Liechtenstein » Tax Research UK

Don’t tell me large companies don’t tax evade

Corruption, G20, Liechtenstein, Tax evasion Comments Off

Apr 012009

In a move that appeared to be timed to coincide with pressure by President Nicolas Sarkozy for a G20 agreement on curbs for offshore tax havens, the French government has demanded tax fraud investigations into bank accounts allegedly held in Liechtenstein by Michelin, Total and Adidas.

They were apparently on the Liechtenstein list.

They deny it all.

They always do.

But it doesn’t mean they don’t do it.

And it’s why tax havens must go. And why the G20 starting this process is so important.

Is Lichtenstein suggesting real change?

Banking, G20, Liechtenstein, Tax evasion Comments Off

Mar 272009

A fascinating article in the FT this morning. It says:

Thousands of British investors with up to £3bn stashed in secret Liechtenstein bank accounts will be asked to come forward voluntarily under a deal to be negotiated next week that could be the first of many worldwide.

Lawyers said the Liechtenstein plan, discussed behind closed doors with the Paris-based Organisation for Economic Co-operation and Development, could serve as an international model for other tax havens seeking to avoid an OECD blacklist.

Liechtenstein’s government announced on Thursday it would begin talks with the UK’s Revenue & Customs next Wednesday, stating it wanted to encourage “voluntary disclosure of untaxed assets”. The decision follows agreement by the tiny alpine principality to ease its bank secrecy rules and to encourage foreign account holders to come clean.

Dave Hartnett, permanent secretary for tax at Revenue & Customs, said the intention was “to open up the historic bank accounts”.

So much hot air was my immediate thought – and yet more flannel about the useless Tax Information Exchange Agreements. And then came this:

Liechtenstein is trying to break away from the traditional image of tax havens by proposing an imaginative long-term process to tackle undeclared assets that could benefit foreign tax authorities, without excessively penalizing the rich.

I hate the caveat since I am unaware of an ethical basis for there being different law for the rich, but let’s continue

Revenue & Customs wants to prise open secret accounts by offering an “offshore disclosure facility”, along the lines of the 2007 partial “amnesty” that raised £400m from holders of undeclared offshore accounts. That would be unlikely to offer immunity from prosecution, but would provide a straightforward mechanism with limited penalties for investors wanting to put their affairs in order.

Liechtenstein banks would be asked to close accounts of customers who did not act on this offer, presenting them with difficulties finding a home for their money.

I won’t raise my hopes yet – but I am not just an idealist. I am also a pragmatist. I know that the realities of life require compromise. I’ve already noted that today with regard to the proposed US tax amnesty.

I don’t like Lichtenstein horse trading for tax evaders. But candidly – I also want those people to pay their tax, to get back into the declared world, and to allow Lichtenstein and other havens to move forward.

The price of these deals has to be real cooperation. It has to be voluntary disclosure or the offer of addresses of those who do not cooperate. The move has to be multilateral – there is no reason why the developing countries of this world should lose out from such moves. And the move has to be linked to joining the EU STD as a full member with the end of the withholding option. But do that and require that data on all companies and foundations be put on public record to a standard at least the minimum set by the UK and I could buy this deal as real progress.

If this is what Gordon Brown means by requesting multilateral agreements with tax havens then there is a prospect for change from the G20.

The fat lady has not sung yet.

More than that – we’re still in the opening bars of the overture – but if this story hints at real change then maybe we’re beginning to explore some of the themes that will require development as this sage develops.

Liechtenstein is a tax haven

Corruption, Liechtenstein, Switzerland 1 Response »

Mar 232009

No, I didn’t say so: a Liechtenstein financial services company did. It said in a PDF made on 12 March:

Liechtenstein is a tax haven

That fact plus the availability of anonymity to facilitate abuse, including foundations set up for the benefit of the settlor, and managed by them which makes them complete sham structures – are the main selling points. Read the second page of the PDF to see how bad it is.

Please don’t tell me anything is changing as yet. It’s clear that in places like Liechtenstein (where attitudes closely match those of near neighbour Switzerland) nothing is changing on the ground.

We have a long way to go.

