|W.I.L. Home Page||Offshore News Digest Home|
|Sign Up||Finance Digest Home|
|Global Business||Taxes||Asset Protection||Privacy||Law||Opinion & Analysis|
DIGICEL ANNOUNCES RENEWED INVESTMENT IN CARIBBEAN TELECOMS
Caribbean telecommunications operator Digicel has announced a major program of investment aimed at expanding its regional wireless network into new territories in 2006. Last year, Digicel received approval for Cingular Wireless’s operation in Bermuda and further acquisitions in Dominica, established a GSM network in Anguilla where the market was recently liberalized, and ended 2005 by launching the WiMAX broadband service in the Cayman Islands. Digicel has operations in 15 Caribbean countries with a combined population of 14 million, and the company’s overall investment in the region is approaching $1 billion since its launch in the region in 2001. Digicel’s network now includes Anguilla, Antigua & Barbuda, Aruba, Barbados, Bermuda, the Cayman Islands, Curacao, Dominica, Grenada, Haiti, Jamaica, St. Kitts & Nevis, St. Lucia, St. Vincent and the Grenadines and Trinidad & Tobago.Link here.
INVESTMENT IN HONG KONG HIT NEW RECORD IN 2005
Figures announced by InvestHK, the Hong Kong government’s investment promotion department, suggest that the city remains near the top of the list of preferred destinations for foreign investors. At a press briefing, InvesHK’s Director-General Mike Rowse announced that his department helped 232 foreign companies set up or expand operations here in 2005 – an increase of 13% compared with the 205 companies it assisted in 2004. Together, they invested more than $8.9 billion – 91% growth over the 2004 record total.
Respected international organizations’ recognition of Hong Kong’s advantages have reinforced these encouraging results. The Heritage Foundation and Wall Street Journal have just ranked Hong Kong the world’s freest economy for the 12th consecutive year. Hong Kong was also selected as the overall winner of “Asian City of the Future 2005/6” by fDi Magazine among over 60 cities and regions in the Asia Pacific. Mr. Rowse attributed these successes to Hong Kong’s fundamental advantages – the rule of law, free flow of information and low tax regime – which remain major attractions for foreign companies. However, he said there is no complacency as there is keen competition in the region, and Hong Kong must strive to maintain and enhance its overall edge.
According to the World Investment Report 2005 released by the UN Conference on Trade & Development, Hong Kong remained the second-largest foreign direct investment recipient in Asia, after mainland China. In 2004, net foreign direct investment in Hong Kong reached US$34 billion, up 150% from US$13.6 billion in 2003, and ranking the territory 7th on a global scale. In the first three quarters of 2005, Hong Kong attracted more than US$26.7 billion in gross direct foreign investment, $14.6 billion more than in the same period in the previous year. Moreover, the number of regional headquarters and regional offices in Hong Kong reached all-time highs in 2005. As of June 1, 2005, there were 1,167 companies with regional headquarters and 2,631 companies with regional offices there.Link here.
Global office occupancy costs survey shows Hong Kong leaping to #3.
Hong Kong has leaped up the global office occupancy costs league table and entered the top three most expensive office locations in the world, according to a recently published survey by DTZ, the global property adviser. DTZ’s 9th annual Global Office Occupancy Costs survey is a guide to accommodation costs in major prime office locations covering 117 business districts in 46 countries worldwide. It found that the West End of London maintained its position as the world’s most expensive office location with occupancy costs of $18,740 per workstation per year. Washington, D.C. climbed two spaces to become the second most expensive location with occupancy costs of $15,370.
However, according to DTZ, the most notable finding was the rate at which office occupancy costs have increased in Hong Kong, posting a 61% increase over the last decade to $15,000 per workstation per year. This resulted in the city climbing 13 places to become the world’s third most expensive location. The report cites Hong Kong’s positive business sentiment, especially among investment banks, who have displayed a greater willingness to pay for better quality offices, as one reason whdy office costs have soared in recent years. However, DTZ also blames the rising costs on a lack of new Grade A office space coming on to the market.
Dubai meanwhile, saw the second biggest increase in occupancy costs – up 50% to $7,180 – triggering a rise of 38 places to claim the 37th position and surpassing Riyadh to become the third most expensive region in the Middle East, behind Doha and Kuwait City. Paris, the City of London, Frankfurt, New York, Dublin, Central Tokyo and Luxembourg were the cities making up the rest of the top 10 most expensive office locations.Link here.
BANK OF CHINA TO LAUNCH HONG KONG IPO
It has been reported that the Bank Of China is intending to launch an IPO in Hong Kong this spring, valuing the company at 400 billion yen ($60 billion) and raising about $8 billion in new capital. BOC, the third or fourth biggest bank in China, was said in the state-run China Securities Journal to have received permission from the State Council and its controlling shareholder, government-owned Central Huijin Investment Company, which has injected about $60 billion into China’s top four banks in order to clean up their balance sheets after decades of mis-directed lending. Bank of China became a limited company in August 2004.
Several foreign institutions have acquired shareholdings in BOC in the last year, including a 5% stake by Singaporean government investment company Temasek Holdings, and a 10% stake by a consortium of U.S. banks. There has been opposition to the Hong Kong “H”-share flotation from domestic interests who are opposed to what they see as “selling off the family silver”, and the State Council’s agreement to the IPO is a signal that more internationalist factions have won the argument. Under the terms of its WTO accession, China is due to open up its heavily-restricted domestic banking sector next year.Link here.
RISING U.K. BANKRUPTCIES: NOW, A BUSINESS PROBLEM
Over the past five years, British consumers grew so “extremely comfortable” with using credit cards that, in 2003, the number of active cards on hand exceeded the number of UK citizens. The country remains Europe’s “most developed card market”, and consumer debt has been growing at record pace – a trend that UK’s credit card companies only expect to continue. But this week, a new report brought unexpected news. In late 2005, British “demand for consumer credit tumbled to its lowest in 11 years,” surprising economists, who expected the growth of about 40% – instead of the actual 9.8%. (Projecting future trends based on where they have been in the past is a popular forecasting method, but this is just one of many examples of how unreliable it can be.)
This slowdown is good news for British consumers who have been filing for personal bankruptcies in record numbers lately. The drop in borrowing may help curb the number of insolvencies. But now it is business bankruptcies that are taking the spotlight in the UK. “Despite the stock market riding high, the number of firms collapsing hit its highest level for three years in 2005,” says This Is Money. Corporate insolvencies rose 11% last year, “indicating just how fragile some sections of the economy are as we move into the New Year.” Analysts are predicting more firms going bust in 2006.
Both consumer and business bankruptcies in Britain are rising largely for the same reason: the increasing reliance on credit. Analysts say that if it were not for the higher interest rates and energy costs, many bankruptcies could have been avoided. That may be true, but then why are people borrowing money so uncontrollably, in the first place? One word: hope. Yes, everyone knows that interest rates and oil prices could – and probably will – continue to rise, but … everyone hopes for the best. And just like many other cultural and economic trends, this hopefulness is a sign of the times. To quote from Robert Prechter’s Conquer The Crash, “Near the end of every major expansion, few creditors expect default, which is why they lend freely to weak borrowers. Few borrowers expect their fortunes to change, which is why they borrow freely.” So record debt and insolvency numbers in Britain are signs of good times, not bad.Link here.
DUBAI ON THE CHEAP
It is the city-state that invented seven-star hotels, where opulence is the norm. But you do not have to have a sheikh’s bank balance to enjoy Dubai. Away from the glitzy hotels and shopping malls is a world of cheap cafes, bargain bazaars and dive bars where the expat crowd go to play. Here is your guide to discount Dubai.Link here.
CAYMAN’S CONSISTENT GROWTH IN CAPTIVE INSURANCE
As of 1 November, 2005, the number of active Class B Insurers (captives) in the Cayman Islands had risen to 724, writing annual premiums in excess of $6.6 billion and reporting assets in excess of $26 billion, a clear indicator of the continued success of the jurisdiction as a captive domicile. At December 31, 2004 there were 694 active captives in the Cayman Islands, writing annual premium in excess of $5.6 billion dollars and reporting assets in excess of $22 billion. The licensing of our insurance management companies over the past 12 months is also testament to the confidence in the jurisdiction’s ability to maintain its position as a leader in the captive industry.
Most notable for 2005 has been the launching of a major reinsurance company in Cayman, Green light Reinsurance, Ltd. This represents a significant step in the development of the jurisdiction as a “one-stop” insurance center and provides an opportunity to attract new companies emerging in reinsurance market. What fuels the success of the Cayman Islands as a leading captive domicile? Simply stated, a sound regulatory regime, the unwavering support of the Cayman Islands’ Government and the Insurance Managers Association of Cayman, and the fact that, as a leading international financial center, the jurisdiction has first-class financial services to back up the captive industry.
Jurisdictional law allows for the issue of two categories of license for insurers not conducting business in the Cayman Islands: Unrestricted Class B licenses, which permit all types of insurance (once plan for such have been approved); and Restricted Class B licenses, which are available only where the risk insured are those of the company’s parent of members. Captives writing healthcare-related risks continue to dominate the Cayman captive market, with over 50% of those licensed in 2005 being healthcare-related. Cayman is well established as the domicile with the experience and expertise to ensure the success of these captives and works diligently to maintain this environment.Link here.
SEVEN EU MEMBER STATES FACING LEGAL ACTION FROM EC OVER INTERNAL MARKET FAILURES
The Brussels beaurocrats’ authority will be respected!
