No, I didn’t say it – Ken Livingstone did.
But it’s got Guernsey going.
Which is no bad thing.
Jan 242009
Yes he will
Tax Havens
Comments Off
Jan 232009
As part of the confirmation process, Senator Carl Levin has questioned Timothy Geithner, nominated to be Secretary of the Department of Treasury about his intentions. The exchange has been published. A key exchange is as follows:
Q. (Levin) The United States loses an estimated $100 billion each year from offshore tax abuses.
a. What priority would you place on tackling the problem of offshore tax abuses?
b. If confirmed, would you support the Levin-Coleman-Obama Stop Tax Haven Abuse Act to shut down offshore tax abuses?A. (Geithner) I share the President-Elect’s commitment to aggressively address the problem of offshore tax abuses and complement you and your staff on the excellent work that they have done to highlight the problem. If confirmed, this issue will be a high priority for the Treasury Department.
The President-Elect is committed to shutting down offshore tax schemes and, as you know, cited your legislation as evidence of steps that he would like to take to accomplish this goal.
If confirmed, I will treat the offshore tax abuse issue as a high priority and will examine a wide range of policy options to address offshore tax abuses, including increasing IRS enforcement authority, requiring greater disclosure and taxpayer accountability, changing the presumption for transactions in tax-secrecy jurisdictions and other ideas included in your legislation.
You have been warned.
Why nationalise the banks? Some see this as purely a defencive move before clearing them of toxic assets and refloating them.
I don’t. I see it as strategic option. now deliverable at very low cost to:
1) Bring seigniorage back into state control for the benefit of all – which I believe will be a source of considerable future wealth for the common good;
2) Regulation credit in the future
3) Regain control of the money supply
4) Ensure that the basic transaction recording processes that are fundamental to the operation of a modern state are under common control and that the risk of their failure that existed last October is eliminated
5) Ensure regulation is enforced
6) Put finance firmly back in its place as a support service – not a means of wealth creation in its own right
7) Ensure society obtains the return from the banking sector that is due to it, and which has been denied to it by that sector’s abuse of all forms of regulation to date, including taxation.
These aren’t opportunistic – these are long term statements of aim for the benefit of society as a whole, but which now have added pertinence now that it is apparent that the existing banking model has failed.
Let’s not apologise for nationalisation: let’s be clear that nothing else will do – and nothing else can deliver what we want.
But that does not of course mean private banks are dead: I’ll be entirely happy to see private operators licenced to provide services in a new banking infrastructure. But let’s be clear: they will secure their funds from a central bank, will pay for them, and earn a margin on them within strictly regulated limits. That’s an appropriate role for the private sector. Letting them run riot as they have over the last thirty years is not.
Look around you. The evidence is clear. Now what’s the problem with adopting this alternative?
These are my links for January 21st through January 23rd:
- FT.com | Willem Buiter’s Maverecon | Can the UK government stop the UK banking system going down the snyrting without risking a sovereign debt crisis? – Worth reading
I don't share all his views – but his comparisons with Iceland are scary and appropriate
And he gets to the right place – nationalisation is the ONLY option
- FT.com / Companies / Technology – Details of alleged Satyam fraud emerge – "The former chairman of Satyam Computer Services inflated the size of the outsourcing company’s workforce by nearly one-quarter and siphoned off the wages of the fake employees, Indian authorities have claimed."
And PWC did not notice?
Come on – this is first year auditing stuff
Trouble is, they probably put a first year on it
Never doubt the rubbish that the big firms pass off as an audit
- FT.com / Companies / Financial Services – Santander fund praised ‘impeccable’ Madoff – People should be asking more questions of Santander I say
- FT.com / Companies / Banks – BofA axes Thain as Merrill deal sours – The facts are simple
The banks deceived themselves as well as us
The opacity and complexity of offshore meant they did not know what they were doing. Someone coming in could not find out
The answer is available: ban the use of offshore, orphan structures and any form of off balance sheet securitisation for now
Isn't that glaringly obvious?
- FT.com / World – Obama ushers in an ‘era of openness’ – The headline works for me
So be it
That's my wish
- FT.com / Companies – Ebay hit by fall in consumer spending – No sector is immune
- FT.com / Companies – Parsons takes over as Citi chairman – "Dick Parsons, former chief executive of Time Warner, was last night named to replace Sir Win Bischoff as chairman of Citigroup, after the US bank’s fortunes failed to recover despite a $300bn government bail-out in November.
Mr Parsons, who was Citi’s lead director and has been on the board since 1996, immediately urged the Obama administration not to nationalise the country’s ailing banks and called for the creation of a government-controlled “bad bank” to buy toxic assets."
Using other people's money without having a duty of care to them is a toxic mix.
