Swiss Bank Wegelin Charged With Helping U.S. Clients Evade Taxes
Bloomberg, February 2, 2012
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
This week, the lawyers of Teodoro Nguema Obiang, the son of Equatorial Guinea’s longtime President, released a statement calling the Obama administration’s seizure of $71 million worth of assets a “character assassination.”
In October of last year the U.S. Department of Justice (DoJ) unsealed an asset forfeiture claim against many of Obiang’s U.S. held assets, including a $38 million Gulfstream private jet, a $35 million Malibu mansion, a Ferrari, and dozens of pieces of memorabilia of pop singer none other than Michael Jackson, which are worth about $2 million. Authorites seized many of these items, although they still haven’t been able to get custody of the plane. The DoJ filing claims Obiang derived the assets from “the misappropriation, theft, or embezzlement of public funds by or for the benefit of a public official.”
Given Obiang’s salary of $82,000 as Equatorial Guinea’s Minister of Forestry, it seems rather unlikely that the funds could have come from anywhere else. Obiang himself has vaguely—and insultingly—explained “I have been very lucky in business…and I like to live well.” His lawyers, who are perhaps a bit more astute, have claimed he “was granted a 20-year concession to harvest timber in the country in the mid-1990s and that made him a ‘very wealthy man’ by 2005 when he bought most of the assets.” I’d like to see the data on those numbers.
Study: Money laundering, tax fraud costing Mexico billions every year
The Arizona Star, January 31, 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
Cross-posted with permission from Oxfam’s Politics of Poverty blog.
1504 Section in Dodd-Frank Wall Street Reform Act requiring companies to disclose taxes, royalties, and other payments made to the US and foreign governments
1.5 billion People living on less than $2 a day in “resource-rich” countries
$30 million Value of Malibu mansion owned by Teodoro Nguema Obiang, son of oil-rich Equatorial Guinea’s dictator
270 Days after enactment that Congress required the SEC to issue a final rule (regulation) to implement the law
559 Days since Dodd-Frank enacted into law by President Obama
Last month, Transparency International released a study (via Corruption Currents) citing how Romania is susceptible to corruption. These conditions create a potential breeding ground for corruption that could not only adversely affect the Romanian Government, but the European Union as well. They focused on four major issues:
If corruption continues to remain high, and the government fails to address it, Romania will struggle to further integrate into the European Economy.
Illicit financial outflows due to corruption, kickbacks, and trade mispricing have been increasing in Romania since 2006. A study by Global Financial Integrity has shown that in the year 2005, when Romania signed the EU adherence treaty, the country’s illicit financial flows declined to a three year low. However, as the graph below shows, illicit financial flows increased significantly at the same time as Romania was integrating into the European Union. Prior to accession, Romania was asked to enact reforms to curb organized crime, corruption, and food safety. Corruption remains one of the biggest drags on Romania’s economy.
In TJN’s inaugural Taxcast, rounding up tax justice news at the end of January, they discuss the implications of the Vodafone vs India landmark tax case, compare Bill Gates and Mitt Romney’s attitudes to taxation and visit the Occupy camp outside St Paul’s Cathedral in London. Audio below:
What’s the Taxcast?
The Taxcast is an entertaining and informative 15 minute monthly podcast with the latest news, research and analysis of events in tax evasion, tax avoidance and the shadow banking system. It has 3 segments: headlines, analysis with campaigning economist Richard Murphy (The Courageous State) and a mini-documentary.
Last week, Global Financial Integrity released its annual country-specific report on the drivers and dynamics of illicit financial flows. This year, GFI examined Mexico. GFI defines illicit financial flows as “cross-border movement of money that is illegally earned, transferred, or utilized… [Generally involving] the transfer of money earned through illegal activities.” These activities can include corruption, transactions involving contraband goods, criminal activities, and tax evasion.
The report’s author, Dev Kar, estimates illicit financial flows as the sum of two components. One of these components is a measure of trade mispricing. Using IMF statistics, Kar compares Mexico’s recorded imports to what the world says it exported to Mexico; and then he compares Mexico’s recorded exports against world imports from Mexico.
In a perfect world these numbers would line up. But they don’t for two reasons. The first is trade mispricing. Trade mispricing occurs when a company or an individual shifts wealth between countries, using either export under-invoicing or import over-invoicing. Suppose a Mexican furniture manufacturer, who wants to send money abroad illegally, is importing $100 worth of timber from the United States. Instead of paying $100, the furniture company reports and pays $200. The company’s U.S.trading partner takes $100 for the furniture, reports the $100 on its own invoice, and shifts the extra $100 to a secret Delaware bank account (and maybe keeps an extra few dollars as a transaction fee). Now the furniture company has shifted the $100 to the United States without Mexico’s knowledge. But the $100 discrepancy is also reflected in the difference between what the United States says it exported to Mexico and what Mexico reports it imported from the United States.