The European Commission announced this week that it has decided to pursue infringement procedures against seven Member States for their failure to implement in national law one or more of eight different Internal Market Directives. The Commission has decided to refer the following Member States to the European Court of Justice over non-communication of national measures implementing certain Directives: the Czech Republic regarding Directives on recognition of dental and medical qualifications, Estonia regarding a Directive on postal services, Greece and Italy regarding the Accounting Modernisation Directive, Luxembourg and Sweden regarding a Directive on supplementary supervision of financial conglomerates, and Greece regarding a Directive on reorganization and winding up of credit institutions.
In addition, the EC has decided, under Article 228 of the EC Treaty, to send further “reasoned opinions” to France, requesting it to comply immediately with a previous judgement of the Court on its non-implementation of the 2001 Copyright Directive, and to Luxembourg, requesting it to comply immediately with a previous Court judgement requiring it to implement EU law on legal protection of biotechnological inventions. If France and Luxembourg do not comply, the Commission can ultimately ask the Court to impose daily fines.Link here.
EC warns U.K. over budget deficit.
The European Commission has this week recommended that UK Chancellor Gordon Brown correct the country’s budget deficit at the next possible opportunity, arguing that at 3.3% of GDP in the 2004/05 financial year, the U.K. is running an excessive budget deficit within the meaning of the EU Treaty and the revised Stability and Growth Pact. The Commission went on to ask the Council to endorse this opinion, and to recommend that the deficit be brought below 3% by the forthcoming 2006/07 financial year. The UK government is likely to dispute the EC findings, arguing that Mr. Brown still expects to meet his own “golden rule” over the economic cycle.Link here.
ONE UGANDA PRESIDENTIAL CANDIDATE WANTS TO MAKE THE COUNTRY “TAX FREE”
Uganda is gripped with election fever or, more accurately, campaign fever. Having followed campaigns elsewhere, I expected the candidates running for the presidency to use the campaign rallies and media appearances to explain the contents of their manifestos. Rather than explaining manifestos, the parties and candidates have engaged in trading blames and making populist promises. Mr. Museveni and Mr. Ssebaana have specialized in blaming each other for the filth, flies and eye sore that is the defining feature of Kampala. Another candidate has been promising compensation to every tribe, district or region that is perceived to have lost in one way or the other in the past 25 years.
Another candidate is ready to usher in a tax free economy. Possibly Uganda will soon become like the Isle of Man which is a tax haven for investors. The greater contribution that political leaders can make to the welfare of citizens is not dishing handouts but creating and maintaining conditions that are conducive for wealth production. I will highlight three issues that I rank highly for their potential to bring or take money out of the pockets or handbags of voters.Link here.
MADEIRA POSITIONS ITSELF AS AN E-BUSINESS HUB
Increasing competitiveness in the e-business sector and the improvement of the jurisdiction’s internal efficiency through e-government may be fundamental tools in stimulating the creation of new economic activities and the strengthening of innovation in Madeira, a recent conference heard. The suggestion was made by Willem Mole, senior adviser of ECORYS Nederland, part of the European research and consulting group, during the conference organized by S.D.M., the jurisdiction’s investment promotion agency, which was held recently in Funchal under the theme, “Madeira, Present and Future: the challenge of development”.
Speakers at the conference debated several proposals, ideas and strategies which Madeira could follow in order to secure its future and take part in the global economy, and during the opening remarks, the President of the Regional Government, Mr. Alberto Joao Jardim, stressed that Madeira must face new challenges ahead in a very determined manner. According to Alberto Joao Jardim, the International Business Center of Madeira will play an integral role in preparing the jurisdiction for change, and he observed that the IBC “is a structure which is an important tool within the regional development policy (and) indispensable for the modernization and diversification of the island’s small and fragile economy.”
The conference also heard how Madeira could learn how other small and dynamic economies, such as Luxemburg, Malta, The Isle of Man and Singapore, overcame their own difficulties and developed strategies to respond to the challenges of the constantly changing global economy. A major hub for international fiber optic cables, Madeira is attempting to sell itself as an ideal location for companies in the field of telecommunications, e-business and B2C transactions with low direct and indirect taxes.Link here.
PANAMA CONTINUES DEBT RESTRUCTURING PROGRAM
Panama continued its debt restructuring exercise by offering a new 30-year dollar-denominated bond in exchange for five shorter-dated bonds. The swap offer will expire on 17th January. Panama says it wants to extend its debt maturity profile and reduce its short-term debt burden. The new bond, maturing in 2036, will have a collective action clause allowing Panama to amend its terms with the consent of not less 75% of the holders of outstanding bonds. In November, Panama offered a new $980 million 20-year benchmark sovereign bond, in exchange for four of its global bonds, maturing in 2008, 2011, 2012 and 2020. That new paper matures in 2026.
In October, Panama filed with the U.S. Securities and Exchange Commission (SEC) to issue up to $2 billion worth of debt. Panama said it planned to issue the securities to raise money for general refinancing and other spending needs. The “shelf registration” allows Panama to sell securities in one or more offerings, determining details such as size and price at the time of sale.
The Panamanian economy expanded by 6.2% in the first six months of 2005, as measured by the monthly index of economic activity. The most dynamic sectors included fish and seafood exports, agriculture products and tourism. The government forecast economic growth in 2005 of between 4.5% and 5%, below the 6.1% growth witnessed in 2004, which was partly a result of temporary real estate tax breaks. The tax breaks, which gave exemption from real estate taxes for up to 20 years, had led to a construction boom in 2004.
Fiscal austerity measures agreed last February are being implemented by the government, with the IMF’s strong approval, and are expected to dent the economy this year. The package seeks to raise revenues from new business taxes, in a bid to reduce the country’s level of debt. The legislature voted 46 to 28 in favor of the measures, which will include a new 1.4% tax on companies’ gross revenues, and a levy on firms operating in the Colon Free Trade Zone – the largest free port in the Americas. Finance Minister Ricaurte Vasquez said that the fiscal reform package will “stabilize Panama’s public finances and establish conditions for the economic and social growth of the country.”Link here.
MARC FABER BETS ON ASIAN PROPERTY AFTER CALLING GOLD, OIL IN 2001
Marc Faber, who told investors to bail out of U.S. stocks a week before the 1987 crash and began recommending commodities at the end of 2001, forecasts property prices in Asia will rise. Faber, author of a monthly newsletter called The Gloom, Boom & Doom Report, said in an interview that migration of people in the region from the countryside will boost the value of land and homes in cities. “When you look at asset classes, given the demographics in Asia and urbanization in the long run, I’m quite sure property prices will rise,” said Faber, 59, the founder of Hong Kong-based Marc Faber Ltd., which manages about $150 million.
The Bloomberg Asia Pacific Real Estate Index, which includes stocks of homebuilders from Japan to Singapore, rose 26% in 2005. That compared with a 35% gain in the Bloomberg U.S. Real Estate Index. In the U.S., some investors and analysts are concerned a decline in housing prices might lead to a collapse in the stock market. Chief Equity Strategist Barry James of Xenia, Ohio-based James Investment Research Inc. forecast in November that major equity indexes will plunge up to 20% in the following 12 months as home prices decline and erode the wealth of homeowners.
Faber is also focusing on Asian stock markets and on commodity-related stocks that are likely to rise on demand for materials and energy from China, which is building up Beijing for the 2008 Summer Olympics. “The stocks I recommend usually I also take a position in, whether it’s long or short,” said Faber, who counted billionaire investor Sir John Templeton, 93, former head of the Templeton group of mutual funds, as a newsletter subscriber. “There is a speculative element to everything in the present time. We live in a world of inflated assets.”
Companies in Thailand that provided a high dividend yield, included Thai Reinsurance Pcl and Thai Union Frozen Products Pcl. Thai Reinsurance had a 7% yield as of Jan. 6 and Thai Union Frozen Products yielded 4.7%. Both companies are based in Bangkok. “I happen to like to buy high-dividend-yielding stocks,” said Faber. “There are not many left.” Gold has risen 97% to $545.47 an ounce and crude oil futures in New York more than tripled since the end of 2001, when Faber began recommending investment in commodities. By comparison, the S&P Index rose 12%. U.S. stocks are overvalued, Faber said, while prices for gold and oil are set to jump due to soaring demand for these commodities in China and India.
Dramatic commodity bull markets all originated after extended bear markets, Faber said. Gold prices soared more than 20-fold and oil rose eightfold from 1970 to 1980, a decade followed by a more-than-20-year bear market. In the current bull run, major indexes such as the Reuters/Jefferies CRB Futures Price Index may be driven higher by commodities such as grains that have not risen, he said. “I would argue the CRB index will outperform the Dow over the next 10 years,” said Faber, who sits on the advisory board of Credit Suisse Group’s Credit Suisse Asset Management Ltd. The CRB index rose to a record 340.65 on Jan. 6. The index, which tracks 19 commodities including gold, oil and sugar, gained 17% last year. Commodity investments may increase by 38% this year to $110 billion as pension funds and other money managers diversify from stocks and bonds, according to London-based Barclays Capital.Link here.
TRADING DOCUMENTATION A TAXING HEADACHE
If you sold stocks or bonds last year, you could spend a lot more time filling out your income tax returns this spring. Accountants across the U.S. are buzzing about a slim paragraph the IRS added to the instructions for filing 2005 forms. The change means that people with capital gains or losses must detail each transaction individually. Previously, tax preparers simply wrote in the net gains or losses and attached a brokerage’s summary of the yea’qs transactions. Now the IRS has explicitly prohibited that. “It adds a whole level of complexity,” said Leon Taylor, a certified public accountant in Beaverton, Oregon, who predicts tax preparation fees will climb as a result.
