Wealth International, Limited

Offshore News Digest for Week of January 19, 2004

Note:  Investing and economics-related items now have their own pages. This week’s may be found here.

Global Business & Living Taxes Privacy Law Opinion & Analysis



Sample articles from this issue include:

Affordable Caribbean: Restrite Sea Gardens Guest House is an establishment I guarantee is not to be found in any guide books to the Caribbean; nor does it exist, even in theory, in the cyberspace fantasyland of travel agent computers. You do not make reservations for the Restrite; you just show up, which is what I did. I in fact have no reservations for any of the seven nights I will spend on the island. This is part of my plan, or non-plan, in proving that a Caribbean vacation can be had for $25 a day. Whaddam I, nuts?

Hiding Out In Panama: There have been a number of famous people who have hid out in Panama in order to escape trouble elsewhere: The Shah of Iran, Graham Greene, Billy Carter. Now Panama is a great place to lay low. Panama has always been a place where you could come and be whatever you want. If you are sick of living inside your skin, sick of your life, your personality, your friends, your name, and if you want to shed you identity for a while, then you will be welcomed in Panama. For the most part people in Panama will welcome you as you are. But the price of entry is that you also must respect what other people like.

Reflections On Immigration To New Zealand: New Zealand has offered my family what we needed. But it has been no fantasy, no fairy tale. Not much has turned out as I expected, but it has been more than I hoped for. Just six months ago, after six years in New Zealand, we were feeling quite “Kiwi” and at peace with our decision to immigrate. And, then I became a widow and a single mom, 12,000 miles from the land of my birth on its birthday. But, I wouldn’t change a thing. This is our story.

Traveling Through Costa Rica: “Pura Vida”. In Spanish it means “Pure Life” and is a phrase you will hear and see, everywhere in Costa Rica. The locals live this expression to the fullest and their love for life is evident on their smiling faces and in their kind actions to strangers. Some of the happiest people I have ever encountered were Costa Ricans. And why wouldn’t they be constantly cheerful? You would be too if you could call one of the world’s most beautiful and exotic countries home.

Traveling The Americas From Connecticut To Usuhaia: Last year, during a seven month period the author drove nearly 25,000 miles in a 1988 Toyota 4Runner from Connecticut all the way to the southernmost city in the world -- Usuhaia, Argentina, passing through some of the world’s most beautiful scenery on some of the world’s worst maintained and most dangerous roads. He ended his 12-country odyssey in Paraguay, where he sold his car and flew home to the USA, forever changed by his life on the road during what was a truly remarkable undertaking. The author has agreed to provide us with glimpses of his travels and insight into what he experienced. This is the first in a series of five articles. To the End of the World Part 1: A Journey Through the Mountains of Mexico, by Charles Ragsdale.

Issue table of contents here.


Ten years ago, in the aftermath of the 1992 Earth Summit in Rio, United Nations member states agreed on a plan to help the small island developing states (SIDS) make economic progress in an ecologically friendly manner. The Barbados Programme of Action specified a variety of measures to be implemented on issues such as climate change, waste management, energy resources, biodiversity and the development of human capacity. But many of the plans were never put into action.

Now a “Barbados +10” review will take place this year from Aug. 30 to Sep. 4 in Mauritius. From Jan. 26 to 30, SIDS representatives will meet in Bahamas, to agree on a strategic paper for the Mauritius conference.

More on this story here.


On Jan. 1, 2004, amendments to the Financial Transactions Reporting Act and The Financial Transactions Reporting Regulations came into force. The Progressive Liberal Party promised to “review the financial services legislation and ensure that amendments are made: (a) to remove all unconstitutional features that presently appear; (b) streamline and reduce the paperwork requirements that apply under the Financial Transactions Reporting Act: and other related statutes.” The PLP had all of the answers prior its election and has had 19 months to implement those answers. It should also be noted that the courts have not found any of the financial laws to be unconstitutional.

But to date, there has been NOTHING OF SUBSTANCE! NOTHING OF POSITIVE AND MEANINGFUL IMPACT! All we have had is an extension of deadlines and no relief for professionals in the financial sector, who must operate within the legislative framework. In fact, the most recent amendments by the PLP have only caused confusion.

More on this story here.

Bahamas must examine tax reform issue, says senator.

Minster of Finance, Senator James Smith, revisited the thorny issue of tax reform this week, stating that the introduction of VAT or a sales tax will be necessary if the country is to fully participate in regional trading blocs such as the Caribbean Single Market and the FTAA initiative. He went on to add that given “taxes on income are not considered to be an option,” should the country decide to fully sign up to the CSME, the government has been advised to look closely at “some form of sales or value-added tax.”

However, the jurisdiction remains, at best, ambivalent towards the Caricom intitative, and the Senator noted that the majority of Bahamians are unsupportive of many of the changes that the CSME will bring, particularly freedom of movement.

More on this story here.


Lawmakers in Panama last week approved new rules which will tax telephone calls made over the internet (known as Voice over Internet Protocol, or VoIP) at the same rate as traditional phone calls. The tax, set to come into force in March, will impose a 12% levy on all international calls, regardless of how they are made. According to reports, the move comes in response to a revenue drop of around $12 million for the Panamanian government which has resulted from the increasing use of VoIP technology. The announcement has received a mixed response from the broadband industry in Panama.

More on this story here.


