Category Archives: European Banks International Monetary Fund

Europe Tells Obama AGAIN to Mind your Own Business

Posted on by

The vote is very….very close so far.

CNNMoney: U.K. citizens worldwide will vote in the historic referendum on June 23. Prime Minister David Cameron will campaign for the U.K. to stay in the EU. The British economy is the second largest in the EU. Its decision on whether to stay or go will have big implications not only for the people of the U.K. but also global financial markets and the future of Europe. More here.

‘Monstrous interference’: UK pols furious at Obama’s plan to intervene in EU debate

FNC: President Obama looks set to wade into the contentious debate in the United Kingdom over whether or not the nation should remain a member of the European Union – and some Brits are angry at the president’s intrusion into a delicate UK issue ahead of a major vote.

Obama will arrive in London late Thursday for a three-day trip. On Friday he will meet Prime Minister David Cameron — who is reportedly keen to get Obama’s backing ahead of the June 23 referendum, in which Britons will choose to remain or leave the European Union.

Cameron is in a difficult position, backing the “Remain” campaign, while many within his own Conservative Party are campaigning for the “Leave” or “Brexit” (British-Exit) campaign. Polls have shows the race is tight, with the Remain campaign holding an edge as small as one percent.

The White House has said Obama is willing to offer his opinion and may announce that he favors Cameron’s position – that Britain should remain in the European Union.

“If he’s asked his view as a friend, he will offer it,” U.S. Deputy National Security Adviser Ben Rhodes said. “As the president has said, we support a strong United Kingdom in the European Union.”

Those calling for Britain to leave the European Union are not happy at that news, with U.K. Independence Party leader Nigel Farage saying Obama should stay home.

‘A monstrous interference,” Farage told Fox News Thursday. “I’d rather he stayed in Washington, frankly, if that’s what he’s going to do.”

“You wouldn’t expect the British Prime Minister to intervene in your presidential election, you wouldn’t expect the Prime Minister to endorse one candidate or another. Perhaps he’s another one of those people who doesn’t understand what [the EU] is,” Farage said.

In March, a letter sent from Conservative MP and former cabinet minister Liam Fox, and co-signed by over 100 MPs from four different political parties, asked the U.S. Ambassador to the U.K. to persuade Obama not to intervene, calling any such intervention “extremely controversial and potentially damaging.”

“It has long been the established practice not to interfere in the domestic political affairs of our allies and we hope that this will continue to be the case,” the letter to Ambassador Matthew Barzun read.

“While the current U.S. administration may have a view on the desirability or otherwise of Britain’s continued membership of the E.U., any explicit intervention in the debate is likely to be extremely controversial and potentially damaging,” the letter said.

London Mayor Boris Johnson — who was born in New York and has expressed strong support for the UK-U.S. relationship — accused Obama of hypocrisy.

“I just think it’s paradoxical that the United States, which wouldn’t dream of allowing the slightest infringement of its own sovereignty, should be lecturing other countries about the need to enmesh themselves ever deeper in a federal superstate,” Johnson said Tuesday.

Cameron however, has said that the advice of allies was welcome, saying “listening to what our friends say in the world is not a bad idea.”

“I struggle to find the leader of any friendly country that thinks we should leave,” he said Wednesday.

***** For the explanation of the referendum and graphics by The Economist, go here.

See Who Does Exploit Offshore Tax Havens

Posted on by

Offshore investment is among the murkiest sectors of the financial world. That’s by design — keeping money offshore can help shield money from tax authorities, obscure its origin and conceal the genuine owners. There are many legitimate reasons for opening an offshore banks account. Wealthy people do it to better manage their investment portfolios or protect their assets. Offshore accounts can also help the rich pay less tax — legally.

However, offshore accounts are also the lynchpin in many illegal tax avoidance schemes. Owners go to great lengths to conceal the existence of these accounts from their home governments, and they are often helped by lax disclosure rules in offshore tax havens.

Investors caught trying to hide their accounts can face steep penalties. More here from CNN.

US corporations have $1.4tn hidden in tax havens, claims Oxfam report

Charity analysis of the 50 biggest US businesses claims Apple have $181bn held offshore, while General Electric has $119bn and Microsoft $108bn

Guardian: US corporate giants such as Apple, Walmart and General Electric have stashed $1.4tn (£980bn) in tax havens, despite receiving trillions of dollars in taxpayer support, according to a report by anti-poverty charity Oxfam.