Whenever you sell an asset, such as a house or a share of stock, you experience a capital gain or loss. The government’s interest is in the net capital gain – that is, your combined gains minus your combined losses. IRS spokeswoman Nancy Mathis said the new instructions merely clarify that the government needs details of individual gains and losses. “We always required this information, but people were sending in copies of their brokerage statement that did not contain all the details,” she said.
The brunt of the change will fall on investors in individual stocks and bonds, because they are the most active buyers and sellers, said John Pridnia, a CPA in Muskegon, Michigan. People who own mutual funds or real estate are also subject to capital gains taxes, but typically have fewer transactions each year. The cost of completing a tax return could double or triple for many clients, both Pridnia and Taylor said.“qIf you literally have to enter everything, and we can’t get it in any form but paper, it could easily add $20 to $30 per trade,” said Ed Zollars, a CPA in Phoenix. “It could become fairly costly to have a number of trades during the year.” Someone with 50 securities transactions in a year will probably pay $200 to $500 more in tax preparation fees, said Dennis Echelbarger, a CPA in Grand Rapids, Michigan.Link here.
ISLE OF MAN GOVERNMENT READIES CORPORATE TAX REFORM PROPOSALS
The Isle of Man Treasury will in the coming weeks table detailed new legislative proposals dealing with important tax reforms which are taking place as part of the Manx’s government’s commitments under the EU Code of Conduct for Business Taxation. The new measures are being introduced as part of a general reform designed to remove what the EU considers are the harmful elements of the jurisdiction’s corporate tax system. The principal parts of these reforms will be a 0% rate of tax for most companies and 10% for a defined sector.
A new Bill to be introduced in the House of Keys before the end of this financial year (5 April 2006) will, amongst other things, repeal the tax legislation relating to International Business Companies, Non-resident Company Duty, Exempt Companies, Exempt Insurance Companies and Exempt Managed Banks. The intention is, subject to completing the legislative process, that these repeals will have effect from 6 April 2007.Link here.
KPMG TAX SHELTER SETTLEMENT MAY STALL
The settlement proposed by KPMG for investors harmed by its recommendation of several tax sheltering arrangements later deemed abusive by the IRS, may be derailed by the failure of an undiclosed number of affected investors to participate. Ruling in November, U.S. District Judge Dennis M. Cavanaugh granted preliminary approval to the $225 million settlement proposed by the accounting firm. The proposed settlement is designed to cover former clients who participated in the tax shelters known as Blips, Flip, Opis and Short Option Strategy. These are the shelters that were the subject of KPMG’s settlement agreement with federal prosecutors in August under which KPMG agreed to pay $456 million in penalties, but will not face criminal prosecution as long as it complies with the terms of its agreement.
However, according to a New York Times report, a number of the class action participants, representing 30% of the claims addressed by the settlement, last month declined to participate in the agreement. KPMG reportedly has the right to junk the settlement proposals if not enough of the affected investors participate.Link here.
IRS CHANGES REPORTING REQUIREMENT FOR TRANSACTIONS WITH BOOK-TAX DIFFERENCES
IRS and Treasury officials have announced that the elimination of a class of reportable transactions involving significant book-tax differences after the introduction a new return schedule for large businesses made separate reporting unnecessary. Under current rules, taxpayers are required to disclose to the IRS their participation in reportable transactions and in certain cases, taxpayers’ advisors are also required to disclose their involvement with reportable transactions to the IRS and to keep lists of participants in those transactions.
The reportable transaction rules aim to increase transparency by ensuring that the IRS learns of potentially abusive transactions before these transactions are uncovered in an examination. Under existing rules, one of the six categories of reportable transactions involves transactions that cause a greater than $10 million difference between financial reporting and tax reporting. Regulations are currently being drafted to reflect recent statutory changes to the disclosure regime. In that context, the IRS and Treasury Department are working to make adjustments to the disclosure rules to ensure that they are properly targeted.Link here.
CHINA TO RATCHET UP INTERNATIONAL TAX ENFORCEMENT
China’s State Administration of Taxation (SAT) will intensify its efforts to crack down on tax evasion this year and will concentrate its efforts on large taxpayers and international taxation, according to SAT’s Deputy Director Wang Li. Wang was reported as stating that SAT will focus on improving administration and enforcement in the areas of international and foreign-related tax and will strive to strengthen cooperation with foreign institutions and tax administrators. Wang also directed the tax authorities at all levels to carry out more assessments and audits on foreign enterprises and revealed that SAT will seek to integrate the administration of key taxpayers at the local level, while also establishing more effective monitoring systems for key foreign corporate taxpayers.Link here.
UK’S TAX REGIME DETERS TOP FOOTBALLERS FROM JOINING BRITISH CLUBS
Several of the world’s most talented and best paid footballers, including FIFA World Player of the Year, Ronaldinho, are said to have been deterred from joining British soccer clubs because of the UK’s unfavorable tax regime for those on high incomes. This is the conclusion drawn by Roy Saunders, chairman of International Fiscal Services, the international tax consultancy, who is urging Chancellor of the Exchequer Gordon Brown to relax taxation rules for sports stars in order to attract the best talent to Britain.
Mr. Saunders argues that the Treasury would benefit from a review of tax laws relating to high-income sport stars by ultimately taking more in tax receipts if the rules were changed. It is estimated by IFS that the players in “Gordon Brown’s dream team” such as Portugal’s Luis Figo, who opted to play for Inter Milan over European Champions Liverpool, and FC Barcelona’s Ronaldinho, who has in the past been linked with a move to Manchester United but preferred to move to Spain from his native Brazil, would have contributed almost £20 million in tax revenues had they been playing for British clubs.
Under the UK’s tax laws, income over £32,400 (apx. $52,700) is taxed at 40%, but because of social security contributions British clubs would have to pay a footballer £100,000 in gross income for him to earn £50,000 in net income. In Spain, a club would have to pay just £66,000 gross income for a player to earn £50,000 after tax. Furthermore, certain other European countries are more attractive to the well-paid from a tax perspective because their governments allow more income to be held offshore.Link here.
U.S. E-FILING SEASON STARTS THIS WEEK
With the IRS due to accept e-filed tax returns from January 13th, H & R Block has declared January 12 “National Tax Advice Day”. The firm’s representatives will be on high alert across the nation to help clients with their tax returns. Says H & R Block, “Millions of taxpayers will lose or gain tax benefits this year because of major tax law changes and missed credits, including new guidelines for claiming child-related benefits and new tax breaks for hurricane victims and charitable donors. The Alternative Minimum Tax (AMT) is on track to snare almost 4 million taxpayers this year, and millions more will fail to claim credits for their higher education expenses.”
The company says it will mobilize its network of more than 70,000 tax professionals to deliver free advice on tax topics with the most widespread impact. The educational effort will be in full force from tomorrow. “Our tax experts have identified five major tax areas that deserve special attention by taxpayers this year,” said Tim Gokey, President of the U.S. Tax Division of H&R Block. “H&R Block’s National Tax Advice Day is about making people aware of these tax issues and helping them claim every tax benefit to which they’re entitled.”
H&R Block’s “Taxes 2006: The Top 5 Things You Need to Know” concern child-related tax benefits, charitable giving and hurricane relief, the Alternative Minimum Tax (AMT), the Earned Income Tax Credit (EITC), and education-related tax benefits.Link here.
TAXPAYER ADVOCATE’S REPORT URGES “FUNDAMENTAL SIMPLIFICATION” OF U.S. TAX CODE
A report submitted to Congress this week by National Taxpayer Advocate Nina E. Olson urged lawmakers to enact fundamental simplification of the the U.S. tax system to ease the tax reporting burden for legitimate taxpayers, while cutting down opportunities for those attempting to evade taxes. The annual NTA’s report also highlights the IRS’s eagerness to focus on enforcement at the expense of service to taxpayers. “Our tax code has grown so complex that it creates opportunities for taxpayers to make inadvertent mistakes as well as to game the system,” Olson noted in her report.
Olson went on to observe that, “As taxpayers become confused and make mistakes, or deliberately ‘push the envelope,’ the IRS understandably responds with increased enforcement actions. The exploitation of ‘loopholes’ leads to calls for new legislation to crack down on abuses, which in turn makes the tax law more complex. Thus begins an endless cycle – complexity drives inadvertent error and fraud, which drive increased enforcement or new legislation, which drives additional complexity. In short, complexity begets more complexity. This cycle can only be broken by true tax simplification, followed by ongoing legislative and administrative discipline to avoid ‘complexity creep.’”
The report also makes legislative recommendations to reduce noncompliance in the “cash economy”, to simplify the Code’s family-status provisions, to revamp the rules governing joint-and-several liability on joint returns as well as community property in the collection of tax, to require brokers to track and report cost basis for stocks and mutual funds to both investors and the IRS, to lessen the burdens of tracking the cost basis of stocks and mutual funds if the current-law step-up in basis on death is eliminated as scheduled in 2010, and to restructure and reform the Code’s collection due process (CDP) provisions.
By statute, the National Taxpayer Advocate is required to identify at least 20 of the most serious problems encountered by taxpayers. In this year’s report, Olson identifies trends in taxpayer service as the most serious problem. While expressing support for a strong IRS enforcement presence, Olson expressed concern that the IRS is expanding enforcement at the expense of taxpayer service. The report states that the IRS has eliminated TeleFile, significantly reduced the number of returns IRS personnel prepare for taxpayers who seek IRS assistance, reduced the percentage of taxpayer calls IRS telephone assisters answer as compared with FY 2004, and substantially reduced its taxpayer education function for small businesses.