The OECD study, which focuses on legal migration in 2001 to member countries, cited the upward trend in international migration “despite the deterioration in the economic climate in some OECD countries.” The trend appeared slow down very slightly in 2002, although data for the year is only partially available. The study also says parts of Europe are having a harder time than the United States providing jobs for newcomers.

The United States admitted more than one million permanent immigrants in 2001 and 2002; followed by Germany, 685,000; Britain, roughly 375,000; and Japan, 351,000. As a percentage of population, Luxembourg was No. 1, followed by New Zealand and Switzerland. Canada and New Zealand had record numbers of permanent immigrants for 2001-2002, the study said, while France, Switzerland and Austria admitted 15% more immigrants during the two-year period.

More on this story here.


Bermuda’s Appleby Spurling & Kempe and the Cayman Islands’ Hunter & Hunter are to merge their business operations on April 1, 2004, forming a hundred-lawyer offshore specialist firm. In addition, the firms revealed that they would be expanding their presence in the British Virgin Islands, as well as Hong Kong and London. The legal offerings will be complemented by a wide variety of addtional financial and business consulting services.

More on this story here.


Members of the European Parliament have proposed an EU-wide regulatory regime for hedge funds in a bid to attract the growing alternative investment sector back to onshore European jurisdictions. Scottish member John Purvis commented: “This should be a light-handed system, so as to help attract them to locate in the EU rather than in the tax havens where they are currently focused.”

More on this story here.


Millions of euros belonging to Parmalat were transferred from a bank account in the Cayman Islands to an account in Luxembourg held by the company’s founder, Calisto Tanzi, before his arrest on December 27. The territory was allegedly used as a transit for billions of dollars by the failed US energy giant Enron, whose finance chief Andrew Fastow was indicted on 78 counts of fraud, money laundering and other charges in October 2002.

“The chief attraction in using a tax haven is to keep one’s financial operations dark,” French examining magistrate Renaud Van Ruymbeke said. “There may be various motives for doing so: to cheat the tax authorities, to switch funds away from their original purpose, or to finance corrupt activities.”

More on this story here.

Parmalat shockwaves spread far and wide.

The collapse of Parmalat is turning into one of the most bizarre as well as one of the biggest fraudulent bankruptcies in Europe for decades. The repercussions are putting bankers, auditors and regulators under the spotlight in many parts of the world as investigators unravel clues to how many billions of euros may be missing, for how long and why.

Among countries touched by the investigation are: Austria, Brazil, Cayman Islands, Germany, Luxembourg, Italy, the Netherlands, Switzerland, the US, and Venezuela. The affair has also besmirched some top names in finance which had dealings with the group and embarrassed international auditing groups Grant Thornton and Deloitte and Touche. It is in Europe that the continuous stream of revelations is hitting hardest. The EU Commission, as well as the Italian government, is reviewing ways to strengthen watchdogs.

More on this story here.

EU reviews Parmalat scandal.

The EU said it was looking to tighten up accounting controls on listed companies after the Parmalat affair, but Italy’s top regulator said the scandal would have escaped even the most attentive watchdog. As investigators continued trying to piece together the puzzle of the multinational food group’s missing billions EU finance ministers met in Brussels to discuss the implications of Parmalat’s sudden plunge into insolvency.

Meanwhile, Bank of America denied allegations by a lawyer for several Parmalat creditors that it has an account containing billions of dollars of Parmalat funds.

More on this story here and here.


U.S. Treasury Department official Richard Newcomb, attending a conference on combating money laundering and the financing of terror, said countries in the region should take steps to ensure charities could not be used by militant groups as information indicated some had been exploited by groups linked to al Qaeda. Gulf states say they are cooperating and most now regulate Islamic charities, some of which were criticised in the United States for alleged terror links, but U.S. official sources said more could be done by the Gulf Arab governments.

More on this story here.


There was great concern in 1999 that the departure of American soldiers would weaken the security of Panama and, more importantly, the effective management of the Panama Canal waterway itself that lies on 144 global shipping routes. The last 4 years of Panamanian control, however, have shown that not only have canal profits never been higher, the number of shipping accidents has never been lower. This may have silenced some critics but there is still plenty of doubt lurking in the shadows for some die-hard sceptics who have since shifted their focus. They now fear, what was first called, more than a century ago, the Yellow Peril. The Chinese card is being played on a regular basis and, because of this, the supposed threat sometimes comes up in conversation with visitors and at local business conferences fears about Chinese control of Panama’s global waterway have been voiced. Panama, linked to a sinister Chinese plot, is fodder for the sceptics and just too tempting a combination for the conspiracy theorists.

More on this story here.


In the face of relentless initiatives by pro-democracy forces, do not be surprised if the Chinese start to show more flexibility. Chinese President Hu Jintao, a dyed-in-the-wool party operative, is no closet democrat. But he has already shown more pragmatism than his predecessors -- and may do so again. That may include giving Hong Kongers a measured dose of democracy. Indeed, some Chinese officials are now talking privately about compromises. Surprised by the depth of feeling against Hong Kong’s unpopular Beijing-appointed chief executive, Tung Chee-Hwa, Beijing has been sending more of its own people to Hong Kong.

More on this story here.

Hong Kong experienced investment boom in 2003, SARS notwithstanding.

