Tax Research UK

Europe unites to deplore Swiss ban on minarets - Times Online .

The Swiss and European establishment united today in deploring yesterday’s decision by Swiss voters to outlaw the construction of minarets but conservative leaders warned that the referendum showed genuine fear over Islam on the continent.

Swiss officials, media and business leaders voiced shame over a vote that they say will stigmatise the country’s 400,000 Muslims and stain Switzerland’s name in the Muslim world. In contrast, hard right leaders in France, Austria, Italy and the Netherlands hailed what they depicted as a triumph for the people against the elite.

The hard right and a secrecy jurisdiction acting in concert: no surprise there.

Secrecy jurisdictions are captured states that are used to promote the hard right.

There will be howls of protest - but let’s be clear. Apart from this very obvious abuse of the human rights of Moslems who should be allowed to worship as they please, secrecy jurisdictions do something much more sinister: they deliberately ensure that what little wealth the poorest of the world might be entitled to in the world’s developing countries is systematically transferred to the world’s wealthiest countries for the benefit of the wealthiest in those wealthiest countries.

This is an abuse as bad as slavery.

And the right say that this is about liberty. No it isn’t: it is only about abuse. There is no other explanation.

Richard Murphy Corruption, Secrecy jurisdictions, Switzerland, Tax Havens

In a Guardian article titled A jamboree of repression, Tom Porteous, director of Human Rights Watch, raises concerns about the failure amongst Commonwealth countries to "muster the collective political will to uphold its core values of political freedom and respect for human rights" and concludes that the Commonwealth has become a ‘haven for human rights abusers.’

Porteous supports his case by highlighting recent actions by governments in Sri Lanka, Pakistan, Bangladesh, Kenya, Cameroon, Uganda and Gambia, all of which have engaged in repressive actions against their citizens without any sign of disapproval or action by the Commonwealth. As the article notes:

Its secretariat fails to push or fund its human rights unit as a viable mechanism to encourage its members to comply with international standards; neither the secretary-general nor the diplomats of leading member states make a serious effort to get the Commonwealth to act collectively at the UN and elsewhere to champion human rights.

This is important and Porteous argues his case robustly but with the appropriate degree of diplomacy. Tax Justice Network would like to come at this issue from another angle: the Commonwealth is also a haven for the majority of the world’s secrecy jurisdictions (generally known as tax havens).

Far from taking action to curtail their harmful practices (and let’s not forget that many of the victims of secrecy jurisdictions are the ordinary people of Commonwealth member states) the Commonwealth secretariat actively participates in organisations lobbying on their behalf. This includes the International Trade and Investment Organisation, the latter having been created specifically to counter the efforts by the OECD to counter harmful tax competition. The Commonwealth’s involvement in this organisation, and its lobbying efforts on behalf of secrecy jurisdictions more generally, is nothing short of scandalous.

Time after time, TJN’s observers at UN events have witnessed Commonwealth member states actively engaged in blocking international efforts to strengthen cooperation in tackling corrupt tax practices. Such behaviour is wholly inconsistent with the idea, recently expressed by Lord Howell, former chair of the British parliament’s foreign affairs committe, that the Commonwealth has a role to play as an "ideal soft power network" for the 21st Century.

Britain and the collection of states and dependencies formerly known as the British Empire, are collectively responsible for around one-third of the global market in cross-border financial services. A significant part of this cross-border trade involves illicit flows, largely routed through structures created in secrecy jurisdictions. These illicits flows devastate the efforts of countries aiming to achieve self-reliance and tackle poverty. There is a direct link between the corrupt practices of secrecy jurisdictions and the human rights abuses in the countries of origin of the illicit funds. In this respect the Commonwealth has a major role to play in engaging constructively with its members to address their shortcomings and take action to diversify their economies away from dependence on secretive offshore financial services.