The report cites Criminal Investigation (CI) refund freezes as the second most serious problem facing taxpayers. The report states that CI places “freezes” on hundreds of thousands of refunds each year due to a suspicion of fraud and then makes a “determination” whether the returns are, in fact, fraudulent without notifying taxpayers that their refund claims are under review or giving them an opportunity to present evidence supporting their positions. Among other problems the report identifies are the need for IRS to develop a comprehensive strategy to address noncompliance in the “cash economy”, the adequacy of training for private debt collection employees as the IRS rolls out its Private Debt Collection (PDC) initiative in 2006, and delays and related problems in examining returns that claim the earned income tax credit (EITC).Links here and here.
IRS ACCUSED OF VIOLATING THE FREEDOM OF INFORMATION ACT
The IRS has come under renewed pressure to supply statistical information relating to tax law enforcement activities after a motion filed in court last week accused the IRS of illegally withholding information from the public. Professor Susan B. Long, a co-director of the Transactional Records Access Center (TRAC) at Syracuse University, filed the lawsuit in the U.S. District Court in Seattle, accusing the IRS of breaking the terms of the federal Freedom of Information Act (FOIA) by failing to abide by a 1976 court order requiring the agency to make available certain detailed information regarding its enforcement of tax laws. TRAC, a non-partisan research center that disseminates federal government statistical information, is used by many groups to analyze the activities of the government.
However, in May 2004, the IRS informed Professor Long that the agency would no longer supply the requested data and that any future statistical data requests would cost $12,000 per month to receive in electronic format. According to IRS spokesman Frank Keith, the agency’s lawyers concluded after lengthy research that the 1976 court order no longer existed and therefore IRS was within its rights to withhold the information. Recent TRAC reports had revealed a fall in the number of hours devoted to audits of large businesses and wealthy taxpayers, at the same time as an increase in the audit rate in lower income groups. “All of these and many other similar findings were based on the kinds of data that the IRS has been unlawfully withholding from TRAC and the American people,” Professor Long stated in announcing the filing.
The IRS argues that it is under no legal obligation to supply TRAC with detailed statistics, and has been doing so on a voluntary basis. According to Mr. Keith, nobody within the IRS is now aware of the 1976 court order. Professor Long however, believes that the IRS has knowingly and deliberately obstructed the law by withholding statistical information.Link here.
ITALIAN AUTHORITIES EXAMINE SWISS ACCOUNTS IN BANKING PROBE
Italian tax authorities are reportedly investigating a number of bank accounts in Switzerland and Liechtenstein in an attempt to establish whether Italian politicians were linked to the scandal-tainted takeover of Banca Antonveneta. The investigation forms part of a wider probe by the Italian authorities into alleged securities violations and fraud during the an attempt by Banca Popolare Italiana to take control of Banca Antonveneta last year. Police in Switzerland and Liechtenstein are conducting searches to find evidence that Italian politicians, none of whom have been named, benefited from insider information, according to Dow Jones Newswires.
BPI’s bid derailed following allegations that its former head, Gianpiero Fiorani, had masterminded several illegal financial operations. The subsequent investigation led to Fiorini’s resignation, along with that of BPI’s board. The Bank of Italy has also been accused of unfairly favouring BPI in its bid to takeover Banca Antonveneta, and it is believed that the affair led to the resignation of Bank of Italy Governor Antonio Fazio last month. A total of 80 businessmen, financiers and real estate agents are reported to be under investigation as part of the probe. While no elected officials are said to be under investigation, media reports of court-ordered wiretaps have revealed that numerous politicians had dealings with some of the accused bank executives.Link here.
HONG KONG TO ELIMINATE FUND PROFIT TAX
The Hong Kong government is expecting that legislation exempting offshore funds from profits tax will be approved during the first quarter of 2005, a move that is likely to give the city’s asset management industry a significant boost and could lure many funds from competing financial centers in Europe, Asia and North America. Secretary for Financial Services and the Treasury, Frederick Ma, told reporters on the sidelines of an investment conference in Hong Kong last week that the elimination of the 17.5% tax on funds’ profits will be a “big attraction” for foreign investors and could help deepen the liquidity of the city’s stock market. “This will put us at par, if not more favorable, with some financial centres like the UK and the U.S.,” Mr. Ma observed. Currently, more than 60% of funds managed in Hong Kong are from foreign investors, according to Mr Ma.Link here.
CONSUMER BANKRUPTCIES SET RECORD IN 2005: STUDY
U.S. consumer bankruptcies increased to a record 2.04 million in 2005, as people rushed to seek protection from creditors ahead of tough new laws, data released show. Filings rose 31.6% from 1.55 million in 2004, with increases in every U.S. state and double-digit percentage increases in every geographic region, according to Lundquist Consulting Inc., a financial research firm. One in every 53 households filed for court protection, the firm said. Chapter 7 filings, which provide the greatest relief for consumers, surged 47.2%, while Chapter 13 filings declined 7.9%.
The Bankruptcy Abuse Prevention and Consumer Protection Act, which took effect October 17, made it harder to erase debts and made filings more costly. The changes constituted the biggest overhaul to the U.S. Bankruptcy Code since 1978. In perhaps the biggest change, a new “means test” prevents debtors from using Chapter 7 if they earn more than the median income in their states, and can repay some of their debt. They must instead use Chapter 13, which requires repayments.
Credit-card issuers championed the new law, saying old laws encouraged abuse. Banks such as Citigroup, Bank of America and JPMorgan Chase have said they will suffer hundreds of millions of dollars of fourth-quarter losses related to the filing surge, but expected to make this up in future periods because filings would decline.Link here.
BEAT THE U.S. RETIREMENT PLAN SYSTEM – GO OFFSHORE
Who needs non-U.S. investments in their retirement plan? You do! If you are a U.S. citizen or U.S. resident, you are the victim of a vast campaign of misinformation concerning how you can invest your retirement plan. Your broker or custodian does not want you to know that many of the world’s best investments are only available outside of the U.S. And that is because it does not put any money in their pockets when you invest offshore. Instead, it puts more money in your pocket. The financial scandals that rocked Wall Street made it clear the U.S. investment system is set up to benefit brokers and their employees – not you. But you can break that trend by finding the truth – and acting accordingly.
Your IRA or pension plan can own raw or improved land, condos, office buildings, single or multi-family homes and apartment buildings in any country, so long as the real estate is not for your current personal use. The only investment a retirement plan cannot make, domestically or offshore, is in collectibles and some types of insurance. Indeed, most investment restrictions are imposed not by U.S. law, but by domestic American custodians or retirement plan administrators.
Another “off limits” investment to most U.S. investors are offshore funds. Of 80,000 funds trading worldwide, only about 10,000 are registered in the U.S. Offshore funds are much more profitable, due to the falling dollar, the superior performance of emerging markets and the ability of offshore fund managers to use risk hedging techniques that are impossible to use in domestic U.S. funds. Unfortunately, due to US securities laws, most offshore funds will not sell directly to U.S. investors. Even if they did, the U.S. tax consequences of direct ownership of most offshore funds can be punitive … unless you purchase them through your IRA or pension plan. And now someU.S.u brokerage firms are so paranoid about offshore investing, thanks to the PATRIOT Act, the mere mention of offshore investing has caused some of them to tell their clients to close their accounts and seek advice elsewhere!
Placing a portion of your retirement offshore can also offer protection against the long-term decline of the U.S. dollar. Asset protection is another reason for placing your retirement plan offshore. In the U.S., pension assets are at risk. Some retirement plans are protected, but many others are not. If a U.S. creditor gets a judgment against your unprotected plan, forget all hopes of a comfortable retirement. But if your retirement plan is invested in a suitable foreign nation it can be made essentially judgment proof against almost all claims.
Many reasonable people want a shield against the prying eyes of business partners, estranged family members or identity thieves. Financial privacy can be the best protection against frivolous lawsuits. If you do not appear to have assets to justify a lawsuit’s time and expense, you will not be a target. Assets you invest offshore are far more private, as they are off the domestic U.S. asset tracking radar screen.Link here.
OBLIVIOUS ON PENSION ISSUES? BETTER WAKE UP
Do you know if your company has a pension plan? Do you care? Chances are that unless you are nearing retirement, you probably have not given it a lot of thought. But that lack of interest – especially if your company is planning major changes in its pension – could mean the difference between enjoying Caribbean cruises or sharing the senior citizen plate at the local cafeteria in your golden years. Now is not the time to ignore the sea change that is taking place with company pensions.
In the past few weeks, profitable companies like IBM and Verizon Communications announced they are freezing their pension plans in an effort to cut costs. That means that the plans, which provide monthly checks to employees when they retire, will no longer allow workers to accumulate credit for their years of service or increase in annual income. The upshot? When employees retire, their pension checks will be significantly lower than they expected. And depending on specific circumstances, such as age and income, it could turn a champagne retirement into one that affords only cheap beer.
So maybe you do not work for IBM or Verizon or one of the troubled companies that froze or terminated their pension plans during the past few years. There is still plenty of reason to pay attention. Some experts predict that other well-off companies will follow the example of longtime bellwether IBM and freeze their pensions, too. Experts blame it on accounting rules that force companies to calculate liability using short-term interest rates. Even if a company has not had to make a contribution to its pension fund and it has enough assets to cover its liabilities long-term, the pension liability alone can hurt the profit and loss statements that drive Wall Street, said Joel Wehner, actuarial practice leader for the Southwest for Milliman, a benefits consulting firm that specializes in life, health and retirement plans in Houston.
