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IMPORTANT NEW BOOK ON GOING OFFSHORE AVAILABLE ONLINE
Protecting Our Legacy: A 21st Century Approach to Wealth Preservation & Restoring Liberty, by Ronald Holland, is a new online -- and soon to be published print -- book is not the usual “go offshore for all the wrong reasons” kind of book. Rather he presents an objective look at the potential benefits and risks to affluent investors when they invest offshore in major money centers. He also makes the case why terrorism threats against the United States and American markets make it prudent and necessary today to diversify outside these markets, the dollar and American financial institutions.
He urges existing and new offshore investors to be compliant, follow the reporting and disclosure rules and do their own due diligence on foreign products and financial firms in order to build safe, protected wealth outside their home country jurisdictions. He further describes the attacks on confidentiality and privacy since 9/11 and makes the unusual case that investors and offshore financial institutions need to go even further in know your customer and client rules than required by the US Patriot and Homeland Security Acts in order to protect financial institutions and clients.
Ron makes that case that offshore diversification and wealth preservation planning is far more important in this new century of lost privacy, reportable, transparent structures and full disclosure than ever before due to old traditional risks to wealth, new government and regulatory threats and the new terrorism threat to markets and financial institutions.Book begins here.
SURVEY: SINGAPORE’S CORPORATE TAX RATE AMONG LOWEST, NEW ZEALAND’S IS TOO HIGH
Singapore’s corporate tax rate of 20% is the 9th lowest among 69 markets, according to international accounting firm KPMG. Singapore is also the second most competitive tax haven in the region after Hong Kong, the survey showed. Still, Singapore’s overall rating is one notch lower than what it was last year even though the republic recently slashed its corporate tax rate by 2 percentage points to 20%.
New Zealand’s higher corporate tax rate may hinder its bid for more foreign investment when the global trend is to drop rates, according to KPM’qs 2004 world tax survey. The corporate tax rate was increasingly one of the factors investors used to weigh up places for investment, KPMG said. Competition for foreign investment was intensifying around tax rates.More on this story here and here.
SWISS POLITICS IS A MAN’S WORLD IN THE PEOPLE’S PARTY VIEW
The Swiss People’s Party is not known for dithering on controversial issues -- it wants Switzerland to stay outside the European Union and women to stay inside the home. And as party president, Ueli Maurer, made clear in an interview with swissinfo, the fact that the party is now fully represented in government changes nothing.More on this story here.
SWISS ECONOMY CHALLENGED BY EU ENLARGEMENT
The Swiss economy, which has been stagnating for the past decade, is now preparing for the challenge of competing with a 25-member European Union. While export-led sectors stand to gain from EU enlargement, the domestic market needs reforming if Switzerland is to experience a return to economic growth. Growth will depend on a clampdown on cartel agreements, improved transparency and more help being offered to business start-ups -- all issues which the Swiss government has been grappling with for some time. But the prospect of EU expansion does not seem to be worrying Swiss business leaders, many of whom view enlargement as a chance to break into new markets.More on this story here.
HAS KHODORKOVSKY STRUCK A DEAL WITH PUTIN?
Mikhail Khodorkovsky, the jailed oil tycoon and critic of President Vladimir Putin, has performed a volte-face and thrown his support behind Russia’s leader. In his article for the Russian financial newspaper Vedomosti, Mr. Khodorkovsky strikes a contrite tone and directly contradicts his previous position. It implies that some kind of deal has been, or is about to be, struck.
Five months after his arrest Mr. Khodorkovsky remains in prison and faces trial on charges of fraud and tax evasion. He has had access to the prosecution’s case against him, as is required by Russian law. The charges relate to the controversial privatizations of Russia’s state assets, including its oil firms during the tenure of President Yeltsin in the 1990s. If convicted he could face up to 13 years in jail. Most Russians regard businessmen like Mr. Khodorkovsky, who made their fortunes out of these privatization deals, as little more than thieves who have stolen assets that belonged to the people.
What is Mr. Putin trying to achieve? Mr. Putin’s central aim is to get big business to pay more taxes. He also wants to boost the authority of central government through regulation. In other words, he is trying to get the captains of big business to do what the Kremlin wants.More on this story here.
ANTIGUA & BARBUDA’S CHALLENGE TO THE US PRAISED BY LEGAL EXPERT
Following the preliminary ruling by the WTO in favour of Antigua & Barbuda in its dispute with the United States over online gambling restrictions, Dr. Gilbert NMO Morris, Executive Director of The Landfall Centre for Finance, Trade & International Affairs has expressed strong support for the Caribbean jurisdiction’s actions. “I am pleased that Antigua and Barbuda have followed this course. I have been impressed over the last two years with its Foreign Affairs team led by Sir Ronald Sanders,” commented Dr Gilbert.More on this story here.
GUERNSEY HOPES OECD’S FOCUS ON LARGER JURISDICTIONS WILL TAKE HEAT OFF THEM
“In the early days, a large amount of the OECD’s effort was focused towards small jurisdictions. Now we are pleased that they are increasing their focus where less activity has taken place thus far, dealing with non-OECD major economies,” said States Supervisor Mike Brown. He added that Guernsey was closely monitoring the work of a sub-group established by the Global Forum to try to achieve a global level playing field. “Of particular importance will be the ability of the OECD to obtain the support of all of its own members to the principles of transparency and exchange of information.”More on this story here.
Guernsey regulator turns promoter.
Talmai Morgan will make the switch from the Guernsey Financial Services Commission to the Guernsey Promotional Agency later this year. He said he was looking forward to presenting the good news of the Guernsey finance sector to international audiences. Mr. Morgan said that he wanted to continue to address the problem of Guernsey’s association with “offshore tax havens”. He said that the label was simplistic and misleading, but he was quite encouraged at changing attitudes in other jurisdictions.More on this story here.
U.S. PLAYING CATCH-UP ON ECONOMIC FREEDOM
Say you are making a list of the world’s freest economies. Where would you place the United States? Would we be number one? In the top three? The top five? The answer, sadly, is “none of the above”. Our 10th annual “Index of Economic Freedom” shows that last year the U.S. dropped from being tied for sixth place worldwide to being alone in 10th. As far as economic freedom goes, you would be better off starting a business in Hong Kong, London or Tallinn, Estonia, than you would be starting it in an American city. What is dragging on economic freedom in America? The Index pinpoints the problem -- “fiscal burden of government”.More on this story here.
HEINZ (CO.) SEEKS TO DISAVOW KERRY CONNECTION
H.J. Heinz Co. has launched an election-year campaign of its own, this one to distance the ketchup maker from what is shaping up to be an acrimonious presidential race. The company has sent nearly 50 letters to radio and television talk shows nationwide to tamp down chatter on the airwaves and Internet suggesting revenue from ketchup sales will benefit the campaign of pending Democratic presidential nominee John Kerry. His wife is Teresa Heinz Kerry, heiress to the $500 million family ketchup fortune. The company has received about 150 calls this month from consumers vowing to boycott Heinz products, or in some instances to buy more, said company spokeswoman Debbie Foster.More on this story here.
EU BLOCKS GIBRALTAR CORPORATE TAX LAWS
The European Commission has decided the planned reform of Gibraltar’s company taxation laws is not in line with EU rules on state aid. The reform aims at abolishing the current 35% corporate tax rate by replacing it with a payroll tax and a business property occupation tax; both capped at 15% of profit. The measures would allow companies registered in the British outpost to benefit from a much lower tax rate than the corporate tax rate applicable in the United Kingdom -- currently at 30%.
“The commission decided today that the planned reform of corporate taxation in Gibraltar would give companies domiciled in Gibraltar an unfair tax advantage in the form of fiscal revenue that the UK would forego,” said an EU executive.More on this story here.
PANAMA’S ECONOMY STILL CHALLENGED DESPITE BOOM
Panama must tackle structural reforms, high unemployment and deficits despite growing tourism, transportation and construction, according to the IMF. Panama has recovered from two years of weak growth “led by a boom in construction, the primary sector (particularly fishing) and a rebound in export-oriented services in the latter part of the year,” the IMF said in its annual report on Panama’s economy. Panama’s real GDP grew by 4% in 2003 but it still needs to maintain a sound fiscal policy and reform its social security. Other challenges include controlling public debt and the risks that accompany a fully dollarized economy.More on this story here and here.
US, Panama to begin free trade talks in late April.
The United States will begin free trade talks with Panama the week of April 26. U.S. Trade Representative Robert Zoellick said “the time is right” to begin talks with Panama following the recent conclusion of free trade agreements with five other Central American countries and the Dominican Republic. Two-way trade between the United States and Panama was $2.1 billion in 2003, with U.S. exports accounting for $1.8 billion of the total, the U.S. trade office said.More on this story here.
