Offshore News Digest for Week of April 14, 2003

THE CIVILIZED LIBERTARIAN

If the U.S.A. ever returns to the sturdy principles of liberty and republican virtue on which it was founded, then Thomas Jefferson’s birthday, April 13, should be a national holiday, notwithstanding that when some good citizens of Boston sought to do precisely that, he refused to tell them his birthday, saying he did not approve of “transferring the honors and veneration for the great birthday of our Republic to any individual.”

It has been fashionable of late to debunk Jefferson -- thoughtfully, regretfully and with respect, of course, but with purpose -- as a hypocrite on the issue of slavery, as a politician who did not practice what he preached, as a clay-footed human rather than a marble statue to be venerated. That is fine. Jefferson is more valuable to posterity as an imperfect human being than as a marble statue.

What rankles modern intellectuals about Jefferson is that he distrusted concentrated power with every fiber of his being, and most modern intellectuals worship concentrated power and seek to serve it -- to make it constructive and refined and sensitive, of course, but to celebrate political power rather than to decimate it or even to question it. Worse, Jefferson was no backwoods yahoo spouting this retrograde nonsense, although he got along with yahoos and saved his scorn for those ambitious for power. “Whenever a man has cast a longing eye on offices,” he noted, “a rottenness begins in his conduct.” He was perhaps the most cultivated, civilized American of his era, and he wrote, “I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.”

ACTIONS OF BANKER WHO HID SADDAM’S MILLIONS REVEALED

For more than 10 years Elio Borradori, a company trustee in the tax havens of Liechtenstein and Lugano, Switzerland, managed the huge “commissions” and “consultancy fees” from the Iraqi dictator’s arms deals and development contracts. The money was funneled into companies controlled by Saddam’s appointees operating through Panama, the Bahamas and Switzerland. It is thought to have partly funded the dictator’s palaces and lavish lifestyle.

Just before the first Gulf war in 1991 almost £1 billion was moved from various Saddam-linked accounts to be hidden around the world. Italian police last month identified £300 million in one account in Geneva. The network of offshore companies remained active long after United Nations sanctions were imposed on Iraq at the end of the war.

The hunt is on for billions of dollars in assets accumulated by the family of Saddam Hussein, now believed to be scattered in a labyrinthine network of front companies and secret bank accounts from Panama to Switzerland to Jordan. As U.S. forces moved into Baghdad and other Iraqi cities, investigators reported signs of large sums of money moving from Iraqi government-controlled accounts to private accounts in the Middle East.

Nobody, including the U.S. government, knows the true extent of the Hussein family wealth, but independent estimates range anywhere from $2 billion to $10 billion.

UK MAY LEAVE OPEN TAX LOOPHOLE FOR RICH FOREIGNERS

The British Chancellor of the Exchequer, Gordon Brown, may leave open most of a tax loophole benefiting 100,000 wealthy foreigners, about two-thirds of whom work for financial institutions, tax experts said. Mr. Brown is under pressure from members of the Labour Party to eliminate the hole and sweep more rich people into the tax net. The exemption allows foreign nationals to avoid tax on overseas earnings.

“The Labour Party realises it has to be very careful with this,” said Paul Bowes, chairman of the tax committee at the London Chamber of Commerce, which represents companies employing 500,000 including HSBC Bank and Royal Bank of Scotland. “They don’t want to scare off loads of wealthy people.”

IRELAND’S REVENUE TO TARGET OFFSHORE TRUSTS

The Revenue Commissioners are launching a formal investigation into the Offshore Investment Trust of Bank of Ireland customers. Other banks are to be targeted too. The Revenue is to petition the High Court for an order requiring full disclosure from Bank of Ireland of the names and details of all offshore trust investments involving their customers.

The Revenue Commissioners are reportedly targeting deposits held by Irish financial institutions in the Isle of Man.

JERSEY FACES TOUGH CHOICES ON TAX SAYS DEPUTY

The president of Jersey’s Economic Development Committee, Deputy Gerald Voisin, has warned of tough times ahead for the jurisdiction as a result of tax reforms brought about by new European rules. Speaking to the Chamber Of Commerce, Deputy Voisin explained that the island would have to soon start looking for “a credible alternative tax” to replace revenue lost as a result of the EU regulations.

LUXEMBOURG’S SUCCESSFUL FORMULA

Currently, Luxembourg is the smallest EU member, but the one with the highest GDP per capita. The population is of about 400,000 people, one third of which are expatriates (mainly coming from other EU member states). Luxembourg is a clear example of a country successfully attracting both foreign investment and at the same time attracting the human resources needed to keep up with economic development.

What makes Luxembourg so successful? This country has used its small size to its advantage. It has developed from a rural country and a steel producer into one of the biggest financial centres in the world. Since it was a founding member of the EU, it has also adopted EU regulations quicker and to its advantage. Luxembourg was never a passive country inside the EU, and, most importantly, it was always present at the discussion and decision table whenever strategic decisions were being taken.

PANAMA A LEADER IN RESISTING OECD ARM TWISTING

This January, after 13 years of bargaining, bullying and persuasion an agreement on the taxation of personal savings within the European Union was reached. The agreement, however, realised Panama’s previously expressed concerns when Belgium, Austria and Luxembourg, all members of the EU, were dealt with preferentially. The salt on the wound was one of the EU’s justifications for the deal. It was argued that the 3 EU members should be granted special treatment because their respective economies were closely tied to being providers of international financial services. Surely, in the case of developing countries that depend heavily on international financial services, such as Panama, the argument for special treatment would be even more compelling? Panama has stated, as a consequence, that the OECD’s tax information exchange project must be considered stalled until it can be determined whether there are sufficient grounds and guarantees to continue with the initiative. Panama’s reaction has been echoed by other offshore participants in the project and the momentum created means that Panama can afford, at this stage, to step back and watch as events unfold if it wants to.

EUROPE THREATENING OECD’S PLANS TO SWAP TAX INFORMATION

The decision of the European Union heads of government to postpone adoption of their savings tax directive does not lift the threat posed to the OECD’s own initiative to increase the transparency of financial transactions. Rather, the proposed EU directive ignores an OECD commitment not to favor its own members over small states and the International Trade and Investment Organization (ITIO) believes the OECD should call an urgent meeting to discuss the implications.

The governments of Antigua & Barbuda, the Cayman Islands, Panama and St. Vincent and the Grenadines, along with other heads of government in CARICOM, have stated they will not participate in any further work of the OECD Global Tax Forum until there is a meeting to discuss the issue of a level playing field.