And what of 401(k)s, which have been pitched as a great way to save for retirement? “Average employees, when left to their own devices, make all the wrong decisions,” said Wehner, who is a big fan of traditional pension plans. “They don’t put enough money into the plans, they take money out at the wrong time, and they make the wrong decisions on investments.” So what can the average person do? If you have a pension plan, Wehner recommends learning as much as you can about it – what you have already earned and what you figure you will get when you retire. And because you do not have a lot of control over the future, contribute as much as you can to your 401(k).Link here.
U.K. TAXMAN WINS RIGHT TO PROBE OFFSHORE FINANCIAL ACCOUNTS
Information about customers’ offshore accounts could be pried from banks by tax inspectors after the government won a landmark ruling on this week against a leading but unidentified financial institution. Thousands of offshore account holders will now be “invited” to own up to their deposits to the HM Revenue and Customs as a result of Wednesday’s decision by the special commissioners’ tax tribunal. Attention will focus on holders of credit cards linked to accounts in the Channel Islands and other offshore centers. HMRC estimates this probe – into customers of what is widely believed to be a high street bank – will yield £347 million of additional tax revenues.
Tax experts expect HMRC’s inquiries into undeclared income from offshore accounts to be extended to other banks, potentially resulting in £billions being clawed back from reluctant taxpayers. Although the ruling applies only to the unnamed institution, HMRC is understood to be making similar demands of other banks. One senior tax investigations expert said the special commissioners’ decision would “really set the cat among the pigeons.” She expected the Revenue to issue similar demands to all the other high street banks and several building societies “to maintain a level playing field.”
The popularity of offshore accounts has increased with the growing availability of credit cards, which make it easy to access funds. But the use of credit cards has helped the Revenue track down offshore account holders, since transactions are often processed in the UK. The Revenue’s attempt to make banks divulge information about offshore tax evasion has been going on for almost 20 years but experts see this week’s decision as a watershed. Even though the Revenue cannot routinely get access to confidential banking information, it is able to serve a formal notice requesting the information under section 20 of the 1970 Taxes Management Act, if a special commissioner agrees it has reasonable grounds for suspicion.
John Avery Jones, the special commissioner who approved HMRC’s latest application, dismissed the financial institution’s argument that the request was incompatible with the human rights convention. He also judged that the Revenue’s request did not amount to a “fishing expedition” because existing information about a sample of offshore customers suggested that many had not declared interest payments.
The heavy workload involved in sifting through years of records means HMRC is likely to hope that publicity about the case encourages voluntary disclosure. This results in a reduction in penalties from the maximum of 100% of the tax owed. Reg Day, head of tax investigations at KPMG said some people could face criminal prosecution if they met certain criteria, such as working in the tax or legal systems, or if they had denied having an offshore account in a previous investigation. HMRC has drawn on the experience of the U.S. IRS, which has made credit card companies divulge information on accounts billed to three Caribbean tax havens.Links here and here.
HACKERS REBEL AGAINST SPY CAMS
When the Austrian government passed a law allowing police to install closed-circuit surveillance cameras in public spaces without a court order, the Austrian civil liberties group Quintessenz vowed to watch the watchers. Members of the organization worked out a way to intercept the camera images with an inexpensive, 1-GHz satellite receiver. The signal could then be descrambled using hardware designed to enhance copy-protected video as it is transferred from DVD to VHS tape. The Quintessenz activists then began figuring out how to blind the cameras with balloons, lasers and infrared devices. And, just for fun, the group created an anonymous surveillance system that uses face-recognition software to place a black stripe over the eyes of people whose images are recorded.
Quintessenz members Adrian Dabrowski and Martin Slunksy presented their video-surveillance research at the 22nd annual Chaos Communication Congress. Five hundred hackers jammed into a meeting room for a presentation that fit nicely into CCC’s 2005 theme of “private investigations”. Slunksy pointed out that searching for special strings in Google, such as axis-cgi/, will return links that access internet-connected cameras around the world. Quintessenz developers entered these Google results into a database, analyzed the IP addresses and set up a website that gives users the ability to search by country or topic – and then rate the cameras. “You can use this to see if you are being watched in your daily life,” said Dabrowski.Link here.
YOUR CELL PHONE RECORDS AVAILABLE ONLINE
The Internet makes everything better – just ask Chicago private investigator Ernie Rizzo, who routinely goes online to track down cell phone records. They help him answer such burning questions as whether a suburban police chief is having an affair, the answer to which is worth quite a bit of money to the police chief’s wife. To Rizzo, such tools are like manna from heaven. “I would say the most powerful investigative tool right now is cell records,” Rizzo said. “I use it a couple times a week. A few hundred bucks a week is well worth the money.”
Most people believe that their phone records are confidential, but it turns out that they are easily available to anyone with an Internet connection, a credit card, and $150 to burn. The situation has gotten so bad that both the FBI and the Chicago Police Department have warned agents and undercover officers about the dangers posed by cell phones when the records are so easily available to criminals, gangsters, and terrorists. The Electronic Privacy Information Center (EPIC) last August identified more than 40 web sites that offer to sell calling records without the knowledge of the person making the calls. Verizon is suing several of these companies in court, but their actions are currently little more than a drop in the bucket.
How these web sites get this information is even more interesting. Three main ways are used to obtain the data: pretexting, hacking, and good-old-fashioned bribery. Pretexting is simply the art of social engineering, in which the online data broker calls the phone company and gains access to a customer’s records by pretending to be that customer. This is made easier by the fact that most of these data brokers subscribe to other databases that give them access to customers’ Social Security numbers, dates of birth, etc. Hacking is another popular option, especially now that most phone companies allow customers to manage their accounts online. Many customers never bother to set up these accounts, leaving them easy targets for determined hackers. Finally, when all else fails, throw money at the problem. Big payouts to individuals inside the phone companies can ensure that a data broker has access to any records it cannot get through other means.Link here.
UK PERMITS GENERAL ELECTRIC TO EXPORT PERSONAL DATA UNDER CORPORATE RULES
The UK’s Information Commissioner has authorized GE to transfer personal information outside the European Economic Area under the company’s own binding rules, rather than relying on the EU’s “safe harbor” provisions. The 8th Principle of the Data Protection Act 1998 (which incorporated the Data Protection Directive into UK law) prohibits the transfer of personal data to a country or territory outside of the European Economic Area unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data.
However the law permits a derogation where the Information Commissioner has authorized the transfer “as being made in such a manner as to ensure adequate safeguards for the rights and freedoms of data subjects.” The “binding corporate rules” applied by GE and approved by the Commissioner fall within the scope of this derogation. Announced the Commissioner, “For the first time the Information Commissioner has authorized the transfer of employees’ information outside the European Economic Area using binding corporate rules. Using procedures, known as binding corporate rules, [GE] is now able to share information on its employees within the multinational company. The authorization applies to information that comes within the Information Commissioner’s jurisdiction, namely data generally held in the UK.” Other European data protection authorities are said to be considering the adequacy of GE’s binding corporate rules and may in time give the company equivalent permissions covering data held outside the UK.Link here.
NO IDENTITY CARD? YOU COULD BE FINED £2,500
Town hall bureaucrats are to be given sweeping new powers to investigate homes for identity card evasion and to impose heavy fines on occupants found without one. The revelation, in an obscure Whitehall consultation paper, calls into serious doubt the Government’s repeated promises that planned ID cards, already hugely controversial, will be voluntary and that no one will be forced to carry one. It will stiffen resolve at Westminster to oppose the Identity Cards Bill, which is due before the Lords again next week.
Peers are already vowing to water down the plans to ensure that registration for cards is voluntary. At present the Bill requires people to submit their details to a new national ID Card Database when they apply for a passport, in effect making registration compulsory. The small print of a consultation paper published by Lord Falconer’s Department for Constitutional Affairs, released during the Christmas holiday, reveals that town hall officials will be asked to police the scheme by using the Electoral Register to identify homes and individuals without cards. The register will be cross-checked against the proposed Identity Card Database in what the Conservatives are calling “Big Brother” tactics. Those who fail to register for a card or to keep their details up to date when, for example, they change address face fines of up to £2,500. In baffling language, the document proposes a shadowy sounding system called “Core” – and discusses the need for “data sharing” and “unique, personal identifiers”. (Core is a new centralized, electronic electoral register to replace the current, locally managed registers.)
The plans for heavy policing of the scheme fly in the face of promises by Tony Blair that the cards would be voluntary, a promise repeated in Labour’s manifesto for the general election in May last year. Charles Clarke, the Home Secretary, promised three months ago that ID cards “will not create Orwell’s Big Brother state”. Shadow constitutional affairs secretary Oliver Heald said, “There is growing concern among the public about Labour’s use of invasive ‘Big Brother’ computer databases – without transparency or clear backing from the public – such as for the forthcoming council tax revaluation.”Link here.
AMERICANS DIVIDED ON DOMESTIC SPYING
Americans overwhelmingly support aggressive government pursuit of terrorist threats, even if it may infringe on personal privacy, but they divide sharply along partisan lines over the legitimacy of President Bush’s program of domestic eavesdropping without court authorization, according to a new Washington Post-ABC News poll. Nearly two in three Americans surveyed said they believe that federal agencies involved in anti-terrorism activities are intruding on the personal privacy of their fellow citizens, but fewer than a third said such intrusions are unjustified. At the same time, however, those surveyed are more narrowly divided over whether the federal government is doing enough to protect the rights of both citizens and terrorism suspects.
