -- even if they define the word home in very different ways.

The book provides exciting and poignant life stories from around the world -- a rough slice through Switzerland’s ex-pat community, the so-called Fifth Switzerland. Dreyer shows particular interest in the theme of identity and the definition of “home”.

More on this story here.


The IRS has revealed that the US and Austria have entered into a competent authority agreement relating to the taxation of deferred payments to US citizens.

More on this story here.


The reason is that travellers sailing to the U.K. mainland from islands such as Guernsey and Jersey face NO passport controls or additional checks. U.K. immigration officers patrol ferries crossing from Cherbourg, France into Guernsey’s capital St Peter Port, and all passports are checked when passengers disembark. But it is virtually impossible for them to catch private yachts and boats that drop off their human cargo on the miles of secluded beaches and coves in the Channel Islands. The Port Authority in Guernsey confirmed that once in Guernsey there is no need to show any ID when boarding ferries bound for English ports.

More on this story here.


The bank in question, known as Nations Merchant Bank, has not received authorisation to conduct financial services or deposit-taking business within the meaning of the laws the JFC said in a statement, adding: “The Commission has reason to believe that NMB may be claiming to have a connection with the Island when it does not.”

More on this story here.


Foreign corporations can invest in Barbados and rest assured they would face little political, economic, legal or security risks. That is because the island’s legal process is in tiptop shape, its tax system efficiently administered and corruption is at a low level. In a profile it developed for its corporate clients, World Market Research Centre (WMRC), a company with headquarters in London but with an office in Boston gave Barbados a “negligible” rating when it assessed business conditions in the country, including political, economic, legal, operational and security risks.

More on this story here.


There are few reasons that come in the way of hindering the world’s gold markets. Among them are the Swiss National Bank’s disposal of 1,300 tonnes of gold over a period of five years. The latest figures from the bank imply that gold disposals in the ten days to August 20 this year amounted to 8.8 tonnes bringing the cumulative total under the disposal programme to almost 856 tonnes. Another factor is that 15 of the world’s key mining and refining companies such as AngloGold, Placer Dome and Freeport, Rio Tinto and Newmont, have signed an agreement not to explore sites that carry United Nations World Heritage site status. There are some 754 such sites.

More on this story here.

Greenspan on gold (1966).

You may already have read Alan Greenspan’s essay, Gold and Economic Freedom, which was published in Ayn Rand’s Objectivist newsletter in 1966, and reprinted in her book, Capitalism: The Unknown Ideal, in 1967. Greenspan has never publicly retracted a word of this essay.

This essay is a good introduction to the government’s war on gold. It summarizes the basic issue: the comparative liberty that a government-guaranteed gold coin standard offers to a society. A gold coin standard places a restraint on the government's ability to defraud the public through monetary inflation. The problem is, a government-guaranteed gold standard is guaranteed by the government. As I like to say, a government-guaranteed gold standard isn’t worth the paper it’s written on.

Please note: Greenspan can speak in English when he wants to. He is not confined to what James Grant has called central banker Esperanto.

More on this story here.


Officials from Austrac, which monitors the financial system and identifies suspicious transactions, said there were many legitimate uses for internet-based payments systems, but they could be misused to provide an outlet for money laundering or tax evasion.

Austrac officials told a recent hearing of the joint parliamentary committee on the Australian Crime Commission that the growing “array of alternative payment system”, such as the popular e-gold, escaped reporting requirements that caught bank-based transactions. Deputy director Liz Atkins told the committee that systems such as e-gold, which allows users to secure a cash deposit against gold held in a US vault and then use it to make online purchases, were being used to evade Austrac’s network.

More on this story here.


The IRS Criminal Investigation has investigated and recommended to the Department of Justice the prosecution of numerous individuals involved in the automotive sales industry. These investigations vary from tax evasion to employment tax fraud to money laundering conspiracies to violations of the Bank Secrecy Act.

More on this story here.


The quarterly statistical bulletin released by Bahrain Monetary Agency (BMA) stated that the consolidated balance-sheet of the banking system in Bahrain full commercial banks (FCBs), offshore banking units (OBUs) and investment banks (IBs) increased by $25.3 billion (34.7%) to reach $98.2 billion at the end of June, compared with $72.9 billion at the end of March. OBUs represented 84.0% of the consolidated balance sheet while FCBs and IBs accounted for 11.3% and 4.7%, respectively.

More on this story here.


Hungary is the author of several successful innovations in the fight against organized crime, which has been threatening this region since the collapse of the Soviet Union a decade ago. It has been instrumental to the introduction of legislation among its neighbours making money laundering illegal and imposing the same reporting obligations on financial institutions that are now being extended to individuals.

These measures seemed to have contributed to the end of indiscriminate criminal turf wars raging throughout the former Soviet possessions in the 1990s. But experts fear that the murder of gangland bosses and the bombing of nightclubs have merely led to a consolidation of the power of dominant criminal interests, and that they may clash again with renewed ferocity. A spectacular recent arson attack on a popular nightclub in the capital followed by an explosion last Monday in front of a busy Budapest railway station suggest that the process has already begun.