STRICT KYC IMPLEMENTATION URGED TO STRENGTHEN FINANCIAL SERVICES

If The Bahamas had enforced the know-your-customer regime long ago, it might not have faced fallout for the potential of money-laundering practices in its offshore banking and eventual blacklisting, the chairman and CEO of the Bermuda Monetary Authority said. Cheryl-Ann Lister said that, recognising the value of a KYC regime, nations such as Bermuda have been implementing it for about 50 years.

PUERTO RICO TO ASK FOR NEW BUSINESS TAX INCENTIVES

Puerto Rico, lobbying Congress for new business tax incentives, plans to release to a report saying the scheduled end to current tax breaks for companies on the island will have a “devastating” effect on the economy.

Puerto Rico, a U.S. territory, said its key manufacturing sector has shed 26,000 jobs, or 17% of the industry work force, in the six years since federal incentives for U.S. businesses began winding down under a 10-year phase-out plan. The apparel and electronics industries have lost 18,000 jobs.

ST. KITTS & NEVIS - TWO ISLANDS, ONE PARADISE

St Kitts & Nevis is an independent English speaking island state situated in the northern part of the Leeward Islands in the eastern Caribbean. The Federation is made up of two islands, St. Kitts and the smaller Nevis, which are separated by a channel two miles wide. It is a former British colony and a member of the Commonwealth of Nations (British Commonwealth) as well as the United Nations, Caricom, and other international organisations.

The Government of St. Kitts & Nevis has introduced extensive legislation to attract financial services business to the island. Since 1984 there is also an attractive Economic Citizenship Program in operation. The St. Kitts & Nevis passport is very well regarded as only relatively few passports have been issued under this citizenship-by-investment programme. As a result, St. Kitts & Nevis passport holders, unlike Belize, Dominica or Grenada passport holders for example, enjoy a passport with and excellent reputation and very good visa-free travel.

SINISTER SHELL GAME ON NAURU HIDES A CAST OF GLOBAL VILLAINS

The paper trail wends its way through Israel, Russia, Indonesia, China, the United States, and Australia. On obscure shell company documents, Moscow addresses turn up alongside Australian names. There are cross-continent money laundering, sophisticated tax scams and straight-out fraud. All this is covered in the thousands of documents delivered by tiny Nauru to tax and crime officials in Washington as they seek to end the remote Pacific Island’s role as a central junction in the global flow of tainted money.

Nauru gained independence in 1968, earning billions of dollars from the mining and export of guano, or bird droppings, the purest natural phosphate in the world. During the 1970s, Nauruans enjoyed the world’s second highest per capita income, after Saudi Arabia. But in a bizarre riches-to-rags story, most of that wealth has been squandered through ill-conceived investments including, in 1995, a London musical about the love life of Leonardo Da Vinci.

The phosphate is fast running out and is expected to be exhausted by 2008. Helen Hughes, a senior fellow at the Centre for Independent Studies in Sydney and Naura expert , said: “The islanders are now flat broke. They have been taken to the cleaners by rogues in Australia, the US and across the Pacific. They fell for every scam and are still falling for them. The latest idiotic idea is to build a casino, and for the [Australian] backers to take 50% of the profits. But it will bring in every type of gangster you can imagine. Nauru has one hotel and not one lightbulb works.”

DEMOCRATS BLAST U.S. CORPORATE TAX EVADERS

As Americans faced an April 15 tax deadline, Democrats blasted U.S. corporations that move offshore to avoid paying their share. In their weekly radio address on Saturday, Democrats also teed off against Republican leaders who they say have helped these corporate tax evaders.

FINCEN DELEGATES POWERS TO IRS

Officials from the Internal Revenue Service and the Financial Crimes Enforcement Network (FinCEN) announced last week the signature of a memorandum of agreement that delegates enforcement powers to the IRS for Foreign Bank and Financial Account reporting. It is the latest move in the IRS’s campaign targeting individuals attempting to hide income in undisclosed foreign bank accounts.

Residents or persons carrying on business in the US are required by the Bank Secrecy Act to file a report with the Treasury if they have an overseas account holding over $10,000 at any time during the calendar year. By noting the account number on their tax return, individuals remain compliant. However, failure to reveal such accounts can lead to civil or criminal proceedings.

THE TAX MAN COMETH

Above the front entranceway to the IRS, engraved in stone, is the famous line by Oliver Wendell Holmes: “Taxes are the price we pay for a civilized society.” If ever there were an absurd (and self-serving) motto for a federal agency it is this one. Holmes had it backwards. As Cato Institute President Ed Crane has said, “Taxes are actually the price we pay for our failure to create a civil society.”

This is useful food for thought as tax filing season is upon us. Today, when combining federal, state and local taxes, many middle-income Americans work as large a share of the day to pay the government’s bills as their own, according to a new report by the Texas-based Institute for Policy Innovation.

ON TAX DAY THANK THE RICH

On Tax Day consider some basic facts. The wealthiest 1 percent of the taxpayers pay 34% of all federal income taxes. The top 50% pay 96% of the total bill. This means that the least wealthy 50% pay almost nothing. In short, the income tax system soaks the rich. In the name of justice, the President, Congress and the American public should be demanding a tax cut that lowers the tax bill of the wealthy.

But the opponents of tax cuts do not want justice. They want redistribution of wealth. They want to confiscate the income earned by the wealthy and give it to people who have not earned it. They want the rich to be the servants of the poor.

The moral principle used to justify income redistribution is altruism. Altruism does not mean generosity or benevolent concern for the less fortunate. Altruism means: other-ism. It is the doctrine that it is your moral duty to live for others and to sacrifice your life, property and well-being for theirs. It is the code of self-sacrifice.

IRS OFFSHORE AMNESTY ENDS APRIL 15

Americans are allowed to have offshore accounts, and undoubtedly hundreds of thousands of them park income and earn interest on it. Their uses may range from legitimate business purposes -- such as checking accounts in jurisdictions where a company operates -- to less savory behavior, such as hiding assets from a spouse during a divorce. But they do not become illegal unless the income is not reported appropriately to the IRS.

The IRS has been offering a deal where if you come clean and agree to pay back taxes, interest and a 20% penalty, you can quit worrying about doing time behind bars. Plus, the IRS will go back only six years when computing your tab, no matter how long you have been dodging taxes. The IRS says it has already collected millions of dollars since the initiative was first announced.

MOVING OFFSHORE COULD SAVE BANKS $138 BILLION

The world’s top 100 financial institutions can achieve annual cost savings totaling $138 billion by 2008 by moving operations to cheaper offshore locations such as India, says new research. But savings of 39% and more will mean the loss of some two million financial services jobs in developed western countries, according to the survey by Deloitte Consulting.

AVERAGE BRITON SPENDS SIX MONTHS WORKING FOR THE TREASURY

According to the Adam Smith Institute, in 2002 the average Briton worked until June 1st before his share of taxes were fully paid to the Treasury. As a result of Chancellor Gordon Brown’s budget however, “tax freedom day” has been put forward again to June 2nd. By next year, the ASI estimates that the average British worker will have to work until June 7th before his pay actually goes into his own pocket, whilst in 2005, he will be working until June 9th before he receives any of his own income.