Republicans offer far greater support for actions directly attributed to the Bush administration in the campaign against terrorism than do Democrats, who worry that the president will go too far and ignore civil liberties. But the broad issue of protecting the country vs. preserving personal privacy splits each party’s coalition, according to the poll. Some Democrats are willing to support tough anti-terrorism policies at the expense of personal privacy, and some Republicans fear that individual rights may be compromised.
Revelations last month about Bush’s program of warrantless electronic surveillance of conversations between the U.S. and foreign countries have heightened interest in the trade-offs involved in the fight against terrorism. After the 9-11 attacks, the president authorized a program that overrode requirements that the government seek approval of the Foreign Intelligence Surveillance Court before listening in on overseas telephone conversations or reading U.S. citizens’ email. Critics have accused the administration of breaking the law in pursuing the domestic spying program, but the president has defended it, saying that it is necessary to protect Americans and that it is lawful and consistent with the Constitution. Congress has signaled its intention to hold hearings to investigate the program. So far, recent disclosures about domestic spying have not hurt Bush’s public standing. According to the poll, his job approval rating stands at 46%, down one percentage point from last month.Link here.
The recent Democratic criticism of President Bush’s use of warrantless wiretaps might lead one to conclude that the opposition party is genuinely concerned with protecting individual rights and, concurrently, restraining executive power. But when it comes to wiretaps, Democratic and Republican lawmakers have been equal partners in expanding the scope of federal power. The present Democratic objection is limited to the absence of pro forma judicial oversight. In October 2005, the Senate unanimously passed a bill that would vastly expand the ability of the Justice Department to spy on American businesses via wiretaps. Not a single senator rose to speak against this bill. Even the most rabid Democratic critic of the White House’s warrantless wiretapping, Wisconsin Sen. Russell Feingold, embraced an unprecedented expansion of unsupervised, albeit warrant-enabled, wiretaps.
So what does this bill do? S. 443, the “Antitrust Criminal Improvements Act of 2005”, would add criminal antitrust investigations to the list of “predicate offense” that can justify the use of wire and oral communication intercepts. This list originated with the passage of the Omnibus Crime Control and Safe Streets Act of 1968, and over the past four decades, Congress has continually added new predicate offenses, everything from terrorism to bribery in sporting contests. Sen. Mike DeWine, Ohio Republican and chairman of the Senate Judiciary Committee’s antitrust subcommittee, co-sponsored S. 443 along with his Democratic counterpart, Herb Kohl of Wisconsin. DeWine offered an “everybody is wiretapping” argument. He said that there were already over 150 predicate offenses on the authorized list, and that other countries, such as Canada, already allowed wiretaps in antitrust cases.
DeWine gave the impression that criminal antitrust enforcement is in a state of paralysis. Quite the contrary. From 1995 through 2004, the DOJ won 97% of all criminal antitrust cases decided, amassing a record of 449 wins against just 16 losses. Beyond the numbers, the greatest danger posed by S. 443 is that it will actually expand the scope of what is considered a crime under the Sherman Act. Antitrust law is notoriously subjective, and the difficulty in investigating cases is one of the few checks on prosecutors. The likelihood of abuse cannot be understated. Section One of the Sherman Act has been interpreted to prohibit “cartels” and other overt “price-fixing” activities, which are generally treated as criminal violations. But Section Two outlaws “attempted monopolization” in any market. These are the cases where the DOJ's discretion to charge a civil or criminal offense is the greatest. There is virtually no business decision or practice that could not be spun as “attempted monopolization” by creative prosecutors. Wiretap authority would therefore create a pretext for the Antitrust Division to spy on any business for any reason. Wiretap authority will ultimately encourage Antitrust Division officials to go on fishing expeditions, particularly against businesses, such as oil, that are unpopular with legislators.Link here.
FORMER BANK OF BERMUDA CHIEF DENIES U.S. SEC ACCUSATION OF FINANCIAL WRONGDOING
Donald Lines, the former president of the Bank of Bermuda, has denied allegations from U.S. regulators that the company he now heads was involved in securities fraud. The SEC stated in documents filed with the U.S. District Court for the District of Columbia that on November 10, 2005, three administrative subpoenas were served on Mr. Lines, chairman and president of the financial services firm lines Overseas Management, while he visited the U.S. to undergo medical treatment.
According to a Royal Gazette report, the subpoenas were related to requests for information regarding an investigation into market manipulation involving shares issued by Sedona Software Solutions Inc., SHEP Technologies Inc., and HiEnergy Technologies Inc. The SEC named LOM and Donald Lines’ son, Scott Lines as “potential key actors in the schemes.” The Lines family and LOM deny any wrongdoing, and Donald Lines continues to maintain that the SEC has not contacted him or the company to serve the subpoenas.Link here.
SWISS COURT REJECTS RUSSIAN REQUEST FOR INFORMATION IN YUKOS PROBE
Switzerland’s highest court has rejected a request for judicial assistance from the Russian authorities, relating to the handover of documents in the ongoing investigation into the embattled oil company Yukos. The Federal Tribunal partially upheld an appeal by several companies seeking to block the passing of documents to Russia detailing bank account information and financial dealings between Yukos and a number of Swiss firms. In doing so, the judges rejected the decision made by the Swiss federal attorney last July to hand over 80 files, out of the 1,300 it has in its possession, to the Russian authorities. “Switzerland would not agree to collaborate with what looks more like a never-ending search for evidence,” the court ruled as it temporarily blocked what is thought to be the 20th request for information from Moscow.
The judges also noted the Council of Europe’s reservations over the trials of former Yukos chief executive Mikhail Khodorkovsky and his associate, Planton Lebedev, which, it is widely believed, were politically motivated and carried out in an atmosphere of intimidation. The fact that the two main protagonists in the Yukos affair have already been tried, convicted and imprisoned was also a factor in the judges’ decision not to release the documents. However, the court ordered the Swiss Federal Prosecutor’s Office to seek further clarification from the Russian authorities relating to the case, and requested translated documents from the Russians so that it can continue to examine the Yukos affair.
In 2004, Switzerland froze almost $5 billion in assets linked to Yukos at the request of Russia, as the company and Khodorkovsky fought multiple charges ranging from tax evasion to money laundering. Yukos was eventually made to pay back taxes totalling some $28 billion, while Khodorkovsky was given an eight year prison sentence after a highly publicised trial last year. Although a large chunk of the Swiss assets has been released, it is thought that about $48 million remains frozen in Swiss accounts.Link here.
POLITICAL BITTERNESS LEAVES THE PATRIOT ACT IN LIMBO
The brouhaha over extending the Patriot Act raises a significant question for the Bush administration. If the anti-terrorism measures are as critical to the nation’s safety as President Bush insists, then why did the White House leave its reauthorization to the last minute? Throughout 2005, the administration’s domestic agenda was chock-full of all kinds of initiatives, from Social Security reform to overhauling the tax code to even intruding on the Terri Schiavo case. During that time, nary a word was heard about some of the most critical laws on the books today, the Patriot Act’s anti-terrorism provisions.
Approved in haste after the September 11 attacks, the Patriot Act was known to have flaws. But there was not time during that scary fall of 2001 for Congress to carefully iron out the wrinkles. That is why lawmakers put a 2005 expiration date on the law, to ensure that a much-needed reappraisal would ultimately take place. The administration and Congress had four years to review the law. Why did they not establish a task force or blue ribbon panel to thoroughly vet the Patriot Act?
To avoid having the law sunset on New Year’s Eve, Congress extended the act through the end of January. It is hard to see what good that will do, except permit more divisive bickering. The Bush administration and Congress ought to set up a panel of experts to conduct a complete review of the Patriot Act. They should identify provisions that are an unnecessary intrusion on civil liberties and recommend ways to bolster those aspects that truly make the nation’s anti-terrorism safeguards stronger.Link here.
U.S. CITES NEW MONEY LAUNDERING THREATS SUCH AS STORED VALUE AND GIFT CARDS
Internet banking, online payment systems and stored value cards not requiring identification give criminals new opportunities to filter money through the U.S. Representatives of the Treasury Department, Federal Reserve, Justice Department and other government enforcement agencies urged in a Money Laundering Threat Assessment report more cooperation to squeeze money launderers and narrow potential avenues for tainted funds. “The volume of dirty money circulating through the United States is undeniably vast and criminals are enjoying new advantages with globalization and the advent of new financial services,” they said in the report, a precursor to the government’s annual Anti-Money Laundering Strategy.
The regulators and law enforcement officials said it was “currently not possible” to accurately estimate the total amount of money laundering in the U.S., or how much is being cut off by government enforcement. Citing a need for a common definition of what constitutes money laundering, regulators said they needed more cooperation to patch vulnerabilities from money orders, stored value cards, check cashing, electronic payments, remittances and other financial transfers. “Moving away from face-to-face customer interaction, particularly for (bank) account openings, challenges the traditional process of customer due diligence,” they said.
The report concluded stored value cards or gift cards were compact, potentially anonymous alternatives for those seeking to smuggle physical cash linked to crime. Cards and other tools to facilitate migrant remittances could also be misused, regulators added.Link here.
Bank of China to list anti-money laundering as routine inspection work.
The Bank of China said it has decided to include anti-money laundering as its routine inspection work, aiming to tighten the bank’s combat against money laundering criminals. Bank spokesman Wang Zhaowen said that the bank has circulated a notice on the decision to all of its branches across the country and urged them to keep close watch on any potential money laundering business and agents at home and abroad. The Bank asked all its branches not to offer financial service to those suspect money-laundering agents and relevant trading records must be saved when dealing with large-amount of clients.Link here.