Hungary is nervous because its traditional role as a link between East and West has made it attractive to the criminal underworld. The Russian mafia has already established a bridgehead in Budapest from which it directs operations as far away as Britain, New Zealand and the US. This is an excellent place for criminals to seek legitimate power by investing freshly laundered cash in buying shares and supporting political parties.

More on this story here.


Born out of the Latin America crisis in 1995, NDFs have blossomed, and are now an indispensable tool for currency speculators and hedgers alike, thriving where currency trading is restricted by central banks. Beginning with the Brazilian real, Chilean peso and Polish zloty, NDFs have now spread to most Asian currencies such as the South Korean won Taiwan dollar and the Chinese yuan. Ironically, what began as a protection against currency devaluation has now become the chief tool for betting on currency appreciation, particularly in China -- where an export boom has led to diplomatic pressure to allow the yuan to rise in value.

Long distance betting: In an NDF contract, two parties agree on a future level for a currency pair. On the agreed future date, the difference between the prevailing and contracted rate is settled in US dollars. An example would be a foreign investor who thinks the yuan, which is pegged to the dollar around 8.28, will be revalued higher within the next year. The speculator might enter into a NDF contract with a bank to sell dollars at 8.12 yuan in one year’s time. If, at the end of 12 months, the yuan was stronger than 8.12 per US dollar, the speculator would profit. If the peg remained, and the yuan still traded at 8.28 per US dollar, he would pay the bank the difference between that and 8.12.

More on this story here.


Two recent opinion polls have somewhat predictably found that the vast majority of Americans would like to see estate tax, otherwise known as death tax or inheritance tax, permanently banished from the statute book. The surveys, conducted by the conservative leaning Luntz Research Companies, and the Global Strategy Group Inc which works with the Democratic National Committee, would appear to suggest that estate tax is universally despised across all income levels and political divides, not just amongst the wealthy. For instance, Frank Luntz, president of Luntz Companies, found that 65% of taxpayers who earned less than $30,000 per year considered the estate tax unfair.

The good news is that the House of Representatives are in tune with the ground swell of public opinion on the issue when they voted to repeal the most extreme and punitive form of income tax last month. However, opponents of estate tax must now wait on tenterhooks for the Senate to follow suit when they vote on the new legislation this fall.

More on this story here.


Senior diplomats from 15 EU states and members-in-waiting who are unhappy with a draft constitution for the bloc met in Monday in Prague and called for parts of it to be revisited. They said their countries were “like-minded” that aspects of the blueprint tabled by former French president Valery Giscard d’Estaing needed “further consideration” when ministers meet in Rome in October to finalise the text. The diplomats singled out the structure of the EU executive and its decision-making procedures as problem areas. The 15 countries oppose replacing the EU’s rotating presidency with a more permanent president and reducing the number of EU commissioners to 15 just as membership is set to expand to 25.

The meeting poses a headache for the leading EU nations who support Giscard d’Estaing’s hard-won compromise text and do not want to go back to the drawing board after 18 months of haggling.

More on this story here.


Not everyone who works abroad waited for a company to give them an assignment. The extensive research that academics have carried out on expatriates deals with those who have been sent abroad by their companies. But they are by no means the only people working outside their home country. Academics have begun to recognize that there are other kinds of working expatriates who have always played a considerable role in organizations.

A survey of 1000 expatriates from Finland found a considerable number of them had not been sent abroad by their employers but had sought and initiated their own international experience. These people included a range of different approaches, but two types in particular seemed to be relatively frequently found: “applicants” and “opportunists”. The former were people who had applied for a job that would inevitably involve working outside their home country. The second type of self-initiated working involved those who had gone to a particular country and then found work. For this group, it was the country (or perhaps the man or woman in the country that they had gone to live with) that was important. The job came later.

More on this story here.


Switzerland is only now beginning to reveal its deepest military secret: the hundreds of large forts and smaller defensive works built from 1940-1960. Upgraded, upgunned and made proof against nuclear contamination after World War II, the near invisible Swiss forts, dug into the sheer walls of its mountains, covered with lethal interlocking fire all passages through the nation’s high Alpine region.

I mention these forts again [in his column] because a pack of American lawyers seeking money from Switzerland recently accused the Swiss of collaborating with Germany and Italy during World War II. These claims are loathsome lies. After the fall of France in 1940, Hitler and Mussolini were preparing to invade Switzerland after it refused to join the Axis. Hitler sneered he would quickly crush “these insolent herdsmen and cheesemakers”.

Switzerland, then a nation of only five million, mobilized 800,000 men. Swiss citizen soldiers were ordered to hold the mountain forts and passes, and wage guerrilla war. “Leave your wives and children behind. Fight to your last bullet; then fight to the death with your bayonet” came the chilling command. This little nation, since 1291 Europe’s oldest democracy and freest nation, would not be conquered. Hitler and Mussolini wisely backed off.

After WW II, the Swiss briefly feared invasion by the U.S. and Britain. Then, from 1960-90, Switzerland became a potential target of Soviet invasion. As Machiavelli rightly observed, “The Swiss are most heavily armed, and most free.” The Cold War may be over, but Switzerland today still finds itself under foreign threat.

