Police raids highlight Italy’s fight against tax evasion
Reuters, February 6, 2012

US tax evasion hangs over Swiss banks
The Financial Times, February 5, 2012

Swiss bank Julius Baer cautious about outcome of US tax evasion probe
The Associated Press, February 6, 2012

United tax evasion defences start to crumble
Swiss Info, February 5, 2012

The offshore banking nightmare
Canadian Lawyer, February Issue, 2012

OSCE meeting on anti-money laundering and countering terrorism in Vienna
The Financial (Georgia), February 6, 2012

Govt probing money laundering allegation
The Daily Star (Malaysia), February 5, 2012

Lawyer: Hedge Funds Must Heed Foreign Corrupt Practices Act
FINalternatives, February 6, 2012

Congress, BJP misleading public on black money issue: Mayawati
PTI, February 6, 2012

Fighting corruption in emerging markets is surpassingly difficult. It involves displacing those with malign power. It cannot be initiated and led by outsiders. Corruption pervades and distorts society in nations like Russia and China where the U.S. has great interests. It was a primary cause of the popular uprisings in the Middle East and elsewhere. It remains a huge issue in the emerging markets of Africa and Asia and, especially in failed and failing states. It is a pervasive obstacle to legitimate and transparent economic globalization. And it undermines a key goal of current counter-insurgency military strategy — the building of a civil society.

At the core of these problems is bribery of public officials, and officials’ extortion and misappropriation of funds. In the last 20 years, there has been growing recognition that corruption of this sort has a widespread and insidious impact. It distorts markets and competition; breeds anger, cynicism and discontent among citizens; stymies the rule of law; corrodes the integrity of the private sector; and impairs development and poverty reduction. Bribery, extortion, and misappropriation also help perpetuate failed and failing states — and sectors of other states — that are incubators of terrorism, the narcotics trade, money laundering, human trafficking, counterfeiting, piracy and other kind of global crime.

Heinman goes on to list what he says the U.S. can do to help: continue to support international anti-bribery conventions such as the Foreign Corrupt Practices Act, apply contemporary counter-insurgency theories in places like Afghanistan, and promote development in a subtle, auxiliary role that offers support in the form of aid, advise, and limited action.

I take issue with nothing that Heinman writes. He does a great job writing about an important topic Unlike so many mainstream commentators, Heinman sees the importance of the United States in helping to solve problems of corruption in the developing world. Too often, opinion leaders seem to believe that corruption is an unsolvable problem, or that the United States can do very little to change things. What I do believe is that Heinman missed a critical component in the fight against corruption, one that is very much accomplishable by the United States. The U.S. needs to stop actively facilitating corruption by maintaining an opaque, easily-laundered financial system.

Corrupt governance in the developing world is, at it’s heart, a financial problem. Corrupt public officials siphon money away from the state, stash it in bank accounts, and spend it on their own consumption. The U.S. contributes in two ways: by allowing for the creation of anonymous corporations, which are easily used by corrupt officials to hide money and business deals, and by functioning as an offshore tax haven for non-residents. Both represent profitable actions for a small number of Americans and corporations, but are highly counterproductive to U.S. foreign policy.

In many ways, the financial system inside the United States resembles that of secrecy jurisdictions like the Cayman Islands. However, unlike in tax havens such as the Cayman Islands, U.S. banks, accounts, and corporations have an inherent air of credibility — it is a whole lot easier to claim plausibile deniability when dealing with a shady-looking corporation from Delaware or Nevada than when dealing with one from the Cayman Islands or Bermuda. We should eliminate anonymous corporations, and stop allowing our banks to hide illicit non-resident alien deposits with no threat of scrutiny.

Bringing financial transparency to the United States would not eliminate worldwide corruption, nor would it make laundering millions of corrupt, illicit dollars impossible. However, it would raise the cost of corruption. It would force corrupt officials to have to take riskier bets in order to benefit from their crimes. They would have to hire more accountants, jump through more hoops to launder their money, and look over their shoulder more often for the threat of law enforcement. Furthermore, action by the United States on this kind of financial transparency would go a long way toward pushing other powerful nations to do the same, tightening the world’s grip around tax havens, secrecy jurisdictions, and their customers.