China accuses North Korea of money laundering.
The Chinese government has concerns after a three-month investigation that North Korea is using a bank in Macau to launder counterfeit money. Washington has banned transactions of U.S. firms with the Macau-based Banco Delta Asia, which it claims permitted North Korean agents to make secret transactions of hundreds of thousands of dollars in cash.Link here.
U.K. MONEY LAUNDERING REGULATIONS FOR BUSINESSES DETAILED
The 2003 Money Laundering Regulations apply to most businesses in the financial sector, and the Money Laundering Regulation (MLR) regime is designed to help ensure that those businesses which Customs supervise have systems in place to prevent money laundering and to report suspicious transactions. Money Laundering is the process by which criminally obtained money or other assets (criminal property) are exchanged for “clean” money or other assets with no obvious link to their criminal origins. It also covers money, however come by, which is used to fund terrorism.
Criminal property is the proceeds of criminal conduct. This includes any conduct wherever it takes place, which would constitute a criminal offence if committed in the UK. It includes drug trafficking, terrorist activity, tax evasion, corruption, fraud, forgery, theft, counterfeiting, black mail and extortion. It also includes any other offence, which is committed for profit. Who does the Money Laundering regime apply to? HM Revenue and Customs (HMRC) are responsible for supervising: Money Service Businesses or MSBs – these are bureaux de change, money transmitters and third party cheque cashers, and High Value Dealers or HVDs – businesses that deal in goods and accept (or are prepared to accept) in cash the equivalent of €15,000 or more (approximately £10,000) for any single transaction.Link here.
Scottish police dog to sniff out dirty money at airports.
Strathclyde Police secretly trained a two-year-old cocker spaniel to catch crooks and money launderers taking large sums out of the country. It will be based at Glasgow but used in all of Scotland’s airports. The sniffer dog will be introduced as the Scottish Drugs Enforcement Agency launch a new unit against lawyers and accountants laundering dirty money for Scotland’s drug trade. SDA boss Graeme Pearson said, “Criminals have great difficulty running businesses and getting rid of dirty money. They can’t hide it under the bed or store it in a van somewhere because it’s too vulnerable. The police service’s focus has been only on the criminals but we know those on the periphery – the lawyers, accountants, estate agents – are enabling organized criminals to run their businesses.” Criminals put millions of pounds every year in foreign or offshore bank accounts or launder it through overseas businesses.Link here.
BUSH COULD SEIZE ABSOLUTE CONTROL OF U.S. GOVERNMENT
President George W. Bush has signed executive orders giving him sole authority to impose martial law, suspend habeas corpus and ignore the Posse Comitatus Act that prohibits deployment of U.S. troops on American streets. This would give him absolute dictatorial power over the government with no checks and balances. Bush discussed imposing martial law on American streets in the aftermath of the 9-11 terrorist attacks by activating “national security initiatives” put in place by Ronald Reagan during the 1980s. These “national security initiatives”, hatched in 1982 by controversial Marine Colonel Oliver North, charged the Federal Emergency Management Agency with administering executive orders that allowed suspension of the Constitution, implementation of martial law, establishment of internment camps, and the turning the government over to the President.
John Brinkerhoff, deputy director of FEMA, developed the martial law implementation plan, following a template originally developed by former FEMA director Louis Guiffrida to battle a “national uprising of black militants”. Gifuffrida’s implementation of martial law called for jailing at least 21 million African Americans in “relocation camps”. Brinkerhoff later admitted in an interview with the Miami Herald that President Reagan signed off on the initiatives and they remained in place, dormant, until George W. Bush took office. Brinkerhoff moved on the Anser Institute for Homeland Security and, following the 9-11 terrorist attacks, provided the Bush White House and the Pentagon with talking points supporting revised “national security initiatives” that would could allow imposition of martial law and suspension of the Posse Comitatus Act of 1978, the law that is supposed to forbid use of troops for domestic law enforcement. Brinkerhoff wrote that intentions of Posse Comitatus are “misunderstood and misapplied” and that the U.S. has in times of national emergency the “full and absolute authority” to send troops into American streets to “enforce order and maintain the peace.” Bush used parts of the plan to send troops into the streets of New Orleans following Hurricane Katrina. In addition, FEMA hired former special forces personnel from the mercenary firm Blackwater USA to “enforce security”.
The authority to declare what is or is not a national emergency rests entirely with Bush who does not have to either consult or seek the approval of Congress for permission to assume absolute control over the government of the United States. The White House press office would neither confirm nor deny existence of Bush’s executive orders or the existence of the Northern Command for National Defense. Neither would the Department of Homeland Security. But my sources within the White House and DHS tell me the plans are in place, ready for implementation when the command comes from the man who keeps telling the American public that he is a “war time president” who will “do anything in my power” to impose his will on the people of the U.S. And he has made sure that power will be absolute when he chooses to use it.Link here.
JACK ABRAMOFF, THE LAW, AND THE IMPERIAL PRESIDENCY
In the wake of Jack Abramoff’s guilty pleas in federal court, Democrats and many libertarians are salivating at the possibilities of seeing members of Congress (mostly Republicans) led out of their offices in handcuffs and spending time in those federal prisons that those same members have supported through their legislation and budgetary appropriations. Yet, we are reluctant to celebrate, because if the U.S. attorneys – and their various cheerleaders among press and pundits – have their way, the result will not be a more “honest” Congress or the dawning of Good Government, but the cold, hard reality of the growth of executive power in government. Unfortunately, many of the same people who have been decrying the “imperial presidency” have been the ones calling for the U.S. Department of Justice (part of the executive branch) to unleash their own prosecutorial dogs. If things go as prosecutors and their supporters hope, that “imperial presidency” will gain even more dictatorial power.
Furthermore, the Jack Abramoffs of the world do not “corrupt” government, as we are hearing today. Instead, the wide reach of government makes people like Abramoff inevitable, as they are responding to the actions and potential actions of legislators and bureaucrats to create economic and social opportunities for some people – and to take away those same opportunities for others. Most lobbyists do not flaunt their wealth and influence as did Abramoff, which is why he is in the dock and they are engaged in business as usual. They are satisfied with their six and (sometimes) seven-figure incomes and do not much care for upstarts like Abramoff, who no doubt peeled business away from more established lobbyists.
While one rightly can call the behavior of legislators and others reprehensible, there are ways to deal with the problem. Bad publicity is one way, and elections are another. Neither provide a perfect remedy, but as long as legislative branches of government exist, our options are limited. Over the next year, federal prosecutors will target certain members of Congress who received gifts and campaign contributions from Abramoff and attempt to criminalize their actions. The first tactic will be to claim that members of Congress “sold” their votes – in other words, bribery. However, we predict that if the various gifts and contributions were legal in and of themselves, then trying to prove bribery in a court of law will be rather dicey, and most federal prosecutors, who are used to employing bullying tactics in order to win guilty pleas, are not skilled enough to convince jurors that real bribery took place.
The second tactic will be to fit the law into grotesque shapes in order to gain “wire fraud”, “conspiracy”, or similar charges that often do not de facto require a real crime to be committed. The major problem that prosecutors face here is that all of these payments and gifts were given openly and were dutifully recorded. Thus, U.S. attorneys will have to find a way to criminalize something that the law says is legal.
Our real problem with this affair however, is not just the use of ancillary and derivative “crimes” to further the cause of prosecutors, but rather because we are seeing another example of the executive branch gaining power at the expense of the legislative branch. This process began with Abraham Lincoln, gained strength during the regimes of Theodore Roosevelt and Woodrow Wilson, and reached full speed during the Franklin D. Roosevelt Presidency. Even the downfall of the Richard Nixon Presidency via Watergate has not appreciably slowed this sorry process. When people complain of the powers that George W. Bush has used, they need to remember that he is doing only what Congress and the courts have permitted him to do. If Democrats do not like the current “imperial” presidency, then they have no one to blame but themselves, for their party was in power when the process commenced in earnest, and FDR still remains the gold standard as far as loyal Democrats are concerned.Link here.
YOU HAVE BEEN FOOLED
“Thousands of dangerous killers, schooled in the methods of murder, often supported by outlaw regimes, are now spread throughout the world like ticking time bombs, set to go off without warning … .In a single instant [on September 11], we realized that this will be a decisive decade.” ~ President George W. Bush, 2002
Presidents know the power of their words and usually filter them through layers of careful advisers and cautious bureaucrats before pouring them out into the public domain. Yet in his 2002 State of the Union address, before the Congress and the world, President Bush succumbed to a commonplace myth: Since the September 11 attacks, the world is more dangerous for Americans than ever before. This legend, often dispensed in stronger doses, can be heard from both elected Republicans and Democrats as well from the pundits and the press. It may even be the unconscious assumption of many people.
But is it true? The fear is that the September 11 attacks, or in other variations, the Bush administration’s reaction to them, have made all of our lives riskier than ever before. At any moment, you could hear the hum of engines overhead or be rocked by blasts on the ground. One of America’s great writers summed up this sense of formless dread in a memorable way: “The subtlest change in New York is something people don’t speak much about but that is in everyone’s mind. The city, for the first time in its long history, is destructible. A single flight of planes no bigger than a wedge of geese can quickly end this island fantasy, burn the towers, crumble the bridges, turn the underground passages into lethal chambers, cremate the millions. The intimation of mortality is part of New York now: in the sound of jets overhead, in the black headlines of the latest edition.”
