Mercury Rising 鳯女

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Archive for July 23rd, 2012

Flying the Jolly Roger: wealthy stash trillions in “pirate banks”

Posted by Charles II on July 23, 2012

Via Robert Frank, CNBC, the Tax Justice Network issues a report that alleges that trillions of dollars of the world economy is beyond the supervision of any nation:

A significant fraction of global private financial wealth — by our estimates, at least $21 to $32 trillion as of 2010 — has been invested virtually tax-free through the world’s still expanding black hole of more than 80 “offshore” secrecy jurisdictions. We believe this range to be conservative, for reasons discussed below.

7. The active role of private banks. Our analysis refocuses attention on the critical, often unsavory role that global private banks play. A detailed analysis of the top 50 international private banks reveals that at the end of 2010 these 50 collectively managed more than $12.1 trillion in cross-border invested assets from private clients, including via trusts and foundations.

9. New Revenue Sources for Global Needs. Finally, if we could figure out how to tax all this offshore wealth without killing the proverbial Golden Goose, or at least entice its owners to reinvest it back home, this sector of the global underground is also easily large enough to make a significant contribution to tax justice, investment, and paying the costs of global problems like climate change.

the term “offshore” refers not so much to the actual physical location of private assets or liabilities, but to nominal, hyper-portable, multi-jurisdictional, often quite temporary locations of networks of legal and quasi-legal entities and arrangements that manage and control private wealth — always in the interests of those who manage it, supposedly in the interests of its beneficial owners, and often in indifference or outright defiance of the interests and laws of multiple nation states.

In short, this comparative handful of major private banking institutions now accounts for 62 to 74 percent of all offshore private wealth. Many readers will recognize the names of the dominant players, as they have done for decades: UBS, Credit Suisse, Citigroup/SSB/Morgan Stanley, Deutsche Bank, BankAmerica/Merrill Lynch, JPMorganChase, BNP Paribas, HSBC, Pictet & Cie, Goldman Sachs, ABN Amro, Barclays, Credit Agricole, Julius Baer, Societe General, and Lombard Odier.

I can’t vouch for the methodology (the report’s writing is uneven), but it’s plausible. What it means exactly is also unclear. There’s nothing intrinsically illegal about using foreign firm to do investments. But it raises a red flag regarding tax evasion, especially the income and estate taxes. Certainly investigations of the Swiss tax havens demonstrated massive tax evasion, with the cost to the US Treasury estimated by the Senate at $100B annually, according to Laura Szarmach). The Tax Justice Network has estimated that it’s more like $1T. Whatever it is, it’s enough that the USG ought to be enforcing the law.

Crossposted to DailyKos.

Posted in taxes | 1 Comment »

In the “Are you sure this is a good idea?” bin…outsourcing justice

Posted by Charles II on July 23, 2012

Owen Bowcott and Maya Wolfe-Robinson, Da Guardian:

Tricky legal dispute in Central America? Sort it out in the London courts. Honduras, the state with the highest homicide rate in the world, is preparing to send appeal cases to the judicial committee of the privy council (JCPC) in Westminster.

The extraordinary expansion of UK legal jurisdiction is being negotiated in an effort to support the development of a pioneering enterprise zone in the crime-scarred republic….

Mauritius, a member of the Commonwealth, still uses the privy council in Westminster as a final court of appeal. Consequently any cases originating in Honduras could progress to the appeal courts in Mauritius and eventually reach the judicial committee of the privy council in London.

OK, so you’re a poor farming community that has a land dispute with one of the country’s oligarchs. It works its way up the justice system…and ends up in the hands of British judges who have no clue about agrarian law, and in particular the notion of the ejido, i.e. common ownership of land. It just does not exist in the English speaking world, where everything must have an owner and therefore be sellable/buyable. There’s not even a proper translation of the word.

This court system will not be used for homicides, where the issues are pretty straightforward… like body: alive/not alive?, weapon: traceable to the alleged killer/not traceable to alleged killer, etc. It will be used in cases where Hondurans know what a just outcome should be and the only way for the oligarchs to win is to get the case in front of people who don’t have a clue.

Posted in Honduras | 2 Comments »

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