US designates two latvia banks as money laundering concerns

www.chinaview.cn 2005-04-22 04:28:01

WASHINGTON, April 21 (Xinhuanet) -- The US Treasury Department designated two Latvian banks on
Thursday as "primary money laundering concerns," and prohibited US financial institutions from any
transactions with the two financial institutions.

"The Treasury has judiciously and strategically utilized the power of Section 311 (of the USA
PATRIOT Act) to isolate rogue actors that present money laundering concerns and risks to the US
financial sector," Treasury Secretary John W. Snow said in a statement.

With the action taken on Thursday, US financial institutions will be prohibited from establishing,
maintaining, administering or managing any correspondent account in the United States for or on
behalf of the two banks - Multibanka and VEF Bank.

Daniel Glaser, the department's deputy assistant secretary for terrorist financing and financial
crimes, said the two Latvian banks "represent a danger to the international community because they
facilitate the placement and movement of dirty money in the global financial system."

The Treasury Department cited several reasons for designating the two banks, both headquartered in
Riga, Latvia's capital, as "primary money laundering concerns," which included confidential banking
services for non-Latvian customers, certain criminals using accounts at one of the banks to
facilitate financial fraud schemes, and lacking adequate controls and procedures to detect and
combat money laundering.

Previously, the department has identified several foreign financial institutions as "primary money
laundering concerns," including Belarus's Infobank, the Commercial Bank of Syria, Myanmar Mayflower
Bank and Asia Wealth Bank.

Copyright ©2003 Xinhua News Agency. All rights reserved.
http://news.xinhuanet.com/english/2005-04/22/content_2862204.htm

Equifax extends online anti-money laundering service to cover Individuals

With money laundering prevention and detection continuing to stay high on the agenda for both the UK
government and the financial services industry, Equifax Plc has responded with additional
enhancements to its range of electronic anti-money laundering solutions. Equifax AML Online now
provides an extensive range of checks on individuals, as well as businesses, for instant customer
validation.

The addition of consumer data to Equifax AML Online means that it provides an immediate solution to
address the latest Anti-Money Laundering regulations to confirm the identity of all new customers,
giving instant access to an unrivalled combination of business and consumer data. Encompassing proof
of residency checks, proof of identity checks and alert notifications, it can be accessed easily and
conveniently through a single search, using rapid address matching technology. It also includes an
innovative AML Profile, which summarises the number of validated checks on an individual.

"Designed to protect organisations that are dealing with individuals as well as businesses, Equifax
AML Online gives organisations all-important protection from the threat of fines, and the adverse
publicity associated with such action, if they do not adhere to the latest Anti-Money Laundering
regulations", confirmed Sue Woods, Head of Equifax ID Services.

"It also provides the UK financial services sector with an unrivalled capability to help tackle the
threats presented by money launderers and terrorist financiers. This is especially important since
the introduction of the Proceeds of Crime Act, because money laundering is now seen as an integral
part of all crime that is spreading across all areas of the UK economy - and being perpetrated by
both businesses and individuals."

The new enhancements to AML Online include Forwarding Address flags, screening against Senior
Political Figures and Sanctions lists along with Halo (Deceased) screening, all of which are vital
for businesses to effectively confirm the identity of new customers.

The Equifax databases are updated daily with information from a wide range of data sources,
including local councils, the courts, the UK credit industry, the Bank of England and the CIA,
making the information the most accurate and up-to-date available.

"Businesses are under increasing pressure to operate with best practices through compliance with the
latest Anti-Money Laundering Regulations and the Proceeds of Crime Act" concluded Sue Woods. "With
the addition of consumer data, AML Online tackle these issues completely, providing an extensive
range of checks on registered companies, directors and individuals, all easily and conveniently
available through an online report.

"AML Online is a highly flexible solution, demonstrating Equifax's ongoing commitment to helping our
customers protect themselves against money laundering and comply with regulations, securing the
future of their business."

http://www.creditman.biz/uk/members/news-view.asp?newsviewid=4694&id=1&
mylocation=news&chksrc=nnow4251

Peak of Oil Production next year?

There's a lot of doom n gloom about the end of oil, and I'm not sure if
I believe it myself. There are a lot of reports around the net that
conclude the 'end' is a very long way away indeed. This article is
referring to the peak of production capacity not the end of the reserves
themselves - an interesting angle in the debate.

Oil production could peak next year, reports John Vidal. Just kiss your lifestyle goodbye

Thursday April 21, 2005
The Guardian

The one thing that international bankers don't want to hear is that the second Great Depression may
be round the corner. But last week, a group of ultra-conservative Swiss financiers asked a retired
English petroleum geologist living in Ireland to tell them about the beginning of the end of the oil
age.

They called Colin Campbell, who helped to found the London-based Oil Depletion Analysis Centre
because he is an industry man through and through, has no financial agenda and has spent most of a
lifetime on the front line of oil exploration on three continents. He was chief geologist for Amoco,
a vice-president of Fina, and has worked for BP, Texaco, Shell, ChevronTexaco and Exxon in a dozen
different countries.

"Don't worry about oil running out; it won't for very many years," the Oxford PhD told the bankers
in a message that he will repeat to businessmen, academics and investment analysts at a conference
in Edinburgh next week. "The issue is the long downward slope that opens on the other side of peak
production. Oil and gas dominate our lives, and their decline will change the world in radical and
unpredictable ways," he says.

Campbell reckons global peak production of conventional oil - the kind associated with gushing oil
wells - is approaching fast, perhaps even next year. His calculations are based on historical and
present production data, published reserves and discoveries of companies and governments, estimates
of reserves lodged with the US Securities and Exchange Commission, speeches by oil chiefs and a deep
knowledge of how the industry works.

"About 944bn barrels of oil has so far been extracted, some 764bn remains extractable in known
fields, or reserves, and a further 142bn of reserves are classed as 'yet-to-find', meaning what oil
is expected to be discovered. If this is so, then the overall oil peak arrives next year," he says.

If he is correct, then global oil production can be expected to decline steadily at about 2-3% a
year, the cost of everything from travel, heating, agriculture, trade, and anything made of plastic
rises. And the scramble to control oil resources intensifies. As one US analyst said this week:
"Just kiss your lifestyle goodbye."

But the Campbell analysis is way off the much more optimistic official figures. The US Geological
Survey (USGS) states that reserves in 2000 (its latest figures) of recoverable oil were about three
trillion barrels and that peak production will not come for about 30 years. The International Energy
Agency (IEA) believes that oil will peak between "2013 and 2037" and Saudi Arabia, Kuwait, Iraq and
Iran, four countries with much of the world's known reserves, report little if any depletion of
reserves. Meanwhile, the oil companies - which do not make public estimates of their own "peak
oil" - say there is no shortage of oil and gas for the long term. "The world holds enough proved
reserves for 40 years of supply and at least 60 years of gas supply at current consumption rates,"
said BP this week.

Indeed, almost every year for 150 years, the oil industry has produced more than it did the year
before, and predictions of oil running out or peaking have always been proved wrong. Today, the
industry is producing about 83m barrels a day, with big new fields in Azerbaijan, Angola, Algeria,
the deep waters of the Gulf of Mexico and elsewhere soon expected on stream.

But the business of estimating oil reserves is contentious and political. According to Campbell,
companies seldom report their true findings for commercial reasons, and governments - which own 90%
of the reserves - often lie. Most official figures, he says, are grossly unreliable: "Estimating
reserves is a scientific business. There is a range of uncertainty but it is not impossible to get a
good idea of what a field contains. Reporting [reserves], however, is a political act."

According to Campbell and other oil industry sources, the two most widely used estimates of world
oil reserves, drawn up by the Oil and Gas Journal and the BP Statistical Review, both rely on
reserve estimates provided to them by governments and industry and do not question their accuracy.

Companies, says Campbell, "under-report their new discoveries to comply with strict US stock
exchange rules, but then revise them upwards over time", partly to boost their share prices with
"good news" results. "I do not think that I ever told the truth about the size of a prospect. That
was not the game we were in," he says. "As we were competing for funds with other subsidiaries
around the world, we had to exaggerate."

Most serious of all, he and other oil depletion analysts and petroleum geologists, most of whom have
been in the industry for years, accuse the US of using questionable statistical probability models
to calculate global reserves and Opec countries of drastically revising upwards their reserves in
the 1980s.

"The estimates for the Opec countries were systematically exaggerated in the late 1980s to win a
greater slice of the allocation cake. Middle East official reserves jumped 43% in just three years
despite no new major finds," he says.

The study of "peak oil" - the point at which half the total oil known to have existed in a field or
a country has been consumed, beyond which extraction goes into irreversible decline - used to be
back-of-the envelope guesswork. It was not taken seriously by business or governments, mainly
because oil has always been cheap and plentiful.

In the wake of the Iraq war, the rapid economic rise of China, global warming and recent record oil
prices, the debate has shifted from "if" there is a global peak to "when".

The US government knows that conventional oil is running out fast. According to a report on oil
shales and unconventional oil supplies prepared by the US office of petroleum reserves last year,
"world oil reserves are being depleted three times as fast as they are being discovered. Oil is
being produced from past discoveries, but the re-serves are not being fully replaced. Remaining oil
reserves of individual oil companies must continue to shrink. The disparity between increasing
production and declining discoveries can only have one outcome: a practical supply limit will be
reached and future supply to meet conventional oil demand will not be available."

It continues: "Although there is no agreement about the date that world oil production will peak,
forecasts presented by USGS geologist Les Magoon, the Oil and Gas Journal, and others expect the
peak will occur between 2003 and 2020. What is notable ... is that none extend beyond the year 2020,
suggesting that the world may be facing shortfalls much sooner than expected."

According to Bill Powers, editor of the Canadian Energy Viewpoint investment journal, there is a
growing belief among geologists who study world oil supply that production "is soon headed into an
irreversible decline ... The US government does not want to admit the reality of the situation. Dr
Campbell's thesis, and those of others like him, are becoming the mainstream."

In the absence of reliable official figures, geologists and analysts are turning to the grandfather
of oil depletion analysis, M King Hubbert, a Shell geologist who in 1956 showed mathematically that
exploitation of any oilfield follows a predictable "bell curve" trend, which is slow to take off,
rises steeply, flattens and then descends again steeply. The biggest and easiest exploited oilfields
were always found early in the history of exploration, while smaller ones were developed as
production from the big fields declined. He accurately predicted that US domestic oil production
would peak around 1970, 40 years after the period of peak discovery around 1930.

Many oil analysts now take the "Hubbert peak" model seriously, and the USGS, national and oil
company figures with a large dose of salt. Similar patterns of peak discovery and production have
been found throughout all the world's main oilfields. The first North Sea discovery was in 1969,
discoveries peaked in 1973 and the UK passed its production peak in 1999. The British portion of the
basin is now in serious decline and the Norwegian sector has levelled off.

Other analysts are also questioning afresh the oil companies' data. US Wall street energy group
Herold last month compared the stated reserves of the world's leading oil companies with their
quoted discoveries, and production levels. Herold predicts that the seven largest will all begin
seeing production declines within four years. Deutsche Bank analysts report that global oil
production will peak in 2014.

According to Chris Skrebowski, editor of Petroleum Review, a monthly magazine published by the
Energy Institute in London, conventional oil reserves are now declining about 4-6% a year worldwide.
He says 18 large oil-producing countries, including Britain, and 32 smaller ones, have declining
production; and he expects Denmark, Malaysia, Brunei, China, Mexico and India all to reach their
peak in the next few years.

"We should be worried. Time is short and we are not even at the point where we admit we have a
problem," Skrebowski says. "Governments are always excessively optimistic. The problem is that the
peak, which I think is 2008, is tomorrow in planning terms."

On the other hand, Equatorial Guinea, Sao Tome, Chad and Angola are are all expected to grow
strongly.

What is agreed is that world oil demand is surging. The International Energy Agency, which collates
national figures and predicts demand, says developing countries could push demand up 47% to 121m
barrels a day by 2030, and that oil companies and oil-producing nations must spend about $100bn a
year to develop new supplies to keep pace.

According to the IEA, demand rose faster in 2004 than in any year since 1976. China's oil
consumption, which accounted for a third of extra global demand last year, grew 17% and is expected
to double over 15 years to more than 10m barrels a day - half the US's present demand. India's
consumption is expected to rise by nearly 30% in the next five years. If world demand continues to
grow at 2% a year, then almost 160m barrels a day will need to be extracted in 2035, twice as much
as today.

That, say most geologists is almost inconceivable. According to industry consultants IHS Energy, 90%
of all known reserves are now in production, suggesting that few major discoveries remain to be
made. Shell says its reserves fell last year because it only found enough oil to replace 15-25 % of
what the company produced. BP told the US stock exchange that it replaced only 89% of its production
in 2004.

Moreover, oil supply is increasingly limited to a few giant fields, with 10% of all production
coming from just four fields and 80% from fields discovered before 1970. Even finding a field the
size of Ghawar in Saudi Arabia, by far the world's largest and said to have another 125bn barrels,
would only meet world demand for about 10 years.

"All the major discoveries were in the 1960s, since when they have been declining gradually over
time, give or take the occasional spike and trough," says Campbell. "The whole world has now been
seismically searched and picked over. Geological knowledge has improved enormously in the past 30
years and it is almost inconceivable now that major fields remain to be found."

He accepts there may be a big field or two left in Russia, and more in Africa, but these would have
little bearing on world supplies. Unconventional deposits like tar sands and shale may only slow the
production decline.

"The first half of the oil age now closes," says Campbell. "It lasted 150 years and saw the rapid
expansion of industry, transport, trade, agriculture and financial capital, allowing the population
to expand six-fold. The second half now dawns, and will be marked by the decline of oil and all that
depends on it, including financial capital."

So did the Swiss bankers comprehend the seriousness of the situation when he talked to them? "There
is no company on the stock exchange that doesn't make a tacit assumption about the availability of
energy," says Campbell. "It is almost impossible for bankers to accept it. It is so out of their
mindset."

Crude alternatives

"Unconventional" petroleum reserves, which are not included in some totals of reserves, include:

Heavy oils

These can be pumped just like conventional petroleum except that they are much thicker, more
polluting, and require more extensive refining. They are found in more than 30 countries, but about
90% of estimated reserves are in the Orinoco "heavy oil belt" of Venezuela, which has an estimated
1.2 trillion barrels. About one third of the oil is potentially recoverable using current
technology.

Tar sands

These are found in sedimentary rocks and must be dug out and crushed in giant opencast mines. But it
takes five to 10 times the energy, area and water to mine, process and upgrade the tars that it does
to process conventional oil. The Athabasca deposits in Alberta, Canada are the world's largest
resource, with estimated reserves of 1.8 trillion barrels, of which about 280-300bn barrels may be
recoverable. Production now accounts for about 20% of Canada's oil supply.

Oil shales

These are seen as the US government's energy stopgap. They exist in large quantities in ecologically
sensitive parts of Colorado, Wyoming and Utah at varying depths, but the industrial process needed
to extract the oil demands hot water, making it much more expensive and less energy-efficient than
conventional oil. The mining operation is extremely damaging to the environment. Shell, Exxon,
ChevronTexaco and other oil companies are investing billions of dollars in this expensive oil
production method.

Guardian Unlimited © Guardian Newspapers Limited 2005
http://www.guardian.co.uk/life/feature/story/0,13026,1464050,00.html

Militarism threatens to bankrupt US economically and morally

Posted on Thu, Apr. 21, 2005

Militarism threatens to bankrupt U.S. economically and morally
By Reed M. Smith

Michael Parenti, eminent author and historian, recently told an audience of almost 300 people in
Penn State's Schwab Auditorium that what empires do is much different from how they are represented
in history by their leaders.

This has been true since Greece and Rome, for Persians in biblical times, Turks, Spanish,
Portuguese, British, French, Belgians and others up to the present time.

We were always told that the United States does not do such things. America, "the land of the free
and the home of the brave," is, as President Bush declared, bringing liberty, democracy, justice,
peace, progress and stability to the poor and troubled nations.

A person can always look at the goodness and blessings of our country, or can look at its faults and
abuses.

We now hear about our responsibility as the world's only superpower to liberate and democratize the
Middle East and to oppose tyranny everywhere. So why aren't we intervening in Darfur, where more
than 2 million innocents have been uprooted or slaughtered in a brutal, racist civil war?

In Iraq, the most prosperous country in the Middle East before our first Gulf War, we helped Saddam
Hussein to gain ascendancy, and even supplied chemicals for his chemical warfare, when current
Defense Secretary Donald Rumsfeld was there in the 1980s.

With an estimated 700 military bases, and American troops worldwide, the U.S. is the greatest empire
in history, whether we recognize it or not. Why then are we so universally hated and resented, not
just by a new breed of terrorists, but are seen abroad as an arrogant superpower, guilty of an
illegal Iraq war, massive arrests, brutal raids and continuing torture?

Members of our rather phony coalition seem to be dropping like flies.

In two years, 1,547 U.S. soldiers have been killed and more than 11,664 wounded, 92 percent of them
since the fall of Baghdad.

By April 9, there were 2,005 Iraqi police and guardsman deaths, and more than 100,000 Iraqi
civilians were killed.

Total coalition losses are 1,724 soldiers, about 90 percent from the U.S.

Congress has been largely supine. It has never officially declared any of our wars since December
1941.

As Parenti noted, the U.S. media has generally legitimized the system, as have many veterans groups,
the dominant Republican Party, the right wing and many churches. A new breed of flag waving
nationalists or superpatriots has been justifying if not propagandizing the war, often with lots of
profitable contracts to clinch the deal.

Competent observers have said that Iraq has never been a direct threat to U.S. security, but it is
now a breeding ground for terrorists as a result of the war and occupation, much of which has been
shielded from American eyes.

We devastated Fallujah, a city of about 200,000, with orders, as in Vietnam, to "shoot anything that
moves." The whole world, particularly the Muslim nations, was shocked.

Informed people who are not swayed by our warhawks agree that Iraq is now a mess, not a budding
democracy, but another grab for oil and lucrative U.S. contracts, a la Halliburton, Boeing and
others. The best thing is to get out before we kill thousands more Americans, Iraqis and others, and
before we turn the Middle East into a smoking cauldron.

As in the case of Vietnam we must face facts, accept defeat -- or as Knight Ridder columnist Joseph
Galloway wrote recently, just declare victory and go home.

Even Rumsfeld was almost promising that to the troops last week.

As Parenti predicted, the very next day things will start to improve.

It is up to the American people to demand that our representatives stop the warhawks' world-girdling
military appetite in the Middle East and elsewhere, restore our own democracy, and devote our tax
resources to urgent human needs at home and abroad.

Rampant American militarism is bankrupting our country morally and economically. The sooner we
recognize that and rejoin the human race, the better.

Reed M. Smith, of State College, is a retired political science professor who taught at Penn State
as a graduate assistant and later at the University of Pennsylvania, Bradley University and
elsewhere.

http://www.centredaily.com/mld/centredaily/news/opinion/11447212.htm

Calibre to tackle money laundering for US Treasury

Calibre to tackle money laundering for US Dept of Treasury

Calibre, a management and technology services company, has been awarded a contract with a total
potential value of $13.7 million by the US Department of the Treasury in an attempt to combat money
laundering.

1 Apr 2005, 15:12 GMT -
The contract has a six-month period of performance with five option years, and has a base period
worth $1.6 million.

Calibre is to provide support for the development of IT and information resource management
strategies of the Bureau of the Public Debt for the Financial Crimes Enforcement Network (FinCEN).
It will also assist in the management of IT programs and capital asset management and offer training
on information resource management and technology issues.

It is hoped the deal will enable FinCEN's Office of Information Technology to efficiently combat
money laundering, both domestically and internationally, across the network of law enforcement and
intelligence communities it serves and the financial industry it regulates.

© 2005 Computer Business Review Online
http://www.cbronline.com/article_news.asp?guid=743d0af5-8dd4-4bc3-ad4c-60b8c91e9db1

Expat brits missing out on offshore opportunities

Nine out of ten expatriate Brits are not taking advantage of offshore savings opportunities, according to research published today.

A survey by Alliance & Leicester International of UK expatriates living in Europe found that 82 per cent held savings in their host country, and over half held savings in the UK.

But only 10 per cent hold savings offshore, where they could be benefitting from higher interest rates and paying less tax.

"The research shows that there are many expatriates who have not considered whether they would benefit from holding their savings in an offshore account. Given the competitive rates available from offshore banks such as Alliance & Leicester International, they could increase their interest earnings significantly," said Alliance & Leicester International managing director Simon Hull.

Alliance & Leicester points out that offshore banking no longer means tying up savings in postal accounts, with internet facilities now allowing clients to view their accounts securely and send messages to the bank 24 hours a day.

Mr Hull added: "Offshore accounts can provide expatriates with a great rate, coupled with the same easy access to money that saving accounts in the host country allow. The opportunities for offshore savers do exist but 90 per cent of the market isn't using them."
myfinances.co.uk

Barclays to set up Hong Kong offshore banking arm

HONG KONG (Reuters) - Barclays said on Thursday it has set up a new banking unit in Hong Kong to help manage the accounts of international trading firms as China becomes an increasingly important global player.

Hong Kong's imports and exports totalled more than US$400 billion last year, while China's trade with the rest of the world hit a record $1.1 trillion, prompting Barclays to set up the business, which it said is the first of its kind in the city.

"Professional service firms and international trading companies in Hong Kong are experiencing a surge in business and they need a high level of banking expertise and service to help them manage their affairs," said Katherine Morgan, head of international banking for Asia Pacific.

Barclays International Corporate, which manages about 10 billion pounds of offshore assets, will run the business and focus on professional service firms like trust companies and law and accounting firms.

The service firms can use Barclays Internet platform to access market information and treasury dealing and complete forward contract transactions online on behalf of their clients.

reuters.co.uk

The bursting asset bubbles

The recent implosion of the global equity markets in 1999-2002 - from Hong Kong to New York - engendered yet another round of the semipternal debate: should central banks contemplate abrupt adjustments in the prices of assets - such as stocks or real estate - as they do changes in the consumer price indices? Are asset bubbles indeed inflationary and their bursting deflationary?

Central bankers counter that it is hard to tell a bubble until it bursts and that market intervention bring about that which it is intended to prevent. There is insufficient historical data, they reprimand errant scholars who insist otherwise. This is disingenuous. Ponzi and pyramid schemes have been a fixture of Western civilization at least since the middle Renaissance.

Assets tend to accumulate in "asset stocks". Residences built in the 19th century still serve their purpose today. The quantity of new assets created at any given period is, inevitably, negligible compared to the stock of the same class of assets accumulated over decades and, sometimes, centuries. This is why the prices of assets are not anchored - they are only loosely connected to their production costs or even to their replacement value.

Asset bubbles are not the exclusive domain of stock exchanges and shares. "Real" assets include land and the property built on it, machinery, and other tangibles. "Financial" assets include anything that stores value and can serve as means of exchange - from cash to securities. Even tulip bulbs will do.

In 1634, in what later came o be known as "tulipmania", tulip bulbs were traded in a special marketplace in Amsterdam, the scene of a rabid speculative frenzy. Some rare black tulip bulbs changed hands for the price of a big mansion house. For four feverish years it seemed like the craze would last forever. But the bubble burst in 1637. In a matter of a few days, the price of tulip bulbs was slashed by 96%!

Uniquely, tulipmania was not an organized scam with an identifiable group of movers and shakers, which controlled and directed it. Nor has anyone made explicit promises to investors regarding guaranteed future profits. The hysteria was evenly distributed and fed on itself. Subsequent investment fiddles were different, though.

Modern dodges entangle a large number of victims. Their size and all-pervasiveness sometimes threaten the national economy and the very fabric of society and incur grave political and social costs.

There are two types of bubbles.

Asset bubbles of the first type are run or fanned by financial intermediaries such as banks or brokerage houses. They consist of "pumping" the price of an asset or an asset class. The assets concerned can be shares, currencies, other securities and financial instruments - or even savings accounts. To promise unearthly yields on one's savings is to artificially inflate the "price", or the "value" of one's savings account.

More than one fifth of the population of 1983 Israel were involved in a banking scandal of Albanian proportions. It was a classic pyramid scheme. All the banks, bar one, promised to gullible investors ever increasing returns on the banks' own publicly-traded shares.

These explicit and incredible promises were included in prospectuses of the banks' public offerings and won the implicit acquiescence and collaboration of successive Israeli governments. The banks used deposits, their capital, retained earnings and funds illegally borrowed through shady offshore subsidiaries to try to keep their impossible and unhealthy promises. Everyone knew what was going on and everyone was involved. It lasted 7 years. The prices of some shares increased by 1-2 percent daily.

On October 6, 1983, the entire banking sector of Israel crumbled. Faced with ominously mounting civil unrest, the government was forced to compensate shareholders. It offered them an elaborate share buyback plan over 9 years. The cost of this plan was pegged at $6 billion - almost 15 percent of Israel's annual GDP. The indirect damage remains unknown.

Avaricious and susceptible investors are lured into investment swindles by the promise of impossibly high profits or interest payments. The organizers use the money entrusted to them by new investors to pay off the old ones and thus establish a credible reputation. Charles Ponzi perpetrated many such schemes in 1919-1925 in Boston and later the Florida real estate market in the USA. Hence a "Ponzi scheme".

In Macedonia, a savings bank named TAT collapsed in 1997, erasing the economy of an entire major city, Bitola. After much wrangling and recriminations - many politicians seem to have benefited from the scam - the government, faced with elections in September, has recently decided, in defiance of IMF diktats, to offer meager compensation to the afflicted savers. TAT was only one of a few similar cases. Similar scandals took place in Russia and Bulgaria in the 1990's.

