Dealing with Tax Haven & Tax Fraud

For those who do not know what tax havens are, it may come as a surprise that they are considered an important solution in creating a just economy.  The sad reality is that this little known industry is one of the greatest enablers  for allowing corrupt individuals to hide money from the global public.  By their very design, they are created for deception and allow stolen money to remain hidden. Their secrecy is for no other purpose than to hide illicit money stolen from and creating the poor of the world.

Divestment

Once again, the solution lay in the hand of you and I, in the power for dissenters to unite and say “enough is enough”. We need to find creative ways to face the problems of great inertia all around us. Be like water and flow around obstacles. If you do business with banks with tax havens, take your money out and keep it in a sustainable bank instead.

 

Figure 1: Divest in these banks with huge numbers of tax havens

Where are the Tax Havens?

 

US: Alternative 1: Austerity

Democrats

  • Obama seeks to trim $1.1 trillion from the budget in the next ten years by cutting or eliminating over 200 federal programs, many dedicated to social services and education:
  • halve funding to subsidize heating for low-income Americans
  • limit an expansion of the Pell grant program for students
  • decrease Environmental Protection Agency funding by over 12%

Republicans

  • raid funds for Social Security, Medicare, education
  • kill health care reform
  • gut needed investments in infrastructure,
  • gut funding for climate change and job creation

These budget cuts demonstrate that Washington has abandoned ordinary Americans.

Alternative 2: Make Em Pay!

  • corporate US enjoys record profits and taxpayer-funded bailouts
  • nearly two-thirds of US corporations pay zero income tax by abusing tax loopholes and offshore tax havens
  • According to this study from the non-partisan GAO, 83 of the top 100 publicly traded US corporations exploit corporate tax havens
  • Since 2009, America’s most profitable companies such as ExxonMobilGeneral ElectricBank of America andCitigroup all paid a grand total of $0 in federal income taxes
  • Tax havens alone account for up to $1 trillion in tax revenue lost every decade

If we pay our taxes, why don’t they?

In 2010, GE reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States. How much tax did pay? Zero! In fact, G.E. claimed a tax benefit of $3.2 billion!

Its success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and “innovative” accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

Corporate citizen GE pays back every penny of the 3.2 billion dollars tax owing to US government!

Bank of America is the #1 largest bank and the 5th largest corporation in our country, holding over $2.2 trillion in assets, and yet it pays less in taxes than the average American household. In fact, the federal government gave Bank of America $2.3 billion in 2009 while it made $4.4 billion in profits.

Bank of America is Bad for America. Despite ruining the economy with their reckless greed, Bank of America consistently avoids any form of accountability to the American taxpayer. Bank of America pockets billions in profits and bailouts, but then pays $0 in American taxes and even gets tax refunds.

Action:

Citizens across the country are targeting Bank of America branches and peaceably but firmly demonstrating that they can’t get away with such egregious tax-cheating. Not only that, but they are probably spending your deposit money on derivatives or investing in dirty energy. Go here to see how much is invested in dirty energy and the carbon bubble. Is your bank one of these investors? You have the power to determine where your money goes. Demand action or leave their bank, withdraw your account and go to a credit union instead.

Verizon made $12 billion in profits last year, but has paid $0 in taxes for two years now. However, they did spend $34 million on lobbying.

Action:

Verizon is part of the problem – Let them know it. Those who don’t have a Bank of America branch nearby, head out to your nearest Verizon wireless store and peaceably but firmly protest. Let them know that they can’t get away with such immoral tax-cheating.

When it comes to paying their fair share of taxes, FedEx simply does not deliver. When FedEx made $1.9 billion in profits, they managed to pay less than .0005% of it in taxes by using 21 tax havens. FedEx also spent 42 times (4200%) more on lobbying Congress than they did in taxes.

Action:

FedEx is as guilty as the rest – Go tell them it’s time to Pay Up! Those who don’t have a Bank of America branch nearby, head out to your nearest Verizon wireless store and peaceably but firmly protest. Let their employees know that our country’s future is critical to their future too. If you are a business and have an account with them, withdraw it and go to a responsible courier.

        

This is really embarrassing! Elaborate tax avoidance schemes deny billions to the UK government. Immoral! France is demanding hundreds of millions from Amazon.

Going After Tax Cheats

More and more tax departments worldwide are aggressively going after corrupt individuals hiding stolen assets in tax havens and offshore accounts. In particuliar, there are a lot of stories about HSBC, implicating them in serious tax haven issues.

October 2, 2012 – HSBC Investigation: clients of Britain’s biggest bank exposed

The newspaper Telegraph UK reported that HSBC, Britain’s biggest bank is at the centre of a major HM Revenue and Customs (HMRC) investigation after it opened offshore accounts in Jersey for serious criminals living in this country. Tax authorities have obtained details of every British client of HSBC in Jersey after a whistleblower secretly provided a detailed list of names, addresses and account balances earlier this week.