Jack Blum, chairman of the Task Force’s Tax Justice Network-USA, recently sat down with Amy Goodman of Democracy Now! to talk about an array of tax justice issues. Mr. Blum has decades of experience on tax issues, both on the legal side as an attorney and the legislative side as an investigator for the Senate Committee on Foreign Relations Subcommittee on Narcotics, Terrorism, and International Operations. He mentions a new documentary he was involved with, We’re Not Broke, which premiered at the Sundance Film Festival in January.
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.
The U.S. government frequently raises the issue of smuggling of bulk shipments of currency from the U.S. to Mexico as a major economic and security issue, one that demands greater effort by Mexican authorities to detect and deter.
However, as a report released this week by Global Financial Integrity reveals, bulk cash smuggling is not the only form of illicit financial transfer taking place in staggering volumes across the U.S. – Mexico border.
The report’s findings indicate that the Mexican economy lost $872 billion to illicit financial outflows between 1970 and 2010. These non-cash outflows from Mexico serve to feed Mexico’s underground economy, enabling the spoils of illicit activity to be stashed abroad. Notably, the vast majority of capital leaving Mexico, including illicit transfers, is destined for banks in the United States, and a significant increase in illicit outflows from Mexico was observed in the wake of the coming into force of NAFTA, suggesting even more strongly that the bulk of illicit outflows from Mexico is placed in U.S. accounts.
As a result, there is a clear window of opportunity for U.S. policy initiatives to make this country less inviting to criminals and tax evaders from our Southern neighbor, which would benefit economic stability and national security in both the U.S. and Mexico.
IPPR produced a report on globalisation last week. With a forward by Lord Mandelson the report was written by Will Straw and Alex Glennie.
I admit I don’t agree with either Mandelson or Straw; they have a political perspective I don’t always share but this report has merit to it, as others have also noted since its publication. It represents a clear change of heart on Peter Mandelson’s part, and that I welcome.
The report is especially strong on the need for corporate tax reform. Having noted that profits are rising as a trend t also notes that there is a steady fall in corporate tax receipts as a proportion of profits and realises this is an issue that has to be addressed. It dismisses the alternative to corporate tax proposed by Oxford University and Mirrlees, which is a form of Value Added Tax. As the report rightly notes there is no doubt this would be regressive and so unacceptable. Instead it suggests five reforms, as follows:
First, the European Union should implement the Common Consolidated Corporate Tax Base (CCCTB). Under the current tax regime, multinationals file separate accounts for each country in which they operate; under the CCCTB, each company would compute only its EU-wide consolidated profit, on a common definition of the tax base. This profit would be allocated to member states on the basis of an apportionment formula containing factors such as shares in employment, payroll, assets and sales. Each member state would retain autonomy to tax its allocated share of profits at its own tax rate. This approach would allow countries to retain their own tax rate and pursue healthy tax competition. But within the EU, companies would have to actually move their staff and physical capital to the lower-tax regimes, rather than relying on the accounting mechanisms outlined above. In time, other jurisdictions could be encouraged to join, paving the way for an eventual global consolidated tax base.
After 6 years with the European Network on Debt and Development (Eurodad), first as Policy Officer and then as Director, Nuria Molina left the organisation at the end of January, 2012. We took the opportunity to ask her a couple of questions about life, taxes, working for NGOs and the role of women as makers of change.
TASK FORCE: How did you become involved in non-government organisation (NGO) work?
NURIA MOLINA: I was already involved in student movements and local environmental campaigns as a child growing up in Barcelona. While studying for my Master’s degree at the London School of Economics and at the College of Europe (the college of the European institutions to train future EU staff) my classmates and I were approached by numerous recruiters from Multi-National Corporations (MNCs) and international institutions, such as the EU, the World Bank and the IMF. NGOs however never came to recruit – which led me to believe that that this is where my skills would be most needed!
TASK FORCE: What do you like about working for NGOs?
NURIA MOLINA: Having the opportunity to devote your professional life to what you believe in is probably one of the greatest luxuries in a world where we spend a fair amount of our lives at the workplace (if I couldn’t work on human rights issues in a professional capacity, I would have dedicated most of my spare time to it). In addition, working in the NGO sector you are often surrounded by people who hold not only highly ethical beliefs, but who also possess great intellectual curiosity and I really enjoy the interaction. NGO people tend to challenge mainstream economic and political thinking with the goal of making the world a better place for all. I have learned so much from my colleagues and I’ve formed some very wonderful friendships.
Today, Global Financial Integrity launched it’s new report, Mexcio: Illicit Financial Flows, Macroeconomic Imbalances, and the Underground Economy in Washington D.C. and Mexico City. An excerpt from the press release:
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.
May 20, 2013·
WASHINGTON, DC / LONDON – A bipartisan Congressional report published Thursday by the U.S. Senate Caucus on International Narcotics Control (Senate Drug ...
May 10, 2013·
WASHINGTON, DC – Global Financial Integrity (GFI) lauded former UN Secretary-General Kofi Annan and the Africa Progress Panel (APP), which he chairs, ...
April 25, 2013·
WASHINGTON, DC / LONDON – In a major victory for transparency advocates, British Prime Minister David Cameron called on members of the ...