One third of the impoverished population of Albania was cast into destitution by the collapse of a series of nation-wide leveraged investment plans in 1997. Inept political and financial crisis management led Albania to the verge of disintegration and a civil war. Rioters invaded police stations and army barracks and expropriated hundreds of thousands of weapons.

Islam forbids its adherents to charge interest on money lent - as does Judaism. To circumvent this onerous decree, entrepreneurs and religious figures in Egypt and in Pakistan established "Islamic banks". These institutions pay no interest on deposits, nor do they demand interest from borrowers. Instead, depositors are made partners in the banks' - largely fictitious - profits. Clients are charged for - no less fictitious - losses. A few Islamic banks were in the habit of offering vertiginously high "profits". They went the way of other, less pious, pyramid schemes. They melted down and dragged economies and political establishments with them.

By definition, pyramid schemes are doomed to failure. The number of new "investors" - and the new money they make available to the pyramid's organizers - is limited. When the funds run out and the old investors can no longer be paid, panic ensues. In a classic "run on the bank", everyone attempts to draw his money simultaneously. Even healthy banks - a distant relative of pyramid schemes - cannot cope with such stampedes. Some of the money is invested long-term, or lent. Few financial institutions keep more than 10 percent of their deposits in liquid on-call reserves.

Studies repeatedly demonstrated that investors in pyramid schemes realize their dubious nature and stand forewarned by the collapse of other contemporaneous scams. But they are swayed by recurrent promises that they could draw their money at will ("liquidity") and, in the meantime, receive alluring returns on it ("capital gains", "interest payments", "profits").

People know that they are likelier to lose all or part of their money as time passes. But they convince themselves that they can outwit the organizers of the pyramid, that their withdrawals of profits or interest payments prior to the inevitable collapse will more than amply compensate them for the loss of their money. Many believe that they will succeed to accurately time the extraction of their original investment based on - mostly useless and superstitious - "warning signs".

While the speculative rash lasts, a host of pundits, analysts, and scholars aim to justify it. The "new economy" is exempt from "old rules and archaic modes of thinking". Productivity has surged and established a steeper, but sustainable, trend line. Information technology is as revolutionary as electricity. No, more than electricity. Stock valuations are reasonable. The Dow is on its way to 33,000. People want to believe these "objective, disinterested analyses" from "experts".

Investments by households are only one of the engines of this first kind of asset bubbles. A lot of the money that pours into pyramid schemes and stock exchange booms is laundered, the fruits of illicit pursuits. The laundering of tax-evaded money or the proceeds of criminal activities, mainly drugs, is effected through regular banking channels. The money changes ownership a few times to obscure its trail and the identities of the true owners.

Many offshore banks manage shady investment ploys. They maintain two sets of books. The "public" or "cooked" set is made available to the authorities - the tax administration, bank supervision, deposit insurance, law enforcement agencies, and securities and exchange commission. The true record is kept in the second, inaccessible, set of files.

This second set of accounts reflects reality: who deposited how much, when and subject to which conditions - and who borrowed what, when and subject to what terms. These arrangements are so stealthy and convoluted that sometimes even the shareholders of the bank lose track of its activities and misapprehend its real situation. Unscrupulous management and staff sometimes take advantage of the situation. Embezzlement, abuse of authority, mysterious trades, misuse of funds are more widespread than acknowledged.

The thunderous disintegration of the Bank for Credit and Commerce International (BCCI) in London in 1991 revealed that, for the better part of a decade, the executives and employees of this penumbral institution were busy stealing and misappropriating $10 billion. The Bank of England's supervision department failed to spot the rot on time. Depositors were - partially - compensated by the main shareholder of the bank, an Arab sheikh. The story repeated itself with Nick Leeson and his unauthorized disastrous trades which brought down the venerable and veteran Barings Bank in 1995.

The combination of black money, shoddy financial controls, shady bank accounts and shredded documents renders a true account of the cash flows and damages in such cases all but impossible. There is no telling what were the contributions of drug barons, American off-shore corporations, or European and Japanese tax-evaders - channeled precisely through such institutions - to the stratospheric rise in Wall-Street in the last few years.

But there is another - potentially the most pernicious - type of asset bubble. When financial institutions lend to the unworthy but the politically well-connected, to cronies, and family members of influential politicians - they often end up fostering a bubble. South Korean chaebols, Japanese keiretsu, as well as American conglomerates frequently used these cheap funds to prop up their stock or to invest in real estate, driving prices up in both markets artificially.

Moreover, despite decades of bitter experiences - from Mexico in 1982 to Asia in 1997 and Russia in 1998 - financial institutions still bow to fads and fashions. They act herd-like in conformity with "lending trends". They shift assets to garner the highest yields in the shortest possible period of time. In this respect, they are not very different from investors in pyramid investment schemes. Sam Vaknin, Ph.D. is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East. He served as a columnist for Central Europe Review, PopMatters, Bellaonline, and eBookWeb, a United Press International (UPI) Senior Business Correspondent, and the editor of mental health and Central East Europe categories in The Open Directory and Suite101.

Until recently, he served as the Economic Advisor to the Government of Macedonia. Sam Vaknin's Web site is at http://samvak.tripod.com

St Lucia PM proposes new budget

St. Lucia's prime minister has proposed a new budget for his tiny Caribbean nation, saying its vulnerable economy has fully recovered from the slump in tourism caused by the Sept. 11 attacks in the United States.

Prime Minister Kenny Anthony presented the Eastern Caribbean $954.1 million (US$353.3 million or euro270.3 million) budget to Parliament Tuesday. It will cover fiscal 2005, which began April 1 and ends March 31, 2006.

St. Lucia's economy has been growing steadily since 2002, when its growth rate slumped to -5.4 percent after the attacks. It shot back to 3.7 percent in 2003. In 2004, it was 3.6 percent.

"This is the second consecutive year of accelerated growth and, in the context of the recessionary conditions which saw contraction in 2001, the performance in 2004 indicates that our economy has fully recovered," Anthony said.

For the first time in the island's history, there were more than EC$1 billion (US$374.5 million or euro286.5 million) in St. Lucia bank accounts, he said.

Tourist arrivals increased a record 15.8 percent in 2004, with tourism revenues increasing 17.1 percent. More than 107,000 visitors came from the United States - a 9.2 percent jump.

Offshore banking and tourism are the major sources of foreign exchange for the former British colony of 162,000 residents, whose manufacturing sector is the most diverse in the eastern Caribbean.

Banana exports increased 24.6 percent, and manufactured goods 6 percent, Anthony said.

The prime minister predicted continued growth. The International Monetary Fund, however, warned in November that the island's roughly 17 percent unemployment rate and US$444 million (euro340 million) debt could slow it down.

Debate on the 2005 budget, which is 24.1 percent more than last year's, begins Thursday. Parliament is expected to approve it, since Anthony's St. Lucia Labor Party has 14 of 17 lower-house seats and in the 11-seat upper house, where it has five seats and the opposition only has three.

forbes.com

RFID establishes positive ID in government

By John Moore, Federal Computer Week

Radio frequency identification (RFID) has been around for a while - some would argue 50 years - but
has only now entered the mainstream.
The technology uses radio frequency waves to transmit information about objects. RFID tags, tiny
silicon-based devices, fundamentally act like bar codes. But the similarities end there.

RFID tags generate much more information than bar codes do. RFID readers, which are equivalent to
bar code scanners, can simultaneously pull information from many tags, while bar code scanners
process items one at a time. In addition, RFID technology breaks through bar codes' line-of-sight
limitation.

RFID's advantages have attracted the likes of retail giant Wal-Mart and the Defense Department.
Wal-Mart officials require their top suppliers to use RFID tags. DOD officials have a mandate to use
the tags as they try to better handle the vast quantities of materiel they ship worldwide.

Such high-visibility customers have put RFID on the map and piqued the interest of numerous
organizations. In the government market, RFID is rapidly moving beyond DOD.

The Energy Department, Homeland Security Department, NASA and the Social Security Administration are
among the civilian agencies pursuing RFID. And applications of the technology vary. At least one
agency uses RFID to manage hazardous materials, while others deploy it to track animals.

Whatever the use, RFID deployments must be handled with care, experts say. Agency officials will not
find a one-size-fits-all solution. RFID tags differ in type, capabilities and cost. Officials may
need to tailor a buffer layer between RFID data and back-office applications.

But the benefits can be considerable for those who thoughtfully plan deployments.

"RFID represents, conservatively, an incremental improvement over bar code [technology], which
represents an incremental improvement over the hand recording of information," said J. Rollins,
manager of the civilian sector at Manugistics Group, a supply-chain solutions provider. "Each
represents a tremendous breakthrough in the reliability and accuracy of information."

A slow buildup

RFID dates back to at least 1948 and a report by Harry Stockman titled "Communication by Means of
Reflected Power." The buildup to widespread adoption of RFID technology has been gradual, however.

In government, animal tracking emerged as an early use of RFID. Officials at Energy's Bonneville
Power Administration (BPA) began using the technology in 1986 to monitor the movement of fish
through the administration's network of dams, said Scott Bettin, a fish biologist at the agency.

RFID tags also have been placed on railcars and affixed to motor vehicles to electronically pay
tolls. But cost and lack of standardization hindered broader deployment. The maturation of
standards, however, has paved the road to greater acceptance.

In the latest round of RFID deployment, DOD officials are using the technology to better track goods
along the supply chain. "DOD has a very specific business problem," Rollins said. "They are
deploying large amounts of assets overseas, thousands of containers. They have to understand the
contents of those containers."

Not to be left behind, civilian agencies have also begun to embrace RFID.

As with DOD, logistics and inventory management rank among the most frequent civilian-sector
applications of RFID technology. SSA officials are expected to initiate an upgraded warehouse system
this month, which will include an RFID component. They will use the technology to track inventory
and process orders for pamphlets and forms.

An SSA printing vendor delivered three large shipments of RFID tags in March to the agency's backup
warehouse. "The tag information included the inventory control number, quantity and Serialized
Shipping Container Code," said Gary Orem, an SSA information technology specialist.

The tagged products will be moved to another SSA warehouse where orders are prepared. Starting this
month, agency employees will read the tag information and update the warehouse system in real time,
Orem said. SSA officials believe the RFID solution will improve the accuracy of order fulfillment
and reduce costly errors.

Beyond logistics

In addition to inventory management, animal tracking remains an important application. BPA officials
plan to use 1.1 million implantable RFID tags this year to monitor fish in the Columbia River and
its tributaries in the Northwest, Bettin said. They can track fish at 200 sites around the basin.

The Agriculture Department's National Animal Identification System uses RFID to track cattle and
other animals. The system's goal is to rapidly identify animals and facilities that have come in
contact with diseases of concern, according to USDA officials.

Bovine spongiform encephalopathy, better known as mad cow disease, tops the list of those diseases.
Another is chronic wasting disease, a related ailment that affects deer and elk. USDA officials have
shipped 26,000 RFID tags this year to states to help prevent the spread of the disease to
domesticated herds, a USDA spokeswoman said.

Civilian agencies also use RFID technology for security and safety issues. For example, DHS
officials will begin testing RFID in July for the U.S. Visitor and Immigrant Status Indicator
Technology program. The tests will occur in Arizona, New York state and Washington state. Officials
will issue automatic identifiers to foreign visitors to record their arrivals and departures,
according to DHS officials.

Officials at NASA's Dryden Flight Research Center are examining the possibility of using RFID to
monitor the location and movement of chemicals. The test project, called ChemSecure, relays
information about the shipment and storage of chemicals to the center's hazardous materials
management system. Officials at the base have used bar codes on chemical containers since 1995.

Ralph Anton, chemical program manager at Dryden Flight Research Center, said center officials
started considering RFID as a way to manage chemicals because the technology requires fewer people
and resources.

The center's test project involves not only RFID but also other sensor networks that take
temperature readings and provide access control. An Oracle 10g application integrates the sensor
networks, Anton said.

How it works

Although uses of RFID vary, the basic components of the technology are microchip-based tags that
emit radio signals and readers that capture those signals.

Tags can be active, passive or semi-passive. Active tags include batteries that enable them to send
a signal to a reader. The signal can be transmitted up to 1,500 feet, said Mohsen Moazami, vice
president of the Internet Business Solutions Group at Cisco Systems.

Passive tags lack batteries and tap readers for power instead. The signal range is generally less
than 30 feet, but the tags are cheaper than their active counterparts. Passive RFID tags can cost as
little as 20 cents each when purchased in bulk.

Active tags range from $3 to $15 on average, said Vijay Sarathy, director of RFID product marketing
and strategy at Sun Microsystems.

Semi-passive tags offer a compromise. A battery runs the microchip's circuitry, but it still needs
to tap power from a reader to communicate. The battery boost, however, extends the range of
semi-passive tags to 300 feet, Moazami said. He said prices range from $2 to $20 per tag.

Organizations may use a mix of active and passive tags. Typically, active tags are used with
high-value assets, while passive ones are used with higher-volume, lower-value items.

Reader devices, meanwhile, come in fixed-location and portable forms. The fixed stations can be set
up in a warehouse or along a river basin, as in BPA's case. The portable devices resemble handheld
bar code readers, and some of the same vendors, such as Intermec Technologies and Symbol
Technologies, manufacture the readers.

Most people associate RFID with tags and readers, but those are only part of a solution. RFID
deployments need a buffer to absorb and understand the vast amounts of data, some industry
executives say.

"What we do with the data is really more important than anything else," said William Mancuso, a
Science Applications International Corp. employee who serves as chief enterprise architect for DOD
Logistics and Materiel Readiness.

DOD's passive RFID implementation uses webMethods' business integration software as a middleware
layer. RFID data doesn't directly hit DOD's back-office applications.

Instead, the webMethods solution receives the data and makes it available for enterprise resource
planning and other applications as needed, Mancuso said.

"It doesn't make sense to take all of the data from the readers and send it back directly to
corporate systems," Sarathy said. "You need some kind of filtering done at the edge."

Eric Hermelee, vice president of marketing at Wavelink, said middleware can be positioned at the
edge, with software residing on a server at a warehouse or other remote location. Wavelink makes
middleware that sends RFID data to host systems.

Alternatively, middleware can run in a central data center, although most executives favor
distributed models.

The need for middleware underscores a warning about RFID deployment: More data doesn't necessarily
mean valuable data.

"We are going to collect more data," Moazami said. "But my proposition is [that] if we don't do the
right thing - turn that data into actionable insights - it won't add value."

John Moore is a freelance writer based in Syracuse, N.Y.

© Copyright 2005 USA TODAY, a division of Gannett Co. Inc.
http://www.usatoday.com/tech/news/2005-04-20-rfid-feds_x.htm

Researchware watches every click

Is it spyware? Company says no; critics aren't so sure
By Bob Sullivan
Technology correspondent, MSNBC

Updated: 3:13 p.m. ET April 20, 2005

It's just a small download, promoted as a free antivirus program. But the software is really
designed to sit silently on consumers' computers, watch everything they do online, and send the
critical data back to the program's creator. The program has swept the Internet in the last year,
with millions of people downloading it.

The newest spyware? Nope. Welcome to the Internet's newest marketing tool, "researchware."

Consider it spyware's above-board, distant relative. Unlike spyware, researchware makes its purpose
clear when downloaded by consumers. Its intent is not to trick people into receiving annoying pop-up
advertisements, but rather, to gather legitimate market research data. And it's easy to uninstall,
unlike spyware, which is as hard to shake as a bad cold in winter.

Still, not everyone is comfortable with researchware. Privacy advocates wonder if consumers really
know what they are doing when they consent to use it. And security-conscious firms say
re-transmitting all that Internet traffic - which can include personal financial information - poses
a big risk.

Company: It's not spyware

The term "researchware" was invented by the field's pioneer, comScore Networks, to distinguish its
Marketscore program from spyware software, to which it had been compared. Marketscore is available
as a free download directly from a comScore Web site and from Internet affiliates.

MarketScore entices volunteers by offering protection from computer viruses. In the past, using the
name Netsetter, comScore software promised faster Internet connections. In both cases, by
downloading the software consumers grant comScore permission to redirect all their Internet traffic
through the company's servers. ComScore then studies the traffic to develop powerful market research
the firm later sells.

Marketscore has about 1 million U.S. users and another 1 million users overseas, the company said.

"There are responsible ways for companies to gather information about your online preferences," said
Chris Lin, chief privacy officer of ComScore. She compared MarketScore to the television audience
research firm Nielsen, which watches the viewing habits of volunteers.

Nielsen, Forrester Research, and Compete Inc. all collect information from Internet users that
voluntarily join a panel for research purposes - though none of those firms use the term
"researchware" to describe their work. (Nielsen//NetRatings provides user data to MSNBC.com.)

"This is no different than what a lot of other market research companies are doing," Lin said.

Banks cut off researchware users

Not everyone agrees. Security professionals say ComScore dangerously slurps up all manner of
personal information, including passwords for online banking services. Several financial
institutions have complained about the service, and last month, major banks in New Zealand announced
they would no longer do business with consumers who have installed Marketscore.

A fraud official for one of Canada's largest banks who asked not to be identified told MSNBC.com
that his firm had recently begun to reject all traffic flowing through Marketscore servers.

"I think people who download the software don't fully understand how much information is going to be
collected," said Larry Ponemon, director of the research firm The Ponemon Institute.

"They tell you it's a value for value exchange.  But as a rational human being, how much would you
have to be compensated to take this risk? Their data is incredibly valuable. And there are risks
that haven't really been thought about."

ComScore carefully controls those risks, Lin said. The company's research data has never been
stolen, she said, and the firm regularly submits to outside audits of its privacy and other
procedures.

ComScore also goes to great pains to avoid storing critical, personal data, she said. "If
identifying information exists, we either ignore it or scrub it," Lin said.  "We destroy pieces of
key numbers and data elements that we think are highly sensitive and that possession of would create
a potential vulnerability."

Detected by anti-spyware software

ComScore's explanations haven't satisfied everyone.  Along with bank offering online services,
several universities have also cried foul at Marketscore. The University of Toronto issued a warning
to students earlier this year about the service, claiming it can actually peek inside secure
transactions, creating a risk that sensitive data can be stolen, even if the user believes the data
is being transmitted in encrypted form.

"They have unencrypted access to their users' secure transaction information. If your computer has
Marketscore software installed, all your SSL secured transactions - banking, purchasing, passwords
or personal record access information is available unencrypted to the Marketscore organization," the
university says on its Web site .

The firm must decrypt the information to find what's there and conduct its research, the school
claims.

ComScore officials said the sensitive data is never at risk.

"We establish two secure communications. One with you, and one with the bank," Lin said.

Anti-spyware firms confused

Antivirus firms and other companies that sell anti-spyware products don't quite know how to treat
researchware. Symantec, for example, designates the program as spyware on its Web site
.

Symantec spokesman David Cole refused to comment on Marketscore. He did say the antivirus industry
was considering a new designation for researchware products. Computer Associates already has done
so -- it calls Marketscore "trackware." 

"The landscape is changing very quickly. We're talking to other vendors about this," Symantec's Cole
said. "It's a really challenging environment right now."

That's why ComScore created the term researchware, Lin said.  She believes one critical distinction
between malicious spyware and honest researchware is the ease of removal.

"There is a dramatic difference between software that obtains your consent and software that doesn'
t. We wanted to create a distinction between software that is out there tracking you, popping up ads
without your knowledge, and software that conscientiously obtains consent," she said.

The marketing industry doesn't know what to make of researchware yet, either.  Dwayne Berlin,
general counsel of The Council of American Survey Research Organizations, said his organization has
yet to take a position on the software.

"There's no official meaning to the term. ... It's really something we're in the process of learning
about ourselves," he said. "Observational research is extremely legitimate. But we need to make sure
industry codes fit the new methods."

Powerful research tool

Not only is observational research legitimate, it is powerful, all sides agree.  Thanks to
MarketScore, ComScore can provide incredibly detailed consumer research to its clients, which
ironically include online banks. In traditional surveys, filled out by consumers on their own,
people tend to distort and mis-report their behavior and preferences. MarketScore allows researchers
to watch consumers in their native environments, making real-life choices.

The firm isn't interested in the personal data, Lin said.  Instead, it wants to observe usage
trends.

"The fact that you are online banking, for example," she said, "And are you interested in mortgages
or are you interested in bill pay? Which services do you find useful? Are you going to just take a
look at the account or are you really going to do something active?"

But even absent security issues, privacy advocates wonder if it's possible for consumers to make an
informed choice when they elect to trade so much information for a small benefit like faster
Internet service or virus protection.

"I would claim that even the most interested and informed individual cannot forecast the
implications of this deal," said Alessandro Acquisti, a professor at Carnegie Mellon University who
studies the economics of privacy.

"This is why: Customers are entering a contract in which they are selling away their future behavior
and information without knowing in advance what that behavior and that information will be ... They
cannot predict what kind of information will be gathered, how it will be used, and therefore how
valuable it may be, or how damaging it could be to the customer."

© 2005 MSNBC Interactive
© 2005 MSNBC.com
© 2005 Microsoft Corporation. All rights reserved.
http://msnbc.msn.com/id/7546554/

Terrorist visa loopholes

Press Release Date 2005-04-17

Terrorist Visa Loopholes vs U. S. Patriot Act?

This program covers the crossroads battle developing between the powerful international
education lobby and the U. S government over the renewal of provisions in the U. S. Patriot Act
pertaining to the security regulations on foreign student visas.

i-Newswire, 2005-04-17 - Los Angeles, CA-Full Disclosure NetworkT cable and Internet television has
launched a first-ever Video Blog from the website at http://www.fulldisclosure.net to publicize "the
news behind the news" impacting current public policies.  The Disclosure Video Blog atwill start
streaming 24/7 beginning Friday, April 15, 2005.

The Disclosure Video Blog premiere entitled "Terrorist Visa Loopholes vs U. S. Patriot Act" covers
the crossroads battle developing between the powerful international education lobby and the U. S
government over the renewal of provisions in the U. S. Patriot Act pertaining to the security
regulations on foreign student visas.

In 2001 there were 547,687 foreign students listed with J-1 Visas in U. S. colleges and
universities. The U. S Department of Homeland Security is estimated that 220,000 new foreign
students and exchange visitors are expected to enroll in the fall of 2005.

The Disclosure Video Blog features exclusive clips from Full Disclosure television interviews and
footage, never before seen on broadcast television. Visitors to the website are encouraged to add
their comments with additional information to the Disclosure Video Blog in order to encourage and
heighten public awareness on hot topics

* * * * * * *
Full Disclosure Network
Marina del Rey, CA
310-822-4449

If you have questions regarding information in these press release contact the company listed below.
Please do not contact us as we are unable to assist you with your inquiry. We disclaim any content
contained in this press release.

More Information
http://www.fulldisclosure.net

http://i-newswire.com/pr15423.html

Bush's voodoo economics

America's trade deficit is rising and the dollar is falling. So what do George Bush's
economic policies portend for America's future?

By Scott D. O'Reilly

"Deficits don't matter" according to one highly placed administration who spends much of his time in
a secure location. Perhaps if you live in a reinforced bunker that's true, but the for the rest of
us deficits do matter; over the past three years the dollar has fallen 50 percent against the euro
and by 25 against the yen.

This is a direct result of America's twin deficits -- the federal account deficit and the trade
deficit. Simply put, Americans are buying more in goods and services than they produce, and more
than they can afford. The government under Bush has done the same, slashing taxes while dramatically
increasing spending at the same time.

The Bush administration can get away with this, of course, because our credit is still good -- the
Chinese, Japanese, and Europeans are only too happy to lend us money to buy their products. So it
was more than a little curious, last week, when the president of the United States stood outside the
Bureau of Public Debt in Parkersburg, W.Va. and implied that the more than $1.7 trillion in U.S.
Treasury notes that make up the Social Security trust fund aren't really worth the paper they are
printed on.

The president, as usual, was being both truthful and misleading at the same time. It is certainly
correct, as Bush claimed, that the Social Security trust fund does not consist of "real assets" --
like gold or greenbacks. Instead, in a rather neat alchemical trick, real money -- the kind you can
spend -- is withheld in the form of a highly regressive Social Security tax from each wage earners'
paycheck where it is promptly diverted to pay for Federal spending unrelated to Social Security
after being replaced by a Federal I.O.U.

All those I.O.U.'s, in case you were wondering, will be paid for by you -- John or Joan Q. Public --
in the form of higher taxes needed to pay back the interest and the principal on the U.S. Treasury
bonds 'guaranteeing' your Social Security benefits. No, this idea didn't originate with Bush
administration. But if you think about it long enough borrowing money to pay for Bush's tax cut was
the perfect way to turn gold into lead for wage earners.

Of course, if you earned your money the old fashioned way -- you inherited it in the form of a
private trust fund (and you don't have to rely on a risky scheme like Social Security, which might
not be there when you retire anyway) -- having the government borrow money to give you a tax cut
here and now is the equivalent of getting money for nothing.

There's nothing inherently wrong with borrowing money, of course, provided one spends it wisely and
has a reasonable plan for paying it back. But this is why Bush's remark that, "There is no trust
fund. Just i.o.u.'s that I saw firsthand," is so disconcerting. The Chinese and others are likely to
keep lending us money so that the United States can continue its spendthrift was, only so long as
they believe we'll pay them back. The falling dollar is an indication that foreign investors are
losing confidence in America's fiscal responsibility. If America's trade imbalance continues to grow
foreign investors will insist on a risk premium in the form of higher interest rates.

Of course, the U.S. taxpayer will bear the burden of financing the increasing yields of U.S.
treasury notes even as rising interest rates will mean higher monthly mortgage payments, effectively
functioning as a stealth tax on ordinary Americans. Increasingly, wealth will be transferred out of
the United States at an ever-accelerating rate.

