Offshore News Digest for Week of March 12, 2001

AUSTRALIA OUTLAWS E-MAIL FORWARDING

Outrageously strict Internet copyright laws which have just gone into effect throughout Australia make it illegal to forward an e-mail memo without the author's permission, and could result in fines of $60,000 or five years in the slam, according to a story by the Aussie Sunday Telegraph.

“It's quite possible that the forwarding of an e-mail could be a technical infringement of copyright,” an unnamed legal advisor to Oz Attorney General Daryl Williams told the paper.

“E-mailing is a ‘communication’ under the Digital Agenda Act, and so is putting something up on a Web site,” the source added.

This could rank as the world's most copyright-friendly and common-sense-hostile piece of legislation yet devised.

And that is not all: Aussies recently revealed a widespread national neurosis by entertaining, in the state of South Australia, an Internet censorship bill which would criminalize the posting any material which cops deem offensive to children - that's anything, anywhere.

The bill would require Net content to be child-friendly according to the country's movie certification scheme; but, in a twist straight out of Kafka, it's not possible for Webmasters to get their sites reviewed by the relevant authority before they get busted.

Which is to say nothing of the lunacy of reducing on-line discourse and dialogue to infant babble. Clearly, the Puritanical delight in censoring impure thoughts and regulating the pleasure of others has once again got out of control down under.

Over half a century ago the English writer Norman Douglas had occasion to observe that "all mankind is at the mercy of a handful of neurotics".

OECD FACED WITH UNITED FRONT BY OFFSHORE JURISDICTIONS

The meeting of the Joint Working Group (combining representatives of the OECD, the Commonwealth Secretariat and the offshore jurisdictions) in Paris last week seems to have made significant progress towards a resolution of the 'harmful tax competition' imbroglio.

Reporting on the meeting, US Centre for Freedom and Prosperity, which has been closely, if unofficially involved with the Working Group's progress, said:

'The low-tax countries stood up to the OECD and should be commended. The outstanding leadership of Barbados' Prime Minister Owen Arthur and Antigua's High Commissioner Sir Ronald Sanders must be acknowledged. I can say without exaggeration that these two gentlemen have made a tremendous difference in this debate.

'Media reports illustrated the OECD's defeat in Paris. From the release of the internal "memo" that insulted the Commonwealth Secretariat to the refusal to treat the non-OECD countries as sovereign nations with as much rights as any OECD country, it became quite apparent that the bureaucrats in Paris have not retreated from their imperialistic agenda.

On the other hand, the proposed plan by the Commonwealth countries seems to be very fair. Indeed, we think the proposal is too generous in that it does not make clear that countries should not try to tax income earned outside their borders.'

HOUSE VOTES TO KEEP E-MAILS SECRET

The Indiana House of Representatives overwhelming approved legislation that would make e-mail and Internet files of public officials private.

In a 92-1 vote, lawmakers this morning approved House Bill 1083. It will now be sent to the Senate for consideration.

If the proposal becomes law, Indiana would be one of the first states in the country to shut down e-mail and Internet files — records that, under current law, the public has a right to inspect.

The lone dissenter in the vote was Rep. Dennis Kruse, a Republican from Auburn.

Shutting down these records would make it impossible for public officials -- such as the governor, lawmakers and school superintendents -- to be held accountable, especially when much of their work is done via e-mail, said Steve Key of the Hoosier State Press Association.

But some say the law is too broad, especially with changes in technology and communication.

"E-mail is like the modern-day telephone, and opening e-mail up to the public is like allowing someone to tap your phone," said Rep. Jeff Thompson, R-Danville, a teacher. "And monitoring Internet use is like checking on what people look up in the library."

EURO-COURT OUTLAWS CRITICISM OF EU

THE European Court of Justice ruled yesterday that the European Union can lawfully suppress political criticism of its institutions and of leading figures, sweeping aside English Common Law and 50 years of European precedents on civil liberties.