Government promotional agency Invest Hong Kong announced that 2003 was the department’s best year in terms of attracting investment into the city, with 142 foreign companies successfully assisted to set up or expand operations in Hong Kong during the past 12 months representing an increase of 21% compared to 2002. In monetary terms, Hong Kong attracted US$13.7 billion in Foreign Direct Investment in 2002 holding the position as the second largest recipient of FDI in Asia, after mainland China (US$52.7 billion).

According to the latest analysis of the Hong Kong economy, the city’s budget deficit may be much lower this year than the government has been estimating, mainly due to an upsurge in economic activity in recent months.

More on this story here and here.

Hong Kong to enhance cracking down on money laundering, organized crimes.

Hong Kong Secretary for Security Ambrose Lee said that “in the coming three and a half years,our bureau will continue to implement various initiatives, including enhancing the capacity of combating terrorism and transnational organized crimes.”

More on this story here.


A poll of over 2000 people indicated that more than three-quarters of Britons would like to live abroad, with most considering going overseas to find a better quality of life. About 52% of people would be happy to move overseas for between six months and two years, while 21% would be happy to spend more than six years abroad, according to Abbey National Offshore which offers banking for expatriates. About 22% of people planning a move overseas would head for the United States, with Australia the second most popular destination, attracting 14%.

More on this story here.

But would they enjoy themselves if they actually made the move?

Just as pilgrims travel to Lourdes in search of physical cures, moving abroad is becoming the suggested salve for directionless souls. The idea is that if you have lost something spiritual along the way, you will find it on a Costa or in the Loire - not in your rainy British backyard. For many, the reality is very different. They are undeniably gorgeous places to visit or in which to own a second home. When Britons move there permanently, however, they can find the restful village becomes listless, even boring. Far from friends, family and things to fill the day, overseas ennui sets in.

More on this story here.


Canadian parliamentarian Peter Goldring is in the Turks & Caicos Islands this week, attempting to revive an old idea of annexing the Caribbean jurisdiction as Canada’s “eleventh province”. According to Goldring, the annexation of the islands by Canada would result in numerous mutual benefits apart from the obvious boost to tourism. He claims that the initiative would give T&C the opportunity to expand and diversify its economy, in addition to providing greater regional stability. Meanwhile, he points out that the islands will provide Canada with a manufacturing and distribution hub for the Caribbean and South America.

More on this story here.


President Bush will ask for a 12.7% increase in his fiscal 2005 budget request for the Treasury Department’s Financial Crimes Enforcement Network, and of around 4 percent for the Office of Foreign Assets Control. FinCEN analyzes and shares a network of financial information with law enforcement and intelligence agencies to help to investigate and track down terrorist financiers and money launderers. OFAC is responsible for ordering U.S. banks to block assets of suspected terrorist financiers and for enforcing economic sanctions against countries, such as Cuba, and against suspected drug overlords.

More on this story here and here.

More rules and pointless cost increases coming.

The seeking of an increased FinCEN budget, made under the rubric of terrorist financing, certainly means an increase in scrutiny of all international financial transactions and a resulting increase in transaction costs for legitimate banking, investment and commercial transactions...

More on this story here (registration required).



Reversing an earlier decision, following a bitter flap, the IRS says it will not require software companies to flag customers who use the government’s program for free electronic tax filing. In its second year, Free File allows selected groups of taxpayers -- low-income, young adults or the elderly, for example -- to electronically file tax returns for free over the Internet using the tax-preparation programs of private companies. Free File is the centerpiece of the IRS effort to wean taxpayers from paper returns, which are costly to process. Last year, 40% of returns were filed electronically. About 2% came through Free File. Last year, the IRS ran into a battle with the software industry when it ruled that companies must identify by electronic code any returns from taxpayers using Free File.

More on this story here.


The UK government is set to abolish the unpopular IR35 tax rules in April of this year, replacing the system with a new set of rules which have been dubbed “IR591”. If introduced, IR591 would represent more of a structural change in the taxation system for small businesses, whereas IR35 was introduced as an enforcement measure designed to prevent “disguised employees” gaining tax benefits through dividend income. Paymster General Dawn Primarolo hinted that government is working on updating the current rules, revealing: “There is currently no precise definition within current tax legislation of ‘owner manager’.”

More on this story here.


The writer defends Paul Martin’s Canada Steamship Lines and other Canadian corporations against the charge of receiving “outrageous, obscene tax breaks, ” and the suggestion that anyone -- particularly the PM -- who takes advantage of the perfectly legal double-taxation agreement between Canada and Barbados is lacking in “morality”. “Don’t fall for emotional, one-sided arguments about ‘morality’ in this environment. What Canadian corporations are doing via the use of tax treaties is growing their operations legally and sensibly, and participating in the global economy. It is a fool’s paradise to think that taking away legitimate avenues like this will result in a stronger Canada; in fact the exact opposite is true,” he writes.

More on this story here.

The controversy as reported from the Barbados here.


In its annual report for 2003, the Gibraltar Bankers’ Association cites the European Savings Tax Directive and an “insidious” campaign by outsiders to sling mud in the direction of the jurisdiction’s financial sector as the major causes for concern in the months ahead.” “As if that was not enough, we in Gibraltar continue to face an uneven playing field as well as an ongoing and insidious campaign by many to misinform on and destabilize Gibraltar as a jurisdiction,” stated the report.

More on this story here.


