Offshore News Digest for Week of July 16, 2001

SINGAPORE SLINGS

Singapore is a free market economic paradise, but personal freedom and liberty are something else again. 2 views,

TAX FUGITIVE IN BELIZE

Last week we reported on an American tax fugitive living on the lam in Belize. Here is more about how he does it.

LIVING OFFSHORE

All about the advantages of living in a foreign country. A new and refreshing way to look at life "offshore."

UK expatriate describes living and working in BERMUDA.

OFFSHORE WITHHOLDING TAXES

If you have offshore investments, read this FT article on custodial withholding taxes, one of the best explanations we've seen.

HEDGE FUND BUBBLE?

A mania has gripped the US and Europe that could have unpleasant consequences for investors, warns Barton Biggs.

FORBES OFFSHORE STOCK PICKS

Foreign stocks got off to a bad start in 2001, but FORBES says the world's biggest companies should finish the year on a better note.

H.N.W.I.s HIT BY U.S. ALT MIN TAX

American high net worth investors suffer from the alternative minimum tax, especially those in tax free municipal bond funds.

U.S. ESTATE TAX GOING UP?

The top US estate tax rate may be going up, not down, based on the state in which you live. It peaks at 47% in 2005, up from 39% now.

UPDATE YOUR ESTATE PLAN

With all those US tax law changes, some suggestions for updated estate planning, including a new, flexible bypass trust.

NUPTIAL AGREEMENTS: POST & PRE

American couples are now signing post nuptial agreements.

ALTERNATIVE CASH

CAMELIAS, COLUMBIA. Where US demand and local supply makes coca paste as good, if not better than, gold.

CANADA-U.S. TRUST TAX QUESTIONED

OTTAWA. Under court review: secret agreement between Revenue Canada and Bronfman family (Seagrams Distillery ) US trusts that avoided $700 million in capital gains taxes.

COLORADO “OFFSHORE” BANK IN TROUBLE

DENVER. A so-called "offshore US bank" aimed at foreign depositors is in trouble for false claims hinting at tax evasion.

IS AMERICA REALLY THE LAND OF THE FREE?

Just as Americans finish celebrating the 225th anniversary of the nation’s birth by belting out the "Star Spangled Banner" and singing praise to the Declaration of Independence and Bill of Rights, reminders of Americans’ diminishing freedoms are everywhere.

In New York City’s Washington Square Park, cameras hidden behind trees and perched atop poles monitor the movements of skateboarders and sun-seekers. In Texas, roadside cameras catch the license plates of anyone crossing state lines and report back to government officials. And in Tampa, Fla., officials keep a close eye, some say too close an eye, on revelers partying it up in the popular Ybor City nightclub district.

It’s all too much for some.

"What’s happening in Tampa is troubling," says civil liberties advocate Norman Siegel, the former director of the New York chapter of the American Civil Liberties Union. "It indicates that the technology is outpacing the civil rights and civil liberties along with the right of anonymity and privacy."

And it’s not just cameras that are causing an uproar.

State and local officials, as well as countless other agencies, can easily monitor people’s movements, lifestyle, personal habits and shopping trends by accessing credit card statements and tracking cell phone records, toll booth payments and e-mail.

But Tampa’s effort to keep tabs on criminals and an eye out for suspicious activity is entering previously uncharted territory. The city has installed a handful of state-of-the-art security cameras that scan crowds of people and in seconds based on facial characteristics can tell whether someone is wanted by the law by comparing the data with mug shots on file.

In a statement released last Friday, Det. D.W. Bill Todd Jr. of the Tampa Police Department refuted the notion that the cameras are an invasion of privacy, saying, "Face-recognition technology is a powerful tool to assist in maximizing public safety."

Besides, he added, on an Ybor City street of restaurants, nightclubs and stores crowded with 20,000 people, "your expectation of privacy is somewhat diminished anyway."

The face-printing system is not uncommon, it has been used by casinos, federal government offices and at Super Bowl XXXV, but it is fueling an incendiary debate over the line between privacy and public safety.