The sum, larger than the economic output of Russia, South Korea and Spain, is held in an “opaque and secretive network” of 1,608 subsidiaries based offshore, said Oxfam.

The charity’s analysis of the financial affairs of the 50 biggest US corporations comes amid intense scrutiny of tax havens following the leak of the Panama Papers.

And the charity said its report, entitled Broken at the Top was a further illustration of “massive systematic abuse” of the global tax system.

Technology giant Apple, the world’s second biggest company, topped Oxfam’s league table, with some $181bn held offshore in three subsidiaries.

Boston-based conglomerate General Electric, which Oxfam said has received $28bn in taxpayer backing, was second with $119bn stored in 118 tax haven subsidiaries.

Computing firm Microsoft was third with $108bn, in a top 10 that also included pharmaceuticals giant Pfizer, Google’s parent company Alphabet and Exxon Mobil, the largest oil company not owned by an oil-producing state.

Oxfam contrasted the $1.4tn held offshore with the $1tn paid in tax by the top 50 US firms between 2008 and 2014.

It pointed out that the companies had also enjoyed a combined $11.2tn in federal loans, bailouts and loan guarantees during the same period.

Overall, the use of tax havens allowed the US firms to reduce their effective tax rate on $4tn of profits from the US headline rate of 35% to an average of 26.5% between 2008 and 2014.

The charity said this had helped firms spend billions on an “army” of lobbyists calling for greater state support in the form of loans, bailouts and guarantees, funded by taxpayers.

The top 50 US firms spent $2.6bn between 2008 and 2014 on lobbying the US government, Oxfam said.

“For every $1 spent on lobbying, these 50 companies collectively received $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts,” said Oxfam.

Robbie Silverman, senior tax adviser at Oxfam said: “Yet again we have evidence of a massive systematic abuse of the global tax system.

“We can’t go on with a situation where the rich and powerful are not paying their fair share of tax, leaving the rest of us to foot the bill.

“Governments across the globe must come together now to end the era of tax havens.”

Oxfam estimates that tax avoidance by US corporations costs the world’s largest economy some $111bn a year, but said it was also fuelling the global wealth divide by draining $100bn from the poorest countries.

“Tax dodging practised by corporations and enabled by federal policymakers contributes to dangerous inequality that is undermining our social fabric and hindering economic growth,” the report said.

Oxfam also singled out British overseas territories such as Bermuda for their popularity with US firms seeking to slash their tax bill by “profit-shifting”.

In 2012, said Oxfam, US firms reported $80bn of profit in Bermuda, more than their combined reported profits in Japan, China, Germany and France, four of the world’s five largest economies.

The charity called on the US government to pass the Stop Tax Haven Abuse Act, including a requirement for firms to report their tax contribution on a country-by-country basis, there is only one caution when doing this though and that is to not be mistaken that a country is a tax haven when in fact it isn’t, for example many people refer to Andorra as the tax haven of Andorra however Andorra is not actually a tax haven, one way to be sure whether a country is a legally classed tax haven is refer to the FATF blacklist, it lists every country that is recognised by government as an actual tax haven.

Country-by-country reporting has been recommended by a host of non-governmental organisations and charities to prevent companies from artificially shifting their income out of the poorest countries.

Any Americans in the Panama Papers?

Posted on by
Headlines coming soon courtesy of media as noted by McClatchy
Mossack Fonseca worked with oil firms owned by Iranian state despite sanctions

Documents show law firm at centre of Panama Papers leak carried on doing business with companies after learning of their real owners

Guardian: The law firm at the centre of the Panama Papers leak acted for an Iranian oil company that had been blacklisted by the US, the documents reveal.

Mossack Fonseca realised it was working for Petropars Ltd in 2010 only when another client accidentally fell foul of the US sanctions that had been imposed on the energy firm.

Petropars and the other client had been assigned the same PO box in the British Virgin Islands by Mossack Fonseca, and the address had been flagged by banks as linked to a blacklisted company.

The episode highlights the perils of giving the same address to thousands of shelf-companies – and the lack of rigour in Mossack Fonseca’s due diligence procedures.