More on this story here.

EU tops agenda in Swiss president’s Portugal visit.

The Swiss president, Pascal Couchepin, has discussed European integration at talks in Lisbon with his Portuguese counterpart, Jorge Sampaio. Sampaio told Couchepin he could count on Portugal’s support during the second round of negotiations on bilateral agreements between Switzerland and the EU.

Relations between Switzerland and Portugal are said to be good. Bern came to the assistance of Portugal when fires raged through its forests this summer, handing over SFr1 million ($714,000) in emergency aid. Couchepin said this was a gesture of recognition towards the substantial Portuguese community in Switzerland, believed to be its third largest immigrant group.

More on this story here.

A Swiss abroad represents El Salvador overseas.

María Eugenia Brizuela de Ávila is not just a Swiss citizen -- she is also the foreign minister of El Salvador.

More on this story here.


Government representatives from the crown dependencies of Jersey, Guernsey and the Isle of Man met last week to formulate draft guidelines on a common approach to the European Savings Tax Directive. The three jurisdictions have all opted to go down the withholding tax route in the initial stages of the directive’s implementation in common with Austria, Belgium, Luxembourg and Switzerland, though investors will still have the choice to exchange information on their savings income with the member state in which they are resident. Therefore, given that many financial institutions have a presence in all three jurisdictions their respective governments have deemed it a logical step to coordinate a joint strategy. In the case of the Isle of Man, the Treasury’s recommendation for the island to introduce a withholding tax will need to be ratified by the Tynwald at its October sitting.

More on this story here.


Election officials decided the Rock is too small to be designated as a European parliamentary region on its own and needed to be “attached” to a mainland region. It means Gibraltarian parties can stand in the South West, with those MEPs elected charged with representing both that region and Gibraltar in the European Parliament. Voters in Gibraltar, who number less than 20,000, will also have a say in who is elected to represent the region, which currently has about 5 million voters.

There was broad support among Gibraltar’s political leaders for joining the South West, and all but one of the region’s current MEPs actively promoted the addition of Gibraltar.

More on this story here.


The European Commission said on Tuesday it rejected U.S. demands for airlines to reveal passenger information as the anti-terrorism measure could breach EU privacy rules. A spokesman for the EU executive said Washington had failed to give binding commitments that personal data could not be abused in ways that might break EU laws on confidentiality.

More on this story here.


New passport photo rules forbidding applicants to smile may be nothing to chuckle at. To get a valid passport, Canadians must now send in two photos with “neutral expressions” -- mouth closed, no teeth, no smile. Privacy experts say the new photos are just the first stage in a process which is paving the way for biometrics -- identifiers based on physical traits such as facial features, fingerprints, or even DNA and stored in a computer or on a chip.

The move to biometrics is aimed at speeding travellers through airports while providing heightened security and guarding against identity theft, according to the International Civil Aviation Organization, the United Nations body recommending the changes.

But some say the passport office is opening an expensive can of worms which could lead to a violation of privacy rights without providing better security. “Once you introduce a technology without public debate, you have a tool that’s costly and you have a tool that nobody’s really been consulted on as to the benefits or lack of benefits,” said Ken Rubin, an information and privacy expert in Ottawa.

More on this story here.

Machine-readable passports needed for USA travel.

Every visitor to the USA will need a machine-readable passport from October under changes to the Visa Waiver Program. Anyone without their own machine-readable passport, including children, will need a visa to travel to the USA. All British Passports issued in the UK, and the vast majority of those issued at British Missions overseas, are machine-readable. By the end of 2003 all full British passports issued overseas will be machine-readable.

More on this story here.


As the UAE prepares to host the Annual Meetings of the Boards of Governors of the World Bank Group and International Monetary Fund, local residents and visitors have expressed their support for the event and the massive impact it will have on international perceptions of the Arab World. Now that the final countdown has begun, citizens, tourists and expatriates are all expressing confidence in the UAE’s ability to host a truly world-class event that will reverberate around the world.

Johann Premfors, a Swede, works in IT and has lived in Dubai for ten years. “I am very impressed that Dubai is hosting an event of this magnitude. This is definitely going to raise the credibility of Dubai as well as the UAE as a whole. It is important that the rest of the world understands that this region is not all about conflict, but one of great opportunity and wonderful avenues for direct and indirect investment.”

More on this story here.


Arguments over the value of the yuan should not get caught up in the upcoming U.S. presidential election, a Chinese state newspaper said on Tuesday, ahead of a visit by U.S. Treasury Secretary John Snow. Snow arrives in Beijing under pressure at home to urge China to revalue its yuan, which is pegged to the weak U.S. dollar and is blamed by many in Washington for making Chinese goods unrealistically cheap.

Few analysts believe Snow can succeed in persuading China to give ground. China has dug in its heels against any radical currency overhaul, saying domestic priorities such as job creation and social stability outweigh other concerns.

More on this story here.

China seen ready to conciliate U.S. on trade and jobs.

China is preparing to reduce incentives for exporters, increase purchases of Treasury bonds and loosen controls on foreign currency holdings to blunt mounting pressure from the United States, where its growing trade surplus has come under heavy political scrutiny, Chinese officials and analysts say.