Already, a national law enforcement organization is calling on the Tampa Police Department to take down the cameras, calling the system an unconstitutional, Big Brother-like invasion of privacy.

Kevin H. Watson, a spokesman for The Law Enforcement Alliance of America, says, "We’re calling for the cameras to be removed simply because there is the potential violation of the Fourth Amendment and the rights of privacy," he says. "The cameras also create a sense of distrust between the community and the law enforcement officers that are there to protect the people, especially when they are perceived as being a part of this Big-Brother scheme."

While Watson agrees that the system is useful in airports where such high-tech X-ray machines as BodySearch can peer behind a person’s clothing he says the technology isn’t for Main Street.

"There are certain venues that this technology is very useful in," he says. "Folks who walk into an airport terminal are voluntarily accepting extra security. It is part of the agreement. But to put it up on Main Street, we just don’t agree with that."

Siegel agrees. "If you are not engaged in criminal activity, no American should be the subject of a database archive from the federal, state or local government," he says. "But with this new technology, it’s a daily occurrence."

Others disagree that the high-tech surveillance violates constitutional rights. "As long as you’re taking pictures, there's really not such an intrusiveness that's going to violate the Constitution," says Stephen Crawford, a Florida-based attorney.

Despite the protests, other communities are moving ahead with plans similar to Tampa’s. Colorado recently announced plans to install a system that will capture drivers' facial characteristics to help prevent people from getting multiple driver's licenses under false names.

Civil libertarians are getting more and more nervous with each such announcement.

"More and more our government is developing the capacity to find out where we are, who we are with, and where we are going," says Siegel. "This should trouble all Americans."

SPAIN USES GIBRALTAR CARD TO WRECK OECD COMPROMISE

Spain is continuing to use the Gibraltar issue to block agreement at the OECD over the continuation of its 'harmful tax competition' initiative.

Last week the OECD's Fiscal Affairs Committee blocked out the shape of a compromise which would allow the initiative to continue with a narrowed focus on exchange of information after the US objected to the other two main planks of the initiative dealing with tax rates and discriminatory practices. But Spain, which objects to British ownership of Gibraltar under a 200-year-old treaty, spotted an opportunity to forward its Gibraltarian agenda by demanding guarantees that the Rock, as it's known, will reform its low-tax regime.

Spain's Ambassador to the Organization for Economic Cooperation and Development Elena Pisonero said she will veto the agreement, which among other things pushes back to November this month's sanctions deadline for 35 tax havens to end "harmful" tax practices, unless there are guarantees that Gibraltar, a U.K. colony, will respect the accord.

"For Spain the maximum guarantee is that Gibraltar is no longer treated as a tax haven but as a preferential tax regime and as such it would fall on the U.K. as the relevant authority to be responsible for eliminating harmful tax practices there," Pisonero said in a statement.

There's no chance that Britain, or for that matter Gibraltar, will agree to the Spanish demand, which will quite possibly have the effect of destroying the fragile agreement put together between Britain and Spain in Stockholm during the Swedish presidency to recommence talks over the constitutional future of Gibraltar.

The longer the OECD talks continue, the more probable it is that the compromise stitched together since the beginning of the year will founder. Switzerland and Luxembourg abstained from previous agreements setting the process in motion. Belgium and Portugal are also likely to abstain in a vote to adopt the new agreement.

The United Kingdom said the Spanish action didn't require a unilateral response from them. "It's not something specific for the U.K.," said a U.K. Treasury spokeswoman. "The OECD is discussing it with the Spanish. They are in the lead."

CAR RENTAL GPS SPEEDING FINES ILLEGAL

A Connecticut group has sided on behalf of consumers in a case where a driver was fined for speeding in a car outfitted with a global positioning system.

The state's Department of Consumer Protection sided with renters against car rental company Acme Rent-a-Car, of New Haven. In an administrative complaint filed against the car rental company on Monday, the department charged Acme with violating state law when it fined drivers who exceeded the posted speed limit while driving a rental car.

Acme installs global positioning system (GPS) in its cars to find stolen rental cars and charge customers for "dangerous" conduct. When a rental customer drives faster than the posted speed limit, that information is sent to the company.