DOMINICA SEVERS TIES WITH TAIWAN, HAVING BEEN BRIBED TO DO SO BY CHINA
Dominican Prime Minister Roosevelt Skerritt announced that his government has established relations with China and severed its 20-year relationship with Taiwan. He also said the Chinese government has pledged financial backing for the Windsor Park Stadium, the improvement of health facilities, rehabilitation of the West Coast highway, a new secondary school and thirty scholarships. He said that China’s assistance to the tune of $122 million was vital, given Dominica’s current economic situation.More on this story here, here, and here.
CAYMAN ISLANDS FINANCIAL SERVICES AUTHORITY SUPPORTS INFORMATION EXCHANGE WITH EU
The Cayman Islands FSA has expressed support for the government’s decision to opt for exchange of banking information when the European Savings Tax Directive comes into force, scheduled for January 2005. Many other jurisdictions, including the UK dependent territories of Jersey, Guernsey and the Isle of Man, have opted to implement a transitional withholding tax on interest income for a period of seven years before exchanging information with the tax authorities of EU member states. However, Cayman Financial Secretary George McCarthy stated that “information exchange would not pose a difficulty to the vast majority of our industry.”More on this story here.
SWITZERLAND TO CLARIFY ITS POSITION ON BILATERAL ACCORDS, AS EU NEGOTIATIONS DRAG ON
Switzerland still hopes to join the Schengen accord on cross-border crime, but it now looks certain that no agreement will be reached on that until the other dossiers are settled. Cabinet ministers -- who are openly divided over the document -- met to agree a common negotiating position.
Over the past few weeks, negotiations with the EU on the Schengen and combating fraud accords have seemed to inch closer to agreement, but both sides still need to make compromises. In both dossiers the sticking point is the EU’s insistence that Switzerland agree to judicial cooperation not only in cases of fraud but also in tax evasion. Switzerland rejects this as a threat to its banking secrecy tradition. Bern managed to stick to its guns in tough negotiations on the savings tax issue, and looks likely to make similar progress over Schengen and customs fraud.
In the case of the Schengen accord, Switzerland could strike a compromise by adopting what is known as the “Luxembourg model”. This would mean integrating the Schengen provision on judicial cooperation into federal law. But banking secrecy would only be lifted in cases where there was proof of criminal intention. It was this fudge that allowed Luxembourg to sign up to Schengen while at the same time preserving banking secrecy.More on this story here.
Swiss cabinet stands firm over EU accords.
Negotiations over a second set of bilateral agreements, including the taxation of EU residents’ savings in Switzerland and accession to the Schengen accord are continuing. The government says it wants to deal with all nine issues as a package. It is rejecting EU calls to deal with the question of savings taxation first.More on this story here.
William Tell, Tax Rebel
The legend of William Tell, the Swiss legendary hero who symbolizes the struggle for individual and political freedom, has its origins in medieval Switzerland, in the tax rebellions that launched the Everlasting League and the defeat of an empire. The legend of William Tell became the central defining myth of the Swiss national identity; it has come to embody the very essence of “Swissness”.More on this story here.
LITHUANIAN PRESIDENT MAY BE IMPEACHED
Lithuania’s highest court ruled that President Rolandas Paksas violated the constitution by arranging citizenship for a businessman with alleged mob ties -- a verdict that will likely set the stage for an impeachment vote. The Constitutional Court said Paksas flagrantly violated constitutional law and his oath of office on three counts. The ruling had been sought by his opponents in the 141-seat Seimas, or parliament.More on this story here.
“ISLE OF MAN CANNOT PROSPER IN ISOLATION FROM THE EU”, SAYS CHIEF MINISTER
The special Protocol 3 relationship with Europe remains the best option for the Island despite concerns about the future development of the EU, according to Chief Minister Richard Corkill. The Protocol 3 arrangement, in place for more than 30 years, keeps the Isle of Man outside of the European Union but allows free trade in manufactured items and agricultural produce between the Island and EU countries.
The Chief Minister was commenting following calls from the Manx EU Realist Group for the Isle of Man Government to consider radical measures, including abandoning Protocol 3 and declaring complete independence, to insulate the Island against the influence of the EU.More on this story here.
MAURITIUS IN ALL-OUT EFFORT TO WOO MAINLAND CHINESE AND HONG KONG FIRMS
The tiny Indian Ocean island of Mauritius is aggressively promoting itself as an offshore tax haven to lure mainland Chinese and Hong Kong companies to use it as a base. A high-level Mauritius delegation is on a roadshow that has taken in Shanghai, Singapore and Hong Kong. Industry Minister Sushil Khushiram said his country was keen to attract mainland and SAR companies to use the attractive tax regime and use Mauritius as a base for operations in Asia and Africa. “Mauritius offers tax optimisation and investment planning opportunities to investors, who can use it as a base to structure their investment,” Khushiram said.More on this story here.
LITTLE ANTIGUA TAKES ON AMERICA, AND WINS ... FOR WHAT IT MAY BE WORTH
Antigua’s win at the World Trade Organisation (WTO) over the US’s online gaming policy might end up being an empty victory for the small, but feisty, island-nation. After all, what kind of measures could a pipsqueak like Antigua take against the economic elephant of the world to force it to comply with the WTO ruling, which the US will probably just ignore? Put a ban on buying burgers? Make US tourists do silly dances when they visit? There is just not a lot of leverage to implement WTO-approved economic sanctions against the US for failure to comply. Call it a moral victory.
What was surprising about the WTO hearings was the weak presentation made by the US. Perhaps this showed just how much of a sideline the US thought of the online gaming dispute, compared to the $4 billion dispute it has with the EU over foreign sales corporations (one which it lost in the WTO). Still, Antigua has set the example for how a small nation can at least try to protect itself against any unfair economic policies.More on this story here.
THE ECONOMIST ON KERRY’S ECONOMIC POLICY PRONOUNCEMENTS: “WE ARE NOT AMUSED”
On March 26th, Mr. Kerry delivered what he hoped would be seen as the most definitive economic speech of his candidacy thus far, the chief part of which is a “plan” to create 10 million jobs during his first term. A few days later, he moved on to energy policy. More utterances on the economy are expected over the next few weeks. How is Mr. Kerry’s vision, such as it is, stacking up?
Absent from Mr. Kerry’s economic thinking is any sense of an overarching, unifying theme. The candidate’s backers promise that, over the coming weeks, with more economic utterances, such a theme will somehow emerge. For now, though, John Kerry is no Bill Clinton.More on this story here.
US investors’ group attacks Kerry’s past record on tax.
An American shareholder group has issued a damning report into the past voting record of the Democratic presidential candidate John Kerry on issues of taxation, accusing him of consistently opposing measures that would have benefited investors.More on this story here.
KPMG TAX EXPERT URGES IRISH GOVERNMENT TO INCREASE CORPORATE TAXES
KPMG tax partner Paul McGowan has suggested that Ireland should agree to an EU-wide minimum corporate tax level, in order to avoid becoming a victim of tax competition from the 10 new EU states. He suggested that, in view of the fact that the Republic is set to compete with accession states with corporate tax levels which in some cases are lower than its own, the Irish government might be wise to take a more conciliatory approach to countries such as France and Germany, which are advocating corporate tax harmonization.More on this story here.
EC REJECTS GIBRALTAR’S CORPORATE TAX REFORM PLANS
The European Commission rejected corporate tax reforms planned by the Gibraltar government, effectively suggesting that for taxation purposes, the jurisdiction should be considered part of the United Kingdom. The proposed reforms aimed at abolishing the current 35% corporate tax rate and replacing it with a payroll tax and a business property occupation tax -- both capped at 15% of profit. However, the Commission argued that this would give companies domiciled in Gibraltar an unfair advantage over their counterparts in the UK. It also took issue with the fact that since the taxes are based on payroll and the occupation of business premises, offshore companies registered in Gibraltar would be unlikely to incur any tax liability.More on this story here.
PRE-APRIL 15 IRS NEWS BLITZ
IRS wising up to average-joe tax evasion.
You would never try to scam Tony Soprano. However, trying to pull one over on the federal government seems perfectly safe. And why not? The tax law is so convoluted these days that many people think they will just get lost in the complexity and Uncle Sam will never catch on, said the incoming chairman of the committee for taxation of individuals at the New York State Society of CPAs. Well, the IRS is starting to catch on. Here are scams they are looking for.More on this story here.
If you have been scammed is it theft, or an investment loss?
If you have been sc have been robbed by Enron, WorldCom and other corporations caught in fraud and accounting scandals will not get any sympathy -- or tax deductions -- from the IRS. Your money was not stolen if you lost it in an investment bought on a public stock exchange, the Treasury Department warned. What is not clear is what will happen to investors who have been scammed, by pyramid or ponzi schemes or South Florida’s notorious boiler-room operations. Those sorts of issues, attorneys said, have to be well-documented and may end up in tax court for a final decision.More on this story here and here.