If all this wasn't bad enough, an increasing number of Americans will soon be hit with what is known
as the Alternative Minimum Tax. Enacted by Congress years ago the A.M.T. was designed to ensure that
wealth taxpayers could not avoid paying taxes altogether through deductions and loopholes. The
problem, however, is that the A.M.T. was never indexed for inflation and as a result an increasing
segment of middle class Americans will soon find themselves facing a huge tax hike.

The cost of reforming the A.M.T., which nearly everyone agrees will unfairly punish ordinary
taxpayers, is estimated at $1.3 trillion dollars, or about the same cost as the first round of Bush'
s tax cuts. And, as if to heap further irony upon injury, the Bush administration has already
counted the increased revenue expected from the A.M.T. as offsetting the costs of its previous tax
cuts. In other words, without A.M.T. revenue the Bush budget projections would be even direr. It
doesn't more cynical than counting on revenue from a tax that for political reason the
administration will have to find someway to get rid of.

Billionaire John Paul Getty once said, "If you owe the bank a hundred dollars, you've got a problem.
If you owe the bank three trillion dollars, the bank has a problem." The Bush administration is
clearly counting on such logic, assuming our foreign lenders will have so much at stake in the U.S
that they can't possibly let America fail. For now this arrangement has something for everyone:
foreign lenders loan us money to buy their products and they send us I-Pods while we send them I.O.U
's. As long as the I.O.U's go out and the money comes in the Bush administration can afford to cut
taxes and raise spending, just as ordinary Americans can use one credit card to pay off another (ad
infinitum if necessary).

Several years ago a financial crisis in Russia was precipitated when the Russian government
realized, too late as it happens, that they [Russian government] had actually bought back, in a
complex financial transaction, the very same Russian treasury bonds that had been issued on their
behalf to raise investment capital. (Well, if you believe that the Russian government was ever going
to pay itself back, have I got a submarine for you). The lesson there is that the minute someone
realizes they've been had they'll pull the plug and the entire financial house of cards will come
tumbling down. But if Bush's voodoo economics helps precipitate a fiscal meltdown don't say George
didn't give you a heads up. After all, as Bush said about his tax cuts, "It's your money, you paid
for it."

Scott D. O'Reilly is an independent writer with degrees in Philosophy and Psychology who has been
published in The Humanist, Philosophy Now, Think, and The Philosopher's Magazine. You can e-mail
Scott at neuroscott@aol.com.

Posted Friday, April 15, 2005

Copyright © 2002 - 2004 Intervention Magazine
http://www.interventionmag.com/cms/modules.php?op=modload&name=news&file=article&sid=1057

WTO slates US offshore credit card only stance on gambling

Apr 14th 2005
>From The Economist print edition

Who was really the winner from the WTO's gambling decision?

GAMBLING is not prohibited by the Ten Commandments, nor is it one of the seven deadly sins. Still,
America bans almost all forms of wagering when it happens by phone or internet, on the grounds of
protecting "public morals". That ban violates free-trade rules for services, complained the islands
state of Antigua and Barbuda to the World Trade Organisation (WTO). On April 7th, a WTO appeals
panel reached a decision that both sides have claimed as a victory.

The WTO agreed with most of Antigua's claims that America's practices are inconsistent and
discriminate against foreign operators (because America allows online horse-race betting, but only
for operators authorised by American states). However, the WTO also concluded that America's "public
morals" exception is allowed, as long as America resolves the horse-racing inconsistency. As a
result, America intends to tweak the law, yet continue to ban online gaming generally.

The ruling will not change much for the online gambling industry, which has estimated revenues of
$10 billion annually, half from Americans. Although America outlaws both supply (websites) and,
occasionally, demand (users)-and even threw one website owner in prison-enforcement remains almost
impossible. Credit-card firms and PayPal, an online payment service, refuse to process transactions
between Americans and online betting operators-but other financial intermediaries are more obliging.

This is the first time that the WTO has considered the "public morals" defence and accepted it. It
may in future be used in other ways: for example, to justify a country banning on ethical grounds
goods made by child workers, says Andrew Guzman, a law professor at Berkeley.

The issue of online gambling may yet find its way back to the WTO. Several American states, which
have authority over gambling, are vying to legalise statewide online gaming. In the long run,
America's prohibition is unsustainable, reckons William Eadington of the University of Nevada,
because regulating, taxing and letting American firms compete against offshore rivals makes far more
sense. Australia allows online gambling, but regulates it and collects tax revenues. Britain plans
to do likewise, to encourage high-street betting shops that host internet sites offshore to return
home.

The Economist

Russian hackers best in the world

The Russian mathematical school is known as one of the best in the whole world

Spokesmen for the RF Interior Ministry officially admit that Russian hackers are the world's
best ones. It has become a popular tradition for Russian hackers to form transnational groups with
their foreign colleagues for stealing information, blackmailing and extortion.

The issue of Russian hackers was touched upon at the recent e-Crimes Congress in London. Head
of the RF Interior Ministry's department for special technical activities Lieutenant-general Boris
Miroshnikov spoke at the congress. He said, the police provided reliable data proving that Russian
hackers are better than their foreign "colleagues." This is quite understandable, he says, because
the Russian mathematics school is known as one of the world's best schools; today programmers from
Russia successfully work all over the world. This is the reason why Russian hackers perform so
wonderfully.

The Interior Ministry is anxious over the increasing number of hackers in this country. In the
mid-1990s, hackers were just mere net hooligans who cracked websites of banks or informational
systems of governmental structures just for fun. But today, hackers form virtual gangs and earn much
money cracking important websites.

In 2000, hackers committed 584 crimes classified as illegal access to computer data. Next
year, the number of cracking increased three times to 1567. And every year, the number of such
crimes is increasing even more (eight thousand of e-crimes were registered in 2004). The same
statistics is typical of making computer viruses and dangerous programs. In 2000, the police
instituted just 170 criminal cases on the basis of the RF Penal Code clause #273 (production and
usage of dangerous computer programs), while in 2004, the number of such criminal cases made up over
one thousand. Unfortunately, today makers of computer viruses and dangerous programs manage to evade
responsibility.

At the same time, Russian programmers are currently holding weaker positions. On the one hand,
Russian IT-experts are welcome all over the world. Israel, now one of the world leaders in computer
technologies, has become the home for many talented programmers from Russia. On the other side, at
the recent students programming championship, students of the Moscow State University and the
St.Petersburg Fine Mechanics and Optics Institute yielded the palm to the Chinese team for the first
time over the past years. Experts state this failure means IT-education urgently needs governmental
support. However, governmental support is not always an effective measure, as talented graduates
often go abroad.

The Russian Union of Businessmen and Industrialists reports that over 150 thousand of
programmers emigrated from Russia over the past years. Unfortunately, today Russia cannot offer
enough vacancies to IT specialists. This is another reason why talented programmers get involved
into illegal cracking of websites.

Read the original in Russian: http://news.pravda.ru/soft_hard/2005/04/13/74678.html
(Translated by: Maria Gousseva)

Pravda.Ru

NYSE specialists in trouble

Apr 14th 2005
>From The Economist print edition

Charges against its middlemen roil the Big Board

LOTS of money can be made in the tiny gaps between the buying and selling prices of shares. But the "specialists" on the New York Stock Exchange (NYSE), who match buy and sell orders, walk a fine line between their duty to their customers and that to their employers. Too fine, it seems. This week federal prosecutors in America charged 15 specialists with making $19m for their firms from improper trading. At the same time the Securities and Exchange Commission (SEC) settled civil charges against the NYSE for poor oversight of its floor, where most trades are still done.

The SEC also brought civil charges against 20 specialists (including those criminally charged) for
"pervasive" fraudulent trading between 1999 and 2003. The reason, says the commission, was that the
specialists traded for their own accounts when they should have been filling customers' orders
first. (Specialists are allowed under certain circumstances to buy and sell stocks for their firm;
this helps keep the market moving if liquidity is low.) For example, when a buy order comes in at a
higher price than a sell order, the specialist's duty is to match the customers rather than profit
from the spread. The SEC says that some such practices went awry-and also that the specialists
sometimes abused their positions by trading in advance of customer orders.

The specialist firms-which include elite names such as Bear Wagner and Spear, Leeds & Kellogg (a
Goldman Sachs subsidiary)-have been braced for this blow. Last year the companies settled with the
SEC for over $240m. One of them, a Dutch firm called Van der Moolen, has seven ex-traders facing
charges this week.

For the NYSE, it is another black mark for its efforts at self-regulation, though its standards have
been toughened since 2003. The exchange got into trouble with the SEC in 1999, when it was charged
with failing to stop illegal trading schemes perpetrated by groups of floor brokers. As part of this
week's settlement, in which the Big Board, as in 1999, neither admitted nor denied charges, the NYSE
is due to pay $20m to buttress supervision of its regulatory system. It must also begin pilot video
and audio surveillance of floor trading of certain highly liquid stocks.

This week's charges may hasten the exchange's switch away from the floor. "Electronic trading
systems are much less scandal-prone," says Benn Steil of the Council on Foreign Relations. The NYSE
already plans to become more electronic-and, says Mr Steil, if John Thain, the chief executive, and
Marshall Carter, just appointed as chairman, want to get serious about an initial public offering,
the trading floor might just have to go altogether. Specialists would rue that day, but would have
only themselves to blame.

RELATED ITEMS

>From The Economist
Trouble over a trading rule Apr 7th 2005
http://www.economist.com/finance/displayStory.cfm?Story_id=3846773

City Guide: New York
http://www.economist.com/cities/citiesmain.cfm?city_id=NY

More Articles about ...

Financial regulation
http://www.economist.com/research/articlesBySubject/display.cfm?id=348936
American stockmarkets
http://www.economist.com/research/articlesBySubject/display.cfm?id=682270

Web sites
The New York Stock Exchange issued a press release
 about charges against the specialists. See also the SEC's announcement  of the charges.

Consequences of economic crime

CONSEQUENCES OF ECONOMIC CRIMES AFFECT PEOPLE'S SENSE OF SOCIETY'S
FAIRNESS, CRIME CONGRESS' COMMITTEE 1 TOLD

Activities such as drug trafficking, exploitation of natural resources, corruption and
misappropriation of funds from banks affected the economic well-being of the people, the
representative of Thailand, the Host Country to the Eleventh United Nations Congress on Crime
Prevention and Criminal Justice, told the Congress' Committee I today.

i-Newswire, 2005-04-20 - The consequences of such activities, he said, went well beyond financial
loss and the economic well-being of society. It was important that people felt they were living in
a fair and just society and, if economic and financial crimes were not checked, people would begin
to feel increasingly resentful.

He said people who were behind financial crimes were usually smart and sophisticated, making use of
financial resources to build extensive connections with law enforcement officials. Authorities had
to fight interference from influential powers, and that was often more difficult than the
investigation itself. Strong political will and government commitment was needed to fight such
crime. If the perpetrators were members of the government, decisive and swift action would restore
society's confidence in government policy on the issue.

During consideration of today's topic: "Economic and financial crimes: challenges to sustainable
development", delegates deliberated on the need for a new convention on money-laundering and the
need to share national experiences and cooperate internationally in combating the scourge.

Implementation was the one theme he would like to see emerging from the discussion, the
representative of the United Kingdom said, referring to the fact that four United Nations
conventions -- the Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances,
the Convention against Transnational Organized Crime, the Convention against Corruption and the
Convention for the Suppression of the Financing of Terrorism -- all included provisions to combat
money-laundering, but had a poor record in implementation.

On the other hand, Brazil's representative said the main obstacle in the fight against international
crime was the lack of international cooperation. International cooperation in the fight against
international crime seemed to be a kind of taboo. Although his country had received help from
Nigeria in solving an important case, there were lots of cases where it could not get cooperation
from other countries because of a lack of a "culture of cooperation".

The representative of the United States drew attention to the fact that apart from the four United
Nations Conventions, which more countries should ratify, there were also the 40 recommendations of
the Financial Action Task Force. They had been endorsed and recognized as the single international
standard by the International Monetary Fund and World Bank and embraced by the twentieth special
session of the General Assembly as the international standard. "We should not risk creating
conflicting guidance and obligations in this area", she said, opposing elaboration of a new
convention.

Turkey's representative, however, supported the High-Level Panel's recommendation to draft an
international convention on money-laundering. Such a convention, he said, could make non-mandatory
provisions of other United Nations conventions mandatory and adherence to the Financial Action Task
Force recommendations universal.

Nigeria's representative said that corruption, as well as economic and financial crimes, had
distorted the image and reputation of his country. He stressed that Nigeria would tolerate the
problem no more. It had charged five of the largest banks for allowing the flourishing of
corruption in his country, the biggest problem facing African countries. Nigeria had brought
several highly placed people to justice, including the President of the Senate, for embezzlement.
"There is a revolution taking place in Nigeria today, and we are proud of it", he said. Today,
Nigeria was the number one country in fighting corruption and was becoming a sort of model on how to
combat economic and financial crimes.

The representative of Argentina addressed the problem of conceptualization of and defining economic
and financial crimes. He said that conceptualization could be an interesting but difficult subject,
since under the terms of economic and financial crime a whole series of crimes could be included
that was already covered by the criminal code. Tax evasion, for example, was in many countries not
an offence, and there were many obstacles in international legal cooperation in dealing with that
crime.

Also speaking today were the representatives of the Republic of Korea, Italy, Morocco, Luxembourg
( on behalf of the European Union ), Australia, Mauritania, Cameroon, Norway, Denmark, Venezuela,
Ukraine, Switzerland, Finland, Philippines, Germany, France, Sri Lanka, Spain and Peru.

Representatives of the Council of Europe and the Asia Pacific Group on Money-Laundering addressed
the Committee as well, as did the representatives of two non-governmental Organizations: Japan
Federation of Bar Associations and Asia Crime Prevention Foundation.

With today's discussion, the Committee I concluded its consideration of economic and financial
crimes: challenges to sustainable development.

Background

Committee I of the Eleventh United Nations Congress on Crime Prevention and Criminal Justice had
before it a working paper prepared by the Secretariat on Economic and financial crimes: challenges
to sustainable development ( document A/Conf.203/7 ), defining "economic and financial crime"
broadly as any non-violent crime that results in a financial loss. A list of economic crimes
includes cartel offences, fraudulent practices, computer crime, violation by a company of standards
of security and health concerning employees, fraud to the detriment of creditors, unfair competition
and fiscal offences. Technical change has had a significant impact on overall levels of economic
and financial crime.

According to the working paper, understanding the impact of economic and financial crime in the
current global context, and on developing countries in particular, is complicated by the difficulty
of determining an all-encompassing definition of the concept and by the fact that both the extent
and costs of such crimes are difficult to measure. There is growing evidence, however, that
economic and financial crimes are increasing, mostly in sectors affected by rapid advances in
technology.

One area requiring particular attention is money-laundering, given its links not only to other areas
of illicit activity in the financial sector, but also because of its use by organized criminal
groups involved in a variety of illegal activities. The High-Level Panel on Threats, Challenges and
Change suggests that a global legal instrument is required on money-laundering. That provides a
renewed focus on the effectiveness of current arrangements and the viability of possible future
arrangements to counter the laundering of criminal proceeds.

Available evidence also suggests that the costs of economic and financial crime, while often eluding
exact measurement in the short term, are severe for many societies seeking to achieve sustainable
levels of development. Such practices undermine, in the medium and long term, effective economic
management, transparent practices and the rule of law. They also benefit only a few people in
society, leaving the majority poorer and with fewer resources.

The working paper recommends that the Congress consider:

-- Establishment of mechanisms at the national, regional and international level to improve data
collection on economic and financial crimes;

-- Ways to improve the global legal framework to counter economic and financial crimes;

-- Provision of effective technical assistance to developing countries to improve their capacity to
confront the problem;

-- Agreement on measures to improve cooperation between government and the private sector in
preventing such crimes; and

-- Identification of effective measures to curb money-laundering in countries where participation in
the "formal" financial system is low, including in the areas of research, training, skills
development, technical assistance programmes and regional and international cooperation.

Statements

PRIDIYATHORN DEVAKULA, Governor, Bank of Thailand, said it was well known that activities such as
drug trafficking, exploitation of natural resources, corruption and misappropriation of funds from
banks affected the economic well-being of the people. The consequences of undesirable activities
went well beyond financial loss and the economic well-being of society. More important was the
feeling among the people that they were living in a fair and just society. When economic financial
crimes were committed, prompt action against the perpetrators was needed. If left unchecked, people
's feelings of resentment would accumulate. They would feel alienated and resent their governments.
The feeling that one lived in a fair society was even more important than economic well-being. The
question was how to prevent feelings of resentment from deepening.

The harmful consequences of normal crime were easily felt and observed, he said. Common crimes were
also less likely to be compromised in the law enforcement process. Economic crimes did not have
direct and immediate impact due to their non-violent nature. Hence, such crimes did not receive
public attention. People who were behind financial crimes were usually smart and sophisticated,
making use of financial resources to build extensive connections with law enforcement officials.
Authorities had to fight interference from influential powers, and that was often more difficult
than the investigation itself. Strong political will and government commitment was needed to fight
such crime. Economic and financial crimes were destructive enemies of nations. Governments needed
to fight against financial crimes in every shape and form. Stock price manipulation, insider
trading, while not directly harming people's lives, made people feel slighted. If the perpetrators
were members of the government, decisive and swift action would restore society's confidence in
government policy on the issue.

Cross-border economic crime was more difficult to combat, he added. The Congress was a good example
of collaboration at the international level. Modern forms of such crimes could be seen in cases of
individual businessmen from big countries moving into small countries under the pretext of
technological advancement. There were cases of certain medicines banned in more developed markets
which could be found on the shelves on less developed markets. In such cases, it was clear that the
small nations were being exploited by bigger nations with greater economic clout. He did not have a
solution to the problem, but only hoped that an internationally neutral body such as the United
Nations would look at the issue of economic exploitation of smaller nations and set appropriate
rules of the game. Protecting the interests of smaller nations would help those in developing
nations think they were living in a fair world.

MARY LEE WARREN ( United States ) concurred with the assessment of the discussion paper regarding
the seriousness of transnational economic crime and the harm it caused to the well-being of many
people. Her country had updated existing laws on money-laundering after 11 September. She did not,
however, join in the suggestion that there was a compelling need for a new convention on
money-laundering. She disagreed that existing mechanisms were inadequate. Four United Nations
Conventions currently addressed that matter, including the Convention against Illicit Traffic in
Narcotic Drugs and Psychotropic Substances, the Convention against Transnational Organized Crime,
the Convention against Corruption and the Convention on the Suppression of the Financing of
Terrorism. Those instruments covered the spectrum of serious crime, and statistics showed that 163
countries had criminalized money-laundering beyond drugs, and 113 countries had criminalized
terrorist financing.

There was still much work to be done with the existing conventions before determining that there was
need for yet another convention, she said. That would be premature. Rather, all countries should
be encouraged to ratify the existing treaties, implement them and provide the basis for
international cooperation. In addition, the 40 recommendations of the Financial Action Task Force
( FATF ) were the universally recognized international standards for anti-money-laundering efforts.
"We should not risk creating conflicting guidance and obligations in this area", she said.

She said the Tasks Force's 40 recommendations had been endorsed and recognized as the single
international standard by the International Monetary Fund and World Bank. At its twentieth special
session, the General Assembly had, in resolution S-20/4 embraced the recommendations as the
international standard. Another concern was that the Secretariat had suggested that a
money-laundering convention might be too difficult to undertake and that a more limited approach
should be taken, one that focused on the Internet. Her country opposed such a piecemeal approach
since the focus would be solely on the instrument or conduit used to commit the crime, rather than
the type of particular offences.

NAM-GEUN YOON ( Republic of Korea ) said technology was being used exponentially in economic
financial crime, adding sophistication to traditional crime. It was timely that the Congress would
focus on high-tech crime under the broader rubric of economic and financial crime. National borders
were becoming irrelevant as world financial systems became increasingly integrated. Over the last
10 years, the Republic of Korea had had many high-profile cases. The country had made sacrifices to
deal with financial debt in the wake of fraudulent lending schemes. The Government had initiated a
series of measures in that regard. Unfortunately, the number of financial crimes was on the rise.
While about 33,000 cases had been reported in 2001, in 2004, the number had increased to about
68,000. What was even more alarming was the number of minors involved in cyber crime.

In the Republic of Korea, new crimes were exploiting high-tech advances both at home and abroad, he
said. Law enforcement agencies needed a system that facilitated information sharing to address the
global threat of e-crime. Identity theft was usually associated with other crimes and, as such,
needed to be criminalized. In 2001, the Republic of Korea had enacted a law that prohibited public
associations from providing information to third parties. Money-laundering was also a problem, and
the proceeds of such crime were often used to commit other crimes. Money-laundering, however, was
not a punishable crime in itself, and legislation was needed to outlaw that form of financial crime.
With advanced information technology, national boundaries were no longer the obstacles they once
were in carrying out financial and economic crime. To stem the tide of financial and economic
crime, advanced nations needed to provide developing countries with financial, educational and
technical assistance. The Republic of Korea was poised to provide its expertise in that regard.

NUHU RIBADU ( Nigeria ) said that, in his country, addressing economic and financial crimes had been
problematic for a long time. However, those crimes had now been identified as the biggest problem
facing the country, and the battle against corruption and economic and financial crimes was on. The
Government had established a high-powered commission in 2003 to address the problem. Tragically,
economic and financial crimes and corruption had distorted the image and reputation of Nigeria. His
country was one of the largest oil producers in the world, but had a big problem of theft of crude
oil, mainly by foreigners. The Commission also addressed that problem.

He stressed that Nigeria would tolerate the problem no more. It had charged five of the largest
banks for allowing the flourishing of corruption in his country, the biggest problem facing African
countries. Nigeria had brought several highly placed people to justice, including the President of
the Senate, for embezzlement. "There is a revolution taking place in Nigeria today, and we are
proud of it", he said. The problem had to be solved to regain the respect of the international
community.

He said his country had also developed strong international working relations, among others with the
Interpol and the Europol, the United States, South Africa and the United Arab Emirates, because most
of the crimes were transnational, and money was being brought out of the country. Moreover, his
country was working with the Financial Action Task Force. Today, Nigeria was the number one country
in fighting corruption and was becoming a sort of model on how to combat economic and financial
crimes.

BRUNO BURATTI ( Italy ) noted that, for some time, the fight against organized crime had focused on
the economic context. The acknowledgement of the presence of illegal financial flows and their
effects on the economic system as a whole had created a growing awareness of the need to fight
economic crimes. The fight against economic crime, in particular money-laundering, must be carried
out with both a repressive approach and a preventive approach. In that regard, Italy had seen
significant innovation in terms of broadening the range of illegal activities. Regarding
prevention, it was important to, among other things, report suspicious transactions. Recently,
Italy's anti-money-laundering legislation had extended to activities considered to be at risk for
money-laundering.

Regarding the role of law enforcement in fighting money-laundering, he said it was important that
investigations into money-laundering must be assigned to a specialized police force. With regard to
money-laundering methodologies, it was important to mention the fundamental role played by both
money transfer systems and unofficial banking circuits. Every system could be improved, even the
most advanced. In that connection, it was important to continue harmonizing national legislation.
Until that was achieved, criminal organizations would continue to move considerable amounts of money
through countries where regulation did not allow for the effective monitoring of money flows. It
was also important to improve the effectiveness of the analysis of transactions in international
financial markets, possibly by means of real-time modules to manage information flows.

PETER STORR ( United Kingdom ) said it was clear that there were weaknesses, and not only criminals,
but also terrorists would exploit them. Criminals targeted those countries where there was an
absence of strong regulations. That sent a strong message to those countries about developing such
regulations. There was a lot that the international community could do, and there was no shortage
of international regional instruments and forums. Apart from the four United Nations conventions
mentioned by other delegates, there was also the Council of Europe money-laundering convention.
There were also regional instruments that laid down the standards for tackling money-laundering, and
the 40 recommendations of the Financial Action Task Force had been recognized broadly as the
international standard.

He said that his country found it difficult to see what value would be added by elaborating a new
United Nations convention. The international community should avoid seeing new conventions as the
automatic solution. If there was one theme he would like to see emerging from the deliberations it
was "implementation, implementation and implementation". The record of implementation was a poor
one.

Another way to battle the crime was through the use of financial disincentives, such as the
confiscation of criminal assets, he said. There was far more that could be done in that regard, and
there was no greater disincentive to organized criminals than the thought of losing the fruits of
his activities. It had taken the United Kingdom three attempts to get its law on the matter
working, but it was proving to be successful now. There was an irony about what his country was
doing, as a significant portion of seized assets would be plowed back into crime prevention and
anti-crime measures. Criminals were now contributing to their own downfall.

MUSTAPHA HALMI ( Morocco ) said money-laundering constituted a new form of crime in both the
developing and the developed world. The crime had seeped into different areas of economic life and
it was necessary to adopt a global policy on the crime of money-laundering in the form of modern
laws and the enhancement of financial systems. To fight money-laundering, Morocco had made great
efforts, including the promulgation of a law that criminalized money-laundering and the creation of
national institutions to check suspect financial transactions. It was now in the process of
ratifying that law. The anti-terrorism law allowed for the tracking down of terrorism-related
transactions. Judges and prosecutors had the authority to coordinate with other States to track
down terrorist-related financing.

The Moroccan justice system had also studied the issue of computer-related crimes, also resulting in
the promulgation of a new law, he said. Morocco also had a number of laws criminalizing tax evasion
and embezzlement -- all crimes related to money-laundering. Morocco intended to reformulate its
criminal law to take into account the latest developments with due respect for human rights and
basic freedoms.

MARIE-LISE STOLL ( Luxemburg ), speaking on behalf of the European Union, said the Union was not in
favour of drafting a convention on money-laundering. A number of international conventions
addressing the issue already existed, and the focus should now be on implementing the existing ones.