Banks have already proven they do not accept the duty of care to a diverse shareholder base.
They don' accept one to government
That's why it will have to be imposed on them
- FT.com / Companies – Merrill delivered bonuses before BofA deal – Crooks
- FT.com / Companies / UK companies – Brown attacked over Northern Rock bonuses – We have to recreate the idea that salary is enough
You should do a good job for what you're paid
What is wrong with that?
- Germany hopes Zumwinkel case will pressure tax havens – One of Germany's business stars will answer charges of tax dodging when he appears in court on Thursday in a case the government hopes will increase pressure on havens such as Liechtenstein and Switzerland.
Klaus Zumwinkel, whose Liechtenstein trust was uncovered when the government paid an informant for a bank disk containing the name of the former Deutsche Post chief and others, will also be confronted with files found during dawn raids on his home. - Tax Justice Network: New German anti-tax haven law – Germany moves against the tax havens – more good news
- Savers need tax breaks, says Barclays Boss – Accountancy Age – a) Savings does not equal investment
b) This helps Barclays more than anyone
c) Savings are not needed right now – they fuel deflation
So as usual a banker has got it wrong
Let's ignore him – it's the only thing to do
There’s an article on Mondaq from Withers LLP- a firm of lawyers well known for its support for offshore – which discusses this issue. It concludes:
Obama has shown little interest in backing away from plans to crack down on tax havens, despite the economic downturn. It appears that Obama will proceed with his proposed middle-class tax cuts as part of an economic stimulus package, and a bill similar to the STHAA could be seen as a useful revenue raiser to offset this cost. In the week after his historic election, Obama did admit that tax increases on the nation’s top earners could be delayed. However, it is not clear whether a crackdown on offshore financial centers will be delayed as well. A key period to monitor will be the first 100 days of the presidency, as Obama may try to make significant and visible policy decisions, which could include tax cuts for the middle class funded a proposal like the STHAA.
At the time of this writing, there are still two Senate races yet to be decided, but it is certain that Democrats will have comfortable margins in both Houses of Congress. The STHAA had bipartisan support in the Senate (although Republican co-sponsor Norm Coleman is currently facing a recount in his Senate re-election bid). Threats against offshore financial centers have been made in the past by both Democrats and Republicans, but have not amounted to concrete action. However, as was seen this summer with the enactment of the exit tax aimed at individuals who expatriate, it is entirely possible that Congress will take action on this potential source of revenue. Accordingly, it would be prudent for intermediaries to consider what effect these proposals could have if enacted.
Of course, along the way the authors argue that the list of havens is wrong – apparently signing a tax information exchange agreement now means you are fully committed to information exchange (which is absurd – as I’ve shown, Cayman expects to exchange no more than 120 time this year). But all that shows is that these people are running out of arguments.
Read the message – the offshore game is over.
Jan 222009
The next focus for cooperation in the attack on worldwide recession is the G20 meeting in London to be held on 2 April. This is an occasion when Gordon Brown will want to shine as the world leader able to guide the world out of its current mess.
It was therefore somewhat disappointing to learn just what the UK’s objectives for the meeting are (and I believe my source on this reliable). Those objectives, stated in a latter that looks as if Alistair Darling is its author are said to be to:
1. Return trust and confidence to the financial markets
2. Build on the benefits that open financial markets bring to the world economy
3. Reduce likelihood of systemic failure in the financial services industry
4. Prepare better for failure within financial.markets ensuring we have the mechanisms in place to protect depositors; to ensure the orderly wind up of failed institutions and to make sure there are appropriate international mechanisms to coordinate the management of failed institutions
5. Increase efficiency in the operation of financial markets so that they perform the task of capital allocation, risk management and facilitating transactions more efficiently.
I am staggered by the implausibility of this agenda. Let’s be clear about the state of the world’s financial system. Like Humpty Dumpty it has fallen off the wall. And do what they will, all HM Treasury’s horses and all of their men cannot put Humpty Dumpty back together again.
But I assure you, that’s what they’re trying to do. A senior Treasury civil servant told me during the autumn that the Treasury’s objective was to rebuild Anglo Saxon capitalism as ‘that’s all we’ve got’.
That’s not true. Worse than that, as a policy that’s as bankrupt as Citigroup looks right now.
I admit I’m almost as worried now as I was last October when the banks were about to fall apart precisely because the Treasury remains committed to what it calls ‘open’ financial markets. And yet what we have is not transparent or accountable and so if far from open, especially to a great many countries of the world.
What this phrase actually represents is a commitment to the current unregulated model of finance: one that amongst other things includes a commitment to the use of secrecy jurisdictions that provides the banks with their ‘get out of regulation free card’ – providing them with an option to at any moment say they refuse to be regulated because they have the right of moving elsewhere.