However, this does not take into account the Chancellor’s massive borrowing requirement, which must be paid for eventually. Adjusting for these, it will be June the 12th this year before the Treasury has had its fill of the UK taxpayer’s hard earned income.

HEDGES ARE BLOOMING ON WALL STREET

Stock-trading volumes may be shrunken, initial public offerings are virtually nonexistent, and merger deals are nearly a distant memory, but financial hedges have emerged as a growth area. With company managers willing to pay more for locking in greater certainty in an uncertain world, investment banks have found a gold mine in selling a wide variety of hedging instruments, of which many are derivatives. Volumes of everything from simple futures -- which generate piddling trading commissions -- to more complex customized swaps and options -- have soared, with little letup in sight.

IRWIN SCHIFF’S MOTION TO REMOVE JUDGE FROM CASE DENIED

Senior U.S. District Judge Lloyd George will continue presiding over a civil case the government filed against anti-tax activist Irwin Schiff, one of the judge’s colleagues ruled Thursday. Schiff previously filed a motion that sought to remove George from the case. He argued that George demonstrated bias last month when he issued a temporary restraining order that bars Schiff from distributing his book, The Federal Mafia: How the Government Illegally Imposes and Unlawfully Collects Income Taxes. George asked attorneys to submit more information before he decides whether to permanently ban Irwin Schiff’s book.

Government attorneys argue that the defendants have been advocating the “false and frivolous position that paying federal income taxes is voluntary.” George’s order bars the defendants from disseminating information, including Schiff’s book, that advocates that position.

Irwin Schiff’s web site here.

WEST PALM BEACH, Florida -- A golf course designer was convicted of tax evasion after a jury rejected his argument that U.S. law does not require citizens to pay income taxes. Prosecutors said Ted McAnlis evaded more than $2.5 million in taxes by such means as listing his home as religious property and having employers issue IRS forms with false Social Security numbers.

UK LAWYERS TURN STOOLPIGEON ON CASH-RICH CLIENTS OVER MONEY LAUNDERING

Detectives are handling a flood of tip-offs from lawyers, bankers, estate agents and car dealers about their money laundering clients. The National Criminal Intelligence Service (NCIS) is even taking on extra staff to deal with the increase in calls since new laws made it easier for the authorities to seize the ill-gotten gains of gangsters. The legislation means professionals who fail to inform the police about suspicious transactions could be jailed for up to 14 years. Clients who buy houses and cars with cash or otherwise raise suspicion are likely to be reported.

U.S. BUYS INFORMATION ABOUT LATIN AMERICANS

Over the past 18 months, the U.S. government has bought access to data on hundreds of millions of residents of 10 Latin American countries -- apparently without their consent or knowledge -- allowing myriad federal agencies to track foreigners entering and living in the United States. A suburban Atlanta company, ChoicePoint Inc., collects the information abroad and sells it to U.S. government officials in three dozen agencies, including immigration investigators who have used it to arrest illegal immigrants.

Privacy experts in Latin America question whether the sales of national citizen registries have been legal. They say government data are often sold clandestinely by individual government employees.

TOTAL INFORMATION AWARENESS PROJECT UNDERGOES FIRST TEST

Pentagon researchers this month completed the first set of test data for the controversial Total Information Awareness system, a key technologist for the project says. Lt. Col. Doug Dyer, a program manager at the Defense Advanced Research Projects Agency (DARPA), said at an IBM-sponsored conference on data privacy in Almaden, Calif., this week that Americans must trade some privacy for security.

Total Information Awareness, an experimental computer system being developed by DARPA under Vice Adm. John Poindexter, seeks to scan information about passport, visa, and work-permit applications, plus information about purchases of airline tickets, hotel rooms, over-the-counter drugs, and chemicals -- both here and abroad -- to discern “signature” patterns of terrorist behavior. Congressional leaders have criticized the system’s potential to spy on Americans and agreed to restrict further research and development without consulting Congress.

DELTA AIRLINES FACES BOYCOTT

As a pilot test of a new Orwellian airline “security” program, Delta will be running background checks on anyone who flies Delta from one of three as-yet undisclosed airports. What will Delta do? Run a credit check on you; Investigate your banking history; Run a criminal background check. Until Delta Airlines withdraws from testing CAPPS II and stops treating citizens like criminals, there is only one thing the American people can do: Boycott Delta!

ENCRYPTION AND THE RIGHT TO FREEDOM

More and more people are becoming aware of the intricate surveillance capabilities possessed and used by government agencies and the private sector to monitor the daily communication of law-abiding American Citizens. Whether it be the ease of wiretapping and email capture that was granted under the “Patriot Act” or the data collection brought about by the Carnivore program, few people can argue the link between personal privacy and personal freedom.

While at first glance, it may appear that those who wish to deprive you and I of the dignity and liberty that is associated with being “secure in their persons, houses, papers, and effects, against unreasonable searches and seizures” have an unbeatable hand, there is no need to worry, as we as citizens still have the right to exercise our 4th Amendment rights legally and for free ... through the use of encryption.

Pretty Good Privacy (PGP) is a program that enables you to send and receive email, telephone calls and computer files in a manner that is as secure as possible in the civilian world. To try PGP go to www.pgpi.org and download the latest version for your operating system.

U.S. COMPANY BOASTS OF ELECTRONIC SURVEILLANCE CAPABILITIES OF CIRCUITS

Press Release: MetaSwitch, supplier of the VP3500, the industry’s first true Next Generation Class 5 Switch, announced today that it has completed an extensive review with the FBI, which demonstrates that the MetaSwitch CALEA specification meets the J-STD-025A standard for circuit switching equipment.

CALEA, the Communications Assistance for Law Enforcement Act, requires that U.S. carriers provide Law Enforcement Agencies (LEAs) with the continued ability to perform electronic surveillance with existing and new telecommunications switching equipment. Electronic surveillance consists of either the interception of call content (commonly referred to as wiretaps) and/or the interception of call-identifying information (commonly referred to as dialed-number extraction).

Text of Communications Assistance for Law Enforcement Act bill here.

HOW LANGUAGE IS USED

You might have noticed, for example, that of late, President Bush has emphasized liberating Iraq rather than destroying weapons of mass destruction. This change came about as U.S. forces got closer to Baghdad without finding any WMDs (at least as of this writing). His speechwriters are scared that they will not find any.

Political speechwriters have to be ready to shift positions in a hurry. You never know when new polls will change the firm convictions of your client to opposite firm convictions. At no time in American history has any politician ever gone before the American people and said: “Hey, I was wrong about that. I made a mistake.” Sometimes they will pretend to be sorry, as in, “I’m sorry you misinterpreted my remarks.”