The EU's top court found that the European Commission was entitled to sack Bernard Connolly, a British economist dismissed in 1995 for writing a critique of European monetary integration entitled The Rotten Heart of Europe.

The ruling stated that the commission could restrict dissent in order to "protect the rights of others" and punish individuals who "damaged the institution's image and reputation". The case has wider implications for free speech that could extend to EU citizens who do not work for the Brussels bureaucracy.

The court called the Connolly book "aggressive, derogatory and insulting", taking particular umbrage at the author's suggestion that Economic and Monetary Union was a threat to democracy, freedom and "ultimately peace".

However, it dropped an argument put forward three months ago by the advocate-general, Damaso Ruiz-Jarabo Colomer, which implied that Mr Connolly's criticism of the EU was akin to extreme blasphemy, and therefore not protected speech.

Mr Connolly, who has been told to pay the European Commission's legal costs, said the proceedings did not amount to a fair hearing. He said: "We're back to the Star Chamber and Acts of Attainder: the rights of defendants are not respected or guaranteed in any way; the offence of seditious libel has been resurrected."

Mr Colomer wrote in his opinion last November that a landmark British case on free speech had "no foundation or relevance" in European law, suggesting that the European Court was unwilling to give much consideration to British legal tradition.

Mr Connolly now intends to take his case to Europe’s other court, the non-EU European Court of Human Rights in Strasbourg.

IRS LAUNCHES LARGEST CRACKDOWN TO DATE ON ILLEGAL OFFSHORE TRUSTS

In an operation described by the US Internal Revenue Service as its largest enforcement action to date, 300 IRS investigators have obtained more than three dozen search warrants in an extensive investigation into illegal offshore trusts and related tax-evasion schemes.

The crackdown came to light last week when IRS investigators arrested at least four individuals in Boston in connection with money-laundering offences. They were known to be involved in an illegal offshore trust operation known as Anderson Ark & Associates whose client funds were believed to be diverted from the US to Costa Rica to avoid paying taxes on the money. The IRS also performed searches in California where other major activities of scam offshore trusts were suspected to have taken place.

Since his appointment as head of the IRS Criminal Investigation Division in 1999, Mark E Matthews has endeavoured to focus on the organisers of illegal trusts and offshore banking. The IRS has stepped up its scrutiny of people who help individuals to disguise their income and make false deductions to reflect the serious problem of tax evasion. It is likely that millions of dollars of taxable income have been transferred to offshore accounts on behalf of hundreds of clients in the schemes it has been investigating.

IRS Commissioner Charles O Rossotti told the New York Times: 'Last week's historic enforcement activities send an unmistakable signal about IRS commitment to pursue investigations of promoters and their clients who would try to move money offshore to evade taxes.'

BANK NEGARA REVEALS MASTERPLAN FOR LABUAN INTERNATIONAL OFFSHORE FINANCIAL CENTER

Last week Malaysia’s Bank Negara launched the Financial Sector Masterplan, which presents the bank’s vision for the financial sector, including its offshore centre, Labuan. Bank Negara chief, Datuk Dr Zeti Akhtar Aziz, said the objective of the plan was to evolve a competitve, dynamic and resilient financial system that could face the challenges of globalisation and withstand the economic cycle.

Chapter Eight of the Masterplan focuses on Labuan and makes recommendations for the offshore centre's further development and expansion. Bank Negara said that it recognised Labuan's major financial players as having been instrumental in the "shaping of an active and clean offshore centre", and that the focus now must be to build on their strength. It also said that several areas could be further developed, such as the banking and insurance sectors, and the concerted promotion of Labuan as a meeting and conference centre.

The recommendations made in the Masterplan cover three main areas. They are to promote and diversify further the financial players and activities in Labuan; to promote the development of Islamic banking and to develop and strengthen the capital market, e-commerce and ancillary activities.