As Heinman points out, corruption is an economic and security problem. The United States has a clear national interest in creating a climate where the developing world can establish stable, transparent, and safe economies. As a result, the opaque U.S. financial system clearly undermines our foreign policy goals. However, there is also a moral problem here. By actively facilitating corruption, the United States is complicit in the consequences.

US indicts Swiss bank on tax charges
Money Life, February 3, 2012

Can America Lead the World’s Fight Against Corruption?
The Atlantic, February 3, 2012

India PM Manmohan Singh: ‘Long way to go’ on corruption
BBC News, February 3, 2012

Manmohan Singh promises systemic response to reduce corruption
Truth Dive, February 3, 2012

S’pore to step up efforts to prevent money laundering
Channel News Asia, February 3, 2012

Zambia probes ex-leader’s wife for money laundering
Reuters, February 3, 2012

Institute of Chartered Accountants of India preparing report on Indian black money in foreign banks
PTI, February 2, 2012

‘Terrorists using black money’
The Nation (Pakistan), January 28, 2012

Obama’s tax code gambit
The Los Angeles Times (Editorial), February 2, 2012

Frontier Africa may choke on mine rush
Reuters, February 2, 2012

Malaysian airports to install money detectors
AFP, February 2, 2012

Russia Joins OECD Anti-Bribery Convention, Bans Bribes Abroad
The Wall Street Journal (blog), February 1, 2012

OECD May Link Tax Offenses to Money Laundering, HZ Reports
Bloomberg, February 1, 2012

Swiss making progress on return of corrupt cash but doubts remain about laundering defences
Reuters, February 2, 2012

Banking Giant Accused of Laundering Billions
WND Money, February 1, 2012

Supreme Court says it will charge Pakistani prime minister with contempt over corruption case
The Associated Press, February 2, 2012

FIFA corruption case goes to Swiss supreme court
The Associated Press, February 2, 2012

Corruption, policy uncertainties pose credit risk in India: S&P
The Economic Times, February 2, 2012

Click here for the Task Force-relevant portion of the interview, here for the full interview. From the transcript:

AMY GOODMAN: What do you want to hear President Obama say in the State of the Union address?

JACK BLUM: That we must not only rewrite the Internal Revenue Code, but we must get a fair contribution from the very wealthy and from corporations, and that that is the only way to balance the budget.

AMY GOODMAN: Citizens United, how does that fit into this picture?

JACK BLUM: We have an amazing situation as a result of Citizens United. “Corporations are people,” says Mitt Romney in one of his statements. They’re not. Corporations are a special privilege granted to a group of people so that they can invest money without the fear of losing if the investment goes bad. They’re not people. And Citizens United has allowed corporations to get in the act and contribute to these funds, which are, quote, “independent funds,” that spend unlimited amounts of money. And that sort of takes control of the election process. Now, that can’t be allowed. What we have developed is a system of representation that is by money talking and no taxation, which is absolutely the reverse of where this republic started.

AMY GOODMAN: How do you talk about tax justice? How do you change the conversation in this country? You’re featured in a film here at the Sundance Film Festival called We’re Not Broke. That’s going to surprise a lot of people.

JACK BLUM: Well, of course, because there’s been this drumbeat of “We’re broke. We’re broke. We’re broke. Fire everybody.” The way we’re going to change that is to show people what’s going on. When people saw this film, when people began to understand that corporations like Google and Apple don’t pay U.S. federal tax, their jaws dropped. Now, how you can solve these budget problems and not talk about that is unfathomable. And we’re going to get them talking about it by looking at those tax returns and looking at what’s really going on.

And this film shows not only the question of how that money has not been paid, but it also shows young people all over the country spontaneously beginning to understand the issue and demonstrating. So, a group called US Uncut stepped forward and began to demonstrate in front of some of these companies, saying, “Pay your fair share of taxes.” And that morphed into some of the folks who are in the Occupy movement. So I think there are groups—there are many groups that are involved now in trying to bring this message across. Tax Justice Network has worked with a coalition called theFACT Coalition. It’s more than 40 different non-profit groups—some conservative, some liberal, some religious, some labor. And they’re all talking about the issue of, we have got to get back to a point where there’s tax collected and where government services are provided based on taxes being collected.