How prevalent is cheating on taxes?
In a highly unscientific survey conducted online by CNN/Money, only 76% of us said we had never cheated on our taxes. In the Roper poll, 12% of respondents said cheating on your taxes “a little here and there” is acceptable.
For those less concerned with fostering norms than just plain staying out of trouble, you might want to keep your eye out for audit news. The odds of being audited are still slim -- and that lack of enforcement is another factor Callahan believes contributes to the cheating culture. But after years of scaling back on its enforcement, the IRS has started to scrutinize returns with greater frequency. The agency will not say who is a likely target for extra reviews, but it has made clear that taxpayers whose incomes exceed $100,000 can expect more audits than those who earn less than that.More on this story here.
5 ways to avoid an audit.
There is no way to avoid a random audit, of course. But there are plenty of red flags the IRS is bound to pounce on during its routine checks through the system. Smart taxpayers should play it safe. Here is how.More on this story here.
IRS warns taxpayers against making frivolous tax claims from stock options.
The Treasury Department and the IRS last week issued a notice cautioning taxpayers against promoters who purport to offer ways in which they can avoid income tax or alternative minimum tax (AMT) via the exercise of stock options. The notice warns taxpayers that any claims made by taxpayers will be treated as frivolous in appropriate cases and outlines the various civil and criminal penalties that could apply.More on this story here.
IRS accuracy rates slipping on questions of tax law.
Testifying before the House Ways and Means Committee, IRS Chief Mark W. Everson revealed that the accuracy rate for responses to questions posed to call center employees on the Revenue’s toll-free help line has fallen to 75.79% in the first months of 2004. This compares to a rate of 84% for 2003. Everson said that the scripts given to IRS workers were a large contributory factor in the decline in accurate answers, and also blamed changes in staffing levels and a management restructure.More on this story here.
BEWARE NEW POWERS OF THE BRITISH TAXMAN
Chancellor Gordon Brown surprised his critics by not introducing major tax rises in the Budget to pay for public spending commitments. Instead, he chose to let borrowing take the strain in the expectation of an expanding economy and rising tax receipts. But this relies on the new unitary tax authority, formed by the merger of the Inland Revenue and Customs and Excise, being able to collect the projected tax receipts.
It has long been established that arranging your tax affairs within the law to minimize the tax payable is legitimate. The tax strategy for the future lies in planning suited to your personal and business needs, supplied by an advisor who understands your requirements. In this way, structures can be set up that will not involve you in long and expensive disputes with an increasingly powerful taxman.More on this story here.
U.K. TAX SYSTEM RIPE FOR REFORM
The British tax system has three features absent in any other industrialised country and they are all irrational. First is extensive zero-rating of VAT, second is a tax on bequests which is rarely paid by the rich and third is the complex council tax, the British version of a property tax. Apart from Ireland, it is the only OECD country where the property tax is local government’s sole source of tax revenue.
The reason for Britain’s uniqueness is that provided the government has a sufficient parliamentary majority, as is usually the case, it can do what it likes. In other countries consensus is necessary for radical change. In Britain someone’s brainchild can become law if backed by the government. The poll tax and council tax would be inconceivable elsewhere.More on this story here.
U.S. TAX ENFORCEMENT SEEN AS UNDERFINANCED
Tax evasion is growing, but the I.R.S. cannot reverse the trend and protect the interests of honest taxpayers because its ability to enforce the law is declining, the citizen Oversight Board -- which is made up of accounting and tax experts who are not connected to the I.R.S. -- that Congress created five years ago concludes in a report to be made public today. The report notes that President Bush’s proposed budget for the 2005 fiscal year represents “the fourth year in a row in which the administration has called for I.R.S. staff increases while not covering pay raises or required expenses.” The board said that while the proposed 4.6% I.R.S. budget increase was far more than what departments other than the Pentagon and Homeland Security would receive, it was not enough because tax cheating continued to rise even faster.
The four-year-old oversight body has never issued such a critique. But board officials said they were driven to speak out by a budget request that, for the fourth year in a row, calls for I.R.S. staff increases but fails to fund them. With the oversight board recommending a 10% boost to the I.R.S.’s budget, board members said they needed to issue a detailed justification.More on this story here, here, and here.
IRISH REVENUE COMMISSION SWAMPED BY TAX EVASION DISCLOSURES
In the run-up to Monday’s deadline, Ireland’s Revenue Commissioners were swamped by a glut of disclosure forms filed by Irish citizens with undeclared assets held offshore, according to reports in the national media. Surpassing predictions made by Revenue Commission Chairman, Frank Daly, who recently suggested that around 5,000 people were expected to come forward and voluntarily reveal undeclared assets, some 15,000 have admitted to owing tax.More on this story here.
IRS TO INCREASE SCRUTINY OF PENSION PLANS
As many retirement plans offer significant tax breaks to firms that sponsor them, the IRS is concerned that some companies and endowments are not administering such tax-exempt vehicles in accordance with regulations, particularly in respect of funding levels, vesting and benefits payments, among other aspects. It is thought that the emphasis of the IRS program, adopted last October after a pilot scheme in 2001, will be placed on the larger plans, specifically those with 2,500 or more participants.More on this story here.
AUSTRALIAN FIRMS’ OFFSHORE PROFITS WILL NOT BE TAXED UNDER NEW BILL
Australian companies with offshore operations will soon only have to pay one lot of tax on their overseas earnings under new laws introduced to parliament. The government new bill aims to make Australian companies more competitive overseas. Parliamentary secretary to the Treasurer, Ross Cameron, said the bill would ensure that profits from offshore active business operations were not taxed in Australia.More on this story here.
U.S. ATTORNEY AND IRS CRACK ANNOUNCE NEW CASES FOR PUBLIC CONSUMPTION
In a collection of Indictments and Informations recently filed by the U.S. Attorney’s Office in Boston federal court, including four new cases within the past week, a series of defendants have been charged with tax evasion, failure to file returns and the filing of false returns with the IRS during the period 1997 through 2001. United States Attorney Michael J. Sullivan and Joseph A. Galasso, Special Agent in Charge of the U.S. IRS, Criminal Investigation, announced the recent filing of six separate cases. U.S. Attorney Sullivan stated that the filing of these cases, during the heart of tax season, “should serve as a timely reminder that on April 15th, all of us must file a tax return with the IRS and satisfy the tax obligations that we owe to our country. People who seek to avoid fulfilling that obligation can and will be criminally prosecuted.”
IRS Special Agent in Charge Galasso echoed Sullivan’s message: “One of our aims is to foster confidence in the tax system and compliance with the law. Honest tax paying citizens should not have to bear the burden of someone else’s tax liability. People who are thinking about cheating on their taxes should think again, as these six prosecutions demonstrate.”
If convicted, the defendants face up to 5 years’ imprisonment on the conspiracy, tax evasion and false returns charges and up to 1 year in prison on the failure to file tax return charges.More on this story here.
Treasury, IRS issue guidance on abusive tax avoidance transactions involving S corporations and tax-exempt entities.
These transactions are structured to improperly shift taxation away from taxable S corporation shareholders to an exempt party, such as a charity, for the purpose of deferring or avoiding taxes. In Notice 2004-30, the IRS says it intends to challenge these transactions on a number of grounds.
It further declares that these abusive transactions are considered “listed transactions”. Participants in a listed transaction who are required to file tax returns must disclose their participation to the IRS. In addition, promoters of listed transactions must keep lists of investors and, in certain cases, register those transactions with the IRS. This notice is the first time the IRS has exercised its authority under the tax shelter regulations to specifically designate a tax-exempt party as a “participant” in a tax avoidance transaction.
“We are acting today to ensure the integrity of our charities. We don’t want Americans to lose faith in a unique and vital part of our nation’s social fabric,” said IRS Commissioner Mark W. Everson. “Use of tax-exempt organizations as mere accommodation parties should not be permitted,” said Gregory F. Jenner, Acting Assistant Secretary (Tax Policy).More on this story here.
BAHAMAS DEBATES “PURPOSE TRUST” BILL
Attorney General Alfred Sears described the Purpose Trust Bill as another example of The Bahamas lagging behind competitors in crafting innovative financial services legislation, in an industry that is dynamic and intensely competitive. The bill would allow for the establishment of a specific type of trust for non-charitable purpose and would have no specific ascertainable beneficiaries. Similar legislation has already been enacted in competing jurisdictions such as Bermuda, Barbados and the British Virgin Islands -- according to Mr. Sears, there are approximately 20 jurisdictions, which have statutory purpose trust regimes.