The Telegraph understands that among those identified on the list are:

  • Daniel Bayes, a drug dealer who is now in Venezuela
  • Michael Lee, who was convicted of possessing more than 300 weapons at his house in Devon
  • three bankers facing major fraud allegations
  • a man once dubbed London’s “number two computer crook”
  • A series of other accounts containing six-figure deposits are also registered to modest addresses in relatively poor parts of the country

The disclosures raise serious questions about HSBC’s procedures in Jersey, with the bank already preparing to pay fines of around $1.5 billion in America for breaking money laundering rules. The bank is legally obliged to report to the authorities any suspicions about the source of money deposited in its accounts. HMRC is sifting through a list of the names and addresses of more than 4,000 people based in Britain who had bank accounts at HSBC in Jersey.

The Telegraph has established from public records that HSBC has opened bank accounts in Jersey for several people who are wanted by the police or have serious criminal convictions.

The information obtained by HMRC is thought to be the biggest data leak identifying holders of offshore accounts ever obtained by the British tax authorities and identifies 4,388 people holding £699 million in offshore current accounts. They are also likely to have billions of pounds more in investment schemes. Several celebrities and other well-known figures are understood to be identified in the client data.

(Source: Telegraph UK)

Nov 10, 2012 – Kejriwal takes aim at Swiss bank account holders

NEW DELHI // An anti-corruption activist yesterday accused Indian politicians and HSBC of helping rich industrialists hide “black money” in tax havens overseas. Arvind Kejriwal said HSBC was expediting the flow of black money – a term for money that is not declared to tax authorities – into accounts in its Geneva branch. His allegations came on the same day that Britain’s revenue and customs service said it was examining a leaked list of the bank’s customers, amid accusations that the clients included drug dealers and gun runners.

Mr Kejriwal said the Indian revenue authorities had a list of about 700 people who held accounts in an HSBC bank in Geneva, and that “a senior Congress party source” had sent him the names and 10 account holders and their balances as of 2006.

These names included:

  • Mukesh and Anil Ambani, of Reliance Group, with 1 billion rupees (Dh67 million) apiece in their Geneva accounts;
  • Naresh Goyal, the promoter of Jet Airways, with 800m rupees
  • Annu Tandon, a Congress parliamentarian, with 1.25bn rupees

While three other people from the list were raided by Indian income-tax authorities, Mr Kejriwal said none of these major figures were prosecuted.

(Source: The National)

Nov 10, 2012 – Greece Tax Fraud Scandal. Widespread Corruption Linked to HSBC and Private Swiss Bank Accounts

Perhaps the most sensational story of all revolves around independent Greek journalist Kostas Vaxevanis. His story and the intrigue uncovered is the story of spy novels. Early in November, 2012, Vaxevanis was acquitted by an Athens court of charges that he breached data privacy laws with the publication of a list of tax cheats and money launderers. This was a triumph for justice. This list, dubbed the “Lagarde List,” was named after Christine Lagarde, the former French Finance Minister and current head of the International Monetary Fund (IMF), who originally gave the list of high-profile offenders to Greek authorities where it sat idle for two years. Vaxevanis, published his story in the investigative news magazine Hot Doc and was subsequently arrested in a radio show.

Journalist Kostas Vaxevanis arrested

Vaxevanis and his story in Hot Doc

Christine Legard, acting head of IMF

Vaxevanis faced two years in prison and a €30,000 ($38,000) fine over that publication’s outing of 2,000 Greeks who hold secret banks accounts at HSBC’s private banking arm in Switzerland. His acquittal and freedom to print the list of these corrupt officials is an important triumph in the fight against corruption.

Kostas Vaxevanis

“Why I published the Lagarde List

In 2010, the so-called “Lagarde List”, which names more 2,000 Greek tax evaders, was handed over to the Greek government. But nothing was done. Kostas Vaxevanis, editor in chief of Hot Doc, was recently arrested for publishing it. For him, it’s a symptom of Greece’s corruption.
Kostas Vaxevanis

“The more laws a country has, the more corrupt it is,” the Roman historian Tacitus used to say. Greece has quite a few laws. So many, in fact, that corruption can feel quite safe. An exclusive club of powerful people engages in illegal practices, then pushes through necessary laws to legalise these practices, granting itself an amnesty, and in the end, there are no media to uncover what really happened.