AMY GOODMAN: Jack Blum, I want to thank you very much for being with us, former top congressional investigator of financial crimes, lawyer and chair of Tax Justice Network USA.

This is Democracy Now!, democracynow.org, The War and Peace Report. Two State of the Union addresses ago, President Obama promised a nuclear renaissance. We’ll look at The Atomic States of America. Stay with us.

Read the whole interview here.

MEXICO CITY / WASHINGTON, DC – Crime, corruption and tax evasion cost the Mexican economy US$872 billion between 1970 and 2010 according to a new report from Global Financial Integrity (GFI), a Washington, DC-based research and advocacy organization. The illicit financial outflows, which averaged a massive 5.2% of GDP, grew significantly over the 41-year period studied from just US$1 billion in 1970 to US$68.5 billion in 2010.

“This is a devastatingly large amount of money for any developing country to lose,” said Raymond W. Baker, director of GFI. “$872 billion is gone, which could have been used to develop the Mexican economy, to invest in education, to build roads, or to fight the drug cartels. The negative ramifications are huge for everyday Mexicans.”

You can read more at mexico.gfintegrity.org.

Rarely have politicians and business leaders met at Davos against such a gloomy backdrop. The World Economic Forum (WEF) helped to set the tone this month when it issued a chilling dystopian vision of mass youth unemployment, wholly inadequate elderly care provision and widening global inequality. WEF’s global risks 2012 report suggested fresh economic turmoil and social upheaval could wipe out gains produced by globalisation. Nationalism, populism and protectionism threatened to take root, it warned.

The world is calling for a bold vision of economic justice to counter dislocation and austerity. But since the global economic crisis reasserted its icy grip after a brief Keynesian impasse, world leaders have failed to deliver one. The inability to articulate a narrative beyond a long, hard march out of economic malaise ultimately caused by politicians’ and regulators’ failure to adequately supervise the financial system is resulting in a widespread disillusionment with mainstream politics that threatens to undermine faith in democracy.

Read the rest here.

Front page image:  Some rights reserved by jbachman01

The amendment to the French-Swiss tax treaty was part of a global initiative to combat tax evasion. Since the end of the 1990s, the OECD has encouraged tax havens to exchange information with other countries on the basis of bilateral tax treaties, but until
2008 most tax havens declined to sign such treaties. During the financial crisis, the fight against tax evasion became a political priority in rich countries and the pressure on tax havens mounted. At the summit held in April 2009, G20 countries urged tax havens to sign at least 12 treaties under the threat of economic sanctions. Between the summit and the end of 2009, tax havens signed more than 300 treaties. This is the largest coordinated action against tax evasion the world has ever seen.

The effectiveness of the G20 tax haven crackdown is highly contested. A positive view asserts that treaties significantly raise the probability of detecting tax evasion and greatly improve tax collection (OECD, 2011). According to policy makers, “the era of bank secrecy is over” (G20, 2009). A negative view, on the contrary, asserts that the G20 initiative leaves considerable scope for bank secrecy and brings negligible benefits (Shaxson and Christensen, 2011). Whether the positive or the negative view is closer to reality is the question we address in this paper.

Guatemala private sector says no to tax increase
The Guatemala Times, January 20, 2012

Singapore, a preferred tax haven
The Hindu, January 22, 2012

Central bank scandal stokes political fires
Swiss Info, January 21, 2012

UBS Customer, Insider Trading, Deutsche Boerse: Compliance
Bloomberg, January 23, 2012

Nigeria’s Rulers Reap Rewards of Corruption with Sudden Descent Into Chaos
Time Magazine (blog), January 22, 2012

THE BIG READ: Fuelled by corruption
The Times (Zambia), January 23, 2012

Nigerian Fuel Price Spike Sparks Corruption Probe
Voice of America, January 19, 2012

Ruling Family Involved in Large Corruption Scandals with Oil and Gas Companies in Yemen
The Yemen Post, January 23, 2012

Bermudian denies money-laundering
The Royal Gazette (Bermuda), January 23, 2012