IRS SLEUTHS COMB DATA ON INTERNET

Nearly three years ago, as part of an IRS restructuring, the agency came up with the idea to create what have become known as lead development centers (LDCs), each headed by one special agent overseeing a number of investigative analysts. How an LDC analyst can help: Agents used to have to go in person to county courthouses or halls of record to search for documents. Now with most counties keeping information online, the analysts can check in a fraction of the time.

As one IRS veteran explains it: “We search different databases. We search all bank records, information through insurance companies, Department of Motor Vehicles, property records, our own IRS information, computer records involving dates, businesses. We search state, federal and local records and the typical databases available to the public. But a lot of the databases have enhanced data available only to law enforcement.”

THE AMERICAN SCHEME: PUSHING THE TAX ENVELOPE

Over the past five years, a senior tax analyst with H&R Block has observed more Americans beginning to take taxes less seriously. At the root of the change: A widespread perception that the government is not paying attention. “I think people fear the IRS much less,” she says. Her suspicion is supported by data.

The shift toward noncompliance, say experts, has likely resulted from the IRS’s five-year effort to mend its reputation as an intrusive, bullying bureaucracy. Many tax-policy experts applaud the IRS’s attempt to burnish its image. But the public- relations campaign has surpassed expectations - and the drive toward a kinder, gentler enforcer of the tax code may have gone too far.

Apparently the financial sleuths at the IRS -- long hailed as the government’s most-sophisticated fraud detectives -- did not get the call from the White House to participate in President Bush’s Corporate Fraud Task Force (CFTF) when it was formed in July 2002. That may be one reason why cheating on taxes is on the rise while the number of criminal tax investigations and prosecutions by the IRS have hit an all-time low.

As for corporations that spent time in the penalty box: that number has dropped, too. According to a recent report, 2,376 negligence penalties were assessed against corporate violators in 1993. By 2002 only 22 such penalties were slapped on companies. The total number of corporate fraud penalties assessed in 2000, according to the IRS, was only 159 -- down from 555 in 1993.

MURRAY ROTHBARD: TAXATION IS SIMPLY ROBBERY

No more and no less. For what is “robbery”? Robbery is the taking of a man’s property by the use of violence or the threat thereof, and therefore without the victim’s consent. And yet what else is taxation? And if taxation is robbery, then it follows as the night the day that those people who engage in, and live off, robbery are a gang of thieves. Hence the government is a group of thieves, and deserves, morally, aesthetically, and philosophically, to be treated exactly as a group of less socially respectable ruffians would be treated.

Murray Rothbard Archives here.

TIME FOR A FLAT INCOME TAX

The tax reform debate has faded somewhat from an increasingly crowded public discourse in recent years. Those bent on preserving the status quo for their own political, financial, and powerful gain have succeeded in sidetracking the tax reform debate temporarily, but they have not derailed it.

The American people still want a tax code that is fair, flat, and simple. They want a tax code that is not punitive and riddled with disincentives. They want a tax code that recognizes the goodness of the American people, not the guile of the federal government.

Imagine sitting down with Form 1 from the IRS. Fill in your income, subtract your personal exemptions, tax 17% of the balance, write that number down, and you are done. Ten little lines, ten little minutes -- that is about all it will take to do your taxes each year under the Flat Tax.

SWISS PROBE SADDAM MONEY NETWORK

The Swiss government is investigating claims by a British newspaper that Saddam Hussein funneled millions of dollars through a Lugano-based holding company. The Sunday Times claims the money was moved from Baghdad to Switzerland before being dispersed among secretive offshore companies.

The newspaper said the funds, which were the proceeds of arms and development deals, were channeled into companies in Switzerland, Liechtenstein, Panama and the Bahamas controlled by the Saddam’s appointees. The alleged network, consisting of over 120 businesses worldwide, was built up in the late 1970s, when Saddam first became president and was used to fund Iraqi leader’s numerous palaces and lavish lifestyle.

Banca del Gottardo in The Bahamas has categorically denied reports that it holds deposits from Iraq’s President Saddam Hussein. Responding reports in the British newspaper, The Sunday Times, the bank said it has followed the April 9 request of the Swiss Federal Council on Modification of the Ordinance on Economic Measures against the Republic of Iraq, issued by the Federal Banking Commission.

NO QUICK FIXES LIKELY FOR BAHAMIAN ECONOMY

Even though foreign currency reserves have held steady, in this current economic environment the Central Bank has predicted no economic growth for 2003. Further, in support of the Central Bank’s no-growth prediction, the Minister of State for Finance has conceded that planned investment projects have been delayed and/or deferred.

BERMUDA TAXES

There has been much news lately about how U.S. corporations have reduced their taxes paid by legally reincorporating in Bermuda. But what is the situation for a Bermuda resident? The bottom line: Bermudian residents do pay a significant portion of their incomes in taxes, and the rates are not progressive.

CAYMAN BANKS MAY CLOSE SOME ACCOUNTS

According to reports, around 5% of Caymanian account holders have so far failed to provide the jurisdiction’s banks with the due diligence documentation required under the updated Proceeds of Criminal Conduct Law, raising the question of what to do with accounts which are still not properly documented after the June 30 deadline.

The Cayman Net News service suggested on Monday that two possible courses of action are being considered for “delinquent” accounts -- the closing of the account and mailing of its contents in the form of a bank draft to the account holder, or the freezing of the account until the necessary documentation is provided.

GREEK CYPRIOT LEADER’S LAW FIRM LINKED TO FUNDING WEB FOR MILOSEVIC

Greek Cypriot bankers, accountants and lawyers are eager to expand their business in EU markets when Cyprus becomes a member in May 2004. Yet doubts persist about Cyprus authorities’ commitment to regulating international companies according to EU best practice.

The obstacles faced by two Serbian bankers who are trying to trace records of Cyprus-based offshore companies involved in UN sanctions-busting during the Yugoslav succession wars have highlighted these problems. And the law firm founded and still controlled by Tassos Papadopoulos, president of the Greek Cypriot-controlled south of the island, is at the centre of the dispute.

MALTA’S EU MEMBERSHIP CONFIRMED

Malta now appears set to join the EU following the return to power of the pro-European Nationalist Party at the weekend. The PN gained a majority of over 51% from a very high turnout of 96%, in what was seen as the most crucial election in the country’s history. The result has been interpreted as a confirmation of the “yes” vote in the EU referendum held last month.

HONG KONG’S TEEMING STREETS LIKE GHOST TOWN DUE TO SARS

The center of this usually teeming city of 6 million is like a ghost town. Buses that are usually packed now carry only the driver. Public transport of this former British colony reeks of disinfectant. A hanky is essential to press the stop button.