Mr. Sears said that the primary attraction for this kind of trust legislation was that it created a vehicle that beneficially, truly does not belong to anyone but yet had the ability to be integrated into commercial transactions without problems associated with ownership by a person or company. Recommending the bill for passage into legislation the attorney general described it as another critical step towards the modernization exercise of the legislative platform of the country’s financial services industry.More on this story here.
New Bahamas Foundations Bill philanthropist-friendly.
When the enabling legislation is passed, it is believed that The Bahamas will be the first common law jurisdiction to enshrine in its statutes the concept of a Foundation, which has only existed in civil law societies. The legislation will facilitate or enable the formation of Foundations by philanthropists, who wish to promote causes that might not be considered charities in a legal sense. It is anticipated that they may also be used to obtain tax-free donations from non-Bahamians who reside in tax jurisdictions.
The foundation will be registered in the public register. The foundation charter sets out the objectives of the foundation. Limits on foundations include not doing business with a resident of The Bahamas or to be in trade. However, a foundation may do acts such as buying and selling assets, ancillary or incidental to those objects. The private foundation must hold at least $10,000 worth of assets.More on this story here.
“ELDER LAW” EXPERTS TRACK LOOPHOLES
Phillip Tribble is an “elder-law attorney”, someone well-versed in the details of New York state’s Medicaid law. What he, and thousands of other lawyers, are selling are legal ways for people to hold onto their assets while still meeting the legal definition of poor, which they have to do to qualify to have taxpayers pay for their nursing-home care. The financial stakes are huge, both for the individuals and for taxpayers.
The per-day cost of nursing-home care ranged from $192 in the Buffalo region to $306 a day on Long Island in 2002, according to figures from the Partnership for Long Term Care, a state agency that provides subsidized long-term health care insurance. That translates into annual rates that range from $70,000 to more than $111,500. But relatively few people -- less than 15% of the 110,000 nursing-home residents in the state -- pay for such care themselves. For more than 75% of nursing home residents, taxpayers pay the bill through the Medicaid program. That translates into a whopping $7.4 billion this year.
To qualify for Medicaid coverage, a nursing-home resident can have only $3,950 in assets and $50 a month in income. The resident’s spouse who is still living in the community can have $2,319 in monthly income and $74,820 to $92,760 in assets, plus a house and a car. But there are legal ways around those limits. There are no recent figures on how many nursing-home residents shelter assets or how much money is involved, but a 1993 study done by the General Accounting Office estimated one in 10 nursing-home residents transferred assets.More on this story here.
IRS WARNS OF “CORPORATION SOLE” TAX SCAM
The IRS issued a consumer alert advising taxpayers to be wary of promoters offering a tax evasion scheme that misuses “Corporation Sole” laws. Promoters of the scheme misrepresent state and federal laws intended only for bona-fide churches, religious institutions and church leaders. Promoters typically exploit legitimate laws to establish sham one-person, nonprofit religious corporations. Participants in the scam apply for incorporation under the pretext of being a “bishop” or “overseer” of the phony religious organization or society. The idea promoted is that the arrangement entitles the individual to exemption from federal income taxes as an organization described in Section 501(c)(3) laws.
The scheme is currently being marketed through seminars with fees of up to $1,000 or more per person. Would-be participants purportedly are told that Corporation Sole laws provide a “legal” way to escape paying federal income taxes, child support and other personal debts by hiding assets in a tax exempt entity. While fraudulent Corporation Sole filings have happened sporadically for many years, the IRS has recently seen signs the scam could be starting to spread with multiple cases seen recently in states such as Utah and Washington.More on this story here and here.
HOW TO DISAPPEAR
A little tidbit on skip-tracers, we do it because there is an adrenaline rush in what we do. What is even better is I get to bill my client and make some money. As we say in my office, “It’s all about the Benjamins.” If your name comes across my desk and the money is right you are in the hunt. I will spend my day finding your mistakes, be it through the utility company, the cable TV Company, or that collect call from Cabo San Lucas to your sister Edith. I have found many a person from Boston to Bali. Usually I find them because of the littlest mistake they made before they departed or while basking in the sun. Let me share a few, some thoughts for you to think. The woman from Beverly Hills who called her doctor asking for her medical records to be shipped to Anquilla. A gentleman from New Jersey who stole money from his company and hid in the Dominican Republic and had Barnes & Noble change his shipping address to his beach front condo. The list goes on and on.
To skip-tracers it is a game we get paid to play. We can make as many mistakes as we want the one you make is the one that most likely lead us to you. Sit back, take some notes and understand the game from my point of view. Take your time, do your research and enjoy the beach.More on this story here.
THE OECD POT IS CALLING THE STAINLESS STEEL OFFSHORE FINANCIAL CENTER KETTLES BLACK
Those of us who work in the offshore world have long known that the best of the offshore financial centres (OFCs) now have far better standards of know your customer and anti-money laundering controls than the main OECD member countries. But the OFCs are still routinely treated as “the usual suspects” by the liberal media and Western governments whenever terrorist financing, money laundering and organised crime are on the agenda.
A recently-released IMF report confirms that, on average, the OFCs are more in compliance with international supervisory standards for financial services than other jurisdictions assessed by the IMF. The IMF reports that OFCs have a higher rate of compliance with the Basel Core Principles in the areas of cross-border banking, information disclosure requirements and, significantly, in prudential regulations and requirements. And in the area of money laundering prevention 76% of the offshore jurisdictions were in compliance with the Basel Core Principles compared to only a 45% compliance rate for onshore jurisdictions.
Post-9/11 studies showed that the OFCs play little to no part in terrorist’s financing operations. And all of the major money laundering scandals of the last 10 years have substantially occurred in Russia, Western Europe (mainly London and Switzerland) and New York. Meanwhile the OFCs have been subjected to enormous expense and inconvenience in the last four years to defend themselves against the OECDs unwarranted attack.More on this story here.
YOUR PASSPORTS, PLEASE
In the aftermath of 9-11, Congress ordered that the 27 countries whose citizens do not need visas to visit the United States -- basically, our best friends -- adopt “biometric” passports with special computer-readable fingerprint and retinal ID information. Technologically, these kinds of counterfeit-proof documents were probably inevitable, but the countries were given only three years to comply. Most will not be able to fully comply, and the requirement has caused a certain amount of ill will, as it would here if another nation tried to dictate the nature of our passports.
The problem is that travelers without these special new passports would have to go through the complex process of obtaining a visa, swamping U.S. consular offices. That means many regular visitors would simply choose not to come, adversely affecting commercial travel and especially the U.S. tourist industry. Now Secretary of State Colin Powell and Homeland Security Secretary Tom Ridge are warning that the deadline could do exactly that.More on this story here and here.
THE PRIVACY THREAT FROM OUTSOURCED INFORMATION PROCESSING
American jobs have been moving offshore for years, primarily manufacturing work seeking out lower-paid workers abroad. The outsourcing of people’s personal information, though, is a relatively new phenomenon -- opening the door to identity theft, fraud and other criminal activities. The safety of outsourced information can never be guaranteed -- no matter how stringent the safeguards -- and a recent case of attempted blackmail offers the most glaring example to date of how a disgruntled overseas worker can violate the privacy rights of U.S. citizens.More on this story here.
Plan on visiting India? Your tax returns might.
Between now and April 15, millions of Americans will be turning over their financial information to tax preparers. What many of them will never know is that their personal data will be shipped electronically to India, where workers will pore over the numbers. Estimates of how many state and federal returns will be done in India this year range from about 100,000 to 150,000, up from about 1,000 just two years ago. The numbers are likely to surge in coming years because of the enormous labor cost savings.
Executives of offshore tax preparation companies say their systems are exceedingly secure and workers highly trained. They say they use very sophisticated methods of encryption to protect valuable data, such as Social Security numbers, account numbers and incomes, from hackers and identity thieves.More on this story here.
RFID FIBERS FOR SECURE APPLICATIONS
Tapemark, a manufacturer of packaging and packaging materials, says it will use a new technology, called Chipless ID, to embed RFID transponders into packaging, paper or film. Invisible to the eye, each transponder emits a unique signal that cannot be forged, making the technology particularly suitable for authentication, anticounterfeiting and security applications. Stressing the security and potentially covert nature of Chipless ID and its possible uses, Tapemark is unwilling to reveal the company it is licensing the technology from or the name of its only customer using the technology in a trial. By doing away with the need for a chip, the company believes that adoption of the licensed Chipless ID technology will be driven by the significantly lower cost of its antennas.More on this story here.
FACIAL ID AS PLAIN AS THE SMILE ON YOUR FACE
The way you smile could uniquely identify you, and provide a basis for new facial recognition technology. Physicists at Stony Brook University in New York have developed a facial recognition technique, which relies on the pattern of muscle movement beneath the skin, rather than matching surface characteristics. Traditional techniques can easily be fooled, according to E. Guan, who heads the Stony Brook team. They rely on measuring distance between the eyes, and the eyes and mouth, for example, which means simple makeup or dark glasses can throw off the system.