The Revenue Commissioners will launch a major investigation into Irish banks with operations in well-known tax havens from the end of March. It has already contacted Ireland’s main financial institutions seeking their co-operation.

More on this story here and here.

Ireland looks at reducing red tape burden on businesses.

The publication of a white paper putting forward proposals for the removal of unnecessary regulatory red tape for Irish businesses has been welcomed by employers groups. Under the new proposals, regulators may be permitted to impose large fines in order to ensure compliance, rather than resorting to prosecutions. According to the paper, approximately 15% of the €4 billion burden on businesses was avoidable, thus unnecessary regulation costs Irish business approximately €600 million per annum.

More on this story here.


The surest way to receive unwanted attention from the feds? Claiming what appear to be wildly excessive itemized deductions. That has always been the case. The IRS has developed a new computer program to identify returns most likely to have underreported income. In the past, IRS computers focused more on fingering returns most likely to have overstated deductions. Other IRS initiatives include cracking down on unreported foreign back accounts, matching partnership reports with income and deductions reported, shutting down “Section 861” schemes, and (as usual) shutting down “abusive” trusts.

More on this story here.



Fear of flying, a subliminal condition for travelers since 9/11, has acquired an even more chilling dimension: fear of arriving. Just as we come to terms with the hassles of airport security checks, delayed and canceled flights and the threat, or promise, of air marshals, visitors to the United States are faced with new, onerous conditions. Anecdotes of harassment by immigration and security officials toward people with the wrong names or the wrong skin color, or simply the wrong demeanor, do nothing to dispel resentment among road warriors at being made to feel guilty each time they pass a checkpoint.

Under the U.S. Visitor and Information Technology program, begun this year, immigration officials take fingerprints and digital photographs of all visitors entering on visas. Travelers from 27 countries, under the Visa Waiver Program, are exempt. The snag is that passports issued after Oct. 26, 2004, must carry biometric details; otherwise one needs a visa. None of the visa-waiver countries is able to meet the deadline.

More on this story here.

Canadian program aims at terrorist “risk scoring” system for air travelers.

The Canadian government is spending millions of dollars on a program to assess the terrorist risk posed by air travelers. The project aims to develop a sophisticated “risk scoring” capability and the technical ability to share that information with the United States, according to interviews and documents released under access to information legislation. The initiative goes beyond the collection of basic passenger information that the federal government authorized after the Sept. 11, 2001 terror attacks in the United States. Few details about how the program operates are publicly available. But it appears to complement a controversial program set to begin this summer in the U.S. that will screen and “color-code” passengers.

More on this story here.


The technology has arrived that allows anyone to track someone down without them having a clue they are under surveillance. It has crept in almost unnoticed -- and at the centre of this new Big Brother technology-for-all is nothing more sophisticated than our own mobile phones. A clutch of brand new and perfectly legal internet-based services have just been launched that cost as little as £0.30 to use, and take less than five seconds to zero in to within 50 meters of where a person is.

A simple text message or phone call to an operator from a suspicious spouse or boss can send one of the new DIY spying services off to track a person down. Another call or a visit to a special website will then tell you where they are. The technology is improving, too. A new, satellite-assisted system that will be able to narrow down the search to just five meters is expected within a year.

The technology has enraged privacy campaigners. Another cause for huge worry is that hackers will be able easily to override the security procedures of the tracking companies. The potential is there for a hacker to break in, enter any mobile number and track it without anyone’s knowledge.

More on this story here.

Bell Labs’ new software gives you greater control over your privacy.

For those who do not want their mobile operator to keep track of your whereabouts and flood them with unsolicited information, new software from Bell Laboratories gives greater control over their privacy. The technology allows mobile phone users to specify what location information they wish to share, when, with whom, and under what criteria. It is the focus of a paper that Bell researchers plan to deliver at an international conference on mobile data management sponsored by the Institute of Electrical and Electronics Engineers.

More on this story here, here, and here.


Just submitting my column on the latest immigration debacle and seeing it published, I had a vague suspicion I had missed an important nexus in the story. Plenty of conservatives and libertarians are scratching their heads and wondering why Bush would forward such a nakedly wrong proposal for simple electoral gain (Did Karl Rove do the math and figure the net gain in illegals voting for the GOP would outweigh the disaffected Republican voters who would stay home out of disgust?).

What crisis could the government create to foment an overwhelming call for a national ID card? Grant de facto amnesty to millions of illegal invaders and use the national security shibboleth to press for the ID cards to ensure any potential terrorists are thwarted through the usual efficient government methods. Richard Perle and David Frum called for a national ID in their new book, An End to Evil, so their national greatness fever dream may see an important component added to their vision of empire. Even Bush the Younger has needed a pretense for this instead of risking an Executive Order to make it so. Mark my words; the Bush administration will use the immigration initiative to justify a national ID card for all Americans.

More on this story here.


Documents obtained by EPIC (Electronic Privacy Information Center) under the US Freedom of Information Act reveal that a second US airline, Northwest, handed over passenger data to the feds without the passengers’ knowledge. The agency in question, NASA, was given data covering a three month period covering passengers travelling in July, August and September 2001, and held it for two years. EPIC estimates that there could be in excess of 10 million PNRs (Passenger Name Records) involved, on top of approximately a million that, it was revealed back in September, had been handed over by Jetblue.

One airline passing over data could have been an exception, but one of the major US airlines also doing so suggests there may be a pattern. The nature of NASA’s activities are of interest.