Many expatriates, gripped by anxiety over SARS, whose Hong Kong toll now stands at 40, have settled in for a siege. One couple sent their maid to shop for four months of stocks. A block of flats in Pokfulam was jammed with groceries, including six packs of 10-roll cartons of toilet paper. Others have just left town.

As a deadly virus spawned in China rages from Toronto to Thailand, readers in Beijing are snapping up copies of SARS Is Not Terrible. The 28-page booklet assures mainlanders that they can avoid contracting the virulent new strain of pneumonia, known as severe acute respiratory syndrome, by eating right and washing their hands. China’s leaders, it promises, have everything under control.

Would it were so. As any Hong Kong resident will tell you through his surgical mask, SARS isn’t terrible; it’s catastrophic. New infections -- tallied in morning papers alongside the weather forecast and daily race results -- are running at 40-plus per day. Hong Kong is bracing for as many as 3,000 SARS patients in the weeks ahead.

The economic toll is also mounting. Retail sales have plunged 50%. Clients will not come to Hong Kong and do not want anyone from Hong Kong to visit. In a region where commerce is built on relationships and personal contact, many feel they are living in a leper colony.

ECONOMIC SECESSION WON’T SUCCEED

Some freedom-minded people pin their hope for liberty on withdrawing from an unfree world. In times of crisis, such as wars and recessions, this idea gains popularity. We might refer to this notion as “economic secession”, borrowing the name from John Kennedy’s article of the same title. Despairing of advancing the cause of liberty in society at large, they hope to be able to secure their own liberty anyway.

We do not mean to disparage someone who wants to move to the remote countryside, encrypt his email, or set up a numbered bank account in Bermuda. Such activities are not, in themselves, objectionable, and they may be a good choice for some people. But we do wish to point out that they do not solve the problem of the gradual erosion of liberty in our world. The attempt fails on its own terms, for several reasons.

All in all, to make economic secession work we should have to withdraw into autarky, foregoing the benefits of the division of labor. It is doubtful whether Thoreauesque self-sufficiency is any longer practicable in developed countries, for all but a minuscule fraction of the population.

BRITISH SOCIALISM IN REVERSE

Instead of curbing aggressive tax avoidance by companies that cost it £25 billion a year, the government has taken the soft option of increasing tax burdens on employees. With modest increases in tax bands, more employees than ever before are paying income tax at the higher rate of 40%. The burden of tax bears little relationship to the ability to pay. In the land of “reverse socialism”, people on the minimum wage, bus drivers, nurses, pensioners and debt-ridden graduates pay a higher proportion of their income in tax than millionaires.

Recent reports suggest that British Chancellor Gordon Brown may leave intact a tax loophole which benefits around 100,000 wealthy foreign individuals working in the UK. British tax law at present leaves non-domiciled foreign nationals exempt from paying tax on income generated overseas.

Mr. Brown is facing mounting pressure from those on the left of the Labour Party to close the tax loophole and bring these non-domiciled people into the tax net, as according to estimates, over three quarters of them have incomes in excess of £100,000 per year. However, others have suggested that the Chancellor is less than keen to close the loophole for fear of upsetting the financial services community.

CHINA’S ECONOMY ROCKETS UPWARD

China’s economy grew by 9% in the first quarter of 2003, the fastest rate in six years, but faces a slowdown in the months ahead, the state press has reported.

A Capitalist Party in China? The Chinese Communist Party (CCP) is struggling to reinvent itself. At the 16th National Congress in Beijing last November, the party approved policies intended to make it more connected with China’s rapidly liberalizing society and economy. After a Week of intropection and political reorganization, party members seemed serious about reclaiming their position at the top of Chinese society. It appears they may do just that.

One key policy shift could yield important gains for Chinese citizens. In a speech at the opening of the party congress, President Jiang Zemin gave a sweeping endorsement of private property.

China is tied for second place in the share of total world foreign direct investment, at 7.1% of world inflows. The United States leads with 23.0%.

37% RISE IN SOUTH AFRICA’S LARGEST RESIDENTIAL PROPERTY COMPANY’S SALES

The strong performance reflects the strength of the country’s underlying property market, which has seen substantial growth and investment over the past year as investors turn away from the volatile and weak equity markets for a more stable source of earnings. This is despite very high interest rates, with the prime lending rate rising by 4% over 2002 to currently stand at 17%.

NAMIBIA: ILLICIT GEM DEALS ON THE INCREASE

The Minister of Mines and Energy, Dr. Nickey Iyambo, has expressed concern over the number of “unscrupulous” diamond traders who have mushroomed in the last few years. The industry has in recent years expanded from onshore to offshore and has even diversified into downstream activities such as cutting.

ORWELL REDUX: U.S. CITIZENS NOW HAVE A MEDICAL IDENTIFICATION NUMBERS

The next time you visit your doctor, you may notice some changes. For instance, you might see privacy screens placed around the edges of computer monitors to prevent someone from glancing at your personal medical information. And once you have received your new medical ID number, the receptionist may call you in from the waiting room by your number instead of your name -- a procedure designed to protect your privacy from others in the waiting room.

More importantly, you will be asked to read a description of the new federal regulation that, in theory, is designed to protect the privacy of your medical records in this new age of electronic record-keeping and file transfer. And you will be asked to sign a document, stating that you have read about the new regulation, understand it, and agree to the new procedures.

The kicker? If you do not sign the form, your doctor is allowed to refuse to treat you and your insurance company is allowed to refuse coverage.

If you are wondering why this new “privacy” that is granted to you is, in effect, being forced down your throat, the answer lies in the fact that these regulations actually weaken your ability to restrict access to your medical history.

13 MILLION ON U.S. TERROR WATCH LIST

U.S. border watchers are on the lookout for potential terrorists and other bad guys -- 13 million of them. The army of suspicious characters, including 20,000 identified by the State Department since the September 11, 2001, terror attacks, is catalogued in a voluminous new watch list assembled for U.S. national security officials.

The size of the watch list surprised some civil libertarians. “It’s unworkable and unwieldy to consider 13 million people to all be potential terrorists,” said Hussein Ibish of the American-Arab Anti-Discrimination Committee. “Rather than getting specific, we’re expanding the list of potential terrorists. It’s bound to lead to abuses.”

US TO TACKLE FLAWS IN AIRLINE WATCH LIST

The US government is developing a procedure for removing individuals from a controversial airline watch list, in response to criticism that too many innocent passengers are repeatedly delayed by measures intended to keep terrorists off aircraft.

The Transportation Security Administration (TSA) plans to review all complaints it receives from travelers who believe they are wrongly targeted. The move by the TSA comes nearly a year after complaints first emerged from individuals who said they had been repeatedly harassed at airports.