The steps are expected to be among concessions Chinese leaders offer Treasury Secretary John W. Snow on his visit to Beijing this week, although they fall well short of meeting Mr. Snow’s demand that China begin allowing market forces to set the value of its currency, the yuan.

With Democratic presidential candidates, influential American manufacturers and even Alan Greenspan, chairman of the Federal Reserve, pressing China to overhaul its currency system, Chinese officials are eager to head off trade tensions. But they are also determined to maintain the current exchange rate, set at roughly 8.3 yuan to the dollar, for some time to come.

More on this story here.

IMF backs Snow’s call for renminbi float.

A spokesperson for the Chinese central bank rejected Mr Snow’s earlier call for China to float the renminbi. Now the International Monetary Fund has added its weight to the argument, saying it was in China’s best interests to move towards a more flexible exchange rate system. “Such a move would improve the central bank’s ability to control money and credit growth, and also help cushion China’s economy from domestic and external shocks,” IMF Managing Director Horst Koehler, the IMF’s managing director, said in a statement on Tuesday.

In unexpectedly tough remarks on the eve of his visit, Mr Snow said: “We want to be heard on the issue of flexible exchange rates so that American firms [are at] no disadvantage.”

More on this story here.


The mainland Chinese, who helped inflate Hong Kong’s property bubble in 1997, are back. Only this time it is not state enterprises buying corporate housing but businesspeople seeking second homes or investment properties. “With 8 or 10 % GDP growth, a lot of people on the mainland, especially in cities, are better resourced to invest again, whether in Hong Kong’s property market or the stock market,” says Justin Chiu, an executive director at Cheung Kong Holdings, tycoon Li Ka-shing’s flagship company.

While still small in financial terms -- executives estimate purchases by mainlanders represent only 5% of the market -- this shift signals a new phase in the relationship between Hong Kong and China: one in which a fluid exchange of goods, services and people leads to a more unified economy and society. That combination, which is unique in history, has thrown up financial opportunities -- but also political challenges.

It is not hard to see what has attracted Chinese investors’ interest. Property prices are down more than 70% from their 1997 peak, lowering the price of a mass-market flat from HK$10,000 per square foot in 1997 to HK$2,000. Mortgage rates, which were between 8 and 9% six years ago, have come down to 2.5%. Returns on rental flats, even at the bottom end of the market, can approach 8%.

Hong Kong’s popularity with wealthy mainlanders has convinced some observers that it will one day become China’s retirement community. “Hong Kong will be a Miami or Orlando,” says Anthony Neoh, a prominent Hong Kong barrister.

More on this story here.


Barely a week has gone by in the past decade when the specter of IT outsourcing has not raised its head, promising great rewards for IT users and striking fear into the hearts of in-house IT staffers. In the last half of the 1990s, whole-of-government outsourcing was a catch-cry that ruffled the feathers of more than a few local small and medium enterprises, which found themselves forced to deal with multinational service providers rather than government departments in order to get business.

Long-standing government IT employees were sold off like fatted calves to outsourcers, which often had no intention of keeping them on staff for more than the minimal tenure stipulated in their contract. Now there is a new bogey on the horizon. A phenomenon called offshore outsourcing, or offshoring, is happening all over the developed world, where multinationals from low-cost markets such as India, China, Mexico, the Philippines and Russia are winning business against local IT outsourcers. Their competitive advantage is that they can deliver services such as software applications development and maintenance for significantly lower prices, thanks to the cheaper costs in these countries.

Local outsourcers large and small find themselves competing for IT contracts against cut-price offshorers who can deliver services from software development sausage factories in low-cost locations such as Bangalore and Shanghai. Most of the large multinational outsourcers have now set up their own bases in relatively low-cost locations in an attempt to stay in the race.

More on this story here.

Dumping the old timers causing massive hi tech problem.

There is a really huge problem looming on the tech support horizon, and most large companies do not even realize it yet. It is all because they are losing their memory. No, I do not mean senior management is getting so old that Alzheimers is becoming an issue, I mean what I call Institutional Memory (IM). The current trend it to overlook it in the name of cost cutting, and it is most likely a fatal error.

More on this story here.


Living abroad for seventeen years of my 36 year life had not imposed on me any particular sensation other than the fact that I was at home in just about any continent, in any city -- including London.

Living as an expat, involves developing a totally dislocated set of values. Thus, in Hong Kong, I would not think twice about paying the equivalent of eight quid to see a movie with two lots of subtitles. Or, in Thailand, a cinema trip that requires you to stand for the king before you dive into your popcorn. It was like being at a new school, and we, as expats, had to learn new rules, yet before long we had forgotten what the cost of a cinema ticket was back in Blighty.

Yet in Asia I never felt disconnected from my own culture ... as long as I lived 9000 miles away from it. On the contrary, Asia helped me appreciate it, and assess it critically. On another level, I completely lost track of England and knew nothing of the day-to-day events of the last 15 or so years. To all intents and purposes, I was foreign and I had no idea what the new coinage looked like, or which latest Royal sibling had got married, let alone who was top of League Division One.