Glen Moreno: a massive error of politcal judgement who has to go

Banking, Corruption, Liechtenstein 4 Responses »

Feb 092009

It is becoming increasingly clear just what an enormous error of political judgement the Chancellor made when appointing Liechtenstein insider and ex-Citibank employee Glen Moreno to head UK Financial Investments – the board appointed to look after the government’s massive commitment of funds to the UK’s banks. As the FT has put it:

Glen Moreno, the man hired by Alistair Darling to help oversee the government’s multibillion stake in the banking industry, came under heavy criticism yesterday for his involvement with a Liechtenstein bank accused of facilitating tax evasion.

George Osborne, shadow chancellor, said on the BBC’s Andrew Marr Show Mr Darling should clear up suggestions that Mr Moreno helped people to evade taxes. He said if this was true, “how can he possibly safeguard taxpayers’ money in the future?”

Vince Cable, Liberal Democrat treasury spokesman, said: “It speaks volumes about the government’s priorities when it seems happy to give a major post to somebody whose CV suggests a high degree of cynicism about the operation of tax havens.”

Mr Moreno can say all he likes about his Lichtenstein past. It’s notable that:

Mr Moreno quit as an LGT trustee two months after the bank hit the headlines with Heinrich Kieber, a bank employee, passing details of thousands of clients to the German tax authorities.

Opportune exit? I think so. And it does not require me to be cynical to say it was a massive error for the Treasury not to mention this role when he was appointed.

Candidly: no one in the UK is going to have confidence in a US citizen who helped direct a failing bank and in his spare time was responsible for management in the personal fiefdom and corporate entity that was the biggest supplier of corruption services in Europe, otherwise called Liechtenstein.

No one but Gordon Brown and Alastair Darling that is.

This man has to go – and all those he has appointed have to go with him or they are tainted by his corruption.

And let me be clear: I am accusing him of corruption, although I have no doubt it was not illegal. There is no one but a fool who could not have known that the business of Liechtenstein was to be a secrecy jurisdiction. Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain that is designed to undermine the legislation or regulation of another jurisdiction and that, in addition, 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.

In that case he is corrupt by reason of his involvement. Until April 2008 he tried to undermine democratic government for personal profit. He has no role now in working for a democratic government.

Transparency has a cost for Liechtenstein, and is not an abuse of rights

Ethics, Europe, Liechtenstein, Tax Havens 1 Response »

Sep 032008

The Guardian has reported that:

A German-led clampdown on tax dodgers has scared savers away from Liechtenstein’s banks and it could take years to win them back, prompting the tiny state to seek to lessen its reliance on the tax haven business.

And this:

The No.1 [ Lichtenstein] bank LGT, owned by the ruling family, said net new money fell to 335 million Swiss francs ($305.9 million) in the first half from 6.2 billion a year ago, while assets under management fell 7.5 billion to 95.3 billion francs.

Both are good news. It is clear that transparency has a cost of the tax havens. Of course, I’ve always argued that. Real transparency would destroy tax havens.

When I was in Canada I was asked what I meant by transparency, and how this interacted with privacy. I made it clear that my position is simple. If someone wants privacy they can have it. They can undertake transactions in their own name. If they do that in Lichtenstein, for example, then they would either have to exchange information with other EU states under the terms of the EU savings tax directive or suffer tax withholding at source. The vast majority of the market for services in Lichtenstein does come from the EU, by the way.

But, if a person wants to make use of structures created artificially by law, be that a corporation or trust in their various forms, then there is a price to pay. The price is twofold. The first is taxation on the entity and the second is transparency as to its ownership, management, and performance. No one has to use companies or trusts. It is a choice. It is a choice that involves the foregoing of privacy for the benefit society provides through their use. There is no compromise of privacy or human rights in saying so. Let no one pretend otherwise.

Questionable? I wouldn’t throw stones

Accounting, CSR, Ethics, Liechtenstein Comments Off

Aug 102008

The Sunday Times has reported that:

A partner at one the world’s biggest accountancy firms said: “By buying stolen data, tax authorities have encouraged anyone in a bank in Liechtenstein, Monaco or any other tax haven to sell private banking records for cash.

“Ethically and legally that is surely a highly questionable way to proceed.”

Not half as questionably as selling the corruption services in the first place, I say.

And let’s remember, all the Big 4 are in Liechtenstein, and there’s not a single ethical reason I can think of for them to be there.