This was acknowledged by the firm’s managing partner, Jürgen Mossack, who sent an angry email complaining about the lack of background checks, the documents show. “Everybody knows that there are United Nations sanctions against Iran, and we certainly want no business with regimes and individuals from such places! Not because of OFAC [the Office of Foreign Assets Control, the US Treasury department that deals with sanctions] but out of principle.”

Mossack Fonseca discovered it had been acting for the Iranian firm when the head of its Geneva office requested that a client be given a new mailing address in the British Virgin Islands (BVI).

PO box 3136 in Road Town, Tortola, was shared by a multitude of other shelf companies on the law firm’s books, including Petropars.

Petropars had been designated by the US Treasury in June that year as an oil company ultimately owned by the Iranian state. With offices in Dubai and London, it played a key role in securing foreign investment for the South Pars natural gas field. The largest in the world, the field lies in the Persian gulf and is shared with Qatar.

Putting Petropars on the official OFAC sanctions list was intended to sap financial support for Iran’s nuclear and missile programmes.

After a flurry of checks, Mossack Fonseca discovered it was acting for Petropars and two other companies in which it held stakes: Drilling Company International Limited and Venirogc Limited, a joint venture with Venezuela’s state-owned oil company PDVSA, which would itself be blacklisted by the US the following year.

Three months after the blacklisting, Mossack Fonseca’s compliance team recommended resigning from Petropars and “all its associated companies”. By then, not only OFAC but the United Nations had issued sanctions against the Middle Eastern state.

Mossack Fonseca duly stood down and Petropars was recorded as inactive from May 2011, as were its two subsidiaries. But another Iranian company remained on the books.

Despite resolving to cut ties with Iran, Mossack Fonseca continued servicing an outfit called Petrocom. It shared the same London accountant as Petropars, and gave its address as Sepahbod Gharani Avenue in Tehran.

The relationship was managed through London, where a separately owned business holds the exclusive UK rights to market Mossack Fonseca’s services.

Mossack Fonseca in the BVI produced a certificate of good standing (often requested by banks or trading partners), stamped by the office of the Virgin Islands deputy governor on 14 September 2010; papers approving the appointment of a new chairman and managing director; and others for the creation of a joint venture.

Mossack Fonseca’s BVI office did carry out checks on the company. A request for the name of the ultimate beneficial owner of Petrocom elicited the following reply from Mossack Fonseca’s UK franchise: “I think we could assume that would be Mahmoud Ahmadinejad unless I’m mistaken.”

While Iran’s then-president was unlikely to have actually held shares in these offshore entities, the comment makes it clear Mossack Fonseca’s UK office knew it was continuing to act for state-owned companies.

In June 2013, the US imposed sanctions on Petrocom’s parent OIIC, describing it as part of a network of 37 front companies set up to manage the Iranian leadership’s commercial holdings. OIIC was allegedly controlled by a holding company called Eiko, which stands for The Execution of Imam Khomeini’s Order.

“The purpose of this network is to generate and control massive, off-the-books investments, shielded from the view of the Iranian people and international regulators,” a US Treasury press release stated.

The most recent data, from December 2015, shows Petrocom remains on the firm’s books. A certificate of good standing was issued as recently as April 2015.

Mossack Fonseca said: “We have never knowingly allowed the use of our companies by individuals having any relationship with North Korea, Zimbabwe, Syria and other countries or individuals sanctioned by the United States or European Union. We routinely resign from client engagements when ongoing due diligence and/or updates to sanctions lists reveals that a party to a company for which we provide services has been either convicted or listed by a sanctioning body.”

Emmanuel Cohen, who runs Mossack Fonseca’s UK franchise, said in a letter from his lawyer that he had been “in the forefront of undertaking due diligence checks over the years”, and that “he takes the obligations of reporting extremely seriously and files any suspicious activity” with the National Crime Agency. Regarding Petropars, Mossack Fonseca UK “was working through a professional client in the UK and was not responsible for any due diligence”. He added that the UK business was under no obligation to follow US sanctions.

Petrocom and Petropars did not respond to requests for comment.

In January 2016, the US removed Petropars and OIIC from its blacklist, following the nuclear deal with Iran.