More on this story here.


Despite taking a cross-cultural training course, reading up on a location and following recommended corporate guidelines and advice, many expatriates are still not fully primed for an overseas move. This is due in part to lack of preparation time.

Chris Brewster, Professor of International Human Resource Management at Henley Management College and a founder of the Centre for Research into the Management of Expatriation at Cranfield School of Management, explains that the main problem is that for the majority of expatriates the time from the decision to move to the actual move is very short: “What one company I know called ‘shoot the dog and sell the car time’,” he says.

Professor Brewster believes that companies should find people who have lived in the target country and give their departing expats a decent allowance to take them and their families to dinner, along with their photo albums, and just talk about what it is like to live there.

More on this story here.


The specter of an ignorant or indifferent populace has long haunted democracy. Montesquieu wrote in 1748, “The tyranny of a principal in an oligarchy is not so dangerous to the public welfare as the apathy of a citizen in a democracy.” James Madison warned, “A popular Government, without popular information, or the means of acquiring it, is but a Prologue to a Farce or a Tragedy; or, perhaps both.” President John F. Kennedy declared in 1963, “The ignorance of one voter in a democracy impairs the security of all.”

Despite numerous eloquent warnings, however, political ignorance has mushroomed as government power has increased. The larger the government, the more the average citizen and average voter is at the intellectual mercy of his rulers. And the more ignorant the voters, the easier it becomes for politicians to treat people like Pavlovian dogs, simply throwing out some phrase after which the citizen, reflexively, runs to vote more power to the politicians.

The issue is not whether a viable democracy can survive an unlimited level of government complexity. Obviously, at some point, there will be so much on the public-agenda plate that even conscientious citizens are overwhelmed. The question is, has America reached that point yet? Or, perhaps more important, has America already reached the point at which elections are mere contests of demagoguery and bathos?

More on this story here.

Citizenship classes US-style.

As the UK prepares to give citizenship classes to those planning to naturalize, BBC News Online looks at how similar courses work on the other side of the Atlantic.

More on this story here.


Immigrants who want a UK passport should have free English lessons and pass a new “Britishness test”, Home Office experts said. A blueprint for the compulsory new exam -- designed to make people feel more proud of becoming new British citizens -- said applicants should learn about the history of the UK.

An earlier version of the proposals published in January was criticized for concentrating on how to claim benefits and use the NHS, and for insisting that learning about Britain’s history “should not be an imposed pre-condition”.

More on this story here.

UK citizens fail the test.

The Guardian devised six questions based on the areas that the government’s advisory group recommends form the core of citizenship classes and testing. Based on a straw poll of nine British citizens, most Britons would be handing back our passports to the Home Office if we had to pass a test to remain citizens. Our respondents’ average score was just 37%.

More on this story here.


Yet another major US organization has urged the Treasury to withdraw its misconceived “interest reporting” regulation, which would have banks report non-residents’ interest receipts to their home tax authorities. A true measure of the opposition to the proposal which exists in the United States can be seen in the fact that some thirty members of the House and eighteen Senators have added their names to letters opposing the regulations; more than thirty think tanks, including the CATO Institute, the Heritage Foundation, and the Center for Freedom and Prosperity have expressed opposition; and of the 217 public comments made during the Treasury’s 90 day consultation period, only one supported the measure. Many observers have also expressed bemusement at the keenness of the government to push through a regulation that is a holdover from the Clinton government.

It is estimated that there is over $1 trillion invested in US banks by overseas residents, and around $200 billion of this is likely to be caught by the new reporting rules.

More on this story here.


The Bank of N.T. Butterfield announced its buy-out of Bahamas bank Leopold Joseph (Bahamas) Limited in Nassau. The announcement from Bermuda’s oldest bank came days after it announced its first Bahamian acquisition -- the purchase of small, private bank Thorand Bank and Trust Ltd. The two banks rival each other in size with Thorand tipping the scales at 22 staff compared to Leopold’s 16 employees. Thorand also reportedly had between $500 million and $1 billion in assets under management while Leopold reportedly caters to about 400 private clients and has some $500 million in assets.

More on this story here.


Everybody enjoys spending time in Italy. The sun shines, the countryside is beautiful, the cities are full of history, and the food and wine are first class. However, while many foreigners have holiday homes in Italy, not so many have chosen to become resident there. Could this however change following the repeal of inheritance tax in 2001? An individual who is resident in Italy can now pass assets to his immediate family either during his lifetime or on death without any liability to gift or estate tax. This could be very attractive indeed for foreigners who want to escape potentially high estate taxes in their own jurisdictions.

There are however practical problems. EU citizens clearly have no difficulty in moving to Italy. However, nationals of other countries would need to obtain immigration permission which can be a difficult process. As well as having immigration permission to live in Italy, the individual is likely to want to be sure that he is tax resident in Italy to help ensure that he is no longer taxable in the jurisdiction in which he used to be resident.

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Campione D’Italia - a special place for your residence.