Super-rich tax dodgers

Liechtenstein, Switzerland, Tax avoidance, Tax Havens Comments Off

Jul 292008

Got nine minutes? Watch this on what is happening in the US Senate hearings on super-rich tax dodgers. It’s worth it.

Are you being complacent Mr Whiting?

Liechtenstein, PWC, Tax Havens, Tax management 1 Response »

Jul 012008

I attended the first hearing of the Treasury Select Committee on Offshore Financial Centres this morning. It was to this committee that we submitted Tax Havens: Creating Turmoil.

The session started well when John McFall, the committee chairman, quoting from Creating Turmoil, as referred to in the Observer on Sunday, asked the panel their first question, which was:

Is it true, as one submission to this Committee has argued, that tax havens are not able to regulate that banks and other organisations that operate within their Offshore Financial Centres?

There was just one problem. No one answered his question. And so it went on all morning. John McFall was quoted as saying before this started that:

We’ve seen the issue of structured investment vehicles in Northern Rock’s demise and questions arising in relation to financial stability. We’re looking for fairness in the taxation system.

John Cullinane of Deloittes and John Whiting of PWC represented the profession in the first session of the hearing, . John Chown joined them, but only, it seemed, to dispense right wing political dogma. His sole role appeared to be the promotion of tax competition. All three of them, plus private bankers from Citi and HSBC, who made up the second panel, appeared to have as their only aim the usual politician’s task of not answering the question they were given. As one member of the Select Committee said to me afterwards, “rarely has this committee obtained so little information or heard such dull presentations”. As Andy Love MP had to eventually say:

Are you being complacent Mr Whiting?

John McFall was only a little more kind when he asked the panel in despair (with words something like this):

Are you telling us we’re wasting our time, that all is well and there is nothing to discuss?

So this lot would have had you believe.

But that, of course, is wholly consistent with the evidence I have submitted. Since these people dominate the OFCs and in turn have captured tax havens it is natural that they will say all is well in them, that regulation is working well, that market pressure will keep everyone in line, that what happened in Liechtenstein was unusual, that no other private banker has ever heard of anyone doing anything of the sort UBS are known to have done, and more. And let me assure you: that’s exactly what they did say.

There’s just one problem with that though. As most committee members know, as I know, and the world at large knows, that’s not true. They didn’t help their cause.

The IMF gets Liechtenstein very wrong indeed

Corruption, Liechtenstein, Regulation, Tax Havens 4 Responses »

Jun 262008

The IMF has issued a report on its web site today but which is dated 21 March 2008. It is entitled ‘ Liechtenstein: Assessment of Financial Sector Supervision and Regulation’. It forms part of the IMF’s regulatory review process. These are the reports which most tax havens use to claim that they are incredibly well regulated.

The review was actually undertaken in 2007. It is almost amusing to note how wrong it is. The executive summary says

The financial sector in Liechtenstein provides primarily wealth-management services, including banking, trust, other fiduciary services, investment management, and life insurance. The industry is expanding, including in the nonbanking areas, particularly investment undertakings and insurance. The success of the financial services industry reflects in part the not insignificant role of quality supervision and regulation.

We now know that this is completely untrue. We all know that the financial sector in Lichtenstein is involved in the provision of tax evasion services. Like every tax haven its sole purpose for existence is to undermine the regulation of other states, so I am hardly been contentious in saying that.

The the very next paragraph says:

The establishment of the Financial Market Authority (FMA) as the unified, independent regulator in January 2005 was a huge step for the financial services industry. This assessment has observed the substantial progress achieved in establishing a modern supervisory and regulatory regime. The FMA’s ability to share information with domestic and foreign regulatory authorities works well in practice, and the capacity and willingness to cooperate has been demonstrated in the interactions by the FMA and other authorities with their foreign counterparts.

And yet we know that Lichtenstein is refusing to co-operate with other nation states. That was why Germany had to buy data.

The list of recommendations that the IMF makes is substantial and includes such basic items is making tax evasion and terrorist financing a crime. In the light of that the apparent warm words in the executive summary are a complete illusion which will however be reported in the press.

Like all tax havens Liechtenstein exists with the intention of assisting people to break the law in their own country. That is its business model. That is the trade that those who operate their assist. They are the suppliers of corruption services. It is time that the IMF spell this out in black and white.