Secrecy has no useful role in the modern world of globalised financial markets. The activities of secrecy jurisdictions are harmful to the vast majority of countries and people. They encourage and facilitate corrupt practices. They support the kleptocrats and business elites who abuse human rights and undermine undermine respect for democracy and the rule of law. Their activities are incompatible with the core values of the human rights agenda. The Commonwealth must urgently get its own house into order.

NB: re-psoted from Tax Justice Network blog, with permission

Richard Murphy Corruption, Development, Secrecy jurisdictions, Tax Havens

James Moore: Lets tackle bank secrecy – everywhere - Business Comment, Business - The Independent.

The spotlight that is now (belatedly) shining down on UBS is showing up some very ugly things. It now appears that the vast majority of the thousands of wealthy people whose account details are to be handed to the US authorities are suspected of serious fraud rather than just common or garden tax evasion. According to the Swiss authorities, that is.

The financial details of about 4,450 UBS clients are to be handed over, and 4,200 of them are suspected of “advanced and serious fraud”.

A further 250 are suspected of the lesser offences of tax dodging.

Note the ratio: 94% serious fraud, 6% straight tax evasion.

But still the secrecy jurisdictions squeal when I accuse them of fostering crime.

Get real: you do foster crime. That’s why you promote secrecy. It has no other purpose. You know that. And you are as guilty for doing so.

Richard Murphy Corruption, Secrecy jurisdictions, Tax Havens, Tax evasion

World Vision have sent me a briefing on a new campaign they are launching. I guess a blog has reached critical mass when such things

happen.

They say this World Vision aims to cut child deaths by two thirds in order to reach the Millennium Development Goals. and note:

· 8.8 million children die each year before the age of five, which equates to 24,000 deaths every day.

· The main causes of these deaths are largely preventable - an estimated two thirds of children could be saved through simple interventions such as low-cost vitamin and mineral supplements to prevent malnutrition and comprehensive postnatal care to prevent post pregnancy complications and infections.

· Rich countries need to increase their commitment to health from the current level of $16 billion a year to $42.5 billion by 2015 if they are to meet the Millennium Development Goals` outlined in 2000 – this is equivalent to five days of health spending in the USA.

· Progress and change is possible. Even in some of the poorest countries, significant progress has been achieved. For example, the improvements accomplished in Malawi, for every 1,000 babies born, 125 more children survived to their fifth birthdays in 2008 than they did in 1990.

These facts are shocking. I share the concern for them. They motivate a lot of what I do. It’s unacceptable that More than 24,000 children under the age of five die every day.

I’m not sure World Vision – a US charity – has got its analysis right though. They’re right to say:

World Vision believes that simple, proven measures – most of them low cost, such as vitamin and mineral supplements to prevent malnutrition and improved water and sanitation systems to give more people access to a treated water supply - can transform the opportunities of the world’s poorest and most vulnerable children.

The World Bank estimates that a further 2.8 million children could die between now and 2015 unless immediate action is taken, adding further urgency to the challenge of child health.

And this has truth in it:

Many of these problems persist due to political inaction and misdirected effort – they fail to attract much comment, or spark outcry from media, politicians and civil society. In short, the global child health emergency is too often greeted with fatal indifference from those people with the power to address it.

It only has elements of truth in it because they go on to say this:

The epicentre of the child health emergency is sub-Saharan Africa and South Asia, with approximately half of all deaths accounted for by just five countries: India, Nigeria, the Democratic Republic of Congo, Pakistan and Ethiopia. Without a concerted and sustained effort in these countries, there’s little prospect of MDG 4 being met at a global level.

Most high burden countries are poor, and many are poorly governed. All of them are characterised by high levels of health inequality, between rural and urban areas, and between rich and poor. For example, in Nigeria, children from the poorest fifth of the population are three times more likely to die than those from the wealthiest fifth. Reducing the health gap between rich and poor even within the poorest countries would have a dramatic impact on overall mortality rates.

In response to which they say:

The main drivers of change have to come from the developing countries. Experience tells us that significant change is often underpinned by popular demand and informed public debate. However, countries which are poorly governed and ill coordinated with levels of internal corruption need help to make these important changes.

