March 2001 Selected News Clips

IS THE US TREASURY DEPARTMENT POISED TO DISTANCE ITSELF FROM OECD BLACKLIST?

It seems that Treasury Secretary Paul O’Neill’s carefully balanced remarks made after the Palermo G7 summit on the subject of the OECD’s “unfair tax competition” initiative reflect a lively debate within the Treasury Department on the wisdom of continuing to support all aspects of the OECD’s campaign.

As is the case with most national revenue-raising authorities, the permanent officials in the Treasury Dept are “slash-and-burn” taxation junkies, and are fully on board the OECD's fiscal juggernaut. During the Democrat administration which has just ended, they and their political masters shared the same agenda - but now they face an anti-tax right-wing administration, and they will not find it so easy to continue with international policies designed to protect the tax base in rich countries through a program of what has been called “fiscal colonialism” aimed at discomfiting the offshore tax havens.

In internal discussions, Treasury Secretary Paul O'Neill is said to have been sceptical about the OECD’s campaign. Treasury Secretaries, especially new ones, do not always find it easy to be aware of what is going on down in the engine room, and senior Republican legislators, as well as Washington lobbyists, have been making sure that the new Secretary is well aware of what is happening in his domain through a series of letters and active press coverage.

TWO FACED O.E.C.D. HEAD “DAMNED MAD”

PARIS, March 1. OECD head Donald JOHNSTON lashed out angrily against accusations his agency is bullying haven nations, saying "Frankly, I'm damn mad".

His dyspepsia was prompted by the leak of a secret OECD memo revealing plans to stiff haven nations after an OECD promise of cooperation, which was denounced by Don McKINNON, head of the British Commonwealth nations.

OFFSHORE TRUST PROVIDERS ARRESTED

Federal tax agents raided offices across the U.S. Wednesday and arrested four leaders of what the US Justice Dept. described as a money laundering and tax evasion operation using offshore trusts. The undercover operation nabbed persons who claimed they were "too clever" ever to be caught. Interesting detailed NBC story here and here.

The arrests follow the sentencing of a California couple who helped clients evade at least $13.8 million in US income taxes.

More information about the continuing IRS crackdown on "abusive" trusts and "abusive" tax shelters here.

SWISS SCHIZOPHRENIA

ZURICH. Swiss leaders can't make up their minds; do they want to continue to be Swiss, or should they sell out to the EU and UN.

SEARCH AND SEIZE

The sorry state of Fourth Amendment rights in the U.S.

ADVICE FROM CATO

Cato's David BOAZ says Pres. Bush should drop the economic growth argument for tax cuts, and stick to the freedom, liberty, and smaller government arguments.

"AN ALPINE FORTRESS GUARDING DIRTY MONEY"

ZURICH. The headline is from a German newspaper grumbling because on Sunday, in a 55% voter turn out, an overwhelming 77% majority of Swiss voters (and all 26 cantons) rejected a referendum proposal to join the EU. On Monday the Swiss government doggedly reaffirmed its commitment to joining the EU. Perhaps the Swiss need a new government?

For a change, the Swiss economy is thriving and here's why.

THE F.B.I. LIKES MAN, CHANNEL ISLANDS

LONDON. The US Federal Bureau of Investigation praises the Isle of Man and Channel Islands police for working closely with them.

NEW BRITISH PROPERTY CONFISCATION LAW

LONDON. The UK Labour government is creating a fascist property forfeiture agency. The director of a UK civil rights group charges this "undermines the presumption of innocence" creating a system in which mere police accusations "will force people to disclose all their financial affairs." Meanwhile, the Inland Revenue may be an unwitting cover for massive money laundering.

CORPORATE MONEY CONDUIT

BOGOTA, Columbia. How alleged dirty criminal money is finding its way to the clean corporate bottom line. An interesting study here.

BUSY CAYMANS BANK INFORMANT

WASHINGTON. A star witness at last week's Senate anti-offshore hearings was government informant and former Cayman Islands banker John MATHEWSON. The convicted US tax evader and money launderer blithely claimed that 95% of those who bank offshore are tax evaders.

Mathewson had a busy week earning his keep as government snitch. At a Pittsburgh trial he also testified against one of his ex-clients.

INVASION OF THE WEB BUGS

A major security threat on the horizon called "Web bugs," a small scripts technology that Web sites can deploy to copy files from hard drives and ship them to 3rd-party sites while evading nearly all firewalls. And they can surreptitiously install programs on your PC.

LOCATION, LOCATION

Wireless systems capable of tracking vehicles and people all over the planet are making would be trackers happy, and privacy advocates are deeply and rightfully concerned.

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.'

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.'

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.

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.