As I write, the adventures of an independent magazine in Greece, Hot Doc, which I edit, are being discussed worldwide. Our publication of a list of alleged Swiss bank account holders, and my subsequent arrest, has provoked a storm. But not in the Greek media. A few months ago, Reuters and the British press uncovered scandals involving Greek banks. The Greek media didn’t write anything then either. The space that should have been granted to reports about these scandals was occupied by paid advertisements sponsored by the very people who caused the Greek banks to go under.

The “Lagarde” case in Greece is merely an extreme expression of this situation. In 2010, Lagarde handed to the then minister of finance, George Papaconstantinou, a list of Greeks who held bank accounts abroad. Some of this was “black money” – money that may not have been taxed or needed to be laundered. In a convuloted train of events, Papaconstantinou admitted to losing the original data, but was able to pass another copy to his successor Evangelos Venizelos, who eventually admitted to having held it but has failed to produce it so far. The list has still never been properly investigated.

For the past two years, the issue of naming people who are assumed to hold bank accounts in Switzerland has poisoned political life in Greece, with political and financial blackmail taking place in the dark rooms of corrupt power. It’s in this context that Hot Doc published 2,059 names of Greeks alleged to have Swiss bank accounts, without specifying the amount of their deposits or any other personal information.

And then, with utmost hypocrisy the powers that be remembered what they were about. The Athens prosecutor made a move ex officio and ordered my immediate arrest. The law on personal data was invoked as a basis for indictment. In reality, though, there was no personal data involved – only the fact that certain individuals held an account in a certain bank. We did not even allege that these individuals were guilty, only called for an investigation.”

The Unfolding Sequence of Events

  1. On October 3, 2012,  the “Lagarde List” was passed to Greek prime minister Antonis Samaras from PASOK party leader and former finance minister Evangelos Venizelos.
  2. Apparently, it had been “missing,” according to a Financial Times article from a few days prior, and current finance minister Yannis Stournaras had vowed to track it down.
  3. Yannis Stournaras, the finance minister, told the Financial Times on Sunday Oct 7, 2012 that he would pursue the issue of the missing CD with Greek depositors names “as a priority”.
  4. “I first learnt of its existence last week from the newspapers . . . but if Greece’s fnancial crime unit SDOE can’t track it down, then we’ll ask our European partners for another copy,” Mr Stournaras said.
  5. This provided the impetus for Venizelos to hand over the list to Greek prime minister Antonis Samaras last Tuesday, saying he had already made Greece’s financial crimes unit, SDOE, aware of it, as reported by Kathimerini.
  6. Venizelos was given the list by his predecessor, former finance minister Giorgos Papaconstantinou, who received it from Christine Lagarde in 2010, when she was serving as France’s finance minister.
  7. Immediately after Samaras received the list from Venizelos, Yiannis Sbokos, a former Greek minister involved in defense, was arrested by SDOE over financial corruption.
  8. Leonidas Tzanis, a former Greek minister who had been under investigation, was found hanged in his home last Friday. The Press Association reports that “the official said Mr Tzanis’s death is being treated as suicide but no suicide note has been found.”
  9. Oct 6, 2012, Vlassis Kambouroglou, a wealthy Greek businessman in the defense industry, has been found dead in a hotel room in Jakarta, Indonesia. The Greek Reporter has the details on Kambouroglou: A Greek businessman who had been accused of being part of the bribery and money laundering network involving former Defense Minister Akis Tsochatzopoulos, who is in jail on charges of stealing as much as $1.29 billion from defense contracts, has been found dead in a hotel room in Jakarta, Indonesia. Vlassis Kambouroglou was the Managing Director of Drumilan International, which was involved in the sale of a Russian-made TOR-M1 missile system to Greece. Authorities in Indonesia did not say how he died. Kambouroglou was called to testify before a Parliamentary inquiry into the arms deal in 2004 but denied that his company made any money from the deal. No charges were brought against him.
  10. Now, Stournaras, Papaconstantinou, Venizelos, and another are going to have to testify before the Greek parliament on the list, according to Kathimerini:
  11. Parliament’s ethics and transparency committee on Monday voted in favor of Finance Minister Yannis Stournaras and three former ministers — Evangelos Venizelos, who now leads socialist PASOK, Filippos Sachinidis and Giorgos Papaconstantinou — being called before the House to reveal what they know about the so-called “Lagarde list” — a list of some 2,000 Greeks with deposits in Swiss banks who are being probed for tax evasion.
  12. According to sources, Venizelos and Papaconstantinou testified over the weekend before financial prosecutor Grigoris Peponis in connection with the list, which Papaconstantinou claims to have received from former French Finance Minister Christine Lagarde, who is now head of the International Monetary Fund. No details about the former ministers’ testimonies were released but they are believed to have repeated the positions they have expressed publicly to date on the matter.
  13. Venizelos faces some serious questions, as members of parliament want to know if he’s been in possession of the list for a long time. The concern is that he may have been shielding fellow PASOK party members from being exposed.
  14. Venizelos was also the most recent finance minister before the current one and served as the deputy prime minister before that, so he has been in a management position in a Greek government that has been failing to meet troika sanctions for a while, now.
  15. The “Lagarde List” has not been made public, so there is no way to say for sure at present whether Tzanis, Sbokos, or Kambouroglou’s names actually appear on the list. However, the timeline of events is striking, and all are tied to past deals between the defense industry and the Greek government.
  16. Meanwhile, the “Lagarde List” doesn’t just contain names of Greek tax evaders. It’s a list of closer to 22,000 names of wealthy people from various EU member states with Swiss bank accounts. The implication is that wealthy elites from other countries could be revealed in a corruption probe as well.
  17. This is all starting to blow up during a crucial moment for Greece as it tries to come to an agreement with the troika over additional spending cuts and German chancellor Angela Merkel visits Samaras tomorrow in Athens.