Moreover, a number of regional and international groupings had dealt with international standards
and norms in that area, she said. The Union fully supported the work done by those groups and
considered that the time was not yet ripe to engage in very resource-demanding negotiations on that
issue. The European Union, however, would be willing to consider ways and means to advance the
issue with its partners, so that a solution could be found that was acceptable to all.

ANTHONY COLES ( Australia ) said that, while economic and financial crimes were not new, the methods
used to perpetrate those crimes had become increasingly complex, involving high-tech crime, identity
fraud, Internet fraud, money-laundering and terrorist financing. What had also changed was the
methodology being used to commit financial crimes. The readiness of consumers, businesses and
governments around the world to embrace new technologies had provided a range of new opportunities
for people to act illegally. Governments and the private sector faced the same challenge, namely
how to respond to the uptake of new technologies by criminals, particularly organized criminals.
Australia was committed to the fight against economic and financial crimes, not only in that country
but internationally. As part of its commitment to combating financial crime internationally,
Australia had ensured that its regulatory bodies had adequate legal and administrative resources to
respond to the requests of other States.

Australia had introduced a range of legislative measures in the fight against economic and financial
crime, he said, including the introduction in 2000 of the Commonwealth Criminal Code Amendment,
which introduced offences specifically designed to cover fraudulent conduct involving computers.
Australia was leading a multifaceted national strategy to combat high-tech crime, including banking
fraud. Economic and financial crimes were multifaceted and complex crimes, constantly evolving due
to changes in globalization, demographics and technology. Australia was committed to undertaking a
range of strategies to combat those crimes, by introducing new legislation and tightening the
process to prevent and identify new and emerging crimes.

AMDELLAHI OULD KEDB ( Mauritania ) said that among the challenges of the third Millennium were those
of organized crime; trafficking in drugs, weapons and persons; money-laundering and terrorism.
Organized crime led to terrorism, insecurity, civil strife and corruption which had a great impact
on judicial systems and law enforcement offices. Corruption undermined development and destabilized
economies. Therefore, the international community must coordinate its efforts and cooperate more
closely to deal with transnational organized crime at its roots.

He agreed with the representative of the United States that there were sufficient international
instruments to combat the scourge, but that those instruments needed to be implemented. The major
obstacles to that were national barriers which still continued to block international cooperation.
Mauritania had ratified the 1988 Vienna convention which provided for investigation of
money-laundering and confiscation of illegal drug profits. Its national law provided for severe
sentences for those involved in money-laundering -- up to 40 years in prison, fines and confiscation
of property. Money-laundering had not yet been detected in the country, but no country would be
spared.

He said the implementation of the 40 Financial Action Task Force recommendations gave rise to
practical problems in his country because of the absence of specialized services to deal with the
matter, as well as the lack of financial resources and the fact that national legislation had not
yet been adapted. An inter-ministerial committee had been established to draft legislation to
punish money-laundering and strengthen international cooperation. That body was also drafting a law
to combat the financing of terrorism.

MICHEL MAHOUVE ( Cameroon ) said economic and financial crime was affecting the development efforts
of countries such as his. It was, therefore, necessary to review and update legislation to curb the
upsurge of such crime. Cameroon was countering white collar crime both nationally and regionally.
At the regional level, it was working within the Economic and Monetary Community of Central Africa
( CEMAC ) to set up various bodies to suppress money-laundering in the Central African subregion.
Cameroon's criminal code dealt with the issue of counterfeit bank notes and article 98 severely
suppressed money-laundering in the context of narcotic sales.

He noted that an ad hoc coordination committee had also been established to deal with the issues of
fraud, smuggling and counterfeiting with the mission of cleaning commercial transactions. Regarding
the detection of counterfeited checks, training seminars were being conducted. Monitoring and
surveillance were ongoing activities in that regard. The weak link, however, was the lack of an
appropriate framework to deal with cyber crime. That framework was currently being drafted and the
Congress would provide an opportunity to address the issue.

ANTENOR MADRUGA ( Brazil ) said his country agreed that international standards should be
established by the United Nations, and it would welcome, in principle, a new convention on
money-laundering. However, there were already international standards to be applied by most of the
United Nations members. The main obstacle in the fight against international crime was
international cooperation. To the words of the United Kingdom representative, he would add,
"cooperation, cooperation, cooperation".

He said that Nigeria had helped his country in a very important case as a result of international
cooperation. However, there were lots of cases where Brazil could not get cooperation from other
countries because of a lack of a "culture of cooperation". International cooperation in the fight
against international crime seemed to be a kind of taboo. He asked the Congress to discuss those
issues. Instead of a broad and shallow final declaration he would prefer that the Congress give
guidelines on how to overcome the problems. International cooperation should be stressed in the
Final Declaration.

ELSE METTE NAESS ( Norway ) said her country accorded high priority to the issue of economic and
financial crime. The adoption of the milestone United Nations conventions against corruption and
transnational organized crime was evidence of that commitment. She agreed with the delegates from
the United States, the United Kingdom and the European Union on the question of negotiating a new
convention. The United Kingdom representative had rightly emphasized the importance of implementing
already existing conventions. Since 2001, the Government had secured the adoption of a number of
amendments to the penal code, the rules concerning tax administration, and the right to request
audit information from banks and financial institutions. It had also adopted a new money-laundering
act and foreign exchange registering act. Norway's penal code also contained proposals regarding
the employees of financial institutions.

Norway had sound legislation for preventing economic crime, she said. The practical follow-up of
the various amendments was now a major priority, however. Efforts to combat financial crime must be
carried out at different levels. To strengthen the fight against money-laundering and corruption,
the Norwegian Government had a money-laundering project which addressed the issue at both the
national and international levels. While considerable efforts were being made to combat economic
and financial crime, there was considerable room for improvement. The effective combating of
economic and financial crime was important for maintaining confidence in the police and the courts.
Failure in that area could weaken public trust in government authorities. While important steps had
been taken internationally, much work remained to be done. The growth of economic and financial
crime posed a significant challenge to the international community, and international cooperation in
that regard was therefore of great importance.

HENNING FODE ( Denmark ) said the result of the work of the United Nations was a number of important
comprehensive conventions, such as the United Nations convention on narcotics, the Palermo
convention, the convention on corruption, and the one on the suppression of the financing of
terrorism. Those conventions were all dealing with various aspects of economic crime, including
money-laundering, and had been signed and ratified by a large number of Member States. There were
also the 40 Financial Action Task Force recommendations that covered the definition of
money-laundering, as well as preventative measures.

In that context, he said, the question of the added value of a new convention on money-laundering
could very well be raised. The focus of the United Nations should not be on elaborating a new
convention on money-laundering. Instead, there should be a focus on a rapid and effective
ratification of the existing instruments. Further international cooperation was also important, for
example in the sense of technical assistance.

MIRNA MASYRUBI ( Venezuela ) said her country belonged to the Financial Action Task Force and other
international networks to supervise capital flows and had also established domestic legislation in
that regard. Her country had established an oversight body under the organic law on drugs and

psychotropic substances. It had a number of control and regulatory measures to monitor businesses
that conducted international transactions.

She said Venezuela was prepared to enforce legislation to ensure that it was not used for the
purpose of organized crime. It was also important to ensure, however, that cooperation to combat
organized crime not result in intervention or veiled intervention of any kind.

VALERIY PIDPALY ( Ukraine ) said that, in his country, measures were being taken to implement the
Vienna Convention. Ukraine, a former Soviet republic, was in the process of liberalizing the
economy. The detection of economic and financial crimes was difficult, as they were committed by
groups using new technologies. Another problem was that criminals did not respect borders and were
truly transnational. In Ukraine, criminals often used false documents in committing economic and
financial crimes. Also, economic and financial crimes were often impossible unless there was
support from highly placed people, which pointed towards corruption. Currently, his country was
setting up a bureau to counter organized crime and deal with high-level corruption.

Among the needs his country had to address were the strengthening of police, identification of the
interests of crime and making legislation against economic and financial crimes stronger, he said.
It was also important to identify what the consequences of economic and financial crimes were in
terms of their impact on society. One had to realize that the criminal work was often linked with
politics as some criminal structures tried to lobby the authorities. The number of prosecutions for
economic and financial crimes was rising.

He said that another cause for concern was the question of money-laundering. His country did not
have well-trained specialists but was, however, very active in its campaign against
money-laundering. In 2003, more than 200,000 illicit financial operations had been detected that
had led to 105 legal cases involving many people. Ukraine had been excluded from the blacklist
regarding money-laundering. The problem was that there was limited access to information on
monetary transactions, bank accounts and "off-shore zones". He would appreciate hearing about
experiences from the international community in countering economic and financial crimes and the way
money was laundered and hidden.

DAVID BEST ( Switzerland ) noted that Swiss regulations to combat money-laundering were among the
most effective in the world. As one of the most important financial centres in the world,
Switzerland had to make particular efforts to ensure that criminal funds did not flow into it.
Switzerland provided judicial assistance on the basis of its own legislation. The Swiss criminal
code had provisions for crimes conducted in Switzerland or abroad. While frameworks were necessary,
alone they were not sufficient. It was also necessary to focus on specific measures to implement
obligations arising from the different frameworks. Strengthening the powers of bodies overseeing
financial transactions was also needed. It was at the stage of entering the financial system that
the funds of criminal organizations were easiest to detect, and it was crucial, therefore, to
develop a level of monitoring and training of the people responsible for those tasks. In that
connection he noted the important role of the UNODC in providing technical assistance.

Regarding a new international convention on money-laundering, he said there were already a large
number of international obligations in that regard. The rules of the Financial Action Task Force
had been broadly adopted throughout the world. He did not see any reason for calling them into
question.

Action

At the outset of the afternoon meeting, the Committee elected by acclamation Anna Mphetlhe (
Botswana ) as its Vice-Chairperson and Khondaker Showkat Hossain ( Bangladesh ) as its Rapporteur.

Statements

REIJO POYHONEN ( Finland ), associating himself with the statement made on behalf of the European
Union, said economic and financial crimes was a real challenge. In a short time, a lot had been
achieved by the United Nations, most importantly the adoption of the four conventions. It was
important to put every effort into the full implementation of those conventions. Money-laundering
was mentioned in the conventions, as well as in the recommendations of the Financial Action Task
Force.

He said Finland had implemented all relevant conventions and the Task Force recommendations.
According to his country's money-laundering legislation, predicate offences to money-laundering
could be any crime. Also, there was no need to start negotiations on a money-laundering convention;
that might risk the effective implementation of existing instruments. It was important to start
working with the exact definitions of money-laundering and other international economic crimes.

He said it was important to concentrate efforts on implementing the existing conventions and the
recommendations of the Financial Action Task Force and to cooperate internationally regarding
money-laundering and help other countries in need to ratify and implement already existing
instruments.

VICENTE S. AQUINO ( Philippines ) said developed countries did not have a monopoly on economic and
financial crimes. Developing countries also had their share of such criminal activities, which
constituted major obstacles to political and social stability and to economic progress. A sustained
international approach was imperative and must involve coordinated action and cooperation supported
by the free exchange of information, mutual legal assistance and extradition measures. The
Philippines had been a proactive partner in collective efforts to detect and deter financial and
economic crimes and bring to justice the perpetrators. The Philippines revised penal code, the new
Central Bank Act, the Securities Regulation Code and other pertinent laws listed many financial and
economic crimes, including manipulation, insider trading, falsification of commercial documents and
theft.

The Philippines had the necessary public and private institutional infrastructure to meet the
challenges that hampered efforts towards sustainable economic development, he said. The private
sector had also been involved in the war against economic and financial crimes. The financial
sector liaison committee, for example, was composed of 39 private sector agencies. The Philippines
judiciary was also involved in the fight. Such unrelenting, comprehensive efforts had not gone
unnoticed or unrewarded. The Philippines had been removed from the Financial Action Task Force's
list of Non-Cooperative Countries and Territories in February 2005.

The world had witnessed the collapse of big corporations and the downfall of corporate executives
because of the deficiency in corporate governance and defective and deceptive practices of the board
and senior management. Good corporate governance was an effective tool that set the acceptable
standards of transparency and disclosure practices by management to their boards of directors, and
by the boards to their employees, the stockholders and other stakeholders. Combating financial and
economic crimes necessarily required not only domestic cooperation but also transnational efforts of
all jurisdictions. The Philippines would continue to cooperate with other countries in the
investigation and prosecution of financial crimes, including money-laundering and terrorist
financing cases through mutual legal assistance, extradition and exchange of material information.

CEREN VANLIOGLU ( Turkey ) said the international community had set up a series of international
instruments to fight against economic crimes, included the four United Nations conventions. Taking
into account the difficulties to reach a consensus on a legal definition of economic and financial
crimes, he supported the High-Level Panel's recommendation to draft an international convention on
money-laundering. Such a Convention could make non-mandatory provisions of other United Nations
conventions mandatory and adherence to the Financial Action Task Force recommendations universal.

He said that, as the fight against economic and financial crimes was a top priority for his
Government, a Law on the Prevention of Money-laundering had established the Financial Crimes
Investigation Board ( MASAK ), which was responsible for evaluating denunciations in relation to
money-laundering, carrying out investigations, and providing the Public Prosecutor with all relevant
information relating to the commission of money-laundering offences. A new Penal Code, entering
into force in June, would establish the laundering of proceeds derived from crime as a criminal
offence, with a minimum punishment of one year of imprisonment. The scope of the crime of fraud was
expanded so as to include the usage of information systems, banks and credit institutions, as an
instrument.

Parallel to its national efforts, his country attached great importance on its cooperation with
international organizations, he continued. It was party to the United Nations Convention against
Illicit Traffic in Narcotic Drugs and Psychotropic Substances, had ratified the Convention on
Transnational Organized Crime and its Protocols and signed the Convention on Corruption. It had
also ratified the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of
the Proceeds from Crime. Turkey was also a member of the South East European Cooperation Initiative
( SECI ). The National Police had established a "Computer-supported urgent intervention system"
with some of its regional partners, which had facilitated exchange of information on criminal
matters.

HERBERT MAASSEN ( Germany ) said the fight against white-collar crime was a focal point of his
country's policy in the field of national security. Modern industrial societies were characterized
by a dense network of global business relations, new and swift communication paths and more likely
possibilities of manipulation and fraud. The huge pressure from international competition was also
encouraging more persons involved in business to use illegal methods and instruments. The fight
against white-collar crime was becoming more difficult and complex. Germany had set five goals in
the fight against white-collar crime. Comprehensive information on the scale of white-collar crime
and the methods used to commit such crime was needed. The forms in which white-collar crime
manifested itself were just as diverse as the ways in which the commissioning of white-collar crime
was complex. To combat white-collar crime efficiently, comprehensive know-how was needed.

He said it was also necessary to intensify cooperation between public authorities and ministries.
Joint investigation groups comprising the police forces, customs and labour administration were, for
example, used in the fight against money-laundering and illegal employment. He also stressed the
need to step up prevention and involve businesses, which could play their part in fighting
white-collar crime. White-collar crime was not a national problem and could not be prevented by
countries going it alone. International links made it necessary to adopt an international
prevention strategy and, thus, to engage in international cooperation. Germany supported the
relevant initiatives launched by the international community, including the Lyon Group of the G-8
States and the European Antifraud office.

He also believed that another money-laundering convention would be counterproductive, as it would
weaken existing instruments. The relevant standard applying to the prevention of money-laundering
in the fight against terrorist financing had been set up by the FATF on money-laundering. The
United Nations had also issued relevant regulations to combat money-laundering, including the
Convention on Corruption. Another international instrument would increase the risk of conflicting
international standards and could hamper rather than promote a uniform strategy to combat
money-laundering. The focus should rather be on strengthening and implementing already existing
instruments.

JEAN-LOUIS BERTRAND ( France ) said economic and financial crime was one of the most serious threats
for the security and stability of nations, regions and the world. The crimes were growing at an
alarming rate and were linked to the growing integration of the world economy. Once that fact had
been accepted, there was a paradox. There was a big problem giving a clear definition of economic
and financial crimes, as those crimes were on the sidelines of other types of crime such as
transnational organized crime, fraud, counterfeiting, tax evasion and corruption.

The theme of money-laundering seemed to be the simplest and most practical way to tackle that kind
of criminology, since blood-money must at one time be laundered, he said. His country was not in
favour of a new convention on money-laundering. That position was based on notions of feasibility
and efficiency. There was no vacuum of regulation regarding money-laundering. Each of the four
Conventions covered money-laundering. What was at stake was implementation of the texts by the
international community.

The recommendations of the Financial Action Task Force already constituted an international
standard. Those standards would be undermined by new standards. Moreover, it would be impossible
to reach agreement within the United Nations on standards that were as strong as the Financial
Action Task Force recommendations. Moreover, a follow-up mechanism to the Convention would have no
effect on countries that had not ratified the Convention.

DHARSHANA PERERA ( Sri Lanka ) said that, with estimates of a staggering $500 billion annually,
money-laundering was now accepted as a serious challenge to the international community. Prominent
cases of fraud in the banking system had had huge impacts globally, affecting people from a wide
range of socio-economic backgrounds. Predictions that the proceeds from economic and financial
crimes for terrorist groups might even rival the proceeds from trafficking in narcotics were
alarming. The input of ill-gotten gains into mainstream economic activity must also be addressed.
The potential threat to national and international economic systems must be taken seriously.

He said people in developing countries were particularly vulnerable and, given the nature of the
problem and related cross-border activities, the need for international cooperation to interdict
those crimes was obvious. It was also necessary that a normative legislative framework be
established, although some difficult issues such as the conceptualization of economic and financial
crimes needed to be addressed. It might be a useful way forward to address some of the crimes on a
sectoral basis.

He said his country was in the process of drafting national legislation to criminalize economic and
financial crimes. Such legislation, when adopted, would provide the authorities with a sound basis
for action. He urged that the United Nations Crime Prevention and Criminal Justice Programme and
its associated technical assistance programme be expanded.

MODESTO GARCIA ( Spain ) said an appropriate response to the issue of economic and financial crime
should include measures to dismantle the economic foundations of criminal organizations. Spain's
criminal code addressed the issue of money-laundering and the fight against it was being carried out
at the administrative, judicial and law enforcement levels. Spain also had a specialized unit for
the investigation of financial crime, which had reported some 300,000 cases, leading to the opening
of about 1,600 cases of suspicious transactions. Some 50 million euros in assets had been seized
and reinvested in the fight against transnational crime.

Spain had also signed bilateral agreements with many countries, he said.

German privacy commissioner worried about anti-terrorism laws

In Berlin to present his 2004 report, Germany's data protection commissioner said that the country's
anti-terrorism measures could undermine hard-won civil liberties.

Data Protection Commissioner Peter Schaar was courting controversy Tuesday when he said that the
sweeping anti-terror laws introduced by the government in the wake of the Sept. 11, 2001 attacks in
the United States undermined basic protection from state snooping into private lives.

Schaar cited new bank laws about to be introduced by the German government as one example of
legislation getting out of control.

"This is an example of how well-intended rules to dry up the financial resources of international
terrorism are being expanded to snoop into private affairs," he said. "By allowing state
authorities, including the revenue service, wider access to individual banking data, privacy laws
are clearly being violated. I have grave concerns about these procedures and hope the constitutional
court will take them into account when it reviews the legislation."

Exercising the veto right

Schaar also criticized plans by some European governments to increase the time span over which
telecommunication companies are obliged to store data on telephone calls and Internet usage. Such
records are currently kept for three months, but five EU countries, including Germany, want to see
this extended to one year. Schaar questions whether such a move would really help investigators in
terrorist cases, fearing Internet providers could end up being misused by governments

"I see this extremely critically," he stressed. "I'm glad the German parliament is also voicing
criticism. I hope that the government will use its veto power in the EU against these plans in
Brussels."

"Half-baked technology"

German Interior Minister Otto Schily, however, is unlikely to do that. After a meeting with his
counterparts from Britain, France, Italy and Spain last month, he said that these kinds of data can
be crucial to prosecuting terrorist crimes. Schily also seems determined to press ahead with the
introduction of biometric ID cards and passports -- which has annoyed Schaar.

"We cannot accept the introduction of half-baked technology and unsafe procedures," insisted Schaar.
"Simply because the Unites States threatens us with tougher immigration regulations."

Schaar sees huge safety gaps emerging after the hasty introduction of the new IDs planned in German
for this autumn. He says errors in design could easily allow unauthorized access to the data stored
on them and has called for a moratorium on the introduction of the new technology until it has been
found to be safe. He says the project could be halted until summer 2006.

DW-Links

Law Allows Officials to Access Bank Details
http://www.dw-world.de/dw/article/0,1564,1528952,00.html
A decision by Germany's highest court Wednesday allowed tax and welfare offices to peek into
citizens' bank accounts if they suspect fraud or tax evasion. Critics fear a breach of personal
rights. (March 24, 2005)

German In-Fighting Threatens EU Terror Initiatives
http://www.dw-world.de/dw/article/0,1564,1386282,00.html
European investigators have called for more efficient cooperation in the fight against terrorism.
But conflicts of interests and privacy issues, especially in Germany, are undermining
investigations. (Nov. 5, 2004)

Germany Toys With New Big Brother Technology
http://www.dw-world.de/dw/article/0,1564,1070970,00.html
While Germany's toll system for heavy trucks flounders, a new Big Brother for the country's roads is
already in the planning: a surveillance system of cameras installed at important traffic junctions
to track criminals. (Dec. 29, 2003)

(c) DW 2005
http://www.dw-world.de/dw/article/0,1564,1557405,00.html

World Bank and IMF 'undemocratic'

Friday, 15 April, 2005, 22:52 GMT 23:52 UK

Finance ministers from developing countries have renewed their calls for a greater say at the
World Bank and International Monetary Fund (IMF).

Their comments came on the eve of the World Bank and IMF's 2005 spring meetings in Washington.

With finance officials from around the world in attendance, those from the G24 group of developing
nations said there remained a "democratic deficit".

The G24 statement also called for action to calm global oil prices.

'Enhanced voice'

Repeating the complaint they made when they last met last year, the G24 finance ministers said "the
role of small and low-income countries in the decision-making process [of the World Bank and the
IMF] is extremely limited".

"Ministers stress the need for concrete actions to reduce the democratic deficit and enhance the
voice and participation of developing countries in decision-making," the statement added.

The G24 also called for the US to take action to reduce America's giant trade deficit, saying the
current high level increased the risk of excessive movements in global currencies.

In addition, it renewed its call for more work to be done to increase debt relief.

'Neo-con'

The G24 was established in 1971 and its members include India, Egypt, Brazil and Mexico.

Australian-born James Wolfensohn will stand down as head of the World Bank on 1 June, after 10 years
in the position.

He is being replaced by Paul Wolfowitz, currently US Deputy Defence Secretary and one of the leading
right-wing "neo-conservatives" in George W Bush's administration.

The appointment of Mr Wolfowitz, a firm advocate of the US-led invasion of Iraq, caused controversy
when it was first announced in March.

(c) BBC MMV
http://news.bbc.co.uk/2/hi/business/4450749.stm

Offshore investing

by: *Murray Priestley*

Offshore investing: spreading risk helps sleep

The world’s economies still dance to different tunes and have different boom and bust cycles that tend to offset each other, even though the differences are getting smaller. As a result, international stocks can provide diversification for a portfolio heavy in U.S. stocks.

Between June 1997 and October 1998, for example, Japan’s Nikkei index lost almost 40%, but European markets did well due to continental economic union. U.S.-style corporate restructurings also began to pay off. One region’s success balanced the other’s failure to get its financial house in order.

There has been less divergence between regions more recently. Even so, we suggest the prudent investor cannot afford to ignore overseas markets. They now represent some 44% of world market capitalization, up from 25% about 30 years ago. International stocks can provide solid diversification for a portfolio heavily invested in U.S. equities.

Exchange rates add an extra flavor to foreign investments. Fluctuations can add to or detract from profits or losses. Institutional investors and others pay significant attention to this factor. When the U.S. dollar was appreciating against the Japanese yen, billions of dollars flowed out of that country and into U.S. stocks and bonds, worsening the economic crisis in Japan. That money started to flow back out when the currency valuation began to reverse. Americans saw their investments in Japan appreciate then, even when the stocks remained in neutral.

Funds that invest overseas fall into four basic categories: world, international, emerging market and country specific. Diversification is the key to containing risk. And, yes, a good fund manager helps, too. Research is scarce and foreign companies, other than some in Canada, are difficult for individual investors to track on their own.

World funds are the most diverse of the four categories. They are, as the name suggests, able to invest anywhere in the world, including the U.S. As a result, they don’t offer as much diversification as a good international fund. Some have 60% or more of their holdings in the U.S.

World funds tend to be the safest foreign stock investments, but only because they typically lean on better-known U.S. stocks. Just examine the portfolio carefully to make sure they don’t mimic your U.S. holdings. Funds invested in small- to medium-sized companies are unlikely to duplicate the foreign investment component of domestic funds.

Foreign funds, on the other hand, invest mostly outside the U.S. Whether they are relatively safe or risky depends on the countries in which they invest.

Advice: choose a fund with the best balance between countries and regions, or be very sure the manager has a good record of moving in and out of regions profitably.

Country-specific funds invest in a single country or region. This type of concentration makes them particularly volatile – especially those that invest in emerging markets. If you pick the right country at the right time, the returns can be substantial. Get it wrong and look for your head to be handed to you on a plate. These funds are for the most sophisticate investors only.

Emerging-markets funds are the most volatile, invested as they are in undeveloped regions subject to political upheaval, currency risk and corruption. These economies, such as Argentina’s in 2002, can collapse; governments can fall or be overthrown. On the other hand, these regions have enormous growth potential. Adding a small sprinkling of emerging markets exposure to your portfolio could serve to lessen downturns in U.S. markets – but they are for long-term investors only, those who can wait for fallen markets to recover.