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.

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.

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.

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.

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.

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.

OFFSHORE TAX ADVICE FOR BRITS

Send your money offshore and save on taxes.

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.

PREPAID PHONE CARDS PRIVACY

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

WANT INFO? FEDS HAPPY TO SHARE

The government should examine its own privacy practices before pointing a finger at the commercial sector, a report published Monday said.

"The Federal government is the largest collector and user of citizens' personal and private information," said Jim Harper, operator of Privacilla.org. "It's hard enough to control your personal information in the commercial world -- it's impossible to protect it in the governmental world."

While legislators debate information-privacy guidelines on Capitol Hill, few have criticized information sharing by government, Harper said.

A survey by Privacilla found that new government information-sharing programs were announced 47 times within the last 18 months, or a little more than once every two weeks.

AMERICAN TAX PROTESTERS PLAN WASHINGTON MARCH ON APRIL 9TH

US citizens who believe that the Federal Government has no legal basis on which it can assess Americans to income tax are planning an IRS 'Walk-Around' for 9th April. The 'We The People Foundation' (see http://www.givemeliberty.org) wants 1,040 people (the code number of the US income tax return) to encircle the IRS headquarters building in Washington.

Close examination of the facts does seem to show that US federal income tax collection has a decidedly shaky legal basis, but the US anti-tax brigade is a motley assortment of people, with genuine libertarians at one end of the spectrum and free-riding tax evaders at the other. So far the movement has been little more than an irritant to the Government, especially at a time when the IRS is short of resources and there is a massive budget surplus. But it can't continue: sooner or later the Government will have to respond, and when it does, the response will be to put in place the legislative certainty which currently seems to be lacking.

What is interesting, though, is how such a legislative endeavour would play in a divided Congress with a Republican President hell-bent on a tax-cutting agenda. Administration planners can't relish having to cope with a situation in which a bill is put forward tacitly admitting that all Federal tax collection since 1913 is possibly illegal.

This is all probably just a good game; but it could get serious!

TALK ABOUT “OFFSHORE” ACCOUNTS!

The paper trail of MILOSEVIC's billions now stretches to Beijing, Moscow, Johannesburg, London, Germany, Switzerland, Greece, Lebanon and Chile.

THE WISDOM OF RON PAUL

The Texas US congressman and former Libertarian presidential candidate says tax cuts are fine, but the ultimate goals should be "the elimination of the federal income tax" and ending the "uncontrolled bureaucracy" that is the IRS.

And here is Rep. Paul’s estimate of a false globalism built on the shifting sands of fiat money.

HEDGE FUND HEADQUARTERS

The top three domiciles for hedge funds in 2000 were The Bahamas, the Cayman Islands and the British Virgin Islands, with Bermuda in 4th place. That's the same as in 1999.

BALTIC TAX BREAK

VILNIUS, Lithuanian. The government is determined to eliminate the 24% tax on corporate profits as of from Jan 1, 2002. IBCs welcome!

OFFSHORE BANK RESTRICTIONS PROPOSED

WASHINGTON. Following trumped up US Senate hearings, new restrictions on US dealings with offshore banks are proposed.

SEALAND MAY HOST NAPSTER CLONE

The North Sea ex-oil rig may serve as an offshore music marketer.

SWISS BANK SECRECY DEFENDED

GENEVA. The head of the Swiss Private Bankers Association vigorously defends his nation's traditional bank secrecy.

I.R.S. CAUSING U.S. RECESSION?

WASHINGTON. Charge: IRS regulations "have caused a massive withdrawal of foreign investment into the US, further depressing stock markets."

OFFSHORE PRIVATE BANKING

AMERICAN CIVIL FORFEITURE LAWS

Why "The 2000 Civil Asset Forfeiture Reform Act" really does not reform the much abused practice of US police forfeiture. Worth reading.

PERMANENTLY OFFSHORE PT's

Two new ocean going projects are afloat, both designed with very independent Perpetual Travelers in mind. Check out The Freedom Ship here and The World of ResidenSea at here.

OFFSHORE RETIREMENT, RELOCATION

....in Mexico, at half the US price, or less. Other places too.

The facts about easy relocation to any offshore nation.

The UK Foreign Office website provides country specific profiles and travel alert updates. Everything you need to know about any nation.

US State Dept. services for Americans living abroad here.

IS OFFSHORE FINANCIAL SECRECY DEAD?

A candid assessment of the future of offshore financial privacy.

THE CYBER TERRORISM EXCUSE

The government uses the terrorism threat to curb privacy and liberty.

“Electronic Pearl Harbor? More Hype Than Threat.”