Campione d’Italia is a small Italian enclave of 1.7 square kilometres located entirely within Switzerland, on the eastern shore of lake Lugano at the foot of a beautiful mountain. There are approximately 3,000 inhabitants, including about 1,000 foreigners. The Comune di Campione is part of Italy (province of Como) and Italian law applies. Official currency is the Swiss Franc, but the Euro is accepted as well. All banking is done through Swiss banks, which gives its residents additional financial privacy. A famous Casino generates substantial revenue, which is one of the reasons why the residents of Campione enjoy some special tax concessions. Furthermore, Campione is exempt from the Italian value added tax (VAT). However, the tax advantages only apply to private persons resident in Campione, and not to companies domiciled or managed from there. Campione real estate prices are extremely high, and since Campione does not offer tax-free residence like for example Monaco, the tax advantages offered by Campione to its residents rarely outweigh the overall cost of living there. Still, in certain cases Campione d’Italia can be an interesting option for residence.

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Switzerland remains in twelfth place in Transparency International’s global survey for 2003, having apparently made little recent progress on improving its image to the outside world according to the Berlin-based anti-corruption organisation. The survey, which quizzes leading public servants, business chiefs and journalists in each of the 104 counties contained in the report, found the general perception of Switzerland was of a clean country, though concluding that there was still significant room for improvement.

The least corrupt nations according to the survey are Finland, Denmark and New Zealand. The United Kingdom was placed 10th, Hong Kong 14th and the United States 16th.

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Survey report here.


The excitement of a foreign posting can quickly start to turn sour as the problems pile up and the pressures on relationships start to grow. In her new book, A Moveable Marriage: Relocate your relationship without breaking it, expat writer Robin Pascoe sets out a survival plan for couples moving to follow a career in another nation.

A Moveable Marriage is Pascoe’s fourth book about families and couples trying to adjust to the pressures of shifting to new environments. In her latest book, Pascoe seeks to identify the challenges facing relationships and to draw up strategies for dealing with dual career questions as well as moving children and the often complicated issue which arise concerning housing.

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The Caribbean jurisdiction has been successful in its plea for a panel to hear the case it has brought against the United States at the World Trade Organisation for banning the taking of online bets from offshore locations. As a result of Congressional scrutiny of the issue, and legislation such as the Leach Act, credit card providers and payment services such as Visa, MasterCard, and PayPal now refuse to process betting transactions between US citizens and offshore casinos and gaming sites, a development which has had a significant negative impact on the economies of countries such as Antigua and Barbuda.

Recent estimates have suggested that the A&B government has foregone between $20 million and $30 million as a result of the US action.

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GYOR, Hungary: This prosperous river town has been on the doorstep of Western Europe for so long that when Hungary and nine other Central European countries join the European Union next May, it will barely register in the humming factories and bustling shops here. At first glance, in fact, European integration may hurt Gyor more than help it. The union’s rules are forcing Hungary to phase out its generous tax breaks to foreign investors like Audi, the German carmaker, which has operated a sprawling assembly plant here since 1994.

For most of the 75 million people in the 10 countries that will join the European Union, the benefits of membership clearly outweigh the costs. But for Gyor and other commercial hubs on the western frontier of the new Europe, integration could prove to be a tricky passage. While labor costs remain lower here than in Western Europe, the gap is closing. Wages in Hungary rose an average of 18% last year, with salaries in some sectors jumping 50%. Lower-cost cities in eastern Hungary, not to mention even cheaper ones in Romania and Bulgaria, are beckoning.

Officials in Hungary acknowledge that the steep wage increases are eroding their country’s competitiveness. But successive governments have been unable to resist the popular demand for fatter paychecks, which many here seem to regard as a fringe benefit of European integration.

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Fearful that overtaxed consumers might want to escape the value-added tax (VAT), the European Union has concocted a plan to impose the VAT on software, videos, computer games, and music downloaded on the Internet from non-EU companies. This means that U.S. companies selling goods to EU customers might be forced to collect taxes on behalf of European tax collectors. The plan is the EU’s way to prevent tax competition, and it will lead to higher prices and higher taxes.

It is not hard to imagine why the EU wants this plan. Thanks to the Internet, highly taxed Europeans can purchase tax-free goods from non-EU nations. With the cost of shipping in constant decline, buying goods from non-EU online sellers is often a no-brainer for bargain-hunters. The number of EU customers buying from non-EU companies over the Internet has increased dramatically.

Under this system taxpayers would be the big losers because no matter where they shop and how they choose to shop, they would face the same rate as if they were shopping in their own country. And because this would undermine fiscal competition among countries, such a proposal would give European politicians more leeway to increase taxes.

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The US and Japanese economies seem to be recovering firmly, heading for growth of two percent or more this year, but the euro zone will struggle to achieve growth of 0.5%, the OECD chief economist Jean-Philippe Cotis said on Wednesday.

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Many countries have set up measures to provide unilateral tax relief for people who are subject to double taxation. South Africa has an extensive network of treaties for the avoidance of double taxation, which also provides additional tax certainty for international investors. Tax experts say although tax treaties are set up to avoid double taxation, they may create an ideal opportunity for “treaty shopping”, which takes place when nonresidents of either treaty country establish an entity in one of the countries to obtain the benefits of such treaty.