Significantly, the Masterplan recommends a review of the existing rules and regulations in Labuan deemed to impede the progress and further development of offshore business. It said that areas to be considered include the introduction of various other types of offshore companies, the changing of the status of Labuan trust companies to offshore companies and the introduction of legislation to make Labuan an active hub for reinsurance and captive insurance.

The full text of chapter eight of Bank Negara's Masterplan can be viewed here and here.

CONGRESS FEARS EUROPEAN PRIVACY STANDARDS

Members of Congress on Thursday sharply criticized European privacy laws, saying they will have global effects and will likely harm U.S. companies seeking to do business online.

Eleven of 15 European Union member states have implemented a Data Protection Directive, passed by the EU in 1995, that promises Europeans wide privacy protections, including requiring Web sites to only collect and use a Web surfer's personal information if that surfer explicitly gives the site permission. But at a House Commerce Trade Subcommittee hearing Thursday, many members and witnesses pointed out that the ramifications of such a directive go far beyond Europe.

The directive "certainly is an effort to impose the EU's will on the U.S.," said House Commerce Committee Chairman Billy Tauzin, R-La. "I am very concerned that U.S. companies, which have been the creators and the leaders of e-commerce, will be forced to deal with such a restrictive concept."

He estimated that the cost of the directive "would be in the multibillions, and all are costs that will be passed onto consumers."

Subcommittee Chairman Cliff Stearns, R-Fla., called on President Bush to take up the matter with the EU quickly before its fifteen member states draft and implement laws based on the directive.

BAHAMAS BANK SUSPENSION ROW

NASSAU, The Bahamas. Suisse Security Bank and Trust Ltd (SSBT) is in court here this week attempting to defend its reputation and challenge a decision made by the Central Bank to suspend its license. The Central Bank is charged with defying a Supreme Court order to allow the bank to remain open.

MORE WILD CHARGES FROM SENATE DEMOCRATS

WASHINGTON. The latest charges from an anti-offshore US Senate staff report cover alleged 10-year-old BERMUDA bank transactions said to involve drug and terrorist money. But where's the proof?

ANOTHER CAYMANS BANK SINGS ON CLIENTS

As the idyllic Cayman Islands struggles to appease the OECD-FATF crowd and erase accusations of dirty money, the Ansbacher (Cayman) Bank throws 120 of its Irish clients to Ireland's judicial wolves.

ISLE OF MAN ADVISOR TELLS ALL

NEWARK, N.J. An official of the VALMET Group from the Isle of Man testifies against a former client at great length in a US bankruptcy fraud trial, reveals dummy corporations and code names.

GUERNSEY BUSINESS GOOD

St. PETER PORT, Guernsey. For an interesting look at how the OECD pressures small haven jurisdictions, see this story here.

Guernsey banks are very concerned about the retrospective features of strict, new anti-money laundering proposals being imposed on all the British Crown Dependencies by the Labour government in London.

BRITISH BANKS LAUNDERED BILLIONS

LONDON. While the British government lectures offshore havens about dirty money, 15 UK banks are hit with charges of laundering billions for the late Nigerian dictator Sani Abacha and his family.

NEVER SAY DEAD

ZURICH. A week ago Swiss voters overwhelmingly (77-22%) rejected joining the European Union. Now a poll claims most Swiss think they should start negotiating to join the EU within 6 years. Huh?

A special report on "Switzerland, Secrecy and the EU" available here.

SWISS RESENT OUTSIDE MEDDLING

ZURICH. Swiss resentment was the key to EU's defeat.

WHY BRITS SHOULD GO OFFSHORE

The Financial Times provides an exposition of why UK citizens should consider going offshore to save on taxes here.

Online trading for offshore expats,information and help here.

THE RISKY 100

The Economist Intelligence Unit assesses the riskiness of investing in 100 countries. Iraq is worst, Singapore best.

ASSET FREEZES BY U.S. COURTS

It can be a disaster, but asset freezing powers of US courts are very limited, at least in theory. An interesting explanation of what courts can and can't do.