I do not for a minute doubt World Vision’s plan for enhanced nutrition, maternal health and the prevention of easily controlled childhood diseases are all valid. My concern is that this is seen as a process of aid. And it is seen as a process in which developed countries take a lead. and it is seen that, without explanation, health inequalities, which are inextricably linked to wealth inequalities will be solved, as will corruption by the great hand of western largesse.

If only that were true. I applaud all efforts to solve these problems: World Vision’s motives are sound. But they have to ask:

• Why is there inequality?
• How can it be addressed?
• How does the corruption take place?
• Who facilitates it?
• Where do the proceeds end up?
• How can we stop that process?

The answer is, of course, that there is a market mechanism to facilitate these outcomes: the secrecy jurisdiction market.

Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain. That regulation is designed to undermine the legislation or regulation of another jurisdiction. To facilitate its use secrecy jurisdictions also create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.

It is secrecy jurisdictions that allow corruption to happen. They facilitate it, provide the mechanisms to let the funds flow, and provide the secrecy to ensure it is never discovered.

Yes, World Vision are right – this is a developed country problem. We have to close secrecy jurisdictions.

Then with country-by-country reporting we have to help force profits to be declared and tax be paid in these countries. Then they can overcome their own problems.

That is the only real solution.

I am posting this to show solidarity with World Vision – but am asking in return that they face the really big issue of why developed countries help strip the poorest nations on earth of their wealth and return what little goes back to the wealthiest who have no need or entitlement to it.

I hope they will rise to that challenge. Because if they don’t they too are guilty of turning a blind eye – and that won’t do.

Richard Murphy Corruption, Country-by-country, Development, Secrecy jurisdictions, Tax Havens, Tax evasion

The following has been issued by Christian Aid, Global Witness and tear Fund and is too important not to note:

Doha:  A handful of countries are responsible for the failure of a crucial meeting to agree to an effective mechanism that would give a global anti-corruption treaty real power, said Christian Aid, Global Witness, and Tearfund today.

China, Russia and Egypt are among the governments who have weakened proposals for a peer review mechanism designed to ensure signatory countries to the UN Convention against Corruption (UNCAC) live up to their commitments.

”A huge opportunity to turn rhetoric into action has been lost due to the irresponsible behaviour of an unlikely coalition of blocking countries”, said George Boden of Global Witness.

”Corruption is one of the main reasons that countries remain poor, as government revenues disappear into the pockets of corrupt officials, whilst the poorest are denied access to healthcare, education and a decent living,” said Laura Webster of Tearfund.

“This fudged agreement begs the question: what do governments have to hide?” said Adele Poskitt from Christian Aid.
The UNCAC includes a package of measures to tackle corrupt practices, including bribery, embezzlement and money laundering. But without a strong peer review mechanism, there is no way to enforce compliance.

This week’s meeting was the opportunity to agree that mechanism. But, in the face of opposition from a number of governments, countries have settled on a weak compromise that does not ensure transparency or accountability.
Under the agreed mechanism, review teams will have to seek permission if they want to make a country visit or talk to those outside of government. The participation of civil society is not guaranteed. Even other UNCAC members will not have access to the full findings of the review teams. A weak review mechanism will mean that corruption will continue to blight the lives of people in poverty.

“This represents a significant setback for UNCAC. The failure to agree to a transparent and inclusive review mechanism will result in a huge loss of momentum for global anti-corruption efforts,” said Webster.

“Without effective anti-corruption safeguards, the funding urgently needed to tackle development issues, such as climate change, may be siphoned off not reaching those most in need,” said Poskitt.

“Shamefully, a handful of countries have rendered UNCAC toothless,” said Boden.

Corruption costs lives, causes misery, destroys well being and blights the hopes of billions.

Those who have blocked progress should have this on the consciences.

If they have one.

Richard Murphy Corruption

BBC - Today - Mutiny in the Caribbean .

According to the report people in Turks & Caicos can’t decide if direct rule is a good thing or not:

Aubrey Butterfield Junior, Chair of the Providenciales Chamber of Commerce, was one of those who publicly advocated for Britain to introduce direct rule.