However, the new method compares images of a person, taken fractions of a second apart, while they are in the process of smiling. Guan then analyses how the skin around the mouth moves between shots by tracking the change position and direction of tiny wrinkles in the skin. It does not actually need a full smile, though, and is sensitive enough to produce a map of features -- even when people were trying to keep a straight face.More on this story here.
CAMPAIGNERS FIGHT BIOMETRIC PASSPORTS
Civil liberties and privacy groups have launched a campaign against airline industry plans, supported by the US and the EU, that would ultimately create an ID database of details on more than a billion passengers that would be computerized and shared globally by 2015 if the plan goes ahead. A global biometric identity system being established on behalf of governments by the International Civil Aviation Organization (ICAO) poses a grave threat to civil liberties, privacy activists warn. Critics have drafted an open letter expressing concerns over plans to mandate the use of biometrics and RFID (radio frequency) technology in all future passports. The controversial measures are due to be finalised at an ICAO meeting in Cairo this week.More on this story here.
SURVEILLANCE TO DOMINATE EU SECURITY CRACKDOWN
Travel and telecommunications surveillance will top new anti-terror measures to be unveiled at a Brussels summit of EU leaders. But measures to set up the logging of all telecommunications records combined with a European database tracking all air and maritime travel in, out and within the EU will raise privacy fears. Key measures to store records of e-mails, mobile phone calls, faxes and internet usage, and moves toward the use of passenger booking data by EU security agencies were revealed last week. The EU is also to accelerate the introduction of biometric identity documents -- a move that will lead to “mandatory” digital fingerprinting.
A study by civil liberties monitors Statewatch finds that of 57 proposals 27 “have little or nothing to do with tackling terrorism -- they deal with crime in general and surveillance.” The group warns that freedoms should not become another casualty of Madrid. “Under the guise of tackling terrorism the EU is planning to bring in a swathe of measures to do with crime and the surveillance of the whole population,” said Statewatch editor Tony Bunyan.More on this story here.
BIG BROTHER SEEPS INTO RENTAL CAR INDUSTRY
Some rental car companies keep tabs on their renters, tracking the renters’ speed and handing out fines for going over the speed limit. Other companies charge a fixed fee for driving the car out of state. The Global Positioning System (GPS) installed in some vehicles provides rental car companies with this information and printouts of customers’ exact routes. While travelers may feel that this is an invasion of privacy, rental car companies say it is all there in the fine print.
Rental companies ensure that GPS is just a way to enforce contracts, not to make money and spy on car renters. Originally installed in the mid 1990s, the GPS systems were meant to help motorists from getting lost, but they now are used for tracking additional information while driving. According to analysts, about one-fourth of the rental cars in the United States come equipped with a GPS or some similar tracking device.More on this story here.
MORE SPY CAMERAS ARE ON THE WAY IN D.C.
The D.C. government will double the number of photo-radar cameras, increase licensing and parking fees and enforce traffic laws more vigorously as part of a plan to raise non-tax revenue by nearly $47 million next year. Beginning today, police will write tickets to drivers caught speeding in the 600 block of Florida Avenue NE.
Motorists’ fines and fees are projected to raise $21 million as part of an overall plan to boost city revenue by nearly $47 million in fiscal 2005. The plan was outlined in a confidential report that Mayor Anthony A. Williams circulated among D.C. Council members last week. The Council voted in July 2002 to exempt itself from its own parking regulations.More on this story here.
CHINA HITS BACK IN US VISA ROW
China has vowed to retaliate over a US move to fingerprint Chinese citizens seeking non-immigrant visas by imposing its own series of tightened rules for US citizens visiting China. US holders of diplomatic passports will have to apply for ordinary visas, and pay visa fees, when wishing to visit China in a private capacity, China’s foreign ministry said on its website.More on this story here.
MEXICO’S AIRPORT SECURITY GAVE ILLEGAL POWER TO U.S. AGENTS
Stepped-up anti-terror measures at Mexico’s international airports violated passengers’ rights by allowing improper passport checks. The National Human Rights Commission, an independent federal organization, said it based the report on a study of security at seven airports. Mexico dramatically increased checks of ticketed passengers for several weeks beginning in December after U.S. officials expressed concern about possible terror threats. The report said that U.S. agents were allowed to roam waiting areas at Mexico City’s Juarez International Airport and check the passports of passengers -- something the commission said only Mexican officials could do.
Mexico’s Transportation and Communications Department declined immediate comment. But Mexican authorities have said the roles of U.S. security personnel have been limited to swapping information with their Mexican counterparts -- not checking travel documents. U.S. Embassy spokesman Jim Dickmeyer said U.S. agents had merely agreed to review some travel documents or luggage items handed over to them by Mexican officials who had doubts about them.More on this story here.
New airport system in Jamaica to go into effect in May.
An automated $2 million immigration and control system is to be implemented at Jamaica’s two major airports in May. This is a precursor to the biometric system, being pushed by the United States, where fingerprints and other personal information will be scanned inside machine-readable passports. The new automated immigration system is expected to counter terrorist threats and reduce the number of persons leaving the island on forged travel documents. The information captured will also serve as a source of intelligence for regional and international law enforcement organizations. Gilbert Scott, Permanent Secretary in the Ministry of National Security, said that the new systems are geared at minimizing security threats to the island.More on this story here.
BRITAIN TO RETAIN AIR PASSENGER RECORDS AS LONG AS THEY SEE FIT
Home Office minister Caroline Flint fought off EU pressure to limit access to the information to just 24 hours -- to protect civil liberties. She told talks in Brussels the restriction was unacceptable when every effort was being made to cooperate in tracking terrorist in the wake of the Madrid train bombings. The government would have vetoed the EU’s data protection proposals unless they included a clause allowing the UK authorities to stick to the terms of the UK Data Protection Act. That means ready access for immigration and police authorities to air passenger information under strictly-controlled circumstances.
It seemed most other member states were happy with the EU provisions under which such data is available for only 24 hours -- and then wiped from computers. Ms. Flint made clear that hardly fitted the new spirit of action to beat terrorism in Europe, and that British determination to retain much more flexibility would not compromise civil liberties.More on this story here.
PASSPORT SAFETY, PRIVACY FACE OFF
The International Civil Aviation Organization, or ICAO, is completing new passport standards this week, setting the groundwork for all passports issued worldwide to include digitized photographs that a computer can read remotely and compare to the face of the traveler or to a database of mug shots. Supporters hope the system will banish fake passports and help fight terrorism. But critics say the standards will enable a global infrastructure for surveillance and lead to a host of national biometric databases, including ones run by countries with troubling human rights records.
The ICAO has already settled on facial recognition as the standard biometric identifier, though countries may add fingerprints or iris scans if they wish. The standards body will vote whether to adopt radio-frequency ID chips, such as those used in Fast Pass toll systems, as the standard method of storing and transmitting the digitized information.
Barry Steinhardt, director of the American Civil Liberties Union’s technology and liberty program, warned that such a biometric passport would soon become ubiquitous in Americans’ daily lives. “In Europe, it has already morphed into more than a passport, and countries are already considering using it as a national ID card,” Steinhardt said. “This incredibly rich document will overtake the driver’s license as the preferred form of identification.”More on this story here and here.
SUPREME COURT WIDENS BORDER GUARDS’ SEARCH POWERS
A unanimous U.S. Supreme Court ruled that border agents have wide freedom to search vehicles entering the United States, even if they do not have a specific reason to suspect wrongdoing. Writing for the court, Chief Justice William Rehnquist said border authorities need broad discretion to search vehicles to combat drug trafficking and terrorism. The decision overturned a Ninth Court of Appeals ruling that such inspections violated the constitutional guarantee against unreasonable searches and seizures of evidence. Rehnquist said searches of vehicles are “reasonable simply by virtue of the fact that they occur at the border.”
“The government’s interest in preventing the entry of unwanted persons and effects is at its zenith at the international border,” Rehnquist said. The case involved the inspection in 2002 of a station wagon driven by a Mexican native living in Los Angeles as he entered the Otay Mesa port of entry on the California border with Mexico.More on this story here.
SEPT. 11 COMMISSION WEIGHS PLAN TO CREATE A DOMESTIC INTELLIGENCE AGENCY
The National Commission on Terrorist Attacks upon the United States completed two days of hearings last week with current and former senior government officials. Specific recommendations for overhauling federal agencies that the commission will take into account when issuing its final report at the end of July include consolidating domestic and foreign intelligence collection and analysis activities, and creating a domestic intelligence service.More on this story here.