As always, of course, the biggest risks carry the greatest potential for outstanding rewards; you simply require nerves of steel. The best course is to diversify well and sleep soundly at night.

*About The Author*

Written & published by Murray Priestley, Managing Partner of Portofino Asset Management, private investment managers and publishers of the Portofino Report. http://www.portofinoasset.com/.

Opening an offshore bank account over the internet

by: *T. O' Donnell*

There is no need to use the many middleman websites you will find via a search engine. In fact, most of these are *bogus*, even the slick-looking ones. More and more banks are offering offshore internet bank accounts direct. Just get a list of banks in the country you're interested in, and go to their web sites.

See the Google Open Directory here:

http://directory.google.com/Top/Business/Financial_Services/Banking_Services/Banks_and_Institutions/

and here:

http://directory.google.com/Top/Business/Financial_Services/Banking_Services/Banks_and_Institutions/Regional/

and the list at EscapeArtist.Com http://www.escapeartist.com/offshore3/banks.htm.

Opening an offshore bank account is like opening one in your high street; meet their criteria, and you're in. The only difference is you're not there in person.

The first thing is to find out whether they will accept citizens or residents of your country. For example, Swiss banks tend not to want US customers; they don't want the hassle from the IRS.

You will need to prove your identity, and the legal existence of your company, if you wish to open an account for it.

If applying by mail, DO NOT PART WITH ORIGINAL DOCUMENTS. Get copies notarised by a notary public. Originals can be used for fraud or identity theft. Or they can get lost.

A Notary Public is a public officer commissioned by the State to perform notarial acts. A Notary is an impartial witness. The notary is empowered to issue an apostille.

Apostille - Is a method of certifying a document for use in another country pursuant to the 1961 Hague Convention. With this certification by apostille, a document is entitled to recognition in the country of intended use, and no certification or legalization by the embassy or consulate of the foreign country where the document is to be used is required.

In practice this means you provide evidence to this man that you are who you say you are, and/or that your company is what you say it is, and take an oath on the Bible. Oh yes, that's right, it's not a joke.

Due diligence: Banks need to show they have checked who their customers are, and how they came by their money.

Passport - If you apply by post a notarised copy is needed;

Proof of your economic background - documents showing how you earn your money (work contract, bank statement, tax return, company documents);

Proof of the origin of your deposits - documents showing how you earned your deposits. For example if you sell a house, proof of the sale, a copy of the estate agent's listing, etc.;

Information about yourself and your deposits - Name, date of birth, address, etc., as well as how much you plan to deposit on the account and what you plan to do with the money once it is in the account.

If opening a company account, you send an apostilled copy of the certificate of incorporation to the bank providing your account, along with evidence of your identity, an application form, and any other documents they ask for.

If you want to get an offshore bank account, *consider visiting the bank in person*. If you can, travel to the country in question, and open a bank account there. You probably live near one tax haven at least. This especially applies if you are planning to deposit large sums; find out who you're dealing with!

NOTES:

1. Don't pay a middleman to open a bank account for you. See above.

2. Do not use services which offer bank accounts in Eastern European countries.

You are likely to be cheated, possibly by the bank itself. Avoid Latvia!

3. Do not give anyone Power Of Attorney.

You can kiss your money goodbye. You may have legitimate reasons for not wishing to broadcast what you're doing. The problem is: *How can you obscure that you are the owner of the company, or bank account, without losing control of it?*

Don't get too clever, or too greedy.

4. Avoid web sites where:

The business address is a P.O. Box, or a 'Suite';

The site is on a free web host;

The site is badly translated into English;

You have the sense you are dealing with Africans or Eastern Europeans;

The site has not been updated recently e.g. the Copyright reads 2001;

They've only been running for a few years;

They offer a range of dubious products - second passports, citizenships, anonymous debit cards;

You cannot pay via credit card - it's much harder to get refunds on banker's drafts, Western Union and e-Gold etc;

They require you sign a confidentiality agreement, or you have the sense you are entering quasi-legal or illegal territory.

Bogus offshore banking sites can threaten to report you to your tax authority if you question their methods. It's an old con trick; get the mark involved in something illegal, then he can't go to the authorities.

How do I know all this? Well, dear reader, let me take you back to 1997, when ecommerce was a new word. Merchant accounts were not easily available to individuals in the UK, especially if you wanted to sell intangibles. So I found a website that offered one, with a Latvian bank account, and a company registration in Panama to go with it. The latter was necessary to open the account, or so I was told. This 'package' was on a 'discount', and cost about $400+.

All worked well, until the bank went bust in 2001. One sorry fellow reported on Usenet that he'd lost $10,000. I lost the sum of $232 (business was diabolical!). I decided in 2002 to shut down the company, as it cost $500 a year in fees to maintain, I was skint, and I had no real use for it. To de-register it cost another $500. Which I paid. Only to find out later that that the middleman website hadn't de-registered it, and that the yearly fees to the Panamanian registrar had not been passed on either.

Result: No merchant account, and a company in bad standing. Total loss: About £2000 GBP.

That Latvian bank is open for business again, with no mention of their previous collapse on their website (well, you wouldn't, would you?).

The moral of this story? Offshore bank accounts and company formations are just like their onshore equivalents; there's no big mystery about them. If you want a company formation, contact a local man, who speaks English, in the country of registration. Then use another local man to check what the first one's done.

Open your bank account yourself.

One last thing: don't think that because your bank account and company are offshore you can do business in your home country, and/or with fellow residents, and avoid taxes there. You'll find plenty of websites that'll purport to help you, right up until the time you get a small brown envelope from your country's tax inspectors, inviting you in for a little chat.

*About The Author*

T. O' Donnell (http://www.tigertom.net) is an ecommerce consultant and offshore banking adviser in London, UK.

COPYRIGHT: You have permission to publish this article electronically or in print, free of charge, as long as the bylines are included. You must publish the article AS IS. Do not modify, alter or edit it.

You are allowed to format the layout of the article for proper display in your website or ezine, so long as the text, hyperlinks and paragraph breaks are not changed or deleted. If presented in a HTML document, any hyperlinks present must be active, clickable, and go direct to the websites they represent i.e. no re-directs.

Notifying the author is not required, but doing so is appreciated, at http://www.tigertom.com/contact.htm.

Four indicted for "God's banker" murder

Mon Apr 18, 2005 10:34 PM BST

ROME (Reuters) - A Sicilian mobster, a Roman crime boss and two others were indicted on Monday in
connection with the 1982 hanging of Roberto Calvi, a financier dubbed "God's banker" for his close
ties to the Vatican, a Rome court said.

Calvi, once thought to have committed suicide, was found hanging from scaffolding under London's
Blackfriars Bridge in June 1982 with bricks in his pockets and $15,000 (8,000 pounds) on his person.

But in the latest twist to the saga, prosecutors now say the Mafia killed Calvi for stealing from
them and from Italian financier Licio Gelli. Gelli was the head of the P2 lodge -- a shadowy Masonic
organisation whose members once included prominent politicians, businessmen and military officers.

The judge said the trial will start on Oct 6 and will involve the convicted Cosa Nostra treasurer
Pippo Calo, Roman crime boss Ernesto Diotallevi, Sardinian financier Flavio Carboni and his
ex-girlfriend Manuela Kleinszig.

The prosecutors' inquiry has focused on millions of dollars that flowed through the bank's offshore
accounts in the weeks preceding Calvi's death.

Shortly before Calvi's hanging, the bank he headed at the time, Banco Ambrosiano, had gone bankrupt.
It was then Italy's largest private banking group and worked with the Vatican.

© Reuters 2005. All Rights Reserved.
http://today.reuters.co.uk/news/newsarticle.aspx?type=topnews&
storyid=2005-04-18t213440z_01_hol877548_rtrukoc_0_crime-italy-bank.xml

9th Circuit OKs Suit Against Vatican Over Holocaust

Tuesday April 19, 2:59 am ET

Jeff Chorney, The Recorder

Just in time for the picking of a new pope, the 9th U.S. Circuit Court of Appeals decided Monday
that Holocaust survivors can pursue the Vatican Bank for profiting from a Nazi puppet regime.
The decision in Alperin v. Vatican Bank, 05 C.D.O.S. 3216, revives a class action that had been
dismissed by San Francisco U.S. District Judge Maxine Chesney.

Groups of Ukrainian, Russian and Belarusian Holocaust victims -- potentially hundreds of thousands,
according to plaintiffs attorneys -- had sued the Vatican Bank, the Franciscan Order, the Croatian
Liberation Movement and various banks in 1999.

Plaintiffs allege the defendants "profited from the genocidal acts of the Croatian Ustasha political
regime," which was installed by the Nazis during World War II, according to the opinion.

The Ustasha regime operated death camps where as many as 700,000 Serbs died. After the Croatian
government collapsed at the end of the war, its leaders fled to Italy and some assets went into
Vatican control, according to a State Department report. Plaintiffs allege that the Vatican Bank, an
arm of the sovereign Vatican government, essentially laundered the money, said plaintiffs lawyer
Thomas Easton of Eugene, Ore.

Easton said he believed it was "just a coincidence" that the decision came on the first day
cardinals deliberated who will be the next pope.

However, Easton hopes the Catholic church takes advantage of the timing and agrees to settle the
case.

"I would think a new pope might want to clean the decks of this kind of stuff," Easton said. "I'm
thinking we have a good chance to settle now."

The claims could exceed $100 million, according to a press release put out by Easton's partner in
the case, Jonathan Levy of Ohio. Pepperdine University School of Law Professor Kathryn Lee Boyd
argued the plaintiffs case at the 9th Circuit.

Chesney had granted a motion to dismiss because she believed the case wasn't justiciable under the
political question doctrine. That legal test requires courts to stay out of business normally
conducted by the executive and legislative branches.

Monday's divided 9th Circuit panel said Chesney was right, but only regarding the so-called "war
objective" claims. Two of the three panel judges -- 9th Circuit Judge M. Margaret McKeown and Senior
Illinois District Judge Milton Shadur, sitting by designation -- said they would allow the more
"garden variety" tort of conversion claims.

"In the landscape before us, this lawsuit is the only game in town with respect to claimed looting
and profiteering by the Vatican Bank," McKeown wrote for the majority. "No ongoing government
negotiations, agreements or settlements are on the horizon. The outside chance that the executive
branch will issue a statement in the future that has the 'potentiality of embarrassment' when viewed
against our decision today does not justify foreclosing the Holocaust survivors' claims."

But the third panelist, 9th Circuit Judge Stephen Trott, said that's not good enough.

"With all respect to my valued colleagues, I see it as a mistake to measure this issue of
justifiability by a 'this lawsuit is the only game in town' standard," Trott write in dissent. "This
is not our 'game,' period, and we do not become vested with jurisdiction by default of the other
branches."

The defendants have not yet decided whether to appeal, said Paul Vallone of San Francisco's Hinshaw
& Culbertson, who represents the Franciscan Order.

Although Monday's decision was a setback for his client, Vallone pointed to sections of the opinion
that tell the plaintiffs they are by no means home free.

"There are several other obstacles that plaintiffs need to get through," Vallone said.

Indeed, several times the judges noted the complexity and difficulty of the massive case, calling it
a "behemoth" and comparing the district court's work on it to Sisyphus, the mythological figure who
rolled a boulder up a hill only to have it roll back down for eternity.

Easton, on the other hand, found those comments encouraging. "Those are signals to both sides to
settle the case," he said.

The lawyer for the Vatican Bank, Jeffrey Lena of Berkeley, Calif., could not be reached for comment.

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.

India Foreign remittance surpasses $23billion

Monday, 18 April , 2005, 10:21

Indians remittances to the country from abroad have soared considerably over the years to touch $23
billion in 2004, according to World Bank statistics.

According the latest Global Development Finance report prepared by the World Bank, India received
$17.4 billion in 2003 from the workers living and working in other countries. The latest figures
place India much ahead of China and other developing countries like Mexico and Brazil. At the
exchange rate that prevailed in 2003, the inward remittances amounted to about Rs 84,000 crore,
which was more than double the amount that government collected as income tax during the financial
year. The actual remittances may be much higher as flows through informal channels, such as hawala,
are not captured in the official statistics but are believed to be quite large, the report points
out.

© Copyright Sify Ltd, 1998-2004. All rights reserved.
http://sify.com/finance/nri/fullstory.php?id=13720237

Ruling on casinos is unclear

The Associated Press

Friday, April 8, 2005

GENEVA Antigua and Barbuda and the United States both claimed victory Thursday in a trade dispute
over whether Washington should drop prohibitions on Americans placing bets at online casinos.

Antigua said a World Trade Organization ruling meant that the United States must drop restrictions
on online gambling. But U.S. trade officials said that the ruling supported their argument and that
the limitations could remain in place.

Mark Mendel, legal counsel for Antigua, said the WTO ruling meant that U.S. authorities would have
to treat Antiguan online casinos in the same way as traditional gambling outlets.

But a U.S. trade official, speaking on condition of anonymity, said the ruling meant that Washington
did not have to lift restrictions on Internet betting.

"This is effectively a win for the United States, as it seems to say that if we tighten U.S.
Internet gambling restrictions, we'll be fine," the trade official said.

The WTO ruling has yet to be made public.

Antigua filed the case in 2003, contending that U.S. restrictions on Internet gambling violated
trade commitments that the United States had made as a member of the 148-nation WTO.

U.S. trade officials disagreed, saying that negotiators involved in the Uruguay Round of global
trade talks, which created the WTO in 1995, intended to exclude gambling.

Antiguan authorities also argued that restrictions that barred U.S. residents from betting at
offshore casinos were harming their country's efforts to diversify its economy. Antigua has been
promoting electronic commerce as a way to end the twin-island nation's reliance on tourism, a sector
hurt by a series of hurricanes in the late 1990s.

The current legal status of Internet gambling in the United States is in dispute. No federal law
prohibits gambling, which is regulated by state law. But in many states, gambling is banned or
permitted with restrictions.

http://www.iht.com/bin/print_ipub.php?file=/articles/2005/04/07/business/gamble.html

Singapore to permit casinos

Singapore ends casino ban
By Wayne Arnold The New York Times

Tuesday, April 19, 2005

City-state aims to lure more Chinese tourists

Singapore said Monday that it would legalize casinos to allow the construction of two Las
Vegas-style resorts, overruling public opposition in an effort to promote tourism.

Prime Minister Lee Hsien Loong told Parliament that the cabinet had decided to lift the city-state's
ban on casino gambling, ending a year of uncharacteristically vigorous public debate in a country
that has been governed by the same party since 1965.

Singapore plans to award licenses this year to build the two casinos. It estimates that this will
translate into roughly $3 billion in investment.

The hope is that introducing casinos will let Singapore fend off increasing competition for tourists
from mainland China. China is one of the largest and fastest-growing sources of tourist arrivals in
Singapore, but competition is mounting, particularly from Thailand.

More broadly, however, the casinos are part of a longstanding effort to reorient the economy in
Singapore toward higher "value-added" service industries like tourism and biosciences as it loses
manufacturing competitiveness to China.

There is no shortage of investors willing to share in the new wager by Singapore. Nineteen gaming
consortia, including Harrah's Entertainment, MGM Mirage and Las Vegas Sands, responded to a
government request for plans.

International casino operators are eager to expand in Asia, where rising incomes are letting
billions of people spend more than ever on wagering. Harrah's, owner of Caesars, has enlisted the
architect Daniel Libeskind, who designed the Freedom Tower that is to stand on the site of the World
Trade Center in New York City, to design one of its proposed resorts.

Singapore business leaders praised the move to lift the ban.

"The government is prepared to give these folks the ability to invest their money and create tourism
attractions that will get Singapore tourism back on track," said Philip Overmyer, executive director
of the Singapore International Chamber of Commerce.

Tourism accounts for at least 5 percent of the economy in Singapore, a number that economists say
understates the importance of the industry to the part of its economy that is not involved with
foreign trade.

Despite its long and colorful history as a regional trading center, Singapore is short on
conventional tourist sites like ancient temples or historic quarters.

Singapore has succeeded in turning itself into a regional hub for air travel, but tourists are
spending less time on average in Singapore, using it instead as a staging ground for forays around
Southeast Asia.

The government plans to have two separate casino resorts, one on an underused theme park island off
the southern coast.

The second resort will be near the main convention center, an area bristling with business hotels
and near the distinctive Esplanade performing arts center that Singapore built in 2002 in an effort
to become a cultural hub.

Harrah's is bidding to build both sites as part of a venture with a local government-controlled
company, Keppel. Other bidders are Kerzner International, Wynn Resorts and the Australian casino
operator Tabcorp Holdings.

Economists said the casino was likely to bring direct, tangible results. A report by Merrill Lynch
estimated that a single casino would cost roughly $2 billion to build and would generate about $2.1
billion a year in revenue, about a third of it from foreign visitors. The project would help the
construction and tourism industries, it predicted, including shops and hotels. It would contribute
$865,000 a year to government tax revenue.

http://www.iht.com/bin/print_ipub.php?file=/articles/2005/04/18/business/casino.html

Money laundering IT specialists in short supply

Anti-Money Laundering IT professionals in short supply as pressures mount in Investment Banking
community

BlueMax IT, a leading banking and finance recruitment consultancy, has recently encountered
increasing activity within the Investment Banking community. In particular, firms have begun to
'swoop' on the scant supply of Anti-Money Laundering professionals in both the retail and card
processing sectors. While Basel II has been the focus for many financial institutions, the increased
expansion of AML regulation is causing a migration of compliance professionals from retail
institutions to the more lucrative Investment Banking and Wealth Management sectors.
Traditionally such AML professionals have come from the retail account and card processing areas of
high street banks. The pool of experienced candidates who know both the current and impending AML
regulations, and have implemented the latest software systems is limited. These candidates typically
are from the Special Investigations / Account Monitoring sections of mature card processing
companies and retail banks, with knowledge and experience of account profiling, KYC, KYCB, and OFAC.
Many are making the leap from Retail Banking institutions to the Investment / Wholesale Banking
community, which imposes the same regulatory requirements but offers significantly larger
compensation packages. Equally Management Consulting firms - who have recently been recruiting for
their regulatory compliance advisory and consulting teams - are offering highly attractive packages.

As the FSA tightens the regulations further, and as pressure from the EU and Basel Committee on
Banking Supervision intensifies, there will be more fines, naming and shaming non-compliant
financial institutions - such as the FSA regulated bank that was fined for 375,000 breaches of money
laundering requirements. This means large City institutions that have significant reputations and
names to protect will happily pay top market rate for the scarce AML expertise out there. AML
professionals are likely to have the longest tenure of employment as this regulation looks set to be
on-going, unlike Sarbanes-Oxley.

BlueMax IT has also seen increased recruitment activity from Management Consulting firms for Basel
II, Sarbanes-Oxley (SOX) and AML professionals for both advisory and consulting roles.

Contact information for BlueMax IT Recruitment Limited
http://www.bobsguide.com/guide/vend/BlueMax.html

© MyGuides Ltd 2002, 2003, 2004, 2005
http://www.bobsguide.com/guide/news/8978.html

Arab anti-money laundering regional group launched

19 April 2005

BEIRUT - The Paris-based Financial Action Task Force (FATF) has set up a regional grouping to combat
money laundering in the Middle East and North Africa, the head of the Arab banking association said
yesterday.

Joseph Torbey told a Beirut forum that 14 Arab states had joined the new grouping, FATF's seventh
regional affiliate around the world.

The new body's president - Lebanon's Mohammed Baasiri - said "no Arab country is on the FATF
blacklist." But Torbey called on Arab states to "demonstrate transparency" following accusations
since the September 11, 2001, attacks in the United States that Arab financial and charitable
institutions had been abused to fund terrorism.

"After adopting laws against money laundering and terrorism funding in the past few years, Arab
states should introduce new measures to boost the immunity of their banks," Torbey said.

"The most important measures are aimed at creating an Arab coordination mechanism to fight money
laundering and an Arab financial compensation centre to avoid the entry of dirty money into Arab"
states, he said.

Central Bank of Lebanon governor Riad Salameh called on Arab central banks to "respect international
laws aimed at controlling the use of dirty money emanating from illegal activities to finance
terrorist acts and corruption."

http://www.khaleejtimes.com/displayarticle.asp?xfile=data/business/2005/april/
business_april368.xml§ion=business

Novel exposes the tax haven and tax shelter industry

Source: AuthorHouse

Novel Exposes Realities of Corporate Tax Schemes -- Young Lawyer Wrapped in Unscrupulous World of
Tax Shelter Industry

CHARLOTTE, N.C., April 19, 2005 (PRIMEZONE) -- In an era when market economies and global capitalism
are increasingly prominent and accounts of unethical business practices dominate American headlines,
a new novel by Lyndon Saint-Matthews, The Shelter: A Tale of Corporate Greed and the Good People Who
Perpetuate It (now available through AuthorHouse), strips away the propaganda and invites the reader
to take an uncensored look at the unscrupulous mores of "tax consultants."

The novel features Jim La Rue, a young attorney seeking to turn his poor academic record and
business acumen into a lucrative career as a top tax attorney. At first he is attracted by the
opportunity but is soon shocked when the true nature of business becomes apparent. Jim moves from
his company's regional office to the national headquarters to the "SWAT team" for clever tax
transactions. After some time, he wants to be free of his life as a "tax shelter hustler" in a Big
Four accounting firm more than he desires money, reputation or love. Another challenge for Jim is a
chance meeting with Megan, a Justice Department attorney who believes her introduction to Jim is a
chance to propel her career.

Woven into this riveting fiction story is an insightful view into the current state of the world's
largest tax consulting firms. Written by a veteran of this industry, The Shelter exposes what lies
behind the corporate scandals and accounting failures recently covered by the American press. What
congressional investigations have implied, The Shelter exposes, including the hologram of
professionalism, the impact of ruthless greed on corporate America and a shocking bankruptcy of
business ethics.

Saint-Matthews has spent more than 15 years in the corporate tax world. He has interacted with the
most prominent corporate tax technicians and advisors and a slew of Fortune 1000 tax departments.
His professional experiences make him uniquely qualified to disclose the truth about the tax shelter
industry.

AuthorHouse is the world leader in publishing and print-on-demand services. Founded in 1997,
AuthorHouse has helped more than 18,500 people worldwide become published authors. For more
information, visit www.authorhouse.com

CONTACT: Promotional Services Department
Tel: 888-728-8467
Fax: 812-961-3133
pressreleases@authorhouse.com
(When requesting a review copy, please provide a street address.)

© 2005 PrimeZone Media Network, Inc. All Rights Reserved.
http://www.primezone.com/newsroom/?d=76538

Novel exposes the tax haven and tax shelter industry

Source: AuthorHouse

Novel Exposes Realities of Corporate Tax Schemes -- Young Lawyer Wrapped in Unscrupulous World of
Tax Shelter Industry

CHARLOTTE, N.C., April 19, 2005 (PRIMEZONE) -- In an era when market economies and global capitalism
are increasingly prominent and accounts of unethical business practices dominate American headlines,
a new novel by Lyndon Saint-Matthews, The Shelter: A Tale of Corporate Greed and the Good People Who
Perpetuate It (now available through AuthorHouse), strips away the propaganda and invites the reader
to take an uncensored look at the unscrupulous mores of "tax consultants."

The novel features Jim La Rue, a young attorney seeking to turn his poor academic record and
business acumen into a lucrative career as a top tax attorney. At first he is attracted by the
opportunity but is soon shocked when the true nature of business becomes apparent. Jim moves from
his company's regional office to the national headquarters to the "SWAT team" for clever tax
transactions. After some time, he wants to be free of his life as a "tax shelter hustler" in a Big
Four accounting firm more than he desires money, reputation or love. Another challenge for Jim is a
chance meeting with Megan, a Justice Department attorney who believes her introduction to Jim is a
chance to propel her career.

Woven into this riveting fiction story is an insightful view into the current state of the world's
largest tax consulting firms. Written by a veteran of this industry, The Shelter exposes what lies
behind the corporate scandals and accounting failures recently covered by the American press. What
congressional investigations have implied, The Shelter exposes, including the hologram of
professionalism, the impact of ruthless greed on corporate America and a shocking bankruptcy of
business ethics.

Saint-Matthews has spent more than 15 years in the corporate tax world. He has interacted with the
most prominent corporate tax technicians and advisors and a slew of Fortune 1000 tax departments.
His professional experiences make him uniquely qualified to disclose the truth about the tax shelter
industry.

AuthorHouse is the world leader in publishing and print-on-demand services. Founded in 1997,
AuthorHouse has helped more than 18,500 people worldwide become published authors. For more
information, visit www.authorhouse.com

CONTACT: Promotional Services Department
Tel: 888-728-8467
Fax: 812-961-3133
pressreleases@authorhouse.com
(When requesting a review copy, please provide a street address.)

© 2005 PrimeZone Media Network, Inc. All Rights Reserved.
http://www.primezone.com/newsroom/?d=76538

Telecom tycoon uses offshore bank accounts to hide wealth

$200,000,000
Telecom Tycoon Used International Financial Labyrinth
By David S. Hilzenrath
Washington Post Staff Writer

Monday, April 18, 2005; Page E01

After building a long-distance phone business in the early days of Washington's telecom frenzy,
Walter C. Anderson did something unusual: He all but gave the company away.

On the verge of a deal that would pay Mid Atlantic Telecom Inc. shareholders about $6.7 million,
Anderson transferred his controlling interest to a company called Gold & Appel Transfer SA, based in
a Caribbean tax haven. When Mid Atlantic was sold, it was Gold & Appel that reaped the gain.

Prosecutors now allege that the 1992 transfer was one of the first steps in a long-running scheme to
cloud ownership of Anderson's assets and escape taxes. All told, the government alleges, Anderson
hid more than $450 million in offshore companies such as Gold & Appel. From 1995 through 1999,
prosecutors allege, he dodged more than $200 million in personal income taxes in what they describe
as the largest individual tax evasion case in U.S. history.