"We alleged they have violated Connecticut law," the department's commissioner, James T. Fleming, said. "There is no legal ability for them to charge a penalty when there has been no damage."

The complaint comes in answer to a small-claims lawsuit filed last year.

The plaintiff in that suit, New Haven resident James Turner, rented a car from Acme Rent-a-Car last October.

On its contracts, Acme states that "vehicles driven in excess of posted speed limit will be charged a $150 fee per occurrence. All our vehicles are GPS equipped." Turner, and many other customers, didn't connect the two statements, and paid for it later.

Turner apparently drove faster than 77 mph at least three times, not knowing that the car's GPS receiver was giving him away. Without providing him any warning apart from the contract, the rental company went ahead and charged Turner $150 for each incident.

Commissioner Fleming declared the charges illegal.

"If they want to track people, well, companies do that right now," he said. "The difference here is that they tracked--and then they fined--people without properly notifying them."

Acme Rent-a-Car's attorney could not be reached for comment but has previously indicated the company would accept the department's interpretation of the law. The company would still be allowed to track the car using the GPS system, Fleming said.

The Department of Consumer Protection has requested that Acme sign a cease-and-desist order banning it from charging consumers the speeding fine and providing restitution to the more than two-dozen consumers who have been charged.

IDENTITY CHIP RAISES PRIVACY CONCERNS

A tiny new chip from Hitachi could have massive implications for security - and also for your privacy Hitachi has developed a chip that could be woven into paper money to help identify counterfeits, and which could also have wide ramifications for the identification and surveillance technologies.

The chip, called Mew, measures just 0.4 millimeters on a side, and stores information such as identification and security code. It includes 128 bits of read-only memory (ROM) and RF wireless circuitry that allows it to transmit over a distance of about 30cm. If inserted in money, a reader unit would be able to instantly detect authentic bills.

Most identity chips are currently several millimeters on a side.

While the chip currently requires a reader unit to work, its size carries big implications for the future of identity technology. For example, future chips could be implanted into all paper money and be connected wirelessly to the Internet, so that authorities would be able to monitor the movement of all cash.

Such chips could also be embedded in other consumer products to track them in the event of theft.

Privacy advocates say the idea of being able to seamlessly track people, money and objects might be attractive to companies and governments, but it raises concerns over how far such technology might go. "What you could achieve with a chip like this is to ensure that surveillance becomes invisible," said Simon Davies, head of Privacy International. "If you really could track things in such an unobtrusive manner than anything an individual does can theoretically be captured."

He said that the ability to track currency is unlikely to be adopted by any democratic government because of the protest it would arouse. "But lots of authorities, like banks, would love to have that facility," he said.

Hitachi says it is considering adding rewritable memory to the device, but for the moment is using ROM to prevent data falsification.

The chip will begin sampling this autumn and Hitachi will begin marketing it next spring. Mew Solutions, the venture formed by Hitachi to promote the chip, expects sales of £145m (about £98m) by 2005.

TAX HAVEN SANCTIONS NOT THE ANSWER -- CULLEN

Finance Minister Michael Cullen has called on Britain to support New Zealand efforts to prevent harsh sanctions being imposed on Pacific Island tax havens.

A number of Pacific Island nations are included on a list of countries cited by the OECD as “non-cooperating nations” suspected of being used to launder money.

The Cook Islands, Nauru, Niue and the Marshall Islands are among those on the watch list, and could face international sanctions unless they clean up their act.

Possible actions could see international companies being warned against dealing with these countries.

Dr Cullen this morning met with Britain's Chancellor of the Exchequer, Gordon Brown, as he continued a two-week visit to Europe and Asia.

He said he hoped to get Mr. Brown's agreement that countries that have difficulty generating economic growth were not dealt with in an excessively heavy-handed manner.

The United Nations has estimated that more than $12,000 billion of dirty money is deposited in banks around the world each year.

RELENTLESS O.E.C.D. NEVER RESTS

PARIS. Certainly not easing its anti-haven bluster, a new OECD report harshly attacks numerous alleged tax havens by name, including - a first - the US State of DELAWARE.