(Source: Globe Research)

Who Leaked it all to Begin with

The source of Madame Lagarde’s List was the computer guy! Hervé Falciani, a computer services specialist with HSBC Private Bank (Suisse) N.A., who supervised data migration on individual accounts. Increasingly troubled by the bank’s dubious practices, for two years beginning in 2006, he mirrored account information onto his laptop.

In 2008, an international arrest warrant was issued by Swiss authorities; however, they committed a serious error. Falciani, a dual French-Italian citizen whom neither country would extradite, was picked up in Nice. When French prosecutors, acting on behalf of Swiss police, searched his home and seized his laptop, they discovered files on 130,000 alleged tax evaders.

Rather then arresting Falciani, they opened an investigation into the alleged tax evaders. When French authorities let it slip to the media that had files on some 3,000 Swiss HSBC account holders and that they would prosecute, they recuperated some €1.2 billion ($1.5bn) in unpaid taxes from profligate citizens.

In the interim, a diplomatic row ensued; Switzerland accused France of using stolen data and the French countered, threatening to have Switzerland added to the OECD Tax Haven Black List. Over Swiss objections, then Finance Minister Lagarde shared the data with tax officials in cooperating countries.

Arrested in Barcelona on July 1, Swiss authorities are demanding Falciani’s extradition to Switzerland where he faces charges of data theft and violation of bank secrecy laws.

If convicted, Falciani faces a three-year prison term and a fine that could top €200,000 ($253,000).

Revelations contained in those leaked files touched off major probes across Europe. In Italy, Italian Treasury officials recovered some €570 million ($730m) from HSBC account holders.

In Spain, the high-profile investigation into the finances of the banking clan led by Emilio Botín, the wealthy Chairman of the Santander banking dynasty caused a sensation.

And why wouldn’t it? Like Greece, Spain’s working class is confronted by demands from international lenders to impose draconian austerity measures, including some €37 billion ($46.9bn) in budget cuts in the face of a severe recession and record-high unemployment.

Last spring, El País reported that “Botín, his daughter Ana Patricia Botín (the head of Santander’s British banking unit), his brother Jaime and five of his brother’s children were among the names of 659 Spanish residents who hold secret Swiss accounts at HSBC Private Bank, with a combined value of some six billion euros.”

Confronted by public outrage and threats of criminal prosecution by Spanish authorities over allegations of tax fraud, the Botín clan caved-in and ponied-up €200 million ($253m).

In a report last summer on Switzerland’s extradition request, El País reported, “now that Falciani is being held in a Spanish jail, the High Court is faced with a legal problem, according to judicial sources.”

Why might that be the case?

“The information coming from Falciani’s database has already been used to prosecute Spaniards and no one in Spain has presented a complaint against the former HSBC computer analyst for ‘stealing’ private bank records.”

The most serious hurdle which Swiss authorities must overcome are that allegations against Falciani are not considered criminal offenses in Spain.

“In fact,” El País noted, “the Law for the Prevention of Money Laundering states that banks have the obligation to report any illicit activities. This might not apply to Falciani because he was only an employee, but the results from the hundreds of investigations opened in Spain because of his list prove that he complied with the law.”

The same cannot be said for HSBC, Santander or other financial giants considered “too big to fail, or jail.”

After his July arrest, The Daily Telegraph reported Falciani as saying that “he took the customer details in order to expose tax evasion among HSBC’s customers,” considering it his “civic duty.”

“If you discover that…offshore structures have no other aim than to avoid taxation and that the sole legitimacy of these structures is that purpose,” he asked, “what would you do?”

This wouldn’t be the first time the hammer of “justice” came crashing down on a financial insider who exposed gross financial chicanery, while state officials allowed perpetrators to walk.

(Source: Globe Research)