More on this story here.

Study used census information for terror profile.

U.S. census information provided by millions of Americans was used in a government study to profile airline passengers as terrorist risks. The National Aeronautics and Space Administration also obtained for its study the private information of hundreds of thousands of passengers flying Northwest Airlines, an action NASA had previously denied. The NASA study highlights concerns among civil-liberties advocates that the government is gathering private information and even using its own data -- contrary to repeated official assurances from the Census Bureau -- to develop a data-mining system to prescreen all airline passengers.

Bill Scannell, president of the group DontSpyOnUs.com, called the inclusion of census information “absolutely appalling”. “Information given by American citizens for reasonable demographics information has been turned around and used to spy on people. This sounds like East Berlin, circa ‘74,” said Mr. Scannell.

More on this story here.

Electronic Frontier Foundation hits out at profiling, sets up protest site.

EFF said that the US government and airlines must take action to prevent privacy violations from passenger profiling systems. It wants US citizens to contact congressional reps to complain, and has set up a website that allows that to be done free of charge, here.

More on this story here.

Electronic Privacy Information Center files formal complaint against Northwest.

EPIC filed the complaint with the Department of Transportation, alleging that Northwest Airlines engaged in unfair trade practices when it mailed three months’ worth of passenger data on CD-ROMs to NASA researchers in 2002. EPIC seeks a federal investigation and possible fines against the company for violating its privacy policy. It also intends to file suit against NASA to compel further disclosure of government documents under the Freedom of Information Act.

More on this story here.


The lower House of the Parliament has adopted the following measures: A judge can order an Internet access provider to block access to specified content; hosting providers must monitor all the content they host to prevent certain types of content (racial hatred and child porn material) being published by Internet users; e-mails are no longer covered by the secrecy of correspondence.

More on this story here.


The Bush administration is pushing to ratify an international convention that civil libertarians say would pose serious threats to privacy rights at home and abroad. “It promises to be an effective tool in the global effort to combat computer-related crime,” said the president. But independent legal experts and right activists on both sides of the Atlantic are sceptical about such claims.

The treaty criminalizes acts such as hacking and the production, sale or distribution of hacking tools, and expands criminal liability for intellectual property violations that nations must have on their books as crimes. The agreement also makes it mandatory for each participating nation to grant new powers of search and seizure to its law enforcement authorities, including the power to force an Internet service provider to preserve a customer’s usage records and to monitor his or her online activities as they occur.

More on this story here.


“Paper or plastic?” is not the only question grocery store customers hear these days. Now they are also asked, “Do you have a discount card?” But some people question whether the personal information needed to get such cards is being used to violate consumers’ privacy. That is why Sen. Ken Chlouber, R-Leadville, wants to do away with them entirely.

More on this story here.


A Birmingham, England-based crime reduction scheme has developed technology to help retailers to stay one step ahead of shoplifters in the fight against retail crime. Birmingham’s Retail Crime Operation has gone live with a new database system that can predict patterns of criminal behaviour based on past experiences.

More on this story here.


Britain may be the first nation to break the sound barrier with a petrol-driven reciprocating-engined vehicle. That at least appears to be what sales manager Peter O’Flynn was attempting when clocked at an impressive 406mph by a speed camera in Cheshire. The achievement becomes even more admirable when we learn that Peter was at the time at the controls of a humble Peugot 406, until now thought to have a top speed of 129mph. Officials say Mr. O’Flynn still faces prosecution despite the obvious attack of insanity which afflicted it speed (sorry, safety) camera.

More on this story here.


A U.S. company using technology developed in Israel is pitching a lie detector small enough to fit a pair of eyeglasses, and its inventors say it can tell, e.g., whether a passenger is a terrorist by analysing his responses to questions in real-time. Nemesysco’s patented Poly-Layered Voice Analysis measures 18 parameters of speech. According to Nemesysco, its accuracy as a lie detector has proven to be less important than its ability to more quickly pinpoint for interrogators where there are problems in a subject’s story. They then can zero in much more quickly with their traditional interrogation techniques.

More on this story here.


In a series of unpublicized meetings and heated correspondence in recent weeks, officials from the Justice Department, the F.B.I. and the Drug Enforcement Administration have repeatedly complained about the Federal Communications Commission’s decision in 2002 to classify high-speed Internet cable services under a looser regulatory regime than the phone system.

As a result of the F.C.C.’s actions, said a deputy assistant attorney general who has played a lead role for the Justice Department, some telecommunications carriers have taken the position in court proceedings that they do not need to make their networks available to federal agents for court-approved wiretapping. The outcome of the debate will have far-reaching consequences.

More on this story here.


Snooping powers given to more than 600 U.K. public bodies look set to create a small industry of private firms that will help process requests for information about who people call, the websites they visit and who they swap e-mail with. Some firms are already marketing their services to the agencies granted the snooping powers under the controversial Regulation of Investigatory Powers Act.

One firm, called Singlepoint, has been specifically created to act as a middleman between the bodies that want access to data and the net service providers and phone operators that hold it. Civil liberty groups said they were worried about the emergence of such firms and said the government must police them closely to ensure that access to sensitive information was not abused.

More on this story here.