Anderson has pleaded not guilty and said in an interview shortly after his arrest that the assets he
controlled in offshore holding companies were to benefit a Panamanian foundation he created to
advance human rights, arms control, family planning and the development of space.

In ordering Anderson, 51, held without bail last month, a federal judge cited his "considerable
experience in conducting business abroad and moving money and assets across borders without
detection."

In fact, Anderson left an extensive paper trail. Whether he was bidding on art at Christie's,
investing in telecom companies during the market bubble, attempting to privatize the Mir space
station or paying a former girlfriend $2 million for the rights to water on a farm her family owned
in Brazil, Anderson had millions of dollars at his disposal. However, it was often unclear where
ultimate ownership or control of the assets rested.

A tax-exempt private foundation he created and presided over in the United States became entwined in
his business affairs in a variety of ways, using (and ultimately losing) some of its assets as
collateral for an Anderson loan, funding research that could support Anderson's profit-making
designs on Mir, and lending money to Gold & Appel, which Anderson controlled.

Transactions at the heart of the prosecutors' case appeared in the public record and attracted
suspicion in the business arena long ago, evidence of how hard it can be for the government to
determine whether sophisticated and successful people are paying their share of taxes.

"The story underneath it that is so shocking is how long it has taken IRS to get its act together
and make the case," said Washington lawyer Jack A. Blum, an expert on international taxation and
money laundering who believes that many Americans use foreign havens to evade taxes. "If anybody
looked at the paper trail and put the pieces together, used some common sense, he would have been up
on the front burner a long time ago."

"Why it took so long and why the system can't produce a result in a reasonable amount of time is
utterly beyond me," Blum said. "What in the hell are they going to do about all the other guys who
are doing this who haven't been quite as flamboyant?"

The Internal Revenue Service's chief of criminal investigation, Nancy J. Jardini, said such
criticism is unfair considering, in Anderson's case, the sophistication brought to bear in trying to
obscure the ownership of funds.

The IRS is keeping up with tax evaders and has over the past couple of years "really started to
extend our enforcement operations to be much, much more international," Jardini said. The agency now
conducts undercover operations in foreign countries, "something that we did not do previously," she
said.

But generally speaking, she said, "in those cases where we have to start from ground zero and
attempt to construct a financial history of these individuals and trace these funds and trace the
nominee names and trace the layered transactions, that is a very tedious time-intensive effort and
it can take years."

Anderson and his lawyer, Abbe D. Lowell, declined to be interviewed for this article, a spokesman
for Lowell's firm said.

Anderson's career began when entrepreneurs were racing to exploit the breakup of AT&T Corp.'s
long-distance monopoly. After a brief stint in a low-level sales job at MCI Corp., one of the first
companies to challenge AT&T, Anderson set out to replicate MCI's success.

Building District-based Mid Atlantic Telecom was a struggle. Nine years after it was founded, the
company was losing money and was in such dubious condition that its auditor, KPMG, warned that it
might go out of business, according to an audit report on file with the Securities and Exchange
Commission.

KPMG fought with Mid Atlantic over how the company wanted to account for the sale of a subsidiary to
another Anderson venture, Esprit Telecom Ltd. Mid Atlantic wanted to claim revenue from the sale,
but KPMG maintained that no real sale had occurred because Mid Atlantic appeared to have control
over Esprit, according to a document filed with the SEC.

In January 1992, to arrange a payment plan with one of Mid Atlantic's creditors, Anderson personally
guaranteed a corporate debt, according to court records retrieved from the National Archives. Within
months, the creditor declared that Mid Atlantic had failed to pay and demanded more than $400,000
from Anderson.

Meanwhile, Anderson's personal taxes were in disarray. For several years, he filed delinquent
returns, but he did not pay the taxes he owed, according to the federal indictment against him.

It was against this backdrop that Anderson began shifting assets to Gold & Appel, in the British
Virgin Islands.

A 1993 letter prepared by the law firm Swidler & Berlin LLP for Mid Atlantic, filed with the SEC in
connection with the planned sale of Mid Atlantic, shows how it worked: First, Anderson gave the
offshore company an option to purchase almost his entire stake in Mid Atlantic Telecom for 3 cents a
share. Then, Gold & Appel exercised the option. Anderson, who already had authority to manage Gold &
Appel's affairs, also had an option to buy the offshore company for a "nominal price," according to
the letter.

The prosecution alleges that Anderson made those arrangements in anticipation of a gain from the
sale of Mid Atlantic. The indictment says Anderson formed Gold & Appel in September 1992 -- the
month that negotiations for the sale of Mid Atlantic began, according to information reported to the
SEC.

However, the Swidler letter says Anderson gave Gold & Appel the option to buy his Mid Atlantic stake
in 1991, "prior to the date on which Mid Atlantic began discussions" with the company that would
later acquire it.

The Swidler letter said that, based on information provided by Anderson and Gold & Appel, the
offshore company was given the option to buy Anderson's shares in Mid Atlantic "for valid business
purposes and not for tax avoidance purposes."

"Anderson controls Gold & Appel and is the beneficial owner of substantially all of the equity of
Gold & Appel," Swidler & Berlin said, citing information provided by Anderson. Anderson intended to
exercise his option "and become the legal owner of substantially all of the outstanding equity of
Gold & Appel," the law firm said.

In early 1993, with the sale of Mid Atlantic still in the works, a court ordered Anderson to pay
more than $450,000 to make good on the corporate debt he had guaranteed, and a creditor was taking
action to seize his local bank accounts, records of the litigation show.

Before the year was out, Mid Atlantic was sold and Gold & Appel received more than $4 million in
stock from the acquiring company, the prosecution says.

The next year, other circuitous stock transfers unfolded at a company Anderson helped found, Telco
Communications Group. The transactions were disclosed in a 1996 SEC filing as Telco was preparing to
sell stock to the public.

First, Telco bought about 5.8 million of its own shares back from Anderson for $25,000. Then,
several days later -- and one day before Anderson was scheduled to meet with IRS agents about his
taxes, according to an IRS affidavit -- Telco sold about 6.5 million shares to Iceberg Transport SA,
a Panamanian corporation, for $50,000.

Later, Iceberg transferred the shares to its wholly owned subsidiary -- Gold & Appel.

When Telco was sold for $1.2 billion in 1997, Gold & Appel's holdings turned into more than $90
million in cash, plus 4.6 million shares of stock in the acquiring company.

Inside Telco, people were uncomfortable with Anderson's transactions, the enigma of who ultimately
owned Gold & Appel, and the way the deals might look to outside investors, an associate said.

Anderson's offshore dealings didn't escape notice in the financial world, particularly among his
adversaries. In 1995, when Anderson was questioned in a lawsuit over a business dispute, he was
asked who owned Gold & Appel. He replied that it was owned by another corporation of which he had no
knowledge, according to an IRS affidavit. Then, after another witness revealed the existence of
Iceberg Transport, Anderson acknowledged in a court deposition that Iceberg owned Gold & Appel, the
affidavit says.

In the fall of 1998, Anderson and Gold & Appel were attempting a hostile takeover of a New Jersey
long-distance company called Total-Tel USA Communications Inc. In a letter filed with the SEC, the
chairman and chief executive of Total-Tel warned shareholders about Anderson's "chain of
'mysterious' foreign entities." Warren H. Feldman noted in his letter that Anderson had Gold &
Appel's power of attorney, but Gold & Appel had only one director, a management firm that acts as
"board member for hire," while Gold & Appel's parent company, Iceberg Transport, was registered in
Panama.

"Mr. Anderson claims not to know the source of Iceberg's initial capital, has not met any of
Iceberg's directors, and has no regular communication with them. Nor does he know whether Iceberg
itself is owned or controlled by another person or entity," Feldman wrote in a letter to
shareholders. "Are you confused yet?"

By operating in concert with another investor, Anderson had defied a court order not to acquire more
Total-Tel shares, Feldman wrote, posing a question to investors: "[H]ow can you trust him to run
Total-Tel in your best interests?"

According to SEC filings, Anderson later struck a deal for Feldman to resign as chairman, offering
Feldman and his father a way to liquidate hundreds of thousands of Total-Tel shares at far more than
the going price. The deal, signed on a day the stock closed at $12.25 a share, obligated Anderson or
one of his companies to buy stock from the Feldmans for $16 a share. But before long, the deal was
amended to involve another party: the Foundation for the International Non-Governmental Development
of Space, a tax-exempt charitable foundation that Anderson created and presided over.

The revised deal shifted to the foundation responsibility for buying much of the Feldmans' stock. In
early 2000, the foundation spent more than $7.3 million making good on the deal, according to
records filed with the SEC.

Feldman declined to comment.

The foundation became involved in other aspects of Anderson's affairs. In 1998, it lent $1 million
to Gold & Appel, and in late 1999 and early 2000, it made grants of more than $1.2 million for
research on technology to keep Mir from falling back to Earth -- research that could support
Anderson's plans to turn the Mir into a for-profit business -- according to foundation tax returns.
(Russia eventually destroyed the space station by plunging it into the Pacific Ocean.)

In March 2000, a company called U.S. Wats Inc. made arrangements to borrow up to $1 million from
Gold & Appel and up to $500,000 from the foundation, SEC records show. Anderson served on the U.S.
Wats board, and Gold & Appel was its majority shareholder as of several months earlier, according to
an SEC filing.

In August 2000, Anderson and Gold & Appel borrowed $13 million from former colleague Donald A. Burns
at an interest rate of 18 percent, according to SEC records, and the foundation put up as collateral
more than 700,000 shares of Total-Tel, since renamed Covista Communications Inc. Gold & Appel agreed
to pay the foundation tens of thousands of dollars for putting its assets at risk, according to an
SEC filing.

Burns subsequently declared the loan in default, and in 2002, he seized the collateral.

Anderson said in an interview that the holdings he managed had declined sharply in value.

"Gold & Appel was in a very severe cash squeeze because of the market decline, and we needed cash,"
Andersen testified in litigation over the Burns debt. "We needed desperately to get some cash to pay
our obligations."

The foundation's former executive director, Rick N. Tumlinson, said he focused on grant-making and
left other foundation matters to Anderson. "All of the financial transactions that Walt was doing on
the investment side I just don't recall much about," Tumlinson said.

The government accuses Anderson of behaving evasively in his dealings with the courts -- refusing to
identify the owners of Gold & Appel when ordered to do so by a judge in a civil suit, and traveling
to the Caribbean to form another entity to hold Gold & Appel's assets when he was scheduled to be
giving a handwriting sample to a grand jury. The court rescheduled that appearance based on a
lawyer's assertion that Anderson was on a business trip to Europe.

Anderson says he used offshore vehicles for legitimate tax savings and to maintain privacy. In an
interview at the D.C. Jail shortly after his arrest, Anderson said the government "has not
understood or doesn't want to understand" who ultimately owns his holding companies -- the Smaller
World Foundation, which Anderson created and controlled and through which he planned to give away
money.

He said he formed the organization in 1993 as a trust based in the British Virgin Islands and moved
it to Panama after he learned about the federal investigation because a Panamanian foundation "would
be less likely to be intimidated into giving up its assets to the IRS."

But Anderson seemed to concede that doing business in foreign tax havens can inspire skepticism.

"For every company like Gold & Appel, Iceberg . . . that is located in a tax haven, there are 50
that are committing, there to commit fraud. They're there to hide assets from your spouse, they're
there to hide assets from your partner, they're there to hide assets from the IRS, which you can see
doesn't work very well," Anderson said.

Staff researcher Madonna Lebling contributed to this report.

Post Archive

* Telecom Mogul's Lofty Dreams Plummet (The Washington Post, Mar 26, 2005)
http://www.washingtonpost.com/wp-dyn/articles/A1910-2005Mar25.html
* Tax Case Defendant Says Money Was to Do Good (The Washington Post, Mar 4, 2005)
http://www.washingtonpost.com/wp-dyn/articles/A5506-2005Mar3.html

© Copyright 1996- The Washington Post Company
http://www.washingtonpost.com/wp-dyn/articles/a61202-2005apr17.html

Forex trading to open in China

Hotspot FX said Monday it has set up an office in China, becoming the second electronic currency
trading company to establish itself in the mainland.

Despite not being able to generate income from their currency-trading business in the country at the
moment, many firms are betting that it is better to get in early and be in the right place at the
right time when trading opens up.

With little or no electronic foreign currency trading taking place onshore in China, it is difficult
to say how much it could contribute to the US$1.9 trillion (HK$14.82 trillion) a day foreign
exchange market. But with more than 100 million Internet users in the mainland, firms are keen to be
first to offer electronic trading services.

They are also hoping that the mainland foreign-exchange business will behave differently from the
rest of the world, skipping the phase of bank-dominated, telephone-based trading through brokers and
going straight online.

``The old way of business was the telephone,'' said John Eley, chief executive of Watchung, New
Jersey-based Hotspot, which uses an electronic platform for their clients to trade spot foreign
exchange. ``But in China, they have the advantage of observing the evolution of electronic trading
and applying its lessons.''

The firm's new license enables it to set up a representative office in Beijing, and to use that as a
base to build awareness among Chinese institutions about the currency trading services it offers.

``We do not have to alter the platform for the Asian market,'' said Robert Fleschler, the firm's
global head of sales. ``The liquidity and the products are the same, the credit intermediaries are
the same, the other clients are the same. But soon those clients could include counterparts in
China. We are never a market maker or a counterparty so if institutions want to take our product
they could trade onshore.''

Hotspot's development comes after London-based CMC Group became the first currency trading firm to
get a license to open in China in January this year, although CMC is not able to offer onshore
trading.

``We are not afraid of competition,'' said Peter Nesden, chief representative officer at CMC in
Beijing. ``We are hoping that the market changes sooner rather than later and we can use the fact
that we were the first over here.''

Like Hotspot, CMC's initial task is to educate people in China about how foreign exchange trading
works. Nesden said CMC's educational seminars draw hundreds of people, with 600 attending a recent
event in Shanghai.

Nesden is aware of several other trading firms that are seeking licenses similar to his.

The firms are hoping that Chinese financial institutions and companies trade currencies on their
platforms rather than directly with banks, the method that dominates in Europe and the United
States. China's regulations on currency trading are the same for banks and trading companies.

Many trading systems operate in a gray area, where Chinese individuals open offshore accounts with
them - a topic that has drawn attention in the local press.

While it is possible for clients in China to do this with CMC or Hotspot, the firms have both
decided to play entirely by the Chinese authorities' rules.

``In China, the relationship with regulators is important,'' said CMC's Nesden. ``We don't think
it's possible to do onshore business now, but in future it will be. We didn't do anything
particularly special [to get our license]. We have done everything 100 percent by the guidelines.''

The big break will come when currency trading is liberalized in China. ``We think the market will
open up in two years,'' said Nesden. ``The worst case scenario is that it will be five to seven
years.'' DOW JONES NEWSWIRES

Copyright 2005, The Standard, Sing Tao Newspaper Group and Global China Group. All rights reserved.
http://www.thestandard.com.hk/stdn/std/markets/gd19ag03.html

More bank data may not aid fight against terrorism

By Caroline Drees, Security Correspondent

Mon Apr 18, 2005 10:30 AM ET

WASHINGTON, April 18 (Reuters) - A plan to force banks into disclosing hundreds of millions of wire
transfers to help fight terrorist financing would overwhelm bankers and regulators and add
questionable value to the war on terrorism, experts and officials say.

The proposal is being studied by the U.S. Treasury and would grant the government unprecedented
access to banking records. Banks wire more than $6 trillion across the globe each day, the bulk of
it in and out of the United States.

While counterterrorism officials are eager to tap into this mother lode of financial information,
some officials, bankers and experts question whether authorities can actually glean pertinent
information from the flood of data, while protecting the privacy of banking clients.

"The big provisos are whether that data can be obtained in a cost-effective way that doesn't
overburden the private sector, doesn't choke the government, and in a way that it can be ... used
without running roughshod over privacy and civil liberties concerns," said Joseph Myers, a former
National Security Council official under U.S. President George W. Bush.

One current counterterrorism official said: "With a billion additional reported transactions a day,
you're just increasing the amount of hay in the haystack. You're not getting any closer to finding
the needle."

Many officials and experts, including Myers, say wire transfers might contain useful information to
track down terrorists and believe the idea of reporting some of those flows merits study, as long as
the challenges are clear.

BURDEN VS. BENEFIT

A sweeping intelligence bill passed by the U.S. Congress in December to overhaul the U.S. spy
community called on the Treasury to study whether the proposal was useful and feasible.

A Treasury spokeswoman said, "Information collected from certain cross-border wire transfers could
be incredibly valuable to our efforts to starve terrorists of funding."

Douglas Greenburg, who coauthored the Sept. 11 commission's landmark report on terrorism financing,
pointed to Abdul Aziz Ali, a facilitator of the Sept. 11, 2001, plot who wired an estimated $120,000
from Dubai to the hijackers in the United States.

"If the government had a database they could search through by name to find what wire transfers he's
made, where and to whom, that could be extraordinarily useful," Greenburg said.

Dennis Lormel, who ran the FBI's anti-terrorism financing operations after the 2001 attacks, also
said access to wire transfer data was a hugely valuable resource, but the government needed to
develop better technology to analyze the vast amounts of information.

"You have to balance the burden versus the benefit. Because right now, you're hard-pressed to
demonstrate what the benefit would be," he said.

In the industry, bankers are wary of more reporting requirements in the wake of Sept. 11. Financial
institutions must already report to the government a host of other transactions, such as "suspicious
activities" and some currency moves.

"Someone needs to take a temperature check," said John Byrne, a senior official at the American
Bankers Association. "Is all of this information worthwhile? Should resources be allocated to yet
another information-gathering requirement without any sort of evidence that this is going to be
remotely useful?"

Jimmy Gurule, the Treasury's former undersecretary for enforcement, agreed.

"In the end, the banks could be reporting this overwhelming volume of data, most of which will
probably not have any legitimate investigative value."

http://www.reuters.com/financenewsarticle.jhtml?type=bondsnews&storyid=8212813

Bush seeking more flexible passports rule

Apr 15, 8:48 AM EDT

By LARA JAKES JORDAN
Associated Press Writer

WASHINGTON (AP) -- Plans requiring passports from people entering the United States don't pass
muster with President Bush, who has ordered a review of this border security effort amid fears it
would impede legal travel from Canada, Mexico and other U.S. neighbors.

The president said Thursday he was surprised by the proposed rules announced last week by the State
and Homeland Security departments.

"When I first read that in the newspaper about the need to have passports, particularly today's
crossings that take place, about a million for instance in the state of Texas, I said, `What's going
on here?'" Bush said when asked about the rules at a meeting of the American Society of Newspaper
Editors.

"I thought there was a better way to expedite the legal flow of traffic and people," he said.

Bush, a former Texas governor, said he has ordered a review of the rules. "If people have to have a
passport, it's going to disrupt the honest flow of traffic. I think there's some flexibility in the
law, and that's what we're checking out right now," the president said.

"On the larger scale, we've got a lot to do to enforce the border," he said.

In December, Bush signed into law an intelligence overhaul that requires tighter border security
against terrorists and was the basis for the passport proposal. The White House did not say why the
president was unaware of the plans, which his administration announced a week ago.

The proposed guidelines would require passports or a select number of other secure documents from
anyone - including Americans - entering the United States from Canada, Mexico, Bermuda, the
Caribbean and Panama. The rules were scheduled to become final this fall after a public comment
period and to be phased in by 2008.

Currently, Americans generally need to show a driver's license or other government-issued photo
identification to cross the border from Canada. Customs officials usually require more proof from
Americans returning from the other countries - a driver's license plus a birth certificate to prove
citizenship, for example.

An estimated 60 million Americans - about 20 percent of the national population - have passports.

The plans have caused a stir in Canada, where the government announced it might follow suit and
impose similar rules against the United States. Canada is the largest U.S. trading partner, with
$1.2 billion worth of goods crossing the border daily. Nearly 16 million Canadians entered the
United States last year.

Canada's public safety minister, Anne McLellan, told reporters in Ottawa that Bush's comments signal
his support for negotiations between the two countries about "accepted forms of ID."

"While we want to keep our borders secure and our respective countries secure, we also want to
ensure that we're facilitating trade and the movement of people between the two countries," McLellan
said.

A spokesman at the Mexican Embassy had no immediate comment.

As proposed, the rules would allow the use of four other documents, geared to the Mexican and
Canadian border, in place of a passport.

People entering the United States from Mexico could continue to use a border crossing card or SENTRI
card, which can be obtained following background checks and other security measures. From the
Canadian border, a NEXUS card for preapproved low-risk travelers and a FAST card for commercial
workers would be accepted.

The plans also leave open the possibility for the use of unnamed "additional documents" that remain
under consideration. But the passport "will be the document of choice for entering or re-entering
the U.S.," according to a Homeland Security information sheet.

Bush said the rules must be more flexible, and could include electronic fingerprint imaging "to
serve as a so-called passport for daily traffic" to help speed up the process.

Homeland Security spokesman Brian Roehrkasse said that although passports were a requirement of the
intelligence overhaul bill, "we are looking at alternative documents that will help us better secure
the country, and at the same time facilitate travel."

At the State Department, spokesman Thomas Casey said officials will "look to find ways to implement
this program ... in a way that's most efficient and that facilitates travel in the best ways
possible."

Bush has proposed immigration liberalization legislation that would establish a guest-worker
program. But it has run into difficulty in Congress, particularly among border-state Republicans.

An estimated 10 million immigrants live in the United States illegally; the vast majority are from
Mexico, with an additional million arriving every year.
---

On the Net:

State Department: http://www.state.gov/
Homeland Security Department: http://www.dhs.gov/dhspublic/

© 2005 The Associated Press. All rights reserved.
Copyright 2005 IndyStar.com. All rights reserved
http://hosted.ap.org/dynamic/stories/b/bush_passports?site=inins§ion=home

Loophole for Britons with offshore bank accounts

The EU is to levy a withholding tax — but you can keep your identity secret from the taxman. By Clare Francis

MOVES to make money laundering harder are about to receive a setback after an EU compromise. A savings directive, due to be implemented in July, aims to clamp down on tax evasion. But bank customers with offshore accounts who agree to pay a withholding tax will have their identities shielded from their home tax authorities.

Mike Warburton at Grant Thornton, an accountant, said: “Anyone who is deliberately evading taxes will shift their money elsewhere — it is wrong and illegal, but there is always somewhere you can move your money to avoid tax and these people will do just that.”

Under the terms of the directive, EU states will have to hand over tax information about the income they are paying to foreign customers. Banks in other member states will have to inform the Inland Revenue about accounts held by Britons.

But Belgium, Luxembourg and Austria objected because they felt it infringed people’s privacy. As a result, they will offer customers a choice: they can either disclose their savings on their tax return or their foreign bank will levy a withholding tax that will be deducted from the interest paid. The rate will initially be 15%, rising to 20% in 2007 and 35% thereafter.

Each year, 75% of the tax collected will be paid to the relevant tax authorities as an anonymous lump sum and the collecting state will retain 25%. So if Luxembourg collected £10m in tax from all the British citizens with accounts in the principality, £7.5m would be given to the Inland Revenue — but the Revenue would not know which individuals this had come from or how much each had paid. This is said to be a temporary measure and these states are due to comply with the full directive in five years.

Graham Parrott at Ernst & Young, an accountant, said: “This enables individuals to keep their identities secret.”

Switzerland and the Channel Islands, which are not members of the EU, have agreed to similar provisions. They will apply a retention tax, basically another name for the withholding tax. So Swiss bank-account holders will continue to enjoy the sort of secrecy that for many years protected the likes of Idi Amin, the infamous dictator of Uganda, and Ferdinand Marcos, the former Philippine president, whose wife, Imelda, became famous for her shoe collection.

Simon Hull at Alliance & Leicester International said: “The Isle of Man, Jersey, Guernsey and Switzerland will apply a retention tax, and will not identify individuals. Customers will have the choice of disclosure or paying the retention tax.”

The tax is deducted automatically and customers will receive a receipt. They are then supposed to pay the remainder through their tax return — but will they do so? One attraction of offshore accounts has been that they enable people to invest funds in overseas bank accounts that they can keep secret from spouses or business partners. Under the new directive, they will still be able to do so — they just need to hold their money in one of the states that is not obliged to share information with their country of residence.

Hull does not agree that the new system will encourage people to do this. He said: “The retention tax is only a temporary measure and I believe it allows people to sort themselves out properly. The vast majority of our customers are in very transparent arrangements and we don’t expect people to change their behaviour.”

Every British resident should be paying tax on their savings, even if they are invested overseas. This should be disclosed on their tax return. For those who already do this, the new directive will have little impact.

Paul Garwood at Smith & Williamson, an accountant, said: “If you are UK-domiciled you are subject to tax on worldwide income, so the directive shouldn’t cause any problem if you have reported your savings correctly.”

However, if you have not, accountants recommend you contact your tax office and inform it of your mistake rather than waiting for the institution where you have your offshore account to notify the Revenue.

Copyright 2005 Times Newspapers Ltd.
http://business.timesonline.co.uk/article/0,,9559-1571809,00.html

Loophole for Britons with offshore bank accounts

The EU is to levy a withholding tax — but you can keep your identity secret from the taxman. By Clare Francis

MOVES to make money laundering harder are about to receive a setback after an EU compromise. A savings directive, due to be implemented in July, aims to clamp down on tax evasion. But bank customers with offshore accounts who agree to pay a withholding tax will have their identities shielded from their home tax authorities.

Mike Warburton at Grant Thornton, an accountant, said: “Anyone who is deliberately evading taxes will shift their money elsewhere — it is wrong and illegal, but there is always somewhere you can move your money to avoid tax and these people will do just that.”