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China’s rebuff this week of foreign entreaties to allow the value of its currency to rise in part reflects the government’s deep desire to protect the nation’s booming growth in exports. But it also underscores a more fundamental concern -- the growing worry of China’s leaders about the health of the financial system and their ability to prevent it from spiraling out of control at a time when unprecedented quantities of investment are pouring in.

Specifically, the Chinese government is concerned about “hot money” -- cash that moves easily and quickly across borders, fueling speculative booms on the way in while sometimes leaving behind disasters, such as the Asian financial crisis of 1997-98, when it exits quickly.

According to private economists and Chinese government officials, $20 billion to $30 billion in hot money has poured into China in the past six months alone. That is in addition to the more than $30 billion in official foreign investment that entered the country in the same period.

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IRS employees at tax help centers gave correct answers to just 57% of tax law questions asked by Treasury Department investigators posing as taxpayers. The investigators concluded that approximately 500,000 taxpayers who visited the centers during the course of the study, from July to December 2002, could have received incorrect responses to their tax law questions. IRS employees provided complete and correct answers to 45% of the questions asked by auditors, and correct but incomplete answers in 12% of the cases.

IRS employees told the auditors to do their own research in IRS publications to find the answers in response to 12% of the questions, despite an IRS policy banning the practice. Incorrect answers were given to 28% of the questions. The questions most commonly answered incorrectly dealt with the earned income tax credit, education credit and dependents.

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The estate tax is either a big-government plot to destroy the family farm or a law that encourages meritocracy over aristocracy. And it is a Senate vote away from being completely repealed.

The law was enacted in 1916 to keep the enormous wealth amassed by a few during the industrial revolution from staying concentrated at the top of American society, but it is under fire from groups that say it destroys family businesses and breaks up family land. Nonsense, said one economist who has worked with farmers on estate tax issues for 40 years. Even though a tiny percentage of businesses, farms and ranches are actually affected, some argue the cost and complexity of estate planning, and the oh-so-American dream that your estate might be worth that much when you die, mean everyone is affected.

People like David Rockefeller, George Soros, Warren Buffet and more than 100 other millionaires and billionaires came out in support of the tax two years ago. Buffet called its repeal the economic equivalent of “choosing the 2020 Olympic team by picking the eldest sons of the gold medal winners in the 2000 Olympics.”

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The 40 Under 40 captures the American dream -- rising from nothing and nowhere to achieve wealth and power -- and combines it with the American obsession: speed. Dot-commers still dominate our annual list of whiz kids who made it to the top.

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Chelsea (U.K) boss tops rich list.

Super-wealthy Chelsea owner Roman Abramovich tops a list of the 40 richest people in business under the age of 40 outside the United States just published. The oil tycoon is one of five Russian billionaires in the top 10 thanks to wealth of $8.3 billion, according to Fortune magazine. Nine people based in Britain, including Harry Potter author JK Rowling, also make the list -- she is at number 24, with $453 million. Six individuals based in China were also included.

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The average US dollar savings account in 2002 yielded less than 1% (0.92% average in April 2002, 0.82% average in November 2002; Source: Bankrate.com). Considering that inflation was 3%, the money in your savings account was actually worth less in December 2002 than it was in January 2002. Over the same period of time, the gold price in US dollars increased by 15%.

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Report: “An Update On The Commodity Case For Gold”

The report concludes, after some interesting reading along the way:

What will happen going forward? Right now, the U.S. Fed fears price deflation. The U.S. economy has a significant output gap. As long as such a gap persists, the U.S. inflation rate will fall. Eventually it will go negative. Given huge excess private debt, price deflation, by raising further the real value of debt, could be disastrous.

U.S. policy must increase aggregate demand to get the economic growth rate above trend and reduce the output gap. To do this, the U.S. needs very low mortgage rates. The Fed, above all, must lift bond prices. Because they are targeting higher inflation, it is not easy to induce investors to bid up bond prices.

They are in a game of very difficult expectations management. To succeed, they need total credibility with investors. For this reason, at this very juncture, they cannot afford a large rise in the gold price, as that would draw the attention of bond investors to the long-run implications of Fed efforts and shatter their confidence. For this reason, we expect further official efforts to restrain the gold price. And, over the near term, the official sector probably has the ammunition to succeed.

But the days of official management of the gold price are numbered. In the end, perhaps after one more bout of disinflation or deflation, excessive private debt globally will force central banks to abandon all restraint. As time passes, the central banks’ ammunition will dwindle. As this is happening, there will be a surge in speculation on a coming inflation. Some central banks will become buyers. Then the official management of the gold price will fail, and the gold price will explode.

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It’s official: The fashionable fall meme for unreconstructed Bush administration cheerleaders is the notion that civil-libertarian concerns about the PATRIOT Act have been much ado about nothing: the squawking of so many Chicken Littles.

The defense of PATRIOT has been slow in coming, in part because it was possible, at first, to dismiss criticism as predictable carping from the usual suspects: the American Civil Liberties Union, the Electronic Frontier Foundation, and other notorious “fifth columnists”, to borrow the new right’s sledgehammer-subtle imprecation du jour. Things became trickier once American Baptist Churches, the American Conservative Union, Gun Owners of America, and folks like Georgia ex-representative Bob Barr began voicing reservations. The conservative base has begun to get nervous.