EUROPE BALKS AT U.S. DATA DEMANDS
The European Parliament said it was illegal for the United States to force European airlines to provide data on arriving passengers and threatened to go to court to block an agreement that calls for the information sharing. The vote came a day after EU ministers overcame similar privacy concerns and agreed to give their own law enforcement authorities access to more limited passenger data.
Washington has demanded airlines headed for the United States transmit extensive passenger information -- from credit card numbers to meal preferences -- within 15 minutes of departure. Noncompliance can be punished with fines of up to $6,000 a passenger and the loss of landing rights. Airlines, caught between having to satisfy U.S. demands and EU privacy law, have been operating under interim arrangements while negotiations were underway. The agreement was less than Washington initially sought as far as the amount of data that can be collected, who can see it and how long it can be stored. But the Parliament voted 229 to 202 for a nonbinding resolution calling on the European Commission, which negotiated on behalf of the EU, to demand a better deal.More on this story here.
BLAIR EYES IDENTITY CARDS AFTER UK ARRESTS
Prime Minister Tony Blair indicated that Britain would speed up the introduction of compulsory identity (ID) cards following the arrest of eight terror suspects this week. Blair told his monthly news conference further measures were needed now. His comments came days after anti-terror police carried out the biggest operation since the September 11 attacks, arresting eight Britons in and around London and seizing half a ton of ammonium nitrate fertilizer -- prime bomb-making material.
British police also said they were working with Canadian authorities after they arrested software developer Mohammed Momin Khawaja, a 29-year-old Canadian with Pakistani parents. He is accused of “knowingly facilitating a terrorist activity” in Ottawa and London. The government has already announced plans for ID cards, but intended to introduce them “incrementally”, starting with a voluntary scheme aimed at stopping welfare benefit cheats.
The issue has been controversial, with critics arguing cards would breach citizens’ human rights. Blair said civil liberties were no longer an objection in the “vast majority of quarters” and that practical issues were now the only obstacle. Britain’s most senior policeman Sir John Stevens, who has warned an attack on London is “inevitable”, has argued ID cards are “a must” in the fight against terror. Britons have not had to carry identity documents since World War II, unlike most European who have to produce ID cards at the request of police or officials.More on this story here.
SWISS MONEY-LAUNDERING INVESTIGATIONS RISE 57%
Some 245 financial institutions were investigated last year -- a 57% increase over 2002. Seven financial institutions were told to cease trading. In its just-published annual report, the global anti-corruption watchdog, Transparency International, praised Switzerland’s mechanisms for fighting money laundering. It said the Swiss system, which had been widely criticized in the past, should now serve as a model for other countries. But Mark Pieth, a former member of the Paris-based FATF, said it was still too early to judge the effectiveness of global anti-money laundering systems. Pieth said there were still cases where Swiss financial institutions should have notified the authorities -- particularly in regard to politically exposed persons.More on this story here.
THE FEDERAL JUDICIARY WAS NOT GRANTED THE POWER TO INTERPRET THE CONSTITUTION
In any contractual agreement involving the creation of an agent, the final word on the extent of the powers granted to the agent rests with the principals not the agent. If 13 home owners got together, and by contract, created an agent and limited its duties to mowing their yards, trimming their trees, and maintaining the outside landscaping, would the agent have the power to interpret the contract to include duties not enumerated in the contract? Absolutely not. This would be an absurdity because the contract would not be worth the paper it was written on. In such a case, the principals would sit their agent down and tell it to either stay within the scope of the powers granted by the contract or we will amend or terminate the contract. The Constitution was designed to operate on this same principle. Unfortunately, the States are failing to exercise this power.More on this story here.
THE MYSTERIOUS MAGIC OF THE LAW
Picture this: A modern day Mystery Temple where black-robed priests practice elaborate and solemn rituals. The atmosphere hangs heavy with awe, tinged with dread. Hushed voices in the background serve as a background for the occasional incantation delivered in monotonous tones as well as impassioned petitions and prayers. The doors to the temple are zealously guarded, and no one may enter without permission. The temple dignitaries retreat to an inner chamber for meditation or quiet consultation during pregnant breaks in the dramatic proceedings.
An uninitiated visitor receives the unmistakable impression that matters of the gravest importance lie at stake in any discussion that takes place in this temple. Momentous decisions affecting society as a whole, and matters of individual life and death wholly outside the jurisdiction of the medical profession are decided here. All present tacitly understand that God supervises the rituals performed here, although none but the most perfunctory invocation of God seems appropriate. One man may be sacrificed on the altar, while another receives benediction and forgiveness at the behest of the highest powers known to man.
Does that sound at all like a courthouse? Have we fallen under the sway of a mysterious brotherhood? A priesthood of Law, with unquestionable power to deprive people of life and liberty, to issue judgments affecting one individual or all, and to determine matters of right and wrong with far greater efficacy than a mere papal edict?More on this story here.
PASSPORT BAN IN NEW ZEALAND GOVERNMENT’S PROPOSED ANTI-TERROR LAW
The Government is preparing to give itself the power to decline and even revoke New Zealand passports and citizenship for security reasons as part of the international “war on terror”. Barely off the drawing board, the bill has been condemned as “McCarthyism” by Green MP Keith Locke and drawn warnings from Government MP Matt Robson of the Progressive Coalition that it carries the potential for “dangerous abuse”, saying the bill would unfairly target newcomers to New Zealand and its powers could also extend to New Zealand-born citizens. “It is a very extreme step to deny the right to travel, which is a guaranteed right under international law,” said Mr. Robson.More on this story here.
U.S. PROBE OF SEPT. 11 FINANCING WRAPS UP
Investigators have accounted for more than $325,000 spent on the Sept. 11 attacks, concluding that money was transferred to the hijacking teams from suspected terrorist operatives in the United Arab Emirates and a handful of other countries. Authorities who are winding down their investigation have traced the money through credit card receipts, ATM withdrawals and other transactions connected to the 19 suspected hijackers and believe the rest of the expenditures for the $500,000 operation were made in cash.More on this story here.
U.K. FIRMS WARNED OVER NEW MONEY LAUNDERING RULES
Anti-money laundering reporting was once the preserve of financial institutions, but from April 1 thousands of businesses will have to take on the responsibility of reporting suspicions to the National Criminal Intelligence Service (NCIS). Car dealerships, auction houses, art galleries, jewellers and other businesses that accept large cash payments will now be in the frontline of the Government’s fight against organized crime, and Robin Crawford, head of KPMG Forensic in Scotland, warned failure to comply could lead to a fine, imprisonment -- or both.
Penalties include two years’ imprisonment for not having proper systems and controls, five years’ imprisonment for failing to report a suspicion or committing a tipping-off offence, and up to 14 years’ imprisonment for assisting a money launderer. “Few people are aware that they risk imprisonment if they do not comply with the new reporting obligations. The Government’s concern is that criminals are hiding their illegal gains by buying high value goods and then selling or exchanging them later,” Mr. Crawford said. “From [April 1], businesses that accept cash payment of more than €15,000 for goods such as cars, jewelery or antiques must register as high value dealers with HM Customs & Excise. They also have to report transactions which they suspect involve the proceeds of crime to NCIS.”More on this story here.
NCIS reports huge inflow of suspicious activity reports from U.K. accountants.
Since the introduction of the UK’s new anti-money laundering regulations at the beginning of the month, accountants have been reporting possible violations of the law committed by their clients at the rate of 100 per day, according to reports in the national media. The National Criminal Intelligence Service and the Inland Revenue have been swamped by the sudden influx of reports.More on this story here.
SCOPE OF ATTORNEY-CLIENT PRIVILEGE IS NARROWING FAST
Solicitor-client privilege is a fundamental common law right necessary for the proper administration of justice. As the Canadian Supreme Court said, it must be “as close to absolute as possible if it is to retain relevance.” Nevertheless, we see an increasing tendency on the part of governments to erode the scope of the doctrine through statutory rules. Legal privilege is essentially a rule of evidence relating to a client’s confidential communications with her lawyer. Legal advice from a lawyer to his client is confidential and permanently protected from disclosure unless the client chooses to waive the privilege.
The purpose of privilege is to allow individuals and businesses to obtain legal advice from their lawyers in confidence. Sound legal advice and advocacy serve public ends. A lawyer can render such advice only if she is fully informed of the client’s business. Unfortunately, with concerns of money laundering, terrorism and tax evasion, governments are increasingly called upon to balance between competing public ends. In doing so, however, they are prone to overreach.
For example, in money laundering legislation, the government went to the extreme of requiring lawyers to clandestinely inform on their clients to a central government agency. In tax law, privilege covers solicitor-client correspondence, opinion letters, tax plans, business structures and agreements. However, the privilege is not absolute.More on this story here.