“If direct rule had not been introduced one or two things would have happened,” he says.

“Either people would have stood up and you would have had a major revolt in this country for good governance or the country would have ended up another banana republic like some other countries around.”

But going by the conversation that was already in full flow when I entered a bustling island café, some here have no time for direct rule or the man charged with running it.

“The governor he is acting like a dictator. The Foreign Office need to look into the governor and remove him immediately,” said one of the men.

“I would like to see our people take over this country. You’ve got to take independence, that’s the only step you can do. independence.”

I am quite sure the independence campaign is well funded. But in the interests of curtailing corruption UK control is right - for now.

It’s a delicate balance, but one where the need to stop small jurisdictions being ‘legislators for hire’ - as has too often been the case - is vital.

Richard Murphy Corruption, Secrecy jurisdictions, Tax Havens

The Observer noted yesterday:

International negotiators will meet this week in Qatar in an attempt to finalise the world’s first and only international corruption convention, in the face of ongoing acrimony over the roles pressure groups should be allowed to play if the treaty comes into effect.

Signed in 2005, the UN’s Convention against Corruption, known as Uncac, has yet to be fully implemented. Nearly 1,000 representatives of dozens of governments have flown to Jordan and Bali, staying for five days at top hotels at a conservative cost of £2m. Hundreds of others have taken part in sessions in Vienna.

But there is anger at the barring of two civil-society groups from Georgia and Algeria. And a host of countries, thought to include Russia, China and Iran, are threatening to block the convention because of the possible involvement of campaigning organisations in a peer review mechanism designed to ensure the convention has teeth.

This is absurd. It is civil society that has most to lose from corruption and civil society that takes most risk in highlighting it. No group has done more in this respect than Global Witness, a fellow m,ember of the Task Force on Financial Integrity and Economic Development alongside the Tax Justice Network and Tax Research UK. As the Observer noted:

Anthea Lawson, a campaigner at anti-corruption group Global Witness, said: "Uncac needs a review mechanism that involves consultation of civil society, country visits, and full publication of the reports. Without this, it’ll be a system where countries can peer review each other without external oversight, which effectively means governments will be able to scratch each others’ backs and the public will be no wiser about whether they are really fulfilling their commitments to tackle corruption."

I wholeheartedly agree. Anthea accurately describes what passes as peer review in far too many areas. Real accountability is needed if corruption is to be beaten. Global Witness has proven its ability in this area, working on the Extractive Industries Transparency Initiative. We need more accountability of the sort that initiative incorporated if we are to succeed in this arena.

Richard Murphy Corruption

FT.com / Companies / Banks - Improper trading case adds to woes for UBS.

News on Thursday that employees in UBS’s wealth management division in London made unauthorised trades that cost clients more than $42m could not have come at a worse time for the Swiss bank.

According to the FSA final notice on Thursday, UBS’s internal controls were so weak that a desk head and three other employees were able to place up to 50 unauthorised foreign exchange and precious metals trades a day for a period of two years without being caught.

The employees took advantage of rules that let them place orders and wait 24 hours before specifying which account they were trading for. They were also allowed to bundle together a batch of trades into a single trade with an “averaged” price, hiding the results of individual punts.

This was a wealth management division, but it simply makes clear what has been said by some of us time and again: that banks manage other people’s assets solely for the benefit of bankers.

This is why the most massive change in banking is needed. I do not think this a case of ‘bad apples’. I am quite sure this is a systemic fault.

Richard Murphy Banking, Corruption

I have noted the American Bar Associations submission to the Senate hearing on incorporation and financial crime today.

Jack Blum of Tax Justice Network USA also gave evidence. He said in response to his fellow lawyers:

Some members of the bar are concerned that imposing AML responsibility of lawyers who act as incorporation agents will violate lawyer client privilege.    I believe that there is a bright line between giving a client legal advice, which is protected by privilege, and performing transactional work that requires interaction with government agencies. If a lawyer explains to a client that he must gather certain information and turn it over to the government as a condition of incorporation the client should have no expectation of confidentiality.  