The proposed computerized federal airline security system that would require passengers to present identification, undergo a background check and be color-coded, based on their perceived risk, harkens back to slave laws that prevented Blacks from traveling, says a Harvard University researcher who specializes in privacy issues. “What this is really reminiscent of is what happened on plantations during slavery when Black people or persons of color had to have passes in order to travel,” says Richard Sobel, a privacy policy researcher at the Harvard Medical School. “Essentially, the 13th Amendment ended involuntary servitude, but when you have to ask the government’s permission to do certain things such as to travel or to work, you are no longer your own person.”

Despite strong opposition from civil libertarians and civil rights activists, the Department of Homeland Security’s Transportation Security Administration is pushing ahead with the so-called CAPPS 2 program with hopes it will be in full operation within a month. It is a heightened version of the Computer Assisted Passenger PreScreening program (CAPPS 1), instituted to heighten security following the Sept. 11, 2001 terrorist attacks.

More on this story here.


U.S. political campaigns and advocacy groups are drawing up detailed profiles of the voters who will determine their success at the polls next fall. They are finding out what kind of car their prospective supporters drive, how much they earn, what sort of neighborhood they live in and what magazines they read. They may not know how individuals voted in the last election, but they do know who showed up at the polls and whether they are registered with a particular party -- strong indicators of how they are likely to vote in the November election, experts say. “It’s pretty scary, the stuff you can get on people,” said Robert Richman, founder of the liberal campaign consulting firm Grassroots Solutions.

Political groups say such “voter targeting” allows them to organize voter-registration drives, communicate with supporters and sway undecided voters to their cause. But such tactics lead to ideological polarization and declining voter turnout as campaigns tailor their message to a dedicated core of likely supporters, some critics say.

More on this story here.



Reading the various newspapers from around the world it seems that everywhere one looks there is evidence of a gestating police state. That totalitarian governments could take over in places like Britain is unsurprising, since its parliament is able to legislate about any matter it chooses. This is in contrast to countries such as the USA which have written constitutions and Supreme Courts to enforce them. The US courts could be expected to strike hard and repeatedly against some of the more repressive acts of the state. Sadly it appears otherwise.

More on this story here.


The mayor of St. Louis suburb Pine Lawn fancied a rare $1,000 bill that was seized in a traffic stop, so the town wrote the driver a check and the politician kept the cash. Not a fair trade, according to the driver, a retired trucker who said he carried the bill in his pocket for two decades. “If you take a personal item from someone, you should give it back,” Curtis Smith Sr., 71, told the St. Louis Post-Dispatch. County police and prosecutors found that Pine Lawn officials broke no laws.

Smith’s note was seized last April when he was arrested on suspicion of drunken driving. Smith said he was sleeping off a few drinks in his truck on a lot he owns.

More on this story here.


An act of secrecy by a Miami judge last year, “super-sealing” a lawsuit by a South Florida man detained after the Sept. 11, 2001, terrorist attacks so that no trace of his case appeared in any public record, has had the opposite of the intended effect. Mohamed Kamel Bellahouel, a one-time country veterinarian who more recently waited tables in Delray Beach, is fast becoming known in civil libertarian circles. His challenge to government secrecy has reached the U.S. Supreme Court.

Federal agents detained Bellahouel in October 2001 and held him for five months on the theory that he might have served food to hijackers and maybe even went to a movie theater with one. What began as a petition for his release has evolved into a battle over the public’s right to know what its government is doing. Bellahouel, 34, alleges that a series of federal judges sealed the entire case against him without giving any reason, without allowing him or anyone else a chance to challenge the action. All of which places Bellahouel, an unassuming immigrant living with his wife, stepdaughter and mother-in-law in Deerfield Beach, at the center of a legal storm.

More on this story here.


In December 2003, the Department of Defense’s Inspector General (DOD IG) issued a report on the controversial Total Information Awareness Program (TIA). The report concluded that the Defense Advanced Research Projects Agency (DARPA) had not adequately considered the privacy concerns associated with TIA. TIA itself is now defunct. But the federal government continues to use “data mining” techniques in other federal initiatives such as the Computer Assisted Passenger Profiling System II (CAPPS II). Moreover, as the DOD IG report notes, the federal government is likely to adopt other versions of “data mining” in the future. And meanwhile, at the state level, as I noted in an earlier column, a new data mining initiative, the Matrix, is already occurring.

What all these programs have in common is that they are “data mining” initiatives -- that is, they seek to develop computer technologies to sift through large data repositories to identify threatening patterns and people. (Data mining, in this sense, is the use of existing data to try to predict crime or terrorist activity prospectively.) What these programs also have in common, is that they do not pay sufficient attention to concerns of individual privacy. Data mining, without adequate privacy safeguards, has the potential to be used as a tool to spy on American citizens without the judicial or procedural constraints that limit how far more traditional surveillance techniques can infringe privacy.

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Using the pageantry of his third State of the Union speech, Bush set in motion a battle over privacy and security that will continue through the presidential campaign and will likely climax before the law’s Dec. 31, 2005, partial expiration date. “Key provisions of the Patriot Act are set to expire next year,” Bush said. “The terrorist threat will not expire on that schedule. Our law enforcement needs this vital legislation to protect our citizens -- you need to renew the Patriot Act.” Democratic presidential candidates have criticized the act to varying extents.

Legislation is pending in both the House and Senate to lessen the Patriot Act's power and enhance privacy protections. All the bills are now awaiting committee action.

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Resistance to Patriot Act gaining ground.