These words were written by E. B. White, in his book Here Is New York. What is interesting, now, about White’s words is that they first appeared in 1949. That simple fact – the date of White’s reflections – suggests two things: that this aura of shapeless anxiety is not new, but periodically descends on New York and the nation, and that it is possible that the world really was more dangerous in the past than it is now.
Indeed, the Cold War era was more perilous than today. With its thousands of nuclear missiles pointed at the homeland, the USSR had the capacity to destroy the U.S. many times over. Nuclear annihilation, lest we forget, haunted the Western world for almost fifty years. The Cold War was not the mythologized happy time of stable co-existence at all. At one point during the Cuban missile crisis, only one political officer stood between a Soviet submarine commander and his desire to launch a nuclear torpedo. The Cold War was a period of dangerous instability, with endless proxy wars, coups, insurgencies, revolutions, counter-revolutions, and state-sponsored terrorism. When Communism fell, most of these activities came to an end. Nor was nuclear holocaust the only nightmare hanging over the free world. The Soviet Union was also a major manufacturer of chemical and biological weapons. Al Qaeda, or any other terrorist group active today, simply does not have the same destructive power.
Communist forces were also responsible for provoking two wars with the U.S., in Korea and Vietnam. Together, these two conflicts cost more than 70,000 Americans their lives and injured more than 400,000. Many of these injuries left soldiers or civilians permanently crippled or disfigured. By contrast, al Qaeda has killed fewer than 4,000 Americans since 1992. And while the Soviets and their allies could field a mechanized army of millions, al Qaeda numbers in the thousands. Across Asia and Africa, as the colonial empires of Britain, France, and other European powers retreated, millions more died in civil wars inspired by Communist guerrillas. When the false dawn of peace finally came, millions more suffered and died under the ruthless rule of dictators allied with either the Soviet Union or the U.S.
Even the risk of terrorism was higher in the end years of the Cold War. The Soviet Union and China provided an ideological justification, extensive small-arms and bomb-making training, and cascades of cash for terrorists around the world. From the Shining Path in South America to the Red Army Faction and Red Brigades in Europe, these self-described revolutionaries kidnapped, killed, and bombed throughout the 1970s and 1980s. Only the fall of the Soviet Union brought an end to their reign of terror. Even Near Eastern terror had its roots in Soviet strategy. The Palestine Liberation Organization (PLO), founded in 1964 to oppose the 1948 creation of the state of Israel, received its doctrine, training, and weapons from the Soviets and their captive satellites. The PLO soon released a wave of assassinations, kidnappings, hijackings, and bombings that plague the Middle East to this day. Other nations, including Iran, Iraq, and Syria, would take the Soviets’ place as terror sponsors – and it is the Russians, from Moscow to Chechnya, who are now bedeviled by the demons they created.
But has the risk from terrorism not risen in the wake of September 11? Not according to any valid statistical measure. One political scientist who is a recognized expert in analyzing risks from terrorist attacks is Todd Sandler, the Dockson Professor of International Relations and Economics at the University of Southern California in Los Angeles. By any measure, he is a distinguished scholar. Sandler sparked a controversy in 2004 by claiming that the Bush administration was substantially underestimating the deaths from terror attacks, apparently, he contends, for election-year reasons. The State Department’s annual survey of world-wide terrorism showed 208 terrorism acts for the year 2003. Sandler, who maintains his own extensive database of global terrorist incidents, recorded 275 attacks – a 32% difference. He charged that the Bush administration was undercounting to leave the “false impression” that the U.S. is winning the War on Terror.
So it is significant that Sandler published data that challenges the widely held belief that the threat of terrorism has worsened since September 11, 2001. In Sandler’s paper, co-authored with Walter Enders, titled “After 9-11: Is it all different now?” he finds: “While there is no doubt that perceptions changed and deep-seated fears arose that fateful day, there has been no data-based analysis on how transnational terrorism (i.e. terrorism with international implications or genesis) differs, if at all, since 9-11.” Sandler’s data reveals that the September 11 attacks were unprecedented and unusual, not part of a pattern. Indeed, terrorist incidents of all kinds “displayed no changes after 9-11. Incidents remained at their pre-9-11 levels.” While casualty rates increased slightly in the 1990s, and remained steady in the years after the September 11 attacks, the risk of terrorrelated death is still low and is in line with pre-September 11 trends, according to Sandler.
Sandler’s work is squarely in the center of research in this field and is backed by the independent findings of many other scholars. John Mueller, a professor of Political Science at Ohio State University, specializes in studying public opinion and risk. Mueller, citing the work of University of Michigan transportation researchers Michael Sivak and Michael Flannagan, points out that there would have to be a September 11-style attack every month before terrorism killed as many Americans as car crashes do. Or to put it another way, the chance of an American dying on one nonstop airline flight is one in 13 million – the same level of risk that one suffers driving just 11.2 miles on a rural interstate highway. So Michael Moore was quite right when he pointed out on CBS’s 60 Minutes that “the chances of any of us dying in a terrorist incident is very, very, very small.” But his interviewer, broadcaster Bob Simon, clearly understood public opinion when he rejoined, “But no one sees the world like that.”
The threat of terrorism should not be shrugged off, but actively fought. One reason that the U.S. and many of its allies have been free of terror since 2001 is that President Bush has prosecuted the War on Terror with vigor. Indeed, if the goal of terrorists is to terrify, then the best way to fight back is to refuse to be terrified. Still, against all evidence, fear remains. Of course, this reaction is human, perhaps all too human. Yet to the extent that we surrender to it against all reason, terror succeeds.Link here (scroll down to piece by Richard Miniter).
WW II REVISIONISTS TURN ON THE SWISS
People who rewrite history make my blood boil. One of the most outrageous distortions I have heard lately comes from American ambulance-chasing lawyers and politicians who are currently mining and demeaning the Holocaust for the sake of fat contingency fees or votes. Greed or anger had led some revisionists, including a number of Swiss socialists who were anxious to undermine their nation’s capitalist system, to claim Switzerland was an active ally of Nazi Germany during World War II, and was not invaded because it sold out to Hitler.
We should not allow grave misdeeds by Swiss banks to distort historical facts. Swiss banks kept secret numbered accounts of many Jews who died in the 1940’s Holocaust. They failed to vigorously seek next of kin to return money. Such behavior was foul and indefensible. Swiss banks handled gold sales and other financial transactions for the German government – perfectly legal acts in keeping with Switzerland’s neutrality. Swiss bankers had no way of knowing that some of the gold came from concentration camp victims. Banks in France, Sweden, Spain, Latin America, and the USA, acted similarly. To keep our sense of proportion, let us recall U.S. banks and the U.S. government handled funds from the Stalin’s USSR, which had murdered four times more victims than Hitler even before the war began.
To accuse Switzerland of caving in to Hitler, as revisionists are doing, is a bare-faced lie worthy of Dr. Goebbels. Having lived many years in Switzerland, I have a better understanding of what actually happened there during the war. Far from bowing to German threats, as did most other European nations, Switzerland, which then had under 4 million inhabitants, mobilized 700,000 soldiers – one citizen in five. The “herdsmen” and “cheesmakers” stood ready to single-handedly battle Germany and Italy with the same, legendary “furia helvetica” their pike and halbard-wielding forefathers had shown against earlier tyrants, like the Austrians at Sempach and Morgarten, or the Charles the Bold at Nancy.
Switzerland’s hundereds of small and large mountain forts, anchored on the strongholds of Sargans, the Gothard Pass, and St. Maurice in Valais, was readied for action. These were extremely powerful forts, as I have seen. The Swiss Army’s troops prepared to pull back into the high mountains, sacrificing 75% of their land, their homes, and, most significantly, their wives and children, who could not be fed or sheltered in the mountain forts. Each Alpine valley and every pass would become a Thermopylae. The vital rail tunnels connecting Germany and Italy were readied for destruction. The small Swiss Air Force shot down 11 Luftwaffe aircraft that overflew Switzerland. Hundreds of pro-Nazi Swiss were arrested, and at least 17 soldiers shot for treason – by their own comrades.
As author Stephen Halbrook points out in his excellent work on this subject, Target Switzerland, unlike other European nations, Switzerland was deterred from caving in to Nazi Germany by its highly decentralized system of government. The weak-willed federal government in Bern, which flirted with capitulation, simply could not order its independent-minded cantons, nor their citizens, to give up and surrender to the Nazis – as did centralized governments in France, Belgium, Holland, Denmark, Yugoslavia, and Czechoslovakia. The rifle clubs to which many Swiss men belonged became centers of patriotism and national resistance to Nazi threats. In the dark days from 1940-1945, Switzerland’s armed citizen soldiers would not accept surrender, or any form of subservience, to Hitler. Though totally surrounded by Nazi Germany and Fascist Italy, and dependant on them for oil, food, and raw materials, tiny Switzerland remained defiant. In the face of Nazi threats, the Swiss took in 37,000 Jewish refugees – exactly 37,000 more than were accepted at the time by the U.S. or Canada.
Nazi Germany and Fascist Italy did not invade Switzerland because they needed it, as revisionist critics currently claim, for money-laundering and gold trading. Germany also conducted such transactions through Sweden, Turkey, Portugal, Argentina, and even the USA which, let us recall, was still a neutral when the Swiss were shooting down Luftwaffe ME-109s over Basel. Switzerland remained free because its citizen soldiers were ready to fight to the last man against Nazi Germany.Link here (scroll down to March 08, 1999 article).
|Previous||News Digest Home||Next|
|Back to top|