INLAND REVENUE ARRESTS TAX ADVISORS

LONDON. As in the U.S., British tax authorities also are pursuing tax advisors with a vengeance.

N.Z. DOLLAR PLUNGES

Sovereign Society advisory board member Doug CASEY says: "The world's weakest currency since January 1 has been the New Zealand dollar." And he explains how you can profit by that fact.

NEW C.I.A. EAVESDROPPING PLANS

The CIA's Office of Advanced Information Technology is developing new data mining enhancements to make life easy for those who would eavesdrop on electronic communications, Reuters reports.

THE WEALTHY FLEE FOR PRIVACY

Diminished financial privacy is yet another reason why the wealthy are leaving the US for offshore destinations.

NO BUSH ACTION AGAINST OFFSHORE BANKS

WASHINGTON: No Bush administration action is expected after those phony Senate hearings on offshore shell banks and correspondent accounts.

VIEW FROM THE CARIBBEAN

Caribbean offshore banks, vilified as havens for tax cheats and money launderers, boost the bottom line of some of America's most respected private banks.

I.R.S. FOREIGN INVESTORS RULES DELAYED

A massive protest against a last minute CLINTON proposal to force US banks to report payments of interest to foreign investors is postponed. Click here and add your voice to the protest against the IRS regs.

SWITZERLAND IS THE EXAMPLE

The Swiss have created a successful working confederation of diverse peoples. Naturally, the European Union attacks them for their freedom and success.

Transparency International (http://www.transparency.de) commends Switzerland for fighting international corruption and money laundering.

ITALY WARNS E.U.

ROME. With a conservative victory looming in May elections, the Italian Right warns it will "shut down" the EU if it tries to sanction them, a la EU sanctions against Austria/Haider.

MILOSEVIC'S BILLIONS?

NICOSIA, Cyprus. Banks here are being searched for billions in gold and cash allegedly stashed by ex-dictator MILOSEVIC of YUGOSLAVIA.

NAURU ANTI-MONEY LAUNDERING PLANS

The remote Pacific island of Nauru, accused of allowing massive money laundering, officially is cleaning up it act.

OFFSHORE PROMOTER ACCUSED BY I.R.S.

WASHINGTON. The U.S. Internal Revenue Service is investigating Jerome SCHNEIDER, author of books on offshore banking. The IRS claims he sold private banks on Nauru as a means to conceal client's reportable income.

Here's the 50 page IRS affidavit against Schneider, in pdf file form here.

DOCUMENTS OF INTEREST

What do BERMUDA banks have to reveal to the UK government in London about offshore investors on the island?

EXPATS EXIT FROM CAYMANS

Expats who work in the financial community here are leaving in droves as business slides downhill. It has much to with the sellout to the OECD and repeal of financial secrecy laws.

E.U. WIDE WITHHOLDING TAX UNLIKELY

BRUSSELS. European Union officials admit chances of implementing controversial taxation on foreign savings income are very slim.

Even so, some EU advocates want to levy a pan-EU income tax on all citizens of member states to finance this glorious Union.

OFFSHORE TAX ADVICE FOR BRITS

Send your money offshore and save on taxes.

But for SOUTH AFRICAN banks, more taxes are planned.

PRIVATE PROPERTY & TAXES

The Christain Science Monitor's editorial board argues against unreasonable erosion of the sanctity of property rights in America.

A small number of upper income Americans shoulder an enormous and growing percentage of the tax burden.

GOVERNMENT WORST PRIVACY THREAT

The government that is the largest collector and distributor of personal information, attacks the private sector for the same practices.

SECRET FACE SCANNING

Police computers monitoring public places to recognize people by their facial characteristics are raising new fears about Big Brother.

PREPAID PHONE CARDS PRIVACY

Companies are offering anonymous prepaid cell phones and credit cards to satisfy the demand for privacy.