Deliberately evoking its Revolutionary history, Brewster (Massachusetts) Town Meeting has formally condemned the antiterrorist USA Patriot Act, united against the laws of a different leader named George. While the act is largely symbolic -- federal law enforcement agencies, not local governments, enforce the Patriot Act’s new search, seizure, and detention provisions -- the grass-roots opposition has forged an unlikely alliance of people angry at Washington's domestic handling of the war on terror. In Brewster, anger at the Patriot Act has drawn together libertarians, an antitax group, and a Unitarian congregation, as well as a more traditional coalition of civil libertarians and antiwar activists. A similar story has already played out in 16 Massachusetts communities, and 16 more are preparing measures against the Patriot Act this spring.

The burgeoning nationwide movement has prompted three state governments, and 236 communities in 37 states, to pass resolutions against the Patriot Act. If the backlash continues to grow, opponents of the Patriot Act believe, their momentum will force Congress and the White House to address some of the law's unpopular elements.

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During the last century, governments given totalitarian powers killed an estimated 169 million people. If you think it cannot happen here, I would remind you of the flames that destroyed the Waco, Texas compound of a religious cult that, by most accounts, did not represent a threat to anyone, was not engaged in any illegal acts, and, in which, more than 90 men, women and children were gassed and incinerated. This would suggest that no one is safe from a government intent on serving a subpoena, even if it has to kill you to do it. It was our introduction to the Clinton administration, but no one would have guessed that a conservative, Republican-controlled government would serve up The Patriot Act that became law on October 25, 2001.

I am not a lawyer and I am not trained in the interpretation of law. However, I know the Fourth Amendment of the Constitution says, “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probably cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or thing to be seized.”

The Patriot Act, however, permits the government to delay notice of the execution of a warrant to parties under suspicion of “domestic terrorism”. If the government can conduct such an investigation of a suspected terrorist, what protects any citizen from being identified as a terrorist and thus subject to “sneak and peak” surveillance? The Act is so broadly written that nothing protects a citizen with the provisions and intent of the Fourth Amendment. It renders anyone subject to a “sneak and peak” investigation in which all actions, communications, and personal records become fodder for prosecution.

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Lew Rockwell’s book, Speaking of Liberty, is a compilation of his speeches. A speech is a different medium from a book or even a pamphlet. A speech must present information in a less concentrated form than a printed document because listeners have to keep up with the speaker. Rare is a speech that presents more than one point that any listener can recall a week later, and this point will probably be different for each listener. This book is different.

The transcribed speeches in Speaking of Liberty are carefully crafted presentations of sophisticated concepts of liberty, yet presented in a way that the information goes down nicely. Somehow, a lot of the information sticks. I did not hear any of these speeches. I do not know how the audience received them, nor do I know how much information the listeners retained. But I do know that the essays in this book are content-rich, as website jargon says.

The French Revolution had a slogan: “liberty, equality, fraternity”. Lenin had a powerful slogan: “peace, land, bread”. Lew Rockwell has inadvertently (I suspect) come up with a slogan for libertarianism: “property, freedom, peace”. Speaking of Liberty is loosely structured in terms of this tripartite slogan. But, unlike the previous tripartite slogans, Rockwell’s slogan is in fact the basis of an integrated social philosophy. It is therefore more than a slogan. He derived these principles from Mises, who was the first man to build an integrated system of economics, and more broadly, of society in terms of these three principles.

Sample quote: “Never have so many rich people who have been given so much by government demanded so much more.” (p. 116)

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Heads up on the content of this column: it contains big thoughts in a short space. The market economy -- globalized, enormously powerful, breathtaking in scope and breadth -- is remaking the world in ways that far surpass any existing political development in the US, from the crafted blather of the State of the Union to the mad rush to grab the Democratic nomination. We are living through changes that may appear slow if observed from the point of view of the daily headlines, but which are momentously fast and completely transforming when looked at globally and from the point of view of years and decades into the future.

These developments are going to bring about surprising political shifts, profound upsets in rooted cultural assumptions, and an eventual and merciful end to the US imperium. These changes will touch everyone in ways that will be both stunning and glorious for average Americans, and deeply disturbing for the American regime that aspires to unchallenged global hegemony.

What is the underlying cause? The unleashing of human energies in nations that have been isolated, regimented, and closed for centuries. China, Malaysia, India, the countries of Latin America, and the new economies of Eastern Europe, among many others, are expanding at as much as twice the rate of American and European markets. This is not only remaking their nations, but the way we perceive the geographical distribution of wealth and power. Over time, and extended far into the future, this trend is going to mean dramatic upheavals in the way Americans perceive their role in the world.

More on this story here.


Each of us is different, unique. The commonality we all share may be no more than being Homo sapiens. So how can anyone dare to presume to tell someone how to live her or his life? How could the nannies possibly conceive that their narrow little boxes can adequately hold all of humanity’s (and inhumanity’s) possibilities? The nanny-ninnies cannot conceive of my horror at their prescriptions and proscriptions -- but that does not stop their efforts to push their ideas on others.

Many pro-freedom circles, especially think tanks, the focus is on “public policy” -- essentially groups butting heads over how much freedom individuals ought to have, or need to have. But as the title of an essay by FEE president Richard Ebeling puts it: “There is no central plan for winning liberty”. Such a thing could never work. Each individual can choose a course that is most effective for him- or herself with respect to advancing liberty.