THE NEW “DUE PROCESS” IN AMERICA: GUILTY UNTIL PROVEN INNOCENT

Intel engineer Mike Hawash is in solitary confinement in a federal prison in Sheridan, Oregon On March 20, the FBI arrested Hawash at gunpoint in Intel’s parking lot near Portland for reasons that remain confidential. A 38-year-old American citizen with a wife and three children, he has not been charged with a crime. Hawash is being held as a “material witness” under a 1984 law that the Justice Department believes should let the government detain American citizens at will for an arbitrary length of time. A well-researched Washington Post article from last fall said the Justice Department has imprisoned at least 44 people, including seven U.S. citizens, under the same law, with some held for many months and possibly for more than a year.

The odd thing about this law, through which Congress intended to prevent the flight of possible witnesses to a crime, is how backward it is: If Hawash had been accused of a violent crime, he would have been out on bail weeks ago.

Combine Attorney General Ashcroft requests for more power to snoop on the Internet, observing private conversations by installing secret microphones, spyware and keystroke loggers, with the broad powers that the Justice Department received under the 2001 Patriot Act, and you have got a situation that concentrates a tremendous amount of surveillance power in a small group of federal police and prosecutors.

These legal battles over the imprisonments are fierce and ongoing. “It’s remarkable -- none of us has ever seen anything like this,” says Dave Fidanque, director of the Oregon chapter of the American Civil Liberties Union. “This is unprecedented. We have no idea what kind of evidence they might have... Our Constitution was designed to prevent secret court procedures. Our Constitution was intended to guarantee every individual the right to due process. Since Sept. 11, Attorney General Ashcroft and the Justice Department have taken the position that they’re entitled only to the rights that John Ashcroft thinks they’re entitled to.”

MOSCOW POLL: COPS BIGGEST THREAT TO FOREIGNERS

If you are afraid of the police, you are not alone. A City Hall-sponsored survey has found that foreigners living in Russia consider the police to be the greatest threat to their personal safety.

“[The police] have completely lost any idea of what the law is,” Georgy Muradov, head of the city’s international affairs department, quoted one of the survey’s respondents as saying. “And the most amazing thing is that they don’t think there is anything wrong with that.” Foreigners are frequently subjected to document checks by bribe-hungry police officers, Muradov said.

THE MEANING OF FREEDOM

Few people think of freedom in very similar terms. To some, it is about political rights: the right to assemble, to free speech, to participate in government (vote, run for office), etc. To others, it is all about property rights: to do with one’s land, possessions, or body as one sees fit. To others, freedom means freedom from hunger, or health fears, or other woes. To a few, freedom means total freedom to do anything -- in some cases limited only by other people’s freedom, and in other cases limited only by the individual’s will and ability to exercise power.

To Iraqis dancing in the streets, the meaning of freedom seems crystal clear: not to live in terror under the rule of a tyrant.

In western culture, philosophers have staked out two basic ways of thinking about freedom. The older kind, associated with what is called “liberal” thinking everywhere except in the U.S., focuses on political rights. Your rights, in this paradigm, do not guarantee you particular things or outcomes, but simply that you will not be molested as you go about your business.

A newer, “progressive” idea of freedom, is that of “freedom from want”. Many influential social thinkers in the 19th and 20th centuries thought that political freedom was not enough; they advocated freedom from the “tyranny of necessity”. In this view, a person too hungry to work, or too poor to feed his or her family, is not really free. Defenders of the liberal tradition of freedom charge that a right to “important things” necessitates a right to force other people to provide them, and coercion, especially organized society-wide coercion, is the antithesis of freedom.

Many free-marketeers recognize the importance of freeing the world’s huddling masses from poverty. They believe that is exactly what the Statue of Liberty promises, and further believe that these two poles do not have to be opposites. Material well-being improves quickly in places where liberal values flourish, enabling more and more of the people affected to exercise their freedom in the material world.

MONEY LAUNDERING PENALTY EYED FOR NAURU

The Treasury Department is proposing to apply one of its harshest penalties to punish the tiny Pacific island Nauru for money laundering activities: cutting off the country's financial institutions from the U.S. banking system. The department announced Tuesday that it was moving forward on a proposed rule that would bring this about.

If the measure ultimately is adopted, it would mark the first time the United States has used the power provided under the 2001 USA Patriot Act. The measure would block Nauru’s institutions from the U.S. financial system by closing corresponding accounts with U.S. banks, securities dealers, mutual fund providers and others. Foreign banks and financial institutions use such accounts to do business in this country.

Terrorists use of Nauru passports and banks. Last month, Nauru passed legislation to close down its off-shore banking sector and it has also moved to end the sale to non-Nauruan nationals of Nauruan passports. An Australian newspaper reported that six suspected terrorists had been arrested in South East Asia in recent months traveling on Nauruan passports. Details were released to the newspaper, after fears that Nauru would renege on its agreement to end the sale of passports and to close down its offshore banking scheme.

ATTACKS ON U.S. CORPORATIONS REINCORPORATING OFFSHORE CONTINUE APACE

Corporations with a large percentage of their earnings from foreign countries find it attractive to reincorporate in Bermuda because their income from outside the United States becomes exempt from American taxes. U.S. companies argue that their worldwide tax rates are higher than foreign competitors’ tax rates, which puts U.S. companies at a disadvantage.

However, the expatriate issue has become so hot that a combination of institutional investors, activists, and congresspersons are actively working not just to stem the flow of companies to Bermuda but also to bring back companies that have relocated there.

BellSouth has been accused by a citizens’ advocacy group of using overseas shelters to dodge corporate taxes. The company is one of 24 Fortune 500 companies listed as “leading offenders" in an advertising campaign launched by The Bermuda Project, an organization pushing for federal legislation to close corporate tax loopholes. The organization claims corporate use of tax havens is costing taxpayers more than $70 billion a year.

LUXEMBOURG’S FUND INDUSTRY CONTINUES TO GROW

Launching its ninth annual Luxembourg Fund Encyclopedia on Tuesday, Fitzrovia International announced that growth in total net assets continued at a healthy level last year, rising to $883.2 billion at the end of December. The fund research company also revealed that the number of funds located in Luxembourg rose by 279 to 7,693 in 2002.

The Fund Encyclopedia says that there are, in total, 564 fund promoters from 36 countries with funds domiciled in Luxembourg, and that with $93.2 billion in assets under management, UBS is currently the largest promoter on this basis.

$11 TRILLION INVESTED IN MUTUAL FUNDS GLOBALLY

The end 2002 survey of mutual funds -- called unit trusts in many countries -- in 37 countries by the International Investment Funds Association shows that the assets of 53,040 global mutual funds amounted to $11.22 trillion, which was up from the recent low of $10.65 trillion at the end of September 2002. The end 2002 mutual fund assets were split into 37% equity, 28% cash, 22% bonds, 8% balanced (a mix of bonds, cash and equities) and 5% unclassified.