Panama Papers reporting team: Juliette Garside, Luke Harding, Holly Watt, David Pegg, Helena Bengtsson, Simon Bowers, Owen Gibson and Nick Hopkins

1 Person a Year Ago, Lead to Panama Papers, Ripple Effect

Posted on by
What banks aided in the accounts of the global elites to hide their wealth? Did our own governmental financial gurus know about this? Well yes. Encryption was also used. Ahem….
Ah yeah sure —>>  WSJ: The U.S. Justice Department said Monday it is reviewing documents published by international media outlets to see if the papers constitute evidence of corruption that could be prosecuted in the U.S. Also Monday, French prosecutors opened an investigation into whether French nationals or financial institutions have used Panama to evade taxes.
****
IndiaExpress: Two global companies were under mounting pressure, and threats were flying. For years, the Swiss banking giant UBS and a Panama law firm named Mossack Fonseca embraced each other in a mutually profitable relationship. UBS had customers who wanted offshore shell companies to keep their finances hidden. And Mossack Fonseca, one of the largest creators of offshore companies in the world, was happy to sell them.
Oh, ousted Egyptian president Hosni Mubarak’s son is on the investigation list.
AhramOnline: Mubarak’s eldest son Alaa was revealed to be involved in dealing with Mossack Fonseca through his British Virgin Islands firm Pan World Investments Inc., which is managed by Credit Suisse. Alaa and Gamal were released from prison in January 2015 after serving the maximum pre-trial detention period of 18 months.Their release decision overturned a lower court conviction that saw the pair given four-year jail sentences and a three-year sentence for the elder Mubarak. They were charged with embezzling public funds earmarked for the renovation of presidential palaces and using the money to spruce up private properties. A Cairo court dropped other graft charges against the two sons in late 2014. More here.

OneIndia: New Delhi, April 5:The Panama Papers leak, claimed by many as the “world’s biggest”, has created ripples across the world, upsetting the rich and mighty with accounts in tax havens. But there is confusion about who actually leaked the papers.The leak turned out to be a Monday mayhem for around 214,000 hidden offshore companies after a group of global journalists, International Consortium of Investigative Journalists (ICIJ), got hold of the papers of the practically unknown law firm Mossack Fonseca based in Panama.
So who leaked the ‘Panama Papers’ — a collection of over 2,600 GB of data comprising more than 11 million documents?According to reports, over a year ago, an anonymous source contacted German newspaper Süddeutsche Zeitung (SZ) and submitted encrypted internal documents from Mossack Fonseca, detailing how the firm set up and sold anonymous offshore companies around the world.In the months that followed, the number of documents continued to grow far beyond the original leak.Ultimately, Süddeutsche Zeitung acquired about 2.6 terabytes, or 2,600 GB, of data –making the leak the biggest that journalists had ever worked with.The source, who contacted the German newspaper’s reporter, Bastian Oberway, via encrypted chat wanted neither financial compensation nor anything else in return, apart from a few security measures, the daily said on its website.
After getting their hands on the data, the Süddeutsche Zeitung decided to analyse the data in cooperation with the ICIJ as the consortium had already coordinated the research for past projects that the daily was also involved in.In the past 12 months, around 400 journalists from more than 100 media organisations in over 80 countries have taken part in researching the documents. The team included journalists from the Guardian and the BBC in England, Le Monde in France, La Nación in Argentina and The Indian Express in India.In Germany, Suddeutsche Zeitung journalists cooperated with their colleagues from two public broadcasters, NDR and WDR. Journalists from the Swiss Sonntagszeitung and the Austrian weekly Falter have also worked on the project, as have their colleagues at ORF, Austria’s national public broadcaster.The international team initially met in Washington, Munich, Lillehammer and London to map out the research process.

China would rather its citizens didn’t talk too much about the Panama Papers.

CNN: A coalition of news organizations has seized global attention with a barrage of reports based on a massive document leak from a law firm in Panama. The reports, which CNN hasn’t been able to independently verify, allege top officials and people connected to them around the world hid wealth through secret offshore companies.

China’s online censors are restricting many search results and discussions on social media involving the terms “Panama Papers” and “Panama.” They’re also censoring use of the names of relatives of current and former Chinese leaders — including President Xi Jinping — that are mentioned in the reports.