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While the United States is freer and more democratic than many countries, it is not, I think, either as free or as democratic as we are expected to believe, and becomes rapidly less so. Indeed we seem to be specialists in maintaining the appearance without having the substance. Regarding the techniques of which, a few thoughts, including: The US government consists of five branches which are, in rough order of importance, the Supreme Court, the media, the presidency, the bureaucracy, and Congress.

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An End to Evil is a worthy election-year polemic from Richard Perle and David Frum. The work is clearly meant to help define foreign policy for a second Bush Administration, and it may well do that if sloganeering continues to displace actual strategic planning. Perle and Frum (P-F) are very good at what they do: arguing for a robust exercise of American power at each and every potential and perceived threat. They obviously and honestly think that bold action will make Americans safer. P-F would literally spend whatever is necessary, “borrow responsibly,” and build a force capable of confronting evil anywhere on the planet.

But is that even possible, let alone the right goal? “The United States may be able to defeat, even destroy, al-Qaeda, but it cannot rid the world of terrorism, much less evil,” is how Jeffrey Record concludes his recent study on the war on terror. Though P-F try to dismiss Record with the defeatist-pessimist label they are so fond of attaching to contrary views, he has some standing as a professor in the Department of Strategy and International Security at the Air Force’s Air War College.

What ultimately sinks the P-F call for perpetual war against all evil is its refusal to acknowledge the limits to American military power. They severely underestimate the need for American manpower to secure victories that superior firepower mated to a steely will might win. Moreover, P-F do not seem to appreciate, even as they heap much-deserved praise on U.S. forces, that America may not soon possess the fighting force it had in spring of 2002. Men and machines wear down in the crucible of combat. But a doctrine that declares war on human evil does not recognize this element of reality. The next step is clear: declare war on the second law of thermodynamics.

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Limited government... balanced budget... fewer regulations -- Republican principles from the Eisenhower era might have protected them. Too bad Republicans no longer believe in them. Never before has the nation been so deeply in debt. Yet, never before have any people been so eager to spend more. On the road to ruination... they press down on the accelerator.

George W. Bush, the conservative republican, is increasing spending more than 300% faster than his predecessor, Bill Clinton, the liberal democrat. But that is the charm of politics. Its shifty sands cover the creepy tracks of countless crooks and connivers. No sooner has a man piled up a few corrupt positions, policies and proposals... than the winds change, and his whole program is blown away. He re-invents himself as the opportunities present themselves.

Like investors, republicans have gone a little light in the head. They no longer aim for a balanced budget and modest programs; they aim for the stars. Gone is any trace of republican virtue... laissez-faire deference, humility, modesty, probity and thrift. Instead, we are expected not just to get along with our fellow man, but to dominate him politically... to outdo him in science... and to outspend him. Forget letting him run his own life. We are going to control “the economic life of humanity”. They might as well be democrats!

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For a group that holds itself up as champions of Democracy, Britain’s chattering classes sure can get their knickers in a knot with the will of the people offends their liberal sensibilities. Case in point: a recent stunt by BBC Radio 4’s Today program. As an exercise in grass-roots lobbying, Today asked its 6 million weekly listeners to propose a new law for the new year. A labour MP, Stephen Pound, was drafted to front the bill when it was all over.

Clearly expecting some sensible law mandating fat-free potato chips or renewed efforts to save the ruby-throated thrush of Upper Equatorial Guinea, the organizers were obviously aghast when the winner, with 37% of the vote, was a law allowing homeowners to use “any means” to defend their property from intruders. he winning law quickly became known as “Tony Martin’s Law” after the Norfolk farmer who spent nearly four years in jail for killing a 16-year-old burglar who had broken into his home. In a far-from-unusual act of gall, he was also sued for lost wages by a second burglar he merely winged.

Martin’s Law is clearly not going anywhere anytime soon. Deputy Prime Minister John Prescott found the wishes of thousands of the citizens he ostensibly represents to be “amusing”. The Guardian called it “embarrassing”. And people wonder why Brits are cynical about their government and media?

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In the summer of 1965, when I had just finished my freshman year in college, I was reading a little book called The Law -- a long pamphlet, really -- by the nineteenth-century French legislator Frédéric Bastiat, when I was riveted by a single sentence: “Look at the law, and see if it does for one man at the expense of another what it would be a crime for the one to do to the other himself.”

In Bastiat’s view, government, beyond the strictest limits of justice, became “organized plunder,” a device by which “everyone seeks to enrich himself at the expense of everyone else.” In other words, government itself tends to become the very evil it is supposed to prevent: crime. But it confuses people because it enacts criminal acts under the forms of law. The simple insight rocked me. It upset my faith in my country and its basic justice. If Bastiat was right, the United States was already profoundly corrupt. It took me years to come to terms with this idea. Today it seems to me almost self-evident. I marvel that anyone with common sense thinks otherwise.

Bastiat, a devout Catholic, reasoned about the state from a natural law philosophy. He concluded that the state violates the most basic principles of natural justice. Once you start thinking that way, you can hardly avoid thinking of politics as a largely criminal activity. At what point, short of taking 100% of our earnings, do our rulers feel they are taking too much from us? The obvious answer is that they recognize no limit. The subject never comes up. They view the taxpayer as an inexhaustible resource. And why shouldn’t they? The sad fact is that the American taxpayer is a remarkably passive creature.

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