Under the terms of the directive, EU states will have to hand over tax information about the income they are paying to foreign customers. Banks in other member states will have to inform the Inland Revenue about accounts held by Britons.

But Belgium, Luxembourg and Austria objected because they felt it infringed people’s privacy. As a result, they will offer customers a choice: they can either disclose their savings on their tax return or their foreign bank will levy a withholding tax that will be deducted from the interest paid. The rate will initially be 15%, rising to 20% in 2007 and 35% thereafter.

Each year, 75% of the tax collected will be paid to the relevant tax authorities as an anonymous lump sum and the collecting state will retain 25%. So if Luxembourg collected £10m in tax from all the British citizens with accounts in the principality, £7.5m would be given to the Inland Revenue — but the Revenue would not know which individuals this had come from or how much each had paid. This is said to be a temporary measure and these states are due to comply with the full directive in five years.

Graham Parrott at Ernst & Young, an accountant, said: “This enables individuals to keep their identities secret.”

Switzerland and the Channel Islands, which are not members of the EU, have agreed to similar provisions. They will apply a retention tax, basically another name for the withholding tax. So Swiss bank-account holders will continue to enjoy the sort of secrecy that for many years protected the likes of Idi Amin, the infamous dictator of Uganda, and Ferdinand Marcos, the former Philippine president, whose wife, Imelda, became famous for her shoe collection.

Simon Hull at Alliance & Leicester International said: “The Isle of Man, Jersey, Guernsey and Switzerland will apply a retention tax, and will not identify individuals. Customers will have the choice of disclosure or paying the retention tax.”

The tax is deducted automatically and customers will receive a receipt. They are then supposed to pay the remainder through their tax return — but will they do so? One attraction of offshore accounts has been that they enable people to invest funds in overseas bank accounts that they can keep secret from spouses or business partners. Under the new directive, they will still be able to do so — they just need to hold their money in one of the states that is not obliged to share information with their country of residence.

Hull does not agree that the new system will encourage people to do this. He said: “The retention tax is only a temporary measure and I believe it allows people to sort themselves out properly. The vast majority of our customers are in very transparent arrangements and we don’t expect people to change their behaviour.”

Every British resident should be paying tax on their savings, even if they are invested overseas. This should be disclosed on their tax return. For those who already do this, the new directive will have little impact.

Paul Garwood at Smith & Williamson, an accountant, said: “If you are UK-domiciled you are subject to tax on worldwide income, so the directive shouldn’t cause any problem if you have reported your savings correctly.”

However, if you have not, accountants recommend you contact your tax office and inform it of your mistake rather than waiting for the institution where you have your offshore account to notify the Revenue.

Copyright 2005 Times Newspapers Ltd.
http://business.timesonline.co.uk/article/0,,9559-1571809,00.html

Korea cracks down on offshore funds and tax havens

Updated : Apr.15.2005 08:09 KST

Preventing Tax Evasion by Foreign Investment Firms

The National Tax Service (NTS) has commenced on a tax probe of foreign investment funds operating in Korea. The funds being investigated are reportedly the American private equity fund Lone Star and large companies. Some people are worried about the waves it will create but there is no reason to get excited. Tax investigations at places disturbing the system of tax administration are a legitimate use of the legal authority to levy taxes.

Foreign investment funds earn profits of sometimes trillions and yet pay not one bit in taxes. Lone Star earned close to W300 billion from its investment in the Start Tower building and has earned between W500 billion and W600 billion alone, but using a loophole in the form of a tax agreement with Belgium it has avoided paying taxes. It has kept the government from being able to do so by selling its real estate in the form of stock shares. Another investment fund used a tax haven to purchase a company and then sell it and take away hundreds of billions in profit. Building a bogus company in a tax haven to avoid taxes is a typical method used by foreign investment funds.


It remains to be seen what the results of NTS's action will be. When a tax haven is involved it needs to be able to prove that the bogus company was built to avoid taxes in order for it to be able to levy taxes anyway according to the "principle of essential taxation," but doing that is not easy. It is hard to grasp the flow of cash across national borders. Still, the investigation must not avoid the issues. Previously the NTS penalized Korean companies that were engaging in tax evasion
using tax havens. In essence this is no different. Also the investigation needs to be a turning point that keeps the country's sovereign taxation rights from being harmed by foreign investment funds. There must be no delay in amending tax agreements with foreign companies so as to block tax evasion by foreign investment funds

There also needs to be a change of thinking among companies. They need to get rid of the insensitivity that allows them to thoughtlessly accept proposals that they go through tax havens.
The subject of this tax investigation is different from the foreign capital that is on the stock market. There is no need to worry beforehand about it influencing the market. Even if it does influence the market, the country should still not concede its "tax sovereignty."

The Hankyoreh, 15 April 2005.

[Translations by Seoul Selection (PMS)]

Copyright 2005 Hankyoreh Plus inc.
http://www.hani.co.kr/section-001100000/2005/04/001100000200504150809001.html

American thought police jail more 'potential terrorists'

Teenage girls Detained Without Charge

Check this out and circulate the details about the case on a new blog created to help defend the girls by clicking here .

Several weeks ago, two 16 year-old Muslim girls, one from Bangladesh and the other from Guinea, were arrested in New York City on the specious grounds that they were potential suicide bombers. Neither of the girls has been formally charged with any crime, but both have been detained indefinitely in facilities far away from their homes and families.

As Ari Berman reported yesterday , few
details about the arrests have been released. What we do know, however, suggests that the charges could well be completely unfounded.

While both of the girls are in the United States illegally, both have also lived here for most of their lives. The lead editorial
<http://www.nytimes.com/2005/04/12/opinion/12tue1.html?n=Top%2fOpinion%2fEditorials%20and%20Op%2dEd%
2fEditorials> in yesterday's New York Times reveals that investigator's suspicions are curiously based on an essay written by one of the girls in her high school--an essay arguing that suicide is a violation of Islamic law. And while investigators maintain that the two suspects are friends who attended the same radical Mosque where they plotted together, their families say that they never even met before their arrests.

>From the dearth of available information, it seems likely that the case of the teenage suicide bombers is simply a routine immigration investigation gone mad. Unfortunately, the rules of immigration hearings require the girls to prove they aren't suicide bombers, rather than the government to prove that they are.

A hearing is being held tomorrow, Thursday, April 14, so please click here
 to send a letter of support for the girls' lawyers to present to the court. There's also a rally being planned to support the girls.

Co-written by Mark Hatch-Miller

Copyright © 2005 The Nation
http://www.thenation.com/blogs/actnow?bid=4&pid=2322

Socialism in the Nordic countries - it's crap

April 17, 2005
PERSPECTIVE

We're Rich, You're Not. End of Story.
By BRUCE BAWER

OSLO - THE received wisdom about economic life in the Nordic countries is easily summed up: people here are incomparably affluent, with all their needs met by an efficient welfare state. They believe it themselves. Yet the reality - as this Oslo-dwelling American can attest, and as some recent studies confirm - is not quite what it appears.

Even as the Scandinavian establishment peddles this dubious line, it serves up a picture of the United States as a nation divided, inequitably, among robber barons and wage slaves, not to mention armies of the homeless and unemployed. It does this to keep people believing that their social welfare system, financed by lofty income taxes, provides far more in the way of economic protections and amenities than the American system. Protections, yes -but some Norwegians might question the part about amenities.

In Oslo, library collections are woefully outdated, and public swimming pools are in desperate need of maintenance. News reports describe serious shortages of police officers and school supplies. When my mother-in-law went to an emergency room recently, the hospital was out of cough medicine. Drug addicts crowd downtown Oslo streets, as The Los Angeles Times recently reported, but applicants for
methadone programs are put on a months-long waiting list.

In Norway, the standard line is that there must be some mistake, that such things simply should not happen in "the world's richest country." Why do Norwegians have such a wealthy self-image? Partly because, compared with their grandparents (who lived before the discovery of North Sea oil), they are rich. Few, however, question whether it really is the world's richest country.

After I moved here six years ago, I quickly noticed that Norwegians live more frugally than Americans do. They hang on to old appliances and furniture that we would throw out. And they drive around in wrecks. In 2003, when my partner and I took his teenage brother to New York - his first trip outside of Europe - he stared boggle-eyed at the cars in the Newark Airport parking lot, as mesmerized as Robin Williams in a New York grocery store in "Moscow on the Hudson."

One image in particular sticks in my mind. In a Norwegian language class, my teacher illustrated the meaning of the word matpakke - "packed lunch" - by reaching into her backpack and pulling out a hero sandwich wrapped in wax paper. It was her lunch. She held it up for all to see.

Yes, teachers are underpaid everywhere. But in Norway the matpakke is ubiquitous, from classroom to boardroom. In New York, an office worker might pop out at lunchtime to a deli; in Paris, she might enjoy quiche and a glass of wine at a brasserie. In Norway, she will sit at her desk with a sandwich from home.

It is not simply a matter of tradition, or a preference for a basic, onmaterialistic life. Dining out is just too pricey in a country where teachers, for example, make about $50,000 a year before taxes. Even the humblest of meals - a large pizza delivered from Oslo's most popular pizza joint - will run from $34 to $48, including delivery fee and a 25 percent value added tax.

Not that groceries are cheap, either. Every weekend, armies of Norwegians drive to Sweden to stock up at supermarkets that are a bargain only by Norwegian standards. And this isn't a great solution, either, since gasoline (in this oil-exporting nation) costs more than $6 a gallon.

All this was illuminated last year in a study by a Swedish research organization, Timbro, which compared the gross domestic products of the 15 European Union members (before the 2004 expansion) with those of the 50 American states and the District of Columbia. (Norway, not being a member of the union, was not included.)

After adjusting the figures for the different purchasing powers of the dollar and euro, the only European country whose economic output per person was greater than the United States average was the tiny tax haven of Luxembourg, which ranked third, just behind Delaware and slightly ahead of Connecticut.

The next European country on the list was Ireland, down at 41st place out of 66; Sweden was 14th from the bottom (after Alabama), followed by Oklahoma, and then Britain, France, Finland, Germany and Italy. The bottom three spots on the list went to Spain, Portugal and Greece.

Alternatively, the study found, if the E.U. was treated as a single American state, it would rank fifth from the bottom, topping only Arkansas, Montana, West Virginia and Mississippi. In short, while Scandinavians are constantly told how much better they have it than Americans, Timbro's statistics suggest otherwise. So did a paper by a Swedish economics writer, Johan Norberg.

Contrasting "the American dream" with "the European daydream," Mr. Norberg described the difference:
"Economic growth in the last 25 years has been 3 percent per annum in the U.S., compared to 2.2 percent in the E.U. That means that the American economy has almost doubled, whereas the E.U. economy has grown by slightly more than half. The purchasing power in the U.S. is $36,100 per capita, and in the E.U. $26,000 - and the gap is constantly widening."

The one detail in Timbro's study that didn't feel right to me was the placement of Scandinavian countries near the top of the list and Spain near the bottom. My own sense of things is that Spaniards live far better than Scandinavians. In Norwegian pubs, for example, anyone rich or insane enough to order, say, a gin and tonic is charged about $15 for a few teaspoons of gin at the bottom of a glass of tonic; in Spain, the drinks are dirt-cheap and the bartender will pour the gin up to
the rim unless you say "stop."

In late March, another study, this one from KPMG, the international accounting and consulting firm, cast light on this paradox. It indicated that when disposable income was adjusted for cost of living, Scandinavians were the poorest people in Western Europe. Danes had the lowest adjusted income, Norwegians the second lowest, Swedes the third. Spain and Portugal, with two of Europe's least regulated economies, led the list.

Most recently, the Danish Ministry of Finance released a study comparing the income available for private consumption in 30 countries. Norway did somewhat better here than in the KPMG study, lagging behind most of Western Europe but at least beating out Ireland and Portugal.

The thrust, however, was to confirm Timbro's and Mr. Norberg's picture of American and European wealth. While the private-consumption figure for the United States was $32,900 per person, the countries of Western Europe (again excepting Luxembourg, at $29,450) ranged between $13,850 and $23,500, with Norway at $18,350.

Meanwhile, the references to Norway as "the world's richest country" keep on coming. An April 2 article in Dagsavisen, a major Oslo daily, asked: How is it that "in the world's richest country we're tearing down social services that were built up when Norway was much poorer?"

Obviously, this is one misconception that won't be put to rest by a measly think-tank study or two.

Bruce Bawer,a freelance writer based in Oslo, reports frequently on social and cultural issues.

Copyright 2005 The New York Times Company
http://www.nytimes.com/2005/04/17/weekinreview/17bawer.html

BEIJING'S ALARM OVER NEW "U.S. ENCIRCLEMENT CONSPIRACY"

CHINA BRIEF
Volume 5 Issue 8 ( April 12 , 2005 )

By Willy Lam

One of Beijing's worst nightmares seems to be coming true. Having apparently steadied the course in
the Middle East, the Bush administration is turning to Asia to tame its long-standing "strategic
competitor." While this particular term has been shelved since 9/11 - and Sino-U.S. relations have
improved thanks to China's cooperation with Washington's global anti-terrorist campaign - there are
signs at least from Beijing's perspective that Washington is spearheading multi-pronged tactics to
contain the fast-rising Asian giant.

In the eyes of the Chinese Communist Party (CCP) leadership, the new doctrine of encirclement and
containment was spelled out during a visit by Secretary of State Condoleezza Rice to Tokyo, part of
a recent tour through Asia. Echoing President Bush's State of the Union address, which pushed a
foreign policy predicated upon "spreading democracy," Rice noted in a speech at Sophia University
that "even China must eventually embrace some form of open, genuinely representative government."
And she dropped hints that the U.S. would somehow bring about a democratic China through joint
actions with its Asian allies. "I really do believe the U.S.-Japan relationship, the U.S.-South
Korea relationship, the U.S.-India relationship - all are important in creating an environment where
China is more likely to play a positive role than a negative role," she added.

It didn't help that Rice saluted in her Sophia speech the father of the anti-Soviet containment
policy George Kennan - who had just passed away - as one of the "great architects of American
foreign policy." Kennan had written in a celebrated 1947 Foreign Affairs piece that "the main
element of any United States policy toward the Soviet Union must be that of a long-term, patient but
firm and vigilant containment of Russian expansive tendencies." The Chinese must be very nervous
about the possibility that Rice - and Bush - will simply substitute PRC for USSR. After all, it was
Rice who coined the phrase "strategic competitor" in a 2000 Foreign Affairs article about the need
to adequately take on a fast-emerging China. "It is important to promote China's internal transition
through economic interaction while containing Chinese power and security ambitions," she wrote.

A Beijing source close to the Chinese foreign-policy establishment said the leadership under
President Hu Jintao was not surprised by Rice's less-than-subtle remarks about revving up the
anti-PRC containment juggernaut. This was despite the fact that in an apparent goodwill gesture, the
State Department had announced shortly before her arrival in Beijing that Washington would this year
not sponsor a motion condemning China at the UN Subcommittee on Human Rights in Geneva. The source
said the CCP leadership saw the joint U.S.-Japan defense statement in February as a turning point in
China-U.S. relations.

The U.S.-Japan statement referred to the looming threat of the People's Liberation Army (PLA) and,
most irksome for Beijing, it cited for the first time the maintenance of peace in the Taiwan Strait
as a "common strategic objective" of the allies. "[The] meeting may mark the end of the extended
Beijing-Washington honeymoon which came about because of 9/11," the source said. "Even now, of
course, Washington requires Chinese help or acquiescence in its dealings with countries including
Iran and North Korea. But Bush seems to have picked up his pre-9/11 agenda of containing China, or
at least slowing down its progress toward quasi-superpower status." And the Chinese are well aware
that Rice, who had advised President George H.W. Bush on ways to sink the Soviet Empire, was
instrumental in shaping then-presidential candidate Bush's relatively hostile posture toward China.

Moreover, the explosive events in Kyrgyzstan last month have been interpreted by a number of
advisers to President Hu as yet another manifestation of Bush's aggravated policy of "spreading
democracy." This is despite the fact that in official press briefings, Chinese Foreign Ministry
spokespeople merely expressed the wish that stability be restored to the former Soviet state as soon
as possible - and that the work of the Shanghai Cooperation Organization (SCO), of which both China
and Kyrgyzstan are members, will not be affected.

More sophisticated observers such as National Defense University academic Jin Yinan has drawn the
difference between the "Tulips revolution" in Kyrgyzstan on the one hand, and the Rose and Orange
insurrections in Georgia and Ukraine. Jin told the Chinese media that should Bishkek fall under the
influence of Muslim fundamentalists, "it's the Americans who would be hurt most." At the same time,
the strategy professor pointed out that Washington's tendency to target pariah and dictatorship
states had "departed from the [principle of] global democracy and engendered ill will in other
[countries]."

Other commentators have noted how Washington could kill several birds with one stone should it
manage to control the new Kyrgyz government. Given the 1,100-kilometer border between Kyrgyzstan and
China - and Washington's already considerable foothold in nearby Uzbekistan and Tajikistan - the
fall of the China-friendly government of disgraced president Askar Akayev would be no small victory
for the "containment policy." A pro-U.S. Bishkek may be much less zealous in cooperating with the
Chinese in rooting out Kyrgyz Muslim organizations that are reportedly funneling weapons and
material to anti-Beijing, pro-independence elements in the Xinjiang Autonomous Region (XAR).
Moreover, U.S. preponderance in central Asia could pose a threat to the giant oil pipeline that is
being built between Kazakhstan and the XAR. And last but not least, the viability of the SCO, which
set up an anti-terrorism center in Bishkek not long ago, is now in doubt.

In a discussion of whether the three allies cited by Rice - Japan, South Korea and India - would
play an effective role in the Washington-led anti-China game plan, a panel of People's Daily experts
and journalists expressed optimism that "the U.S. plot to encircle China will come to no avail." The
specialists reckoned that only Japan would faithfully do Washington's bidding. Korean expert Shen
Lin noted that Seoul "will not damage its ties with China because of the U.S." Shen added that South
Korean politicians and opinion leaders had expressed reservations about Washington's plans to use
Korean-based U.S. military facilities to promote American interests in northeast Asia.

New Delhi-based People's Daily journalist Ren Yan indicated that "India will not blindly follow the
lead of the U.S." because the strategic partnership that Washington wanted to forge with the South
Asian country was "centered on American interests." One purpose of Premier Wen Jiabao's trip to
India this month is to consolidate China-Indian cooperation through means including resolving the
decades-old border dispute between the two countries. A Chinese Foreign Ministry spokesman said
Beijing was keen to push Sino-Indian relations to a "new high." Analysts said despite the suspicion
between the two neighbors - as well as Beijing's warm ties with Islamabad - the CCP leadership is
confident that dramatic improvement in ties with India the past few years would at least persuade
New Delhi not to become a pawn in America's anti-China machinations.

Indeed, Beijing is upbeat that China's fast-expanding global clout - and especially the vast China
market - has better enabled the country to drive a wedge between the U.S. and quite a few of its
traditional allies. Take Australia, which was one of the staunchest supporters of Washington's war
against Iraq. Earlier this year, Prime Minister John Howard made it clear that Canberra would not
join in the U.S. effort to lobby the European Union to persevere with its embargo on arms exports to
China. And last summer, Foreign Minister Alexander Downer indicated that despite the Australia-U.S.
joint defense agreement, Canberra could remain neutral if American forces were involved in a war
over the Taiwan Strait. Immediately afterwards, Singapore, another close friend of the U.S., made
known a similar stance of neutrality regarding a possible U.S.-China military conflict over Taiwan.

In any event, Rice's unusually candid statements in Tokyo have convinced President Hu, who is deemed
within Chinese political circles as much less "pro-U.S." than former president Jiang Zemin, that he
is right to treat Washington with extreme caution. Outwardly, of course, Hu will still cleave to
late patriarch Deng Xiaoping's dictum that as far as the U.S. is concerned, Beijing should "avoid
confrontation and boost cooperation." Because of China's dependence on the U.S. market - as well as
Beijing's desire to acquire American technology - the Hu-Wen leadership will continue to bend over
backwards to avoid a direct confrontation with America.

However, Beijing's suspicion that Bush may adopt a harsher China policy during the rest of his
presidency could predispose the Hu leadership to be even more determined to boost China's military
arsenal. Hu and his colleagues are also expected to play the "North Korean card" for whatever its
worth. The Chinese president and commander-in-chief is due to visit Pyongyang next month for
high-level talks with DPRK dictator Kim Jong-il. While Hu will at least go through the motions of
persuading Pyongyang to return to the six-party talks, the Chinese supremo will also explore ways to
use China's still-formidable clout with the Hermit Kingdom as a diplomatic weapon against the U.S. -
and Japan.

Indeed, another unfortunate result of growing tension between Beijing and Washington is that
Sino-Japanese relations are fast heading toward a vicious cycle. Given the intensification of the
U.S.-Japanese military alliance - as well as joint U.S.-Japan efforts to persuade Brussels to hold
on to its anti-China arms embargo - Beijing is close to giving up hope that it could turn around
worsening China-Japan ties in the foreseeable future. This is despite the overture made by Premier
Wen last month that both sides should "enthusiastically" create conditions for the resumption of
high-level exchanges. Top-level visits between the two neighbors were stopped after Prime Minister
Junichiro Koizumi's first visit to the controversial Yasukuni Shrine in 2001. In the past fortnight,
a campaign launched by nationalistic Chinese websites to prevent Japan from being made a permanent
member of the United Nations Security Council has developed into a boycott of Japanese products in a
number of coastal cities.

Willy Wo-Lap Lam is a Senior Fellow at The Jamestown Foundation as well as a Hong Kong-based
journalist and analyst.

1983-2003 © The Jamestown Foundation
http://www.jamestown.org/publications_details.php?volume_id=408&issue_id=3298&article_id=2369586

Bank says Saudi's top field in decline

By Adam Porter in Perpignan, France
Tuesday 12 April 2005, 13:52 Makka Time, 10:52 GMT
Speculation over the actual size of Saudi Arabia's oil reserves is reaching fever pitch as a major bank says the kingdom's - and the world's - biggest field, Gharwar, is in irreversible decline.

The Bank of Montreal's analyst Don Coxe, working from their Chicago office, is the first mainstream number-cruncher to say that Gharwar's days are fated.

Coxe uses the phrase 'Hubbert's Peak' to describe the situation. This refers to the seminal
geologist M King Hubbert, who predicted the unavoidable decline of oilfields back in the 1950s.

"The combination of the news that there's no new Saudi Light coming on stream for the next seven
years plus the 27% projected decline from existing fields means Hubbert's Peak has arrived in Saudi
Arabia," says Coxe, referring to data compiled by the International Energy Association's (IEA)
August 2004 monthly report.

Problematic effects

The Canadian bank is the latest in a line of oil opinion-makers to speak out about.

Others, notably banker Matt Simmons and the head of the Association for the study of Peak Oil
(Aspo), Colin Campbell, have called into question the validity of its stated reserves, supposedly
258 billion barrels.

If Gharwar, the world's biggest field, is seen to be "in decline", as Coxe says, the effects could
be problematic. Markets could panic, forcing prices up, creating shortages and profoundly affecting
the world economy.

"The kingdom's decline rate will be among the world's fastest as this decade wanes," predicts Coxe.
"Most importantly, Hubbert's Peak must have arrived for Gharwar, the world's biggest oilfield."

Coxe dismisses Saudi claims that the country can produce extra capacity to satisfy surging demand.
He notes that Saudi promises to increase production last year failed to materialise. Aramco had
pledged an extra 500,000 barrels of oil immediately and an extra 5 million bpd by 2012.

He says the markets had "assumed this first flow would be a half million barrels daily of the
benchmark Saudi Light, the high-end product that any oil refinery can process. Instead ... the new
oil was heavy, sulphurous oil that only a few refineries had the spare capacity to use".

Continuing, he asks: "What about those 5mbpd of new production by 2012? It turned out that only 2.5
million barrels would be net additions to Saudi output: Declines from existing fields will slash
production by 2.5 million bpd."

Saudi response

Saudi Aramco's chief executive officer Abd Allah Jumaa denies anything of the sort is happening.

"We have ambitious expansion plans to boost our capacity to 12 million bpd and also have a long-term
crude development scenario that would raise our production capacity to 15 million barrels a day. We
are confident that we can maintain these production rates for about half a century," he says.

However, Campbell noted that in 1990 Saudi Arabia, along with other Opec producing countries,
notably Kuwait, revised their reserve estimates overnight.

This was in order to pump more oil as part of Opec's quota arrangement. The more reserves you
claimed to have, the more money you made.

Same reserves

Saudi Arabia announced "a massive increase from 170 to 258gb in 1990. It had evidently decided to
follow Kuwait's practice of reporting original, not remaining reserves," Campbell says.

Since that time, despite pumping around 9mbpd, Saudi Aramco says the size of its reserves have not
only remained the same but increased slightly from 258gb to 259gb thanks to better extraction
techniques.

However, Simmons believes Gharwar, responsible for around 5mbpd of Saudi output, may have been
damaged by poor management.

Pumping large amounts of oil at the maximum rate can damage the geological structure of the field,
usually referred to as "rate sensitivity". Basically the hole falls in on itself, making large
amounts of oil within it un-extractable.

Lack of transparency

The rising speculation among analysts may ultimately be the fault of the Saudis. The lack of outside
independent scrutiny has created space for sceptics like Coxe to question their facts and figures.

In 2005 alone, the OECD, the G7, the IEA and the IMF have all openly called for increased
transparency over oil reserve calculations, mainly from Middle Eastern states.

The market cannot hope to understand its current position without knowing how much oil lies in
reserve. This is at the heart of much of the current oil market's problems.

But Coxe's figures may even be on the sympathetic side. According to Saudi Aramco's own statistics,
existing Saudi fields deplete by 600,000 to 800,000bpd each year. If such levels are maintained
until 2012, Saudi depletion will have reached a minimum of 4.2mbpd.