Each piece defending PATRIOT trots out the “don’t you realize we’re at war?” trope, which it is tempting to read as an imputation to civil libertarians of almost mindboggling naiveté. They are not (as one might think) animated by a concern that liberties may be sacrificed without any appreciable gain in security, or an insistence that law enforcement show that existing powers have been used effectively -- a highly dubious proposition -- before expansive new powers are granted. No, the ACLU and company have apparently just been snoozing for two years: They missed the news about that little dust-up involving a couple of planes and skyscrapers two Septembers ago.

Oddly, the sweeping claims of governmental authority -- that all the powers a government might exercise during a conventional military war, say World War II, are equally appropriate in the War on Terror -- are typically coupled with the insistence that PATRIOT has given us nothing (or nothing much) new under the sun.

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Florida town-hall attendees question Patriot Act.

TALLAHASSEE: It seemed like a reasonable question. Toward the end of Wednesday night’s town-hall meeting on homeland security, a man asked how many terrorists -- or at least suspected terrorists -- do law enforcers think are in North Florida? He even offered some percentages: 10% of the population? Five percent? One percent?

U.S. Attorney Greg Miller, looking uncomfortable, said he could not reveal that information. The guy was undaunted: 0.1%? 0.01%? Miller, North Florida’s top federal prosecutor, would not budge. He later confirmed that his office has yet to prosecute anyone for terrorist acts under the USA Patriot Act.

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“I’m sorry,” the clerk at the U.S. National Archives says: “You can’t see the Saudi Arabian documents.” I am surprised. All the National Archive’s documents are already reviewed and then declassified or removed. In theory, whatever is there is no longer secret -- Until 9/11.

“It’s part of the Patriot Act,” the clerk averred. “The U.S. State Department records you requested are indeed declassified and theoretically available. But they also may contain information that terrorists can use, like names and addresses and information of U.S. citizens.” I gave a blank look. “So?” The clerk’s brow furrowed with concern. “A terrorist could come into the National Archives and try to steal their identities or target them for assassination.”

I was stunned by the clerk’s absolute refusal, and stung by his implication that I, a wife, mother, and published researcher and writer, was some kind of horrid criminal. But this is only a taste of the Patriot Act’s damage to the American mind. If the mere desire to research Saudi history is met with stern threats of arrest or detention, imagine what it is like to be a Saudi in America today. Or a Muslim. Or someone from the Middle East. We are hardly any safer for keeping Saudi history a secret. The 9/11 terrorists committed a horrendous crime, but they did not take away our national security. We have done this to ourselves.

More on this story here.


Facial recognition technology designed to detect terrorists failed to match identities of a test group of employees at Logan International Airport in 38% of the cases, according to a study released by the American Civil Liberties Union. Other technology that scanned the eyes of airport employees entering secure areas to verify their identities was rejected recently by Massachusetts Port Authority officials, partly because some employees found it too intrusive.

Yet, officials said other technologies tested recently at Logan have been more successful and will soon be adopted permanently, including the installation of infrared cameras to detect intruders around the perimeter of the airport, and hand-held computers that State Police can use to run background checks on people or to check license plates.

State Police Major Thomas Robbins, who oversees Troop F at the airport, said officials were hopeful that facial recognition would help them spot and arrest terrorists if they came to the airport. But the new technology “was very labor-intensive ... and quite frankly, it’s not ready for prime time.”

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It is with deep regret I must inform each and every one of you that my former amusement with your constant requests for my bank account number has turned to impatience. ...

Rest of “letter” here.


Russ Cooper, the editor of the NTBugtraq mailing list has announced 6 new security holes in Microsoft products. These allow suitably clever net.evildoers to do various nasty things like wipe your hard disk, steal your files or overfeed your hamster. Russ is on record as saying that Windows NT and IIS are easier to secure than comparable Unix or Linux-based servers, which is lucky, because it certainly seems like Microsoft users have a lot of securing to do.

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FBI agents armed with a federal arrest warrant out of New York were searching for Adrian Lamo Thursday, according to the hacker and his mother.

The 22-year-old Lamo has become famous for publicly exposing gaping security holes at large corporations, then voluntarily helping the companies fix the vulnerabilities he exploited -- sometimes visiting their offices or signing non-disclosure agreements in the process.

Until now, his cooperation and transparency have kept him from being prosecuted. Lamo’s hacked Excite@Home, Yahoo, Blogger, and other companies, usually using nothing more than an ordinary Web browser. Some companies have even professed gratitude for his efforts: In December, 2001, Lamo was praised by communications giant WorldCom after he discovered, then helped close, security holes in their intranet that threatened to expose the private networks of Bank of America, CitiCorp, JP Morgan, and others.

Lamo believes the arrest warrant is for his most high-profile hack. Early last year he penetrated the New York Times, after a two-minute scan turned up seven misconfigured proxy servers acting as doorways between the public Internet and the Times private intranet, making the latter accessible to anyone capable of properly configuring their Web browser.

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