TAX HAVENS WARN O.E.C.D.

Banding together, tax haven nations warn the OECD it is doomed to failure unless havens are included in decision making.

MONACO’S RUSSIAN INFLUENCE

From an apartment overlooking the tax haven of MONACO, two brothers from New Zealand exert extraordinary influence over Moscow's equity markets. A fascinating, behind the scenes read at

IRS PROPOSALS SLAMMED

Daniel MITCHELL lays bare the fallacies behind IRS proposals that would force US banks to report the bank deposit interest paid to nonresident foreign investors.

E.U. DISCOVERS ITS OWN “UNFAIR TAX COMPETITION”

BRUSSELS. Looking inward, the EU this week attacked corporate tax schemes in 8 EU countries as possible illegal state aid.

The EU also demanded the UK clamp down on GIBRALTAR's tax breaks for offshore IBCs registered there.

JERSEY JAMBOREE

ST. HELIER. This Channel Island goes overboard polishing its new squeaky clean image with a mid-summer anti-dirty money conference.

MANX PRIVACY REAFFIRMED

DOUGLAS. The Isle of Man High Court reaffirms statutory financial privacy guarantees that block foreign requests for information.

U.K. FORCES BERMUDA CONSTITUTION CHANGE

HAMILTON. London underscores the "dependent" status of its largest overseas territory, forcing constitutional changes without adequate consultation with many of the island's unhappy colonials.

BANK OF BERMUDA SETTLES FOR $67 MILLION

MIAMI. A major offshore bank, the Bank of Bermuda, pays up to $67.5 million to settle claims it aided a $300 million scheme that victimized 2500 people.

CALIFORNIA bans Allied Boston Bank, an offshore bank licensed by the Republic of PALAU.

BELIZE WONT FREEZE CASH

BELMOPAN. The Belize Supreme Court denies a US request to freeze $2 million in assets of a previously extradited US financier accused of money laundering and fraud.

CAYMANS BEST SELLER

GEORGE TOWN C.I. Islanders are reading the memoirs of Vassel JOHNSON, the ex-court clerk who created this tax haven's offshore legislative regime.

HONG KONG DECLINE

Hong Kong passes a law that will erode its autonomy by giving communist China power to sack the special territory's leader.

U.A.E. TAX HAVEN FALTERS

ABU DHABI, the UAE city that wants to be a tax haven for e-commerce and telecommunications in the Middle East, is hit by the tech collapse.

WORLD PASSPORT FRAUD

CHANDIGARH, INDIA: Police arrest con men doing a thriving business issuing 'world passports' 'authorized' by the World Service Authority.

E.U. ALL EUROPE TAX DEAD

BRUSSELS. Belgium stands alone in wanting to impose a multi-national layer of taxes on top of all other EU nation taxes.

WHERE THE YACHTS ARE

CANNES, France. "The very large yachts line the harbor here, white fiberglass behemoths whose home ports are the tax havens of the former British Empire: Bermuda, The Bahamas, the Cayman Islands, Guernsey, Jersey, the Isle of Mann."

WORLD TAX COLLECTOR

Thanks to Bill CLINTON, US banks may have to report foreign depositor data to countries such as Russia and China.

UNSEEN U.S. TAX HURTS

The Alternative Minimum Tax is an entirely separate tax system that hits newly prosperous Americans with a nasty surprise.

ASIAN & LATIN ECONOMIES IN TROUBLE

Third world recession is a reality. Here are the facts.

PHILIPPINES DIRTY MONEY

MANILA. A government that still cannot find out what happened to the millions Ferdinand MARCOS stashed offshore....

.....is pushing for a strong, new anti-money laundering law.

REGISTER OF CORRUPT ASSETS?

LONDON. Yeah, that's the ticket! Get crooks to register their ill gotten gains with their bankers.

ONLINE INVESTMENT WEB SITES

American stocks, http://www.fool.com, here and here.

Create your own custom monitor for your offshore shares at here.

United Kingdom, here, France, here, Germany, here, and European stocks, here.

Free wealth building strategy kit for UK expats, here.