The end 2002 total was, however, $1 trillion less than at the end of March 2000, when global equity markets peaked. At that stage global mutual fund assets amounted to $12.25 trillion. The Nasdaq index has moved from a 1994 close of 751.96 to a peak of 5,132.52 in March 2000. It then slumped to 2,470.52 at the end of 2000, 1,950.40 at the end of 2001 and 1,335.5 at the end of 2002.

GUERNSEY INTERNATIONAL BUSINESS ASSOCIATION CHAIRMAN OPTIMISTIC

The new chairman of the GIBS, Robin Fuller, has given an upbeat assessment of the finance industry’s outlook and seems confident that the island will remain prosperous. While Fuller conceded that the economic downturn has badly affected some sectors of the finance industry, he noted strong growth in other sectors such as captive insurance and funds, and stated that this was reason enough to remain optimistic.

WANTED: ATTORNEY-GENERAL FOR THE CAYMAN ISLANDS

Legal eagles looking for a new challenge might care to consider the following job ad: “Wanted: solicitor or barrister for the role of Attorney-General of the Cayman Islands. Tax-free salary of up to £113,000.”

What the ad omits to say is why the previous incumbent, David Ballantyne, left last month. He resigned over the collapse of a big money-laundering trial after a key prosecution witness admitted to destroying evidence on the orders of a UK agency, widely presumed to be MI6. The islands’ assembly vented their anger on Ballantyne who pocketed a £230,000 pay-off.

“BLACK MONEY” FLOWING BACK TO INDIA

Large amounts of an estimated $150 billion -- double India’s foreign exchange reserves -- that Indians had stashed away illegally in secret accounts abroad are making their way back into the country. These account holders have been spooked by US-led crackdowns and probes, after the September 11, 2001 attack, into hidden funds that could be used to support terrorism, The New Indian Express said.

Rather than risk being exposed, these Indians are choosing to bring what is commonly refered to as “black money” back home. An unidentified banker, quoted by the newspaper, said: “Any discovery and disclosure of black money stashed in tax havens by Indian politicians, bureaucrats and businessmen could be damaging for them here.”

WHO WILL COMPENSATE VICTIMS OF THE SOUTH AFRICAN APARTHEID REGIME?

For all its continuing problems -- unemployment, crime, severe inequality, AIDS -- South Africa is faring better than many had feared in 1994, when the oppressive, white-run regime based on “apartheid” (racial segregation) ended and the country’s blacks, the majority of its population, voted for the first time. “Everyone thought that a racial bloodbath would drown us. It didn’t happen,” says Desmond Tutu, a former archbishop of Cape Town, who chairs the country’s Truth and Reconciliation Commission. That it did not is due in large part to the commission itself, set up in 1995 to investigate and document the apartheid era’s human-rights abuses.

Last month, Mr Tutu presented the commission’s final report to President Thabo Mbeki, including a recommendation to set up a 3 billion rand ($385 million) compensation fund for the era’s victims, partly financed by a “wealth tax” on businesses operating in South Africa. However, giving his formal response to the report on April 15th, Mr. Mbeki announced that he would not introduce the wealth tax. He also hinted that the government would not support the lawsuits being brought on the victims’ behalf in the American courts, demanding much higher sums in compensation.

EU ADMITS NEW MEMBERS

ATHENS: The European Union has welcomed 10 new members to its ranks in a lavish signing ceremony rich in symbolism at the foot of the Acropolis, ancient cradle of Western democracy. The 10 acceding countries are Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia. They will formally join the EU on May 1, 2004.

The leaders of Bulgaria and Romania, which hope to join the EU in 2007, were also present. Participants also included the leaders of would-be EU candidates such as Croatia and Serbia. But Turkish leaders stayed away from the ceremony, possibly to mark Ankara’s displeasure that Cyprus has been allowed to join the EU despite the absence of a peace settlement between its Greek and Turkish Cypriot populations.

CONVENTION BACKS BLAIR’S PLAN FOR EU PRESIDENCY

Tony Blair’s plans for a powerful new full-time president of Europe look set to become reality after the man charged with drafting a European Union constitution backed the project yesterday. Valéry Giscard d’Estaing, the former French President who chairs the convention on Europe’s future, supported the EU’s biggest member states who argue that the Union needs a president if it is to punch its weight on the international stage.

However, well-organised opposition from the EU’s small states, which have joined forces with the ten new entrants from Central and Eastern Europe and who want to stick with the system under which each member state has six months as EU president, means that weeks of horsetrading lie ahead.

US TAX SLEUTHS “IN A SHAMBLES”

Tuesday was the deadline for Americans to file their tax returns, but according to one think-tank, they may as well not have bothered. Investigation of US tax dodgers is “in a shambles”, says the Transactional Records Access Clearinghouse (Trac) at the University of Syracuse, which monitors the performance of federal agencies.

Trac found that prosecutions for tax offences had halved in the past 10 years, and investigations had fallen by one-third. At the same time, Trac alleged that the IRS had started deliberately to focus on small offenders, while turning a blind eye to malpractice by corporations.

The IRS was quick to deny Trac’s allegations. It also protested that its agents were becoming increasingly overstretched: the number of tax returns filed has grown 12% in the past 10 years, while there are one-quarter fewer agents capable of auditing them.

USA Today: IRS needs more money and respect. To reverse the recent trend toward cheating, the IRS has taken some welcome steps this year. It has a new audit strategy aimed at upper-income taxpayers, who are more likely to hide income. It is increasing scrutiny of offshore tax-evasion schemes and clamping down on phony partnerships and small corporations created merely as tax shelters. But unless Congress increases the agency’s enforcement budget, these efforts could prove inadequate. Acting IRS Commissioner Bob Wenzel recently warned lawmakers that he does not even have money to hand out congressionally mandated pay increases to his shrinking workforce.

In addition to more money -- which tax experts say would be recouped through additional collection -- the IRS needs a little more respect. For years, Congress has treated the agency like a pariah. Hearings in 1998 on aggressive enforcement techniques highlighted IRS excesses, such as the harassment of innocent victims. Reforms were needed to curb those IRS abuses, but in clipping the agency’s powers so it would be more considerate of taxpayers, Congress also made it more accommodating to cheats. Lawmakers can help the IRS do its job properly. Failure to do that risks encouraging U.S. taxpayers to show contempt for the law.