PGP FLAW FOUND, DISPUTED

The most popular software for sending encrypted e-mail, PGP, may have a flaw.

Online Flaw report: here.

Free PGP version: here.

Network Associates' PGP unit: here.

Phil Zimmermann invented PGP encryption software and defeated government efforts to suppress it and imprison him. Now he's working a new privacy program that will shield voice communications.

OECD STEPS UP TAX HAVEN DRIVE

The Organisation for Economic Co-operation and Development has warned tax havens that it will not relent in its campaign to make them reform their financial systems.

The OECD said it aimed to win commitments to greater transparency from 32 offshore financial centres by the end of July.

The plan will disappoint some Caribbean havens, which wanted to set up a global forum to review the status of offshore centres rather than negotiate with the OECD individually.

In an interview with the Financial Times, Seiichi Kondo, OECD deputy secretary-general, said the organisation hoped to build on commitments already made by the Seychelles, the Netherlands Antilles and the Isle of Man.

"The more jurisdictions that sign up, the more pressure will be put on the remaining ones," he said.

The OECD last June published a list of 35 havens that it threatened with economic sanctions unless they agreed by this July to raise levels of financial disclosure and improve co-operation.

Mr Kondo said a working group created in January by the OECD and offshore centres had helped clarify how the havens could implement the OECD's demands. But he warned that the OECD planned to press individual centres for commitments rather than forge a multilateral agreement on reform.

"There is certainly a limit to this multilateral dialogue," he said. "We are getting very close to this limit."

U.S. CONGRESS BLACK CAUCUS DENOUNCES O.E.C.D.

WASHINGTON. 32 members of the US House Congressional Black Caucus, all Democrats, have denounced the OECD's campaign against tax haven nations as an "initiative [that] threatens to undermine the fragile economies of some of our closest neighbors and allies, as well as the U.S. Virgin Islands." The signers all have significant Caribbean immigrant populations in their districts. The move gives a decidedly bipartisan cast to the anti-OECD movement in Congress.

U.S. MONEY LAUNDERING LAWS A TRAP

American anti-money laundering laws can snare the unwary or uneducated, says Denis KLEINFELD, noted asset protection attorney and Sovereign Society Advisory Board member. A very educational read, here.

The Finance Minister of CYPRUS refutes charges that his island nation is a center for money laundering.

OFFSHORE HAVENS' ANNUAL SURVEY

The annual survey of changes and trends in offshore haven nations from the pages of Offshore Investment magazine.

CUSTOMS GRABS RICH'S CASH

GATWICK, U.K. Customs officers seized nearly $2 million (£1.4 million) in cash Monday after it was flown into Britain on behalf of Marc Rich, the fugitive billionaire pardoned by Ex-Pres. Bill Clinton.

FREE BORDER SCHENGEN STATES EXPAND

Switzerland looks on as Norway and Iceland join the Schengen states that allow free international cross border passage.

IDENTITY THEFT FASTEST GROWING CRIME

Stolen IDs are costing millions in the US.

MUTUAL FUNDS UNSAFE?

Hans F. Sennholz gives a detailed explanation for mutual fund investors of how such funds operate and their relative degree of security.

U.S. CAPTIVE INSURANCE GROWS

South Carolina has joined a growing number of US states trying to encourage captive insurance companies to form domiciles onshore.

PRISON AMERICA

A record number of people in US prisons increased to 1,932,000 inmates last year and will surpass 2 million late this year.

The Cato Institute comments on Jail House America and what can be done.

FREEDOM QUOTES Directory

1,000 quotes regarding freedom, free markets and defending liberty, here.

“OFFSHORE” FOR THE MASSES

MIAMI. The Herald discovers “tax havens” and breathlessly tries to explain what goes on in the sinister “offshore world”.

AN ASIAN VIEW OF TAX HAVENS

HONG KONG. The Far Eastern Review finds tax havens have a role to play.

MOODY’S REPORTS ON OFFSHORE BANKS

Moodys says offshore banks may lose business from the wealthy because of THE OECD controversy. One of the strongest offshore banks rated; Dexia Banque Internationale à Luxemborg.

But a major BERMUDA bank disagrees with Moody's gloomy conclusions.

TAX FACTS FOR AMERICAN EXPATS

Forbes magazine explains how Americans living abroad can save a bunch on income taxes. As much as $76,000 a year is tax exempt.

For more about this offshore tax break for US persons, go here.

I.R.S. DRIVES AWAY INVESTMENT IN U.S.

Marshall J. LANGER says IRS rules requiring US banks to report interest paid to nonresident aliens may cause an outflow of millions from US financial markets.

More IRS-caused capital flight from the US and less future foreign investment due to those damnable "Qualified Intermediary" rules.