At a news briefing Tuesday, Chinese Foreign Ministry spokesman Hong Lei declined to comment in response to repeated questions about the reports, which he described as “pulled out of nowhere.”

It’s not against the law to have offshore financial holdings, and the leaked documents don’t necessarily indicate illegal activity. But the personal finances of Chinese leaders and their family members is a hugely sensitive issue for the ruling Communist Party, which is in the midst of a sweeping anti-corruption campaign led by Xi. More here.

 

 

NATO members Pay Billions

Posted on by

There is no doubt the NATO member countries have offered aid and support in the war on terror. Could countries do more? Yes, yet member countries are hardly free riders. NATO does coordinate more than what is realized in current conditions of hostilities in the Middle East.

NATO: The first group of officers from Iraq’s national security forces started their NATO training course at the King Abdullah Special Operations Training Centre in Amman, Jordan, on 2 April 2016. Their training is part of NATO’s effort to help Iraq build up its defence capacities, reform its security sector and increase its ability to contribute to regional stability. In the next six months, 350 Iraqi officers will be trained in the NATO course. Training will begin with a focus on military medicine, civil military planning and on countering improvised explosive devices.

NATO Intelligence Fusion Cell Operations since 2006

Trump Willing to Break Up NATO

AtlanticCouncil: Donald J. Trump on Saturday went further than ever before in his criticism of the North Atlantic Treaty Organization, telling a crowd here that he would be fine if NATO broke up.

Mr. Trump had previously questioned the need for the organization, and on Saturday he reiterated his criticism that other NATO countries were “not paying their fair share” in comparison with the United States.

“That means we are protecting them, giving them military protection and other things, and they’re ripping off the United States. And you know what we do? Nothing,” Mr. Trump said at a subdued rally here on the outskirts of Milwaukee. “Either they have to pay up for past deficiencies or they have to get out.”

“And if it breaks up NATO, it breaks up NATO,” he concluded.

The role of the United States in NATO has become a point of contention here between Mr. Trump and his chief rival, Senator Ted Cruz of Texas, as the candidates battle to win the state’s 42 delegates in Tuesday’s primary. Mr. Cruz has criticized Mr. Trump’s comments on NATO, saying that the United States needed to support the organization’s fight against terrorism and to counterbalance Russia’s influence….

Later, at an event in Wausau, Wis., Mr. Trump seemed to acknowledge the controversy his initial remarks about NATO had prompted.

“I said here’s the problem with NATO: it’s obsolete,” Mr. Trump said, recounting his comments. “Big statement to make when you don’t know that much about it, but I learn quickly.”

**** WSJ:

Paying up? Well yes, no free-riders

In part from Bloomberg: Even before being pinched by the global financial crisis, most NATO nations repeatedly cut their defense budgets, failing to meet the 2 percent benchmark. On the other hand, this viewpoint — part of what my colleague Eli Lake calls the Obama-Trump Doctrine — ignores some facts.Japan, Korea and European countries to some extent subsidize the U.S. troop presence inside their borders; Germany pays over $1 billion and Japan upped its 2016 contribution by 1.4 percent, to $1.6 billion. Recall, too, that the allies have been there for American-initiated wars in Afghanistan and Iraq.

Consider NATO. According to the latest annual report from Secretary General Jens Stoltenberg, 16 members spent more on defense last year than in 2014. While the Baltic states and other smallish countries living in Russia’s shadow generally had the largest percentage increases, Germany has approved boosts of $2.1 billion per year through 2019, and the U.K. has pledged an additional $18 billion over a decade.

More important, perhaps, NATO nations are spending a lot more on actual fighting equipment rather than staffs and pensions — eight allocated more than 20 percent of their military budgets to hardware. Readiness is also being stressed: Last year’s Exercise Trident Juncture in Southern Europe was the largest joint drill in over a decade, involving 36,000 troops, 140 aircraft and 60 ships.

Just as Russia has shaken Europe out of its defense stupor, so have China and North Korea energized the rest of East Asia. Japan has allocated a record $42 billion in fiscal 2016 (although a sluggish yen means its global spending power has increased at a lower rate). The budget includes purchases of six next-generation Lockheed-Martin F-35s and three Global Hawk drones, and funding for building a new guided missile destroyer. For more information and charts on funding NATO.