If a lawyer handles an incorporation in a situation where that lawyer knows the corporation will be used as part of a money laundering scheme then the lawyer ceases being a lawyer and becomes a co-conspirator. Under those circumstances neither the lawyer nor the client deserves protection.

Quite so. When I wrote my blog on the ABA submission I had not read what Jack had said. I’m always encouraged when I find I’m in agreement with Jack. I am here, absolutely.

Richard Murphy Corruption, Lawyers

A recent conference at the Cato Institute has been reported by Tax Notes in the USA. They noted that:

Prince Michael von Liechtenstein, a majority owner of ProfitFundCom AG, a company that manages a Liechtenstein-based offshore hedge fund, said bank secrecy is about freedom.

‘‘Financial privacy is not an issue of rich people, it’s not an issue of taxes, and it is not an issue of hidden money. It is primarily an issue of freedom,’’ said Prince Michael.

The prince pointed to the importance of savings and investment in the promotion of a solid middle class and said bank secrecy was an integral part of preserving and increasing wealth.

‘‘The best long-term protection for your savings and capital is if nobody knows about it,’’ said Prince Michael.

What a deluded man the Prince is. What he’s advocating is a world of criminality, where society is destroyed and the only way of defending your property is with a gun, for that is the certain outcome of the lawlessness he still proposes.

Another speaker, Veronique de Rugy, a senior research fellow at the Mercatus Center and a Center for Freedom and Prosperity board member, set out, according to Tax BNotes to:

make what she called the ‘‘moral case for tax evasion.’’ De Rugy said that although ‘‘evading taxes when taxes are low’’ is ‘‘questionable,’’ tax evasion when rates are high is defensible. ‘‘Who is to say that those tax laws are actually legitimate?’’ she asked.

‘‘When taxes are high, people respond with their feet or their capital flies away, and that’s an important signal to government to keep taxes low. I think it’s extremely valuable, and in that way I think there is a true purpose for tax evasion: It’s to teach high-tax nations that what we make does not belong to them,’’ explained de Rugy, to a round of applause from the audience.

This is incitement to commit a rime: no more, or less.

And how is the secrecy the Prince espouses and the crime that de Rugy describes as desirable facilitated? I turn to the evidence of Jack Blum of Tax Justice Network USA to the Senate Committee on Homeland Security and Governmental Affairs today. Jack said:

The single most important tool in the toolkit of people trying to hide money  from law enforcement and tax collection is the anonymous shell corporation. These shell corporations have no physical place of business, use nominee officers and directors, and as a rule do no business in the place of incorporation. Their sole purpose is hiding where money is, who controls it, and where it is moving, from law enforcement and tax collectors. These shell companies should not be allowed remain anonymous.  

States that offer corporations to individuals without insisting on information on beneficial ownership are undermining the efforts of law enforcement to prevent crime, recover stolen assets and collect tax. They are also putting the United States out of compliance with international standards for customer identification. From our perspective gathering basic information about ownership for government use is essential to protect national security and to limit financial crime and tax evasion.  

Exactly so.

The contrast could not be sharper. The friends of tax havens promote secrecy and law breaking to undermine society, the Tax Justice Network promotes law enforcement to underpin democratic society as we know it – and all the benefits that come from it.

Who is mainstream? Tax Justice Network, of course.

Who is trying to undermine society? The tax havens, their friends in right wing politics and the pinstripe mafia of lawyers, accountants and bankers who service the needs of those who tax evade and do not wish to be held accountable for doing so.

Was the choice ever more clearly visible? I doubt it.

So let’s abolish secrecy now. let’s get rid of secrecy jurisdictions now. And let’s work for democratic freedom, accountability, honesty, justice and well being for all, now – before the crime supporting tax havens / secrecy jurisdictions destroy it.

Richard Murphy Corruption, Ethics, Secrecy jurisdictions, Tax Havens