This has to end. This has to end now.
Look at what we committed to at the Task Force meeting on Financial Integrity and Transparency last week:
• That systems be put in place to curtail the practice of mispricing trade;
• That country-by-country reporting of sales profits and tax paid by multinational corporations be required in audited annual reports and tax returns;
• That the beneficial ownership, control and accounts of companies, trusts and foundations be readily available on public record to facilitate due diligence;
• That automatic exchange of information between tax and governmental authorities on income, gains and property received by non-resident individuals, corporations, and trusts, be made mandatory;
• That predicate offenses for a money laundering charge be harmonized and codified.
That’s a real five point agenda for the G20. OK – maybe not a sufficient agenda – but a good starting point. In the meantime Alastair Darling can only blow the process off track if his poverty of aspiration defeats the audacity of hope.
And that really troubles me.
Jan 222009
The Guardian has reported this morning that:
The UK has failed to join a new international crackdown on financial secrecy and tax havens by more than 50 countries, including Germany, France and Spain – part of a package of measures to restore the world’s economy to health.
Failure to participate in the formation of the new Taskforce on Financial Integrity and Economic Development, launched in Washington DC this week, is part of a pattern of UK opposition to key financial transparency reforms. Campaigners argue that the UK’s seeming desire to protect the City of London threatens to isolate Britain as international momentum for fundamental changes to tax secrecy grows.
Richard Murphy, the forensic accountant who is a key member of the taskforce, said: “The UK was invited to participate. They haven’t and they show no indication that they will engage with this. Other European partners are interested and we’ve seen what’s happened in the States. It’s obvious Obama is interested yet the UK remains coolly indifferent.”
The taskforce is demanding that the beneficial ownership, control and accounts of companies, trusts and foundations be available on public record to facilitate due diligence. It wants mandatory exchange of information between tax and governmental authorities on income, gains and property received by non-resident individuals, corporations, and trusts and that offences for money-laundering charges be harmonised across the world. It also calls for an end to the practice of transfer pricing, whereby companies manipulate the cost of trading goods to reduce the tax.
Last night, the Treasury said: “We are committed to addressing these issues the taskforce has raised through the G20. We are definitely putting these issues on the agenda.”
But last autumn, the UK opposed the upgrading of a United Nations sub-committee on tax to powerful intergovernmental status. It has also voiced concern about reforms to the EU’s savings tax directive, which will close tax avoidance loopholes. And last week, a leaked letter by Alistair Darling exposed the UK’s negotiation stance before the G20 summit this April in London . Darling stressed that the G20 must maintain open, lightly regulated capital markets.
The issue is this: the time has come for action. And I do not for one minute think the UK is putting these issues on the G20 agenda.
What is the point of an audit?
Accounting
Comments Off
Jan 222009
The FT has reported that:
The City regulator is holding talks with top auditors to try to ensure banks are not destabilised by accountants making a qualified judgement in annual accounts on their capacity to continue as a going concern.
The talks come amid fears that auditors could qualify the accounts of big banks because of uncertainties around their funding and their dependence on government money.
The Financial Services Authority has held two meetings with representatives from the top six accounting firms to discuss key issues, including how it can help to avoid any problems with the audit opinions.
This is an astonishing admission: the requirement that an audit of a bank has to deliver a clean report is tantamount to saying the audit has no meaning in one sense. The possibility of failure is inherent in the audit process, or at least it should have been.
Of course it could be argued that the power of the audit is in the fact that the talks are being held.
My concern is that this is not true. There seems to be little doubt that this is an FSA initiative, not an audit initiative. Auditors gave clean reports last year when it was very obvious they should not have done (Northern Rock was nationalised during last year’s reporting season) and this year they’re threatening to qualify when it is glaringly obvious that the banks are not going to be allowed to fail.
As a result the audit process is seen to be meaningless in both cases because in both it is a matter of the auditors protecting their own interests, not that of society. And that’s why a change in the whole process is required.
The FSA need to give that issue urgent attention.
These are my links for January 21st:
- Irish Taxation Institute – Fantasy Budget 2008 Winners display innovative proposals to drive economic recovery. – I am afraid even the next Irish generation is addicted to Tax Incentives. No surprise they are for online gaming given this University is sponsored by J P McManus one of Ireland's tax exiles "famous" for his gambling exploits
No surprise also then with the students' confusion of principle and principal!
- Breakthrough for taxman after Guernsey agrees to reveal bank account details – Times Online – The glory of misinformation
If the UK is lucky it will get confirmation of five things it already knows a year
- An absolute mess – The art of raising money – care of Goodman Jones, Chartered Accountants