BUSH/ASHCROFT DEFENDER DEFENDS PATRIOT ACT
The USA Patriot Act has consistently been derided by the Left since President Bush signed it into law on October 26, 2001. Given all the hubbub, it is surprising how little is known about its content. The majority of the Act amends and broadens several other statutes, including the Foreign Intelligence Surveillance Act of 1978 (FISA), the Federal Reserve Act and Title 18 of the United States Code.
John Kerry claims John Ashcroft is the problem, not the Patriot Act. If Kerry becomes President and replaces Ashcroft with a kinder, gentler Attorney General (as Kerry has adamantly said he will), then it would not be necessary to alter the Patriot Act in any way because Ashcroft will no longer have the power to “abuse” it. In other words, Kerry voted for a piece of legislation which increased the surveillance and investigative powers of the government, but then was shocked when it was actually used by the Justice Department. More likely, as with NAFTA and the war with Iraq, Kerry knew exactly what he was doing, but must now furiously backpedal to comply with the ideology of his leftist constituents.
The part of the legislation regarding library records would not worry normal people. According to a Boston Globe article, “Justice Department officials have long insisted that such warrants are used rarely and only with proper judicial oversight from the Foreign Intelligence Surveillance Court (ed: which is no restraint at all, but anyway ...), which oversees espionage and foreign terrorism cases. This week, Attorney General John D. Ashcroft called complaints about the law ‘baseless hysteria.’” Which pretty much sums up liberals’ attitude toward the Patriot Act as a whole.More on this story here.
MARTHA’S LESSON: DON’T TALK TO THE FBI
Do not ever, under any circumstances, answer questions put to you by the FBI or any other federal agent unless you have a competent criminal lawyer at your side. And it would be better if it were a very good criminal lawyer. There are other lessons to be drawn from the fate of poor Martha, but that is the main one.
You see, there is a section in the federal code, referred to as 1001 by legal eagles, that makes it a crime to lie to a federal agent. The agent does not have to put you under oath. If you tell him or her a lie, you are guilty. The federal officer does not even have to tape the conversation. All he or she has to do is produce handwritten notes that indicate that you made false statements. So, if you misspeak or the agent mishears or there is an ambiguity that the agent chooses to interpret in an unfortunate (for you) direction, you are on the hook. There is also the possibility that you might be tempted to shade the truth a bit when an IRS agent is quizzing you about that business deduction you took for the trip to Vegas. My advice to you is, Don’t do it. To be on the safe side, when confronted by a federal agent, do not say anything at all unless your lawyer says you have to.
It is a shame things have come to this. It used to be that people felt it their duty as citizens to cooperate with federal authorities. That was before Law 1001. We now live in an era of Incredible Shrinking Civil Rights. You have to protect yourself at all times. Let us look more closely at the case of Poor Martha the Match Girl. What did she do?More on this story here.
THE MORE REAL JOURNALISM DECLINES, THE EASIER FOR GOVERNMENT INFOGANDA TO FILL THE VACUUM
Real journalism may be reeling, but faux journalism rocks. As an entertainment category in the cultural marketplace, it may soon rival reality TV and porn. Television is increasingly awash in fake anchors delivering fake news, some of them far more trenchant than real anchors delivering real news. Even CNBC, a financial news network, is chasing after the success of Jon Stewart; its new nightly fake newscast, presided over by a formerly funny Saturday Night Live fake anchor, Dennis Miller, is being promoted with far more zeal than was ever lavished on CNBC’s real News With Brian Williams.
This phenomenon has been good news for the Bush administration, which has responded to the growing national appetite for fictionalized news by producing a steady supply of its own. Of late it has gone so far as to field its own pair of Jayson Blairs, hired at taxpayers’ expense. George W. Bush tries to facilitate this process by shutting out the real news media as much as possible. By the start of this year, he had held only 11 solo press conferences, as opposed to his father’s count of 71 by the same point in his presidency. (Even the criminally secretive Richard Nixon had held 23.) When the president made a rare exception last month and took questions from an actual front-line journalist, NBC’s Tim Russert, his performance was so maladroit that the experiment is unlikely to be repeated anytime too soon.More on this story here.
REPEAL EVERY LAW ENACTED SINCE 1912 ... AS A START
The problem with proposing “pragmatic” solutions that might help the statists out of the hideous swamps in which they have bemired themselves is that we are surrounded by proud government-school graduates with little historical perspective, who therefore assume everything our government now does is historically “normal”, and who are equally likely to denounce as either a failed comedian or a “nut” anyone who proposes anything radically different. Take Social Security. Point out that this Ponzi scheme is actuarially bankrupt, and the Peanut Gallery shrieks “It’s easy to criticize; what do you suggest we do?”
The case is similar as we begin to examine why the United States has by far the highest incarceration rate in the world. Take the case of Martha Stewart. They couldn’t charge her with selling her stock when her broker told her it was going to fall in value, since that is not illegal. Instead, they convicted her of telling the FBI that is not the reason she sold her stock. This is the kind of thing for which Americans now go to prison. (In the meantime, the cops can lie to you with impunity, and bribe other suspects to testify against you by promising them lesser punishments, with no penalty to the cops or prosecutors if that testimony turns out to be a pack of lies.) And this is the set-up that our critics will tell us is sane.
That said, here are few modest proposals. For starters, we could reduce our prison populations by about two-thirds simply by retroactively repealing every law enacted since 1912. Was murder illegal by 1912? Of course. Rape? Of course. Kidnapping, armed robbery, bunko fraud? All serious criminal behaviors had been outlawed by 1912. So why have the number of lawbooks on the shelf multiplied tenfold in the past 92 years?More on this story here.
THE USES OF FAILURE
In Herodotus’s magnificent history of the Persian wars, there is a speech in which the brother of the Persian king tries to talk his royal sibling into abandoning the ill-fated project of invading the Greek peninsula, and in the argument he makes he put forth as powerfully evocative image: It is the tallest tree in the forest that the lightning strikes -- not the rudest or the most arrogant tree, but simply the tallest. But what crime did the tallest tree commit that justified its doom and destruction? It did not know where to stop.
Failure has lessons to teach us that are often far more valuable than those of success. Success all too often reassures us that we are right, and often with little reason. The man who sells everything he owes in order to buy lottery tickets, and who loses, becomes a little wiser. But the man who sells everything, and wins, will remain a fool forever.More on this story here.
AMERICANS ARE POLARIZED FOR GOOD REASON
It is apparent that Americans nurse bitter disagreements and increasingly see political battles in terms of good vs. evil. Government has so intruded into every nook and cranny of modern life that Americans have real reason to fear the outcome when their opponents control the levers of political power. Who can blame Americans for being at-daggers-drawn when marital arrangements and lunch menus are at the mercy of the victors in the next election?
The solution is clear: lower the stakes. Get government out of any area of human life where its presence is not essential. Why wage electoral campaigns over the definition of marriage when you can get politicians out of the marriage business entirely and leave relations between consenting adults to the people involved? Shrinking the role of government will not make people stop arguing, but it will improve the chances that they can afford to lose an occasional argument.More on this story here.
AMERICAN GOVERNMENT AND THE 10 COMMANDMENTS
While Americans would agree that it is morally wrong for Person B to take Person A’s money without her consent, they have implemented a political system in which the very same result is achieved through political means. In fact, the moral corruption has become so pervasive that not only do Americans no longer consider the welfare-redistribution process to constitute stealing, they have convinced themselves that what they are doing is actually moral, compassionate, and benevolent.
Nothing could be farther from the truth. By making a violation of God’s commandment against stealing a permanent feature of their political system, the American people have perverted and corrupted the sacred words of God. And by pretending that their political stealing actually reflects their goodness, morality, compassion, and benevolence, they mock and ridicule God’s sacred words.
By adopting the political way of life known as the socialistic welfare state, Americans have not only compromised moral principles, they have abandoned them. And by placing their federal god alongside their other God -- the God of Abraham, Isaac, and Jacob -- they have knowingly and deliberately blocked out their minds the first of God’s Ten Commandments: “Thou shalt have no other gods before me.”More on this story here.
UTOPIA AND REALITY
I occasionally receive e-mails from readers who label me “utopian”. I think of myself as a realist, preferring to focus my attention on better and worse ways of accomplishing ends, mindful that our visions of the “ideal” will be forever changing and beyond our grasp. Focused experience is a far better teacher than abstract reasoning. I believe that drinking a quart of orange juice each day is better for your health than drinking a quart of Scotch. I believe that a market economy is far more conducive to our material well-being than is a socialistic system. I believe that respecting the lives and properties of others is a better way of living in society than is a life of predation; that contractual undertakings with others produce a better life for all than does confiscation or conscription. I know how the violent methods of the state are destructive of life, and that peaceful behavior is life-sustaining. Above all else, my experiences inform me that social systems grounded in politics, with its use of force, produce worse consequences for humanity than do those that are free of coercion.