PAYPAL CAUGHT UP IN CIVIL FORFEITURE LAW NET

PayPal has been in the news lately. A Missouri prosecutor sent Ebay a letter insisting that its recent acquisition, PayPal, was violating the Patriot Act by processing payments from Internet gambling operations. Internet gambling is illegal in the U.S., but about 5 million Americans use overseas sites. Ebay discontinued PayPal’s gambling operations last fall. This comes on top of troubles PayPal has had with the New York attorney general and authorities in other states. So what is up with PayPal? Is something sinister going on there? Far from it. Prosecutors may get paid by the public, but they do not always serve the public.

Police are interested in pursuing larger amounts of money, especially when they can seize it and keep it. And this may well be what is underlying state prosecutors’ interest in PayPal’s past role in gambling. The Patriot Act provisions that PayPal allegedly violated bar the transmission of funds known to have come from criminal activity. And they also provide for civil forfeiture. Civil forfeiture means that prosecutorial discretion will be directed not at the actual wrongdoers (under our assumption, gamblers or gambling businesses), but businesses caught up with them because they offer services to everyone without inquiries into the exact nature of their business.

So again the weight of the law comes down on PayPal, despite the amazing service they offer at extraordinarily low cost. As long as prosecutors and police are tempted by forfeiture laws, law enforcement will remain divorced from ordinary concepts of individual responsibility and the civil servant’s duty to the public. And it will begin to look a lot more like legalized extortion.

PayPal account holder asks: “PayPal: is this a response?” Some users whose accounts have been frozen by PayPal are now considering filing criminal complaints in respect of PayPal’s refusal to release their funds. What is PayPal’s response?

REP. RON PAUL: CONGRESS EXCEEDS ITS CREDIT LIMIT

The term “national debt” really is a misnomer. It is not the nation’s debt, but rather the federal government’s debt. The American people did not spend the money, but they will have to pay it back. And if Congress has its way, the U.S. Treasury will have twice as much debt ten years from now as it does today.

Most Americans do not spend much time worrying about the national debt, which now totals more than six trillion dollars. The number is so staggering that it hardly seems real, even when economists issue bleak warnings about how much every American owes -- currently about $22,000. Of course the federal government never hands each taxpayer a bill for that amount, for obvious reasons. Instead, it uses income tax collections to pay interest on this debt, which is like making minimum payments on a credit card. Notice that the principal never goes down. In fact, it is rising steadily.

The problem is very simple: Congress almost always spends more each year than the Treasury collects in revenues. Congress is at it again, raising the debt limit in a new budget that is as wasteful as any I have seen during my tenure in Washington -- and that is a strong statement. In fact, the 2004 budget passed by the House raises the debt limit by nearly one trillion dollars, the single largest increase by far.

HOW ST. JAMES’S BECAME AN INTERNATIONAL FINANCIAL CENTER

Time was when St. James’s, in London’s West End, had a reputation altogether more shady than the staid one it now enjoys. In the early 19th century it was notorious for prostitution and gambling. Over the years bordellos and gambling dens were replaced by expensive clothes shops, art galleries, and, among other icons of respectability, the London Library, the Institute of Directors and The Economist.

But something of its former raffish atmosphere may be returning, for St. James’s has become a financial center of international stature. As the undisputed home of the European hedge fund, it now rivals, if not the City, at least Frankfurt.

LAWYERS SEE SECURITY SUIT-RIDDLED FUTURE

Many lawyers think security could be the next big area of cyber law, especially as attacks become more prevalent and companies and their customers suffer growing financial losses. What is more, hackers who breach the systems to steal and use credit card addresses are often difficult to find, meaning victims must find new targets for blame.

Lawyers said companies need to plan for security and privacy risks of all stripes and bring in security experts and attorneys long before a breach happens. “We’re probably the last to get called in,” Jeffrey Aiken, an attorney with Whyte Hirschboeck Dudek, told a crowd of lawyers and security consultants at the RSA Conference 2003 in San Francisco. “You need to get everyone involved in this process.”

419 SCAMMERS MOVE INTO THE FRENCH AIR DISASTER MARKET

Nigerian advance fee fraudsters have moved into the foreign language and air disaster markets. They now have tailored come ons for those who speak French. Another version talks of finding a cache of money that belonged “to a deceased person, who died on EgyptAir Flight 990 plane crash of 31st october 1999... This fund has been dormant in his account with my Bank without any claim of the fund that is in our custody neither from his family or relation before our discovery to this development...”

WHITE HOUSE SEEKS TO EXPAND DNA DATABASE

WASHINGTON: DNA profiles from juvenile offenders and from adults who have been arrested but not convicted would be added to the FBI’s national DNA database under a Bush administration proposal. Under current law, only DNA from adults convicted of crimes can be placed in the national database, which is used to compare those samples with biological evidence from the scenes of unsolved crimes. As of January, there were about 1.3 million DNA samples in the database, U.S. officials say.

“DNA is to the 21st century what fingerprinting was to the 20th,” says Deborah Daniels, assistant U.S. attorney general for justice programs. “The widespread use of DNA evidence is the future of law enforcement in this country.”

Critics say adding juvenile and arrestee profiles to the database threatens privacy by expanding the pool of samples beyond adult criminals. “It’s only a matter of time before the government gets its hands on those DNA samples and starts playing around with our genetic codes,” says Barry Steinhardt, privacy specialist for the American Civil Liberties Union’s national office in New York City. “They say they don’t want to do that, but not too long ago they were saying they’d only take DNA profiles from rapists and murderers and now they want juveniles ... We’re not just on a slippery slope, we’re halfway down it.”

FEDERAL E-MAIL WIRETAPS RESULT IN CONVICTIONS

The federal investigation into the Wisconsin-based online betting service, Gold Medal Sports, involved the first time the IRS used wiretapping hardware -- specially designed at the request of investigators in Wisconsin -- to monitor e-mail. The intercepted e-mails were a gold mine...

MEDICAL PRIVACY TAKES A HIT WITH NEW RULE

As of Monday, a new federal medical-privacy rule gives data-processing companies, insurers, doctors, hospitals, certain researchers, and others legal permission to share citizens’ personal health informat -- including genetic information -- without individuals’ consent.

Citizens will be notified that their data legally can be exchanged with others. But under the federal rule, they will not be guaranteed the right to stop the flow of data for purposes related to treatment, electronic claims processing, and healthcare operations -- this last term being so broad that it includes marketing.

In essence, the federal government is giving the medical industry regulatory authority to decide whether personal health information can be obtained by others without patients’ permission. What is more, some powerful industry groups strongly support having the federal rule preempt state medical-privacy laws. Given their lobbying success, it is likely that in the near future these groups will attempt to accomplish this.

NEW U.K. LAW CLAMPS DOWN ON CROSS-BORDER TAX EVASION

Automatic exchange of information between tax authorities to combat cross-border tax evasion on savings income came a step closer today with the publication of the Finance Bill.