If I reject murder, rape, robbery, mayhem, and warfare as ways of dealing with others, does that qualify me as a utopian? Am I a hopeless visionary if I insist on not trespassing the interests of others as I pursue my own interests?
Those who criticize me for alleged visionary tendencies are, more often than not, themselves the defenders of the most pervasive of utopian schemes: constitutional democracy. Most Westerners have an unquestioning attachment to the belief that political power can be limited by the scribbling of words on parchment! A belief in constitutional government remains nothing but a collection of undigested reveries. Like the gullible soul who purchases stock in a non-existent gold mine and hangs onto his investment lest he admit to himself that he was bilked, most of us are fearful of confronting the inherent dishonesty of the idea of “limited government”. We prefer a new illusion: there is some “outsider” who can be elected to the presidency, and who will go to Washington and “clean up” the place. What is more utopian than the current tunnel vision mindset that, whatever the problem, the state can resolve it? Utopians are those who believe they can allow others to have coercive power over their lives and property and, at the same time, limit the exercise of such power. It is time for decent, intelligent, thoughtful men and women to move beyond the daydreams of our ancestors and confront the modern world as realistically as we can.More on this story here.
THE 1812 EPISODE OF IMPERIAL OVERSTRETCH
Napoleon’s invasion of Russia in 1812 is one of the great tragic epics of history. Legends were created at the time and have multiplied since. But, beyond the terrible human suffering, what seizes our fascination is the hubristic ambition of the man who brought such disaster on more than half a million of his soldiers and destroyed his own empire. It is tempting to make comparisons with Hitler embarking on an even greater disaster 129 years later, but Adam Zamoyski, in 1812: Napoleon’s Fatal March on Moscow, wisely leaves this up to the reader.More on this story here.
BO GRITZ INTERVIEWED
One, of many, interesting quotes: “I ran for President as Populist in 1992. My platform was a single plank -- the U.S. Constitution. The President doesn’t create law, but is responsible for enforcing law. As President, I would recognize publicly our dependence of God and following His Laws if we seek to progress as a nation. Above all I would require that every public official be required to tell the truth. Any lie under oath would carry a severe penalty. America must be given reason to again trust those in government. The US Marshals and FBI must not lie under oath just to win a case. Prosecutors must seek true justice and not use the enormity of the government just to gain guilty verdicts. We must not be a trained dog for Israel. We should recognize that American is a great Christian nation and it is because of that fact that people within our borders can believe as they choose. America was founded on free enterprise, which means fortunes can be made by citizens with initiative and zeal to work for themselves. The government was made to serve the people, not tax them to death. Welfare should be left to churches and great charities. I could go on, but you can see my course. America is a beacon for all the world. Let them follow us if they please, but we shouldn’t have to join them.”
... and: “If the mouth of government is moving, it is most probably a lie. George Wallace said it best: “There’s not a dime’s worth of difference between a Democrat and a Republican.” Jimmy Carter was well-meaning but his raid to rescue Americans from Iran was purposely derailed to allow Reagan to win the 1980 election. Reagan was shot less than 90-days after taking office and George Bush ruled for the next 12-years.”More on this story here.
NO WONDER PEOPLE FEEL DISFRANCHISED
In a recent poll of cable-television viewers, only 20% said the general public has much say in what the government does. Maybe people are finally catching on. It’s about time. The poll by Peter D. Hart cannot be pleasing to those who make a holy shrine of the ballot box. Recent events could hardly be expected to build confidence. It may be starting to dawn on people that government has been largely inept at what they would regard as its most important task: keeping them safe from foreign attack. The revelations after 9/11 demonstrate what some people have long known: government is like the Wizard of Oz. Behind the imposing façade are a bunch of clueless bureaucrats and politicians who are more interested in extending their tenures in office than anything else.
This is a bipartisan phenomenon. The current debate over who was more incompetent, the Clintonites or the Bushies, is just a distraction. When it comes to the fraud known as “national security”, it is strictly a one-party system.
In the presidential season one might expect people to feel that this is their chance to make a difference -- until one looks at the “choice” facing them. Who is set to oppose the incumbent who ignored warnings about terrorism and then misled the American people into war against a country that had nothing to do with that terrorism? John Kerry, a senator who voted to give President Bush a blank check to go to war (in violation of the Constitution); who voted to give Attorney John Ashcroft astoundingly un-American powers to curtail civil liberties (including habeas corpus); and who now says his votes do not mean what they clearly do mean. Or as Groucho Marx said once, “Who are you going to believe, me or your eyes?” Two hundred and eighty-five million people cannot rule a country. But a small clique can rule and say it is on behalf of the people. The last few years have been a valuable civics lesson.More on this story here.
THE NEOCONS ARE BIBLICALLY GROUNDED
The new conservatives, or neocons, are a powerful group in Washington, D.C. They are credited as being the driving force, through neocon and Deputy Defense Secretary Paul Wolfowitz, to suggest to George W. Bush that the US needed to start a war in Iraq. After thousands of dead and horribly wounded Iraqis, 600 dead and well over 2,000 mutilated and wounded Americans, the American people are still faithfully marching down the road the neocons put them on. Where did the neocons’ ideas originate? What is their driving and sustaining force?
All the leading neocons, from Irving Kristol and his son William Kristol, to Paul Wolfowitz, Abram Shulsky, and Richard Perle, either studied under, or independently studied, the teachings of Leo Strauss. The neocon movement is definitely made up of Straussians. Leo Strauss was a German Jewish scholar who immigrated to the US in 1938. Seeing how the Weimer Republic could not stop the National Socialists, he turned against secular democracy. After arriving in the US, he became a professor at the University of Chicago, where Wolfowitz and Kristol became his students and disciples.
Believing that progress is bad because it moves beyond early superstitions and myth, such as the Bible, Strauss taught an unnatural reverence for the past. Strauss thought that most people are incapable of living their lives without a belief in a God who would punish them for disobedience, and reward them for obedience. In order for the people to know what this God demanded of them, Strauss, being a student himself of the Twelfth Century influential Jewish leader Rabbi Maimonides, believed the best bet was to use the Hebrew Bible. The cornerstone idea that the Jewish religion through the Hebrew Bible should be used to control the sheep is what motivates and holds together the Jewish and Christian neocons. It is the driving force that sparks increasing and unquestioned US support for Israel, no matter what the cost is to the US and the rest of the world.
In the book of Isaiah we read “... the nation and kingdom that will not serve thee shall perish; yea, those nations shall be utterly wasted." George Bush, the faith-based president, obviously takes this quote as Biblical truth. It was probably in the forefront of his tiny brain when, as the executive director of the 9/11 commission said, he started the war in Iraq for Israel’s security. Superstitious Christians, such as Pat Robertson, accept the Hebrew Bible as the word of God. Wanting to please the Judeo-Christian God, Robertson believes the borders of Israel should be extended to borders dating back to 950 BC -- which encompasses the better part of modern-day Syria, and went from the Euphrates River all the way down to Cairo. Based on Robertson’s ideas, American youth, and the youth of any country that is foolish enough to be sucked into taking part in these neocon wars, better be prepared for much more sacrifice and dying.More on this story here.
EMPIRE OF THE LOCUSTS
Suetonius was a republican in an age of brutal autocrats and rampaging militarists. He wrote his masterpiece, Twelve Caesars, around 100 AD, when Imperial Rome was kicking into overdrive. Suetonius was employed in the position of librarian, a seditious profession even in antiquity. He was apparently in charge of collating and preserving the imperial correspondence. During breaks from catering to the epistolary whims of Trajan, he rummaged through the imperial vaults for material for his writing. Suetonius unearthed a juicy trove of scandal from the lives of the Julian and Claudian emperors. His scathing biographies of demented Caesars and scheming courtiers chart how the expansion of that ancient empire paralleled the rise of a totalitarian regime at home that plundered the provinces to bankroll the invidious habits of a degenerate ruling elite. Today, his Twelve Caesars reads with an unnerving immediacy. It does not feel like history, but a kind of long-distance journalism.
The old stories of corruption and blood lust told by Suetonius strike such a familiar chord because we too find ourselves inmates in an age of empire, an empire careening on a downward and dangerous course. The government is increasingly remote and paternalistic, the people frightened by their own rulers.
Like all great polemics, Kurt Nimmo’s Another Day in the Empire is a dangerous read precisely because it tells the bitter truth. More dangerous still, because this is not dusty history or arid political theory, but a vivid and lucid account about what is going down right now. The stakes are as high as they get. You may want to avert your eyes from these pages. Don’t. Read Nimmo’s book with half as much courage as went into the writing of it. Heed its call. Then spread the word: This empire shall not stand.More on this story here.
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