Water injection

In other words - by their own admission - Saudi Arabia will have added only 800,000bpd of supply in
the next seven years. That is the best case scenario.

To put these rates into context, the IEA predicts a year-on-year rise of 1.6mbpd by the fourth
quarter of 2005.

One factor contributing to the scrutiny the Gharwar field faces is the huge amount of water
injection used. Water is pumped into an ageing oilfield in order to maintain high pressure inside.

This allows the oil to be pumped out at the original constant rate. Eventually, however, the water
reaches the well-head, and the field effectively dies.

Coxe goes on to ask why new Saudi fields, not just ageing ones, are also water injected.

"As if that weren't bad enough news, the Saudis claim they need at least $32 a barrel to justify new
production, because ... new production ... requires water flooding. Water flooding on newborn Saudi
wells? Isn't water flooding [the] Viagra of ageing wells?"

Abd Allah on the other hand states that it is modern techniques, not water injection, that will let
Aramco meet any future demand.

"We are confident that we can extend [our] success well into the future given continued advances in
exploration and production technologies and the fact that vast relatively unexplored areas exist in
the kingdom with potential hydrocarbons to be discovered."

Canada oil link

While the Bank of Montreal weighing in on the prospects of Gharwar depletion is noteworthy, it
should be pointed out that the bank is financially involved with the Albertan oil sand deposits.

The Albertan "sands" are deposits of sticky oil and sand, traditionally too costly to extract, which
are now receiving great attention as conventional oil prices rise.

Coxe is extremely bullish on prospects of companies working in Alberta.

"The Alberta oil sands companies aren't like other oil companies," he says.

These companies are, of course, potential alternatives to Saudi oil. But Coxe ends up painting a
bleak picture.

"With Opec's excess capacity ... tapped out, oil consumers have lost their security blanket against
petro-chills. Free markets ... can be messy and unpredictable, little people can get hurt."

As debate over Gharwar intensifies, pressure on Saudi Arabia to independently reveal its actual size
will come from many sources.

Now, for the first time, a major bank has joined that chorus. The arguments over the world's biggest
oilfield are set to stay.

© 2003 - 2005 Aljazeera.Net

Equatorial Guinea - Who financed the coup?

11/4/2005

THE MYSTERY OVER who financed the planned coup in Equatorial Guinea may be solved if a committee of
ex-politicans release bank records.
British tax haven Guernsey has so far refused to release the bank statements of mercenary Simon
Mann.

Now the Privy Council, made up of former British ministers, will be asked to rule on Mann's bank
records held at the Bank of Scotland's Guernsey branch.

One privy council member, Baroness Thatcher, will be ruled out because her son Mark Thatcher is
implicated in the conspiracy to mount a coup in oil-rich Equatorial Guinea.

But there are no shortage of Thatcherite former Cabinet members on the privy council who could yet
hold the key to unlocking the coup mystery.

Mann's bank statements are expected to reveal who funded the planned coup in the west African state.
in March 2004.

Lawyers acting for Mann, who is serving a seven-year jail sentence in Zimbabwe for his part in the
coup attempt, successfully challenged an attempt by Equatorial Guinea to release the records.

Mark Thatcher is currently in Britain after being handed a four-year suspended sentence in South
Africa in January for breaking anti-mercenary laws.

He agreed to finance a helicopter which was to be part of the bid to forcably oust Guinea's
President Teodoro Obiang. Former Conservative candidate for London Mayor Lord (Jeffery) Archer has
denied reports he was involved.

Black Information Link. All rights reserved.
http://www.blink.org.uk/pdescription.asp?key=6716&grp=18&cat=183

European Bank Limited of Vanuatu wins another round

By The Independent
Posted Monday, March 14, 2005

The European Bank Limited of Vanuatu has won one more round in its fight to return more than US$8
million to the jurisdiction of the Vanuatu supreme court.

Thomas M. Bayer from European Bank Limited in Vanuatu reported to the media almost a year ago that
the bank, in the New South Wales Supreme Court, had won in the matter against Citibank and the USA
government's Federal Trade Commission.

While Citbank agreed to turn over the monies to European Bank, the US Federal Trade Commission
decided to again appeal and was able to have the New South Wales court once again freeze the money.

Last Friday the Federal Trade Commission's last attempt to block the return of the funds to Vanuatu
failed by a unanimous decision. The decision of the NSW Supreme Court in favour of European Bank
Limited remains the final ruling.

It has been over five years of fighting by European Bank Limited in the Australian courts to reach
this point and now the matter can be dealt with by the Vanuatu Supreme Court as it should have been
initially, if the US Federal Trade Commission had not attempted to ignore the authority of Vanuatu's
court.

http://www.news.vu/en/business/bankingfinance/050314-european-bank-vanuatu.shtml

Techies - the USA wants you

Are you a techie? US wants you!
INDRANI BAGCHI

TIMES NEWS NETWORK[ THURSDAY, APRIL 14, 2005 11:45:03 PM ]

NEW DELHI: The US senate this week decided to shelve legislation on the L-1 visas until later this
year. This provides a strong signal to offshore companies that the US will continue to welcome
imported tech skills.

It was believed that with the increase of 20,000 H1-B visas this year, the pinch would be felt in
the L-1 visa category, which doesn't suffer from caps like H1-B and has a maximum term of seven
years compared to six of H1-B.

Though the delay in legislation is a shot in the arm for the tech services industry here, the recent
L-1 and H1-B Visa Reform Act, 2005, takes care of certain perceived loopholes in the L-1 laws.

What has actually happened is a marriage of security provisions that target the abuses of the L-1
visas category while keeping doors open for...

...foreign technology professionals. For instance, companies cannot any longer place their L1-B visa
employees at third party sites unless they are under the control of their L-1 employer.

This will prevent essentially employment agencies masquerading as tech companies from farming out
their L-1 visa employees from site to site.

Henceforth, an L-1 visa holder can only work in services or areas related to the specialised
knowledge for which the L-1 visa was given in the first place. According to tech immigration
watchers, this move will prevent many companies using their L-1 visa holders as "contract labour".

These moves are also designed to protect US jobs from being ruthlessly taken away to cheaper foreign
skills. According to sources, a number of these provisions have been made after spirited lobbying by
some senior US lawmakers.

Chief among them is Tom Tancredo from Colorado, while organisations like the AeA have been lobbying
to keeping America's doors open for skilled foreign labour.

Bennett, Coleman and Co., Ltd. All rights reserved.
http://timesofindia.indiatimes.com/articleshow/msid-1078165,prtpage-1.cms

Inevitable monetary and banking crisis?

More ominously, powerful forces are even now working for major reduction of the role of Federal
Reserve Notes as a world reserve currency and medium of international exchange. In Europe,
politicians in the European Union desire as much as possible to replace Federal Reserve Notes with
the Euro.

ARE MONETARY AND BANKING CRISES INEVITABLE IN THE NEAR FUTURE?

Dr. Edwin Vieira, Jr., Ph.D., J.D.
March 17, 2005
NewsWithViews.com

Contrary to a widespread belief, socialism in the Soviet Union and Eastern Europe did not collapse
because of the clever geostrategic maneuvers of the Reagan Administration. Neither did the East Bloc
break up because its leaders were incompetents who put into practice the wrong plans. Particular
politicians and policies--East or West--had next to nothing to do with it.

The East Bloc fell apart--and had to fall apart, no matter what anyone did--because of an obscure
principle of economics known as "the impossibility of rational economic calculation under
bureaucratic central planning". Socialism failed--and must always fail--because, without prices for
goods and services generated by a free market, central planners cannot allocate resources and
manpower intelligently. But central planners cannot allow a free market to set prices (otherwise
there could be no central planning). In the long run, this self-imposed bureaucratic blindness to
the real values of people and things results in monumental waste, the failure of central plans to
deliver sound capital investments and advancing standards of living, and finally the collapse of
those societies that allow politicians and bureaucrats, rather than free entrepreneurs and workers,
to direct the course of economic affairs.

Although this principle had been recognized by other economists for almost a century theretofore, it
received systematic exposition in Ludwig von Mises's seminal treatise, Socialism, first published in
the 1920s. So, during the heyday of central planning from the 1920s to the 1980s, no one should have
been unaware of the problem. Nonetheless, the political elite and the intelligentsiia ignored it,
just about everywhere. In the Soviet Union and Eastern Europe, where Stalin and his successors
imposed industrial-strength central planning through police-state terrorism and slave labor in the
Gulag, the price was higher than in (say) the United States, to which Franklin D. Roosevelt was able
to administer only a diluted dose of the same poison. But a price there was, paid as usual by common
people.

Economic theory also teaches that any scheme of fiat currency and fractional-reserve central banking
is just as inherently flawed, incapable of permanent existence, and inevitably doomed to disaster as
all-around, full-blown socialism, because fractional-reserve central banking systematically subverts
the free market's structure of prices through expansion of currency and credit--which results in
redistribution of wealth, misallocation of scarce capital, and collapse in either depression or
hyperinflation followed by depression. This is no new insight. The problems fractional-reserve
banking causes were widely discussed in the 1800s; and the whole subject of political versus
free-market money was exhaustively examined by Ludwig von Mises, in his treatise The Theory of Money
and Credit, first published in the 1920s. (Probably the best book on this subject now available for
the average reader is Murray Rothbard's The Mystery of Banking.) But, throughout the Western world
during the 1900s and even unto the present moment, the political elite, high finance and big
business, and their hired intelligentsiia have generally ignored these problems--doubtlessly because
irredeemable currency and fractional-reserve central banking have served their short-term interests,
and the costs of the system have always been paid by picking the pockets of the common man.

For this country's system of fractional-reserve central banking, though, Americans cannot blame some
foreign dictator such as Stalin, but instead need to indict their own home-grown usurpers and
tyrants: primarily, Presidents Woodrow Wilson (who signed the Federal Reserve Act in 1913), Franklin
Roosevelt (who outlawed private possession of gold for use as currency in 1933-1934), and Lyndon
Johnson (who repudiated the government's promise to redeem its paper currency in silver coin in
1967-1968). Some people also assign a large share of responsibility to Richard Nixon, who terminated
redemption of Federal Reserve Notes in gold for foreign banks in 1971. This, however, is unfair. By
"closing the gold window", Nixon extricated this country from an especially expensive variety of
parasitism by the Federal Reserve System: its ability to prop up the value of Federal Reserve Notes
by looting America's gold reserves. Indeed, such was Nixon's legal duty. Because the Federal Reserve
System as a whole is unconstitutional, paying out this nation's gold in redemption of Federal
Reserve Notes is unconstitutional, too. (Nixon, of course, was far from being a constitutionalist.
But, as folk wisdom teaches, "God writes straight with crooked lines".)

In the case of the Federal Reserve, economic history all too strongly confirms economic theory. In
1913, the Federal Reserve's touts predicted that it would allow bankers and politicians to "manage"
currency "scientifically", and thereby to end business cycles, eliminate inflation, and forefend
depressions. Yet, the country soon suffered a sharp, albeit short depression in 1920-1921, followed
by the horrendous collapses of the stock market and the banks in 1929-1933, and the Great Depression
that festered for the remainder of the 1930s. And since World War II, Federal Reserve Notes have
lost more than 90% of their purchasing power--which is a serious consequence of inflation by any
reasonable standard.

Moreover, since 1933 the Federal Reserve System has been anything but strengthened, because every
link between Federal Reserve Notes and gold or silver coin has been severed. Today, (in the words of
former high-level banker John Exter) Federal Reserve Notes are an "I owe you nothing" currency.
True, the Treasury and the banks will redeem Federal Reserve Notes for "lawful money"; and the
Treasury must receive Federal Reserve Notes in payment of taxes. See Title 12, United States Code,
Section 411. But the "lawful money" paid out consists only of base-metallic coins. See Title 31,
United States Code, Section 5118(b, c). So redemption amounts to exchanging intrinsically valueless
rag currency for almost valueless slugs. And a right to use Federal Reserve Notes to pay taxes is of
dubious economic benefit to the taxpayer whose wealth is expropriated through that very payment.

Because Federal Reserve Notes are irredeemable in silver or gold, or any commodity other than the
Treasury's base-metallic slugs (and even then at no permanently fixed ratio of exchange), their
purchasing power in the free market ultimately depends upon public confidence--or, more
realistically, public gullibility. That is, the Federal Reserve System is a confidence game, in both
senses of that term. What should give every American pause is that the powers that be--who are most
intimately acquainted with the problem because they are its cause and the reason it is not being
solved--lack confidence themselves.

For the most pertinent example, a statute recognizes and provides for the possibility, if not the
likelihood, of a recurrence of what happened in 1929-1933:

[D]uring such [financial] emergency period as the President * * * by proclamation may prescribe,
no member bank of the Federal reserve system shall transact any banking business except to such
extent and subject to such regulations, limitations and restrictions as may be prescribed by the
Secretary of the Treasury, with the approval of the President.
Title 12, United States Code, Section 95(a). As this statute proves, the political and economic
Establishment is prepared for banking and currency crises so severe that a national financial
dictatorship will be necessary to deal with them.

The Federal Reserve System is a confidence game, not only domestically, but on a global scale as
well, because of the status of Federal Reserve Notes as the premier world reserve currency and
preferred medium of exchange in international trade. This status, however, is becoming increasingly
tenuous--as even a cursory study of today's financial media will disclose. If unsophisticated
Americans allow themselves to be misled by rosy propaganda flowering from the Federal Reserve and
the Treasury, the rest of the world does not. The instability of Federal Reserve Notes and the
Federal Reserve System as a whole is becoming increasingly apparent to foreigners. And knowledge of
this increasing instability is itself further increasing instability in the vicious circle
characteristic of the break-up of all Ponzi schemes. This auto-catalytic process threatens to
generate an accelerating downward spiral of crises, until America's monetary and banking systems are
either reformed or self-destruct. If economic history is any guide, as this process works itself out
gold and silver will appreciate step-by-step with the depreciation of Federal Reserve Notes.

More ominously, powerful forces are even now working for major reduction of the role of Federal
Reserve Notes as a world reserve currency and medium of international exchange. In Europe,
politicians in the European Union desire as much as possible to replace Federal Reserve Notes with
the Euro. To the extent the Euro is successful in this competition, the purchasing power of Federal
Reserve Notes, at least in international markets, will drop significantly--because, as demand for
that currency declines, its supply remaining the same, its value must also decline. And in Asia, Red
China--for geostrategic as well as economic reasons--is likely to adopt policies that will diminish
the role of Federal Reserve Notes, and therefore decrease their purchasing power, in that huge
market, too. Although these actions will threaten Federal Reserve Notes and the Federal Reserve
System in particular, they will not necessarily undermine fiat currency and fractional-reserve
central banking in principle. Europe, Asia, or both will simply substitute some other fiat currency
for Federal Reserve Notes, and rely on some fractional-reserve central banks of issue other than the
Federal Reserve. However, the displacement of Federal Reserve Notes and the Federal Reserve System
from their leading positions in world finance cannot but throw into serious question the stability
of other fiat currencies and the fractional-reserve banks that emit them. Very likely, this will
lead to a general increase in the values of gold and silver as against all fiat currencies.

Far more dangerous than these possibilities is the call by radical intellectuals in the Islamic
world for more than a billion Muslims to reject all forms of Western fiat currency, and adopt
instead the Islamic gold dinar and silver dirhem coins as their exclusive media of exchange, both
perforce of their religious duties under Islam and as a means to strike at the Great Satan's
greatest vulnerability. Were this movement to take hold, it would drive the values of gold and
silver to unprecedented heights, and the values of Federal Reserve Notes (and all other fiat
currencies as well) to unheard-of lows. One need be no expert trader of precious metals to imagine
what would happen if (say) 500,000,000 Muslims suddenly entered the markets, each seeking just an
ounce of gold, an ounce of silver, or both! And a month later, did the same thing...and so on. Such
an eventuality could presage the beginning of the end, not only for irredeemable Federal Reserve
Notes, but also for all fiat currencies, and even for fractional-reserve central banking (which is
prohibited under Islamic law).

So, the question is not, "Will there be monetary and banking crises in the foreseeable future?" but,
"What can common Americans do about them--preferably, before they break out?" For some suggestions,
stay in touch with www.NewsWithViews.com web site.

© 2005 Edwin Vieira, Jr. - All Rights Reserved
--------------------------------------------------------------------------------

Edwin Vieira, Jr., holds four degrees from Harvard: A.B. (Harvard College), A.M. and Ph.D. (Harvard
Graduate School of Arts and Sciences), and J.D. (Harvard Law School).

For more than thirty years he has practiced law, with emphasis on constitutional issues. In the
Supreme Court of the United States he successfully argued or briefed the cases leading to the
landmark decisions Abood v. Detroit Board of Education, Chicago Teachers Union v. Hudson, and
Communications Workers of America v. Beck, which established constitutional and statutory
limitations on the uses to which labor unions, in both the private and the public sectors, may apply
fees extracted from nonunion workers as a condition of their employment.

He has written numerous monographs and articles in scholarly journals, and lectured throughout the
county. His most recent work on money and banking is the two-volume Pieces of Eight: The Monetary
Powers and Disabilities of the United States Constitution (2002), the most comprehensive study in
existence of American monetary law and history viewed from a constitutional perspective.
www.piecesofeight.us

He is also the co-author (under a nom de plume) of the political novel CRA$HMAKER: A Federal Affaire
(2000), a not-so-fictional story of an engineered crash of the Federal Reserve System, and the
political upheaval it causes. www.crashmaker.com

His latest book is: "How To Dethrone the Imperial Judiciary"

He can be reached at:
P.O. Box 3634,
Manassas, Virginia 20108.

E-Mail: Coming soon

http://www.newswithviews.com/vieira/edwin2.htm

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The indicted American

The Indicted American
Michael Maiello, 04.15.05, 2:18 PM ET

NEW YORK - Yesterday, the U.S. attorney's office in New York revealed its indictment of Houston oil trader and Bayoil owner David Bay Chalmers, who, the government alleges, used intermediaries to pay at least $3 million to Saddam Hussein's dictatorship over the course of the seven-year-long United Nations Oil-For-Food Program.

The program was meant to use Iraqi oil proceeds to buy humanitarian goods for Iraq's people while still constraining Hussein's government with sanctions. Today, Chalmers was released on a $500,000 bond.

Chalmers' attorney, Catherine Recker, says that Chalmers will plead not guilty. If convicted, Chalmers could face a 62-year prison sentence and the seizure of $100 million in assets. The indictment alleges that Chalmers overpaid commissions to foreign trading partners, knowing that those overpayments would be passed on to Hussein's government.

In recognition of Iraq's sovereignty and the legitimacy of Hussein's government, despite its pariah status, the U.N. allowed Hussein to choose which companies he would sell oil to, and throughout much of the program, Hussein demanded kickbacks for companies that wanted his crude. In an effort to drum up demand for Iraq's oil, the U.N. also set the price of Iraqi oil at a discount to the market. This discount allowed companies to pay bribes but still profit. While the U.N. monitored the loading of oil from Iraq's ports, it did not monitor the trading of that oil on the secondary market.

A Londoner named John Irving, indicted alongside Chalmers, was the head of oil trading at a firm called Crown, which had been based in Switzerland but then moved to Gibraltar during the Oil-For-Food Program. Irving has told the British press that he is innocent of all charges. Crown was a frequent trading partner of Bayoil and was also a subsidiary of Russia's Alfa Group, owned by Moscow billionaire Mikhail Friedman
forbes.com.

According to a report by U.S. Central Intelligence Agency analyst Charles Duelfer, completed about a year after the fall of Baghdad, Alfa Group was one of the companies that paid kickbacks to Hussein's regime. Alfa Group has repeatedly denied this.

In November, Forbes reported that Alfa Group traded Iraqi oil on the secondary market among its own subsidiaries and with friendly companies like Bayoil (see: "The Saddam Shuffle"
forbes.com). Each trade drove the price per barrel
higher as the oil was daisy-chained in a scheme that Alfa's traders called "the rondo." The purpose of the rondo was to divert Alfa's profits to its subsidiary in Gibraltar, which is a tax haven. Bayoil engaged in 32 rondo-style trades with Alfa Group entities between 1999 and 2000.

In many cases, once the oil had been passed around enough, it wound up sold to larger companies like Exxon Mobil (nyse: XOM - news - people ). The U.N. did nothing to monitor the flow of money on the secondary market, so it's no wonder that $229 million found its way into Hussein's hands.

Chalmers had a long history in Iraq and a close relationship with the Hussein regime. In the 1980s, Bayoil brokered the sale of 20 million barrels of oil from Iraq to Chilean arms dealer Carlos Cardoen, as recounted by Forbes in 1995.

U.S. Rep. Henry Hyde, R-Ill., who has been investigating the Oil-For-Food program for the better part of a year, said the indictments show that "once again the degree to which the Oil-For-Food Program was so pervasively corrupted." Hyde's committee had already subpoenaed and received documents from Bayoil that are currently being reviewed.


Forbes.com

Va. Man Charged With Illegal Cash Transfer

By LARA JAKES JORDAN
Associated Press Writer

WASHINGTON (AP) - A Virginia man who defended small money exchange businesses in front of Congress was indicted with illegally wiring millions of dollars to Afghanistan, Iran, Pakistan, and some Middle East counties, federal authorities said Friday.

Rahim Bariek, an Afghan native and U.S. citizen, allegedly wired without proper licenses more than $4.9 million from Bariek Money Transfer in Herndon, Va., according to an indictment in the U.S. district court in Alexandria, Va.

Calls to Bariek Money Transfer were not immediately returned Friday.

Between November 2001 and August 2003, officials said, Bariek deposited funds from worldwide customers in several bank accounts. After taking out his fee, Bariek transferred the funds to individuals designated by his customers in the Middle East. At least some of the money was sent to Afghanistan while it was still under Taliban rule, authorities said.

U.S. Immigration and Customs Enforcement investigators seized more than $12,700 from three bank accounts and $19,000 in cash from Bariek, the indictment says.

Under the anti-terror USA Patriot Act, which became law a month after the Sept. 11, 2001, attacks, money transfer businesses must be licensed with federal and state authorities.

On Nov, 14, 2001, Bariek defended money exchange businesses, or ``hawala,'' in testimony before a Senate panel examining underground terrorist financing systems. He said he started his business after unsuccessfully trying to send money to his father-in-law in Pakistan. He told senators his money transfer was rejected by banks that could not ensure its delivery, and a money order he sent instead was stolen.

``I pay taxes on my hawala business, and I comply with the law,'' Bariek testified. ``I am happy to comply with the new federal law. ... I believe that all legitimate hawala will be happy to comply. It is upsetting to us that there are hawala used for illegal activity. They give all hawala a bad name.''

The case suggests Bariek ``didn't take his own advice,'' said Allan J. Doody, ICE Special Agent in Charge of the Washington-area bureau. ``Any criminal or terrorist can use these firms to move funds anywhere in the world with no questions asked.''

Authorities seized Bariek's passport before releasing him Friday after a court appearance. If convicted, he faces up to five years in prison.
---

On the Net:

U.S. Immigration and Customs Enforcement: http://www.dhs.gov

Guardian Unlimited © Guardian Newspapers Limited 2005
http://www.guardian.co.uk/worldlatest/story/0,1280,-4940575,00.html

US is not pressuring UK for biometric data

By Wendy M. Grossman
Friday 15 April 2005, 07:37

EUROPEAN CALLERS to airlines have for some time now been read a message that beginning in October
2004 they will require a machine-readable passport to visit the US. What they may not realise as they stand on line to be fingerprinted and iris-scanned under the US-Visit program is that the US is not being much less invasive to its own citizens. The next move is the RFID-enabled passport, which this week has provided the classic Computers, Freedom, and Privacy http://www.cfp2005.org/
blood-on-the-carpet moments and which garnered for itself a couple of Ed Hasbrouck, who probably knows more about travel industry data practices than anyone. With quivering intensity Hasbrouck endeavoured to explain to Moss exactly why the RFID plan was so dangerous and how it could percolate throughout air travel. Moss was impervious. Hasbrouck was not atypical.

The big question, as many CFPers tried to indicate to Moss, was why contactless RFID chips rather than chips like those in today's smart cards that have to be physically in contact with the reader to divulge their data. Standards. That's why.

Moss explained that the International Civil Aviation Organization, which sets passport standards, wanted to introduce the technology in a way that involved as few changes as possible to the production systems. If, he explained, you used a chip that required contact, that chip would have to be located in one standard position so that readers from various countries would interoperate. A contactless chip that could be read at distances of up to 10cm - four inches for the metrically challenged - would allow travelers' documents to be read before they reached the inspector, so their
data is displayed on the screen by the time they reach the desk. Nice idea: imagine passengers speeding through immigration the way cars whiz through tollbooths using the EZ-Pass transponder payment system. The chip can be anywhere in the passport for such a system and readers can vary too.

The thing is, there are so many risks to doing this. RFID is largely an untested technology especially on this scale. We don't have any systems in place on this scale - although, granted, they are rolling out in other applications, such as retail. Hasbrouck and others raised the issue of cloning, where someone might skim the data as it's being read and use the captured information to create a copy of that passport. Moss says the skimming risk can be mitigated by using the right
materials in the cover.

British folks, who've been listening to Blair and Blunkett defend the ID card proposal for months on the basis that the ICAO and the US will require us to have biometrics in our passports anyway, so the costs of the ID card itself are smaller than we think, will be intrigued to hear that this is not true. Moss said categorically that the US is not pressuring the UK to include biometrics beyond
the ICAO-mandated digital photograph. The fingerprints and iris scans are all Blair's and Blunkett's. The basis of everything is still the face. The other bit of good news in all this is that if you dislike the chips the passport remains a valid travel document even if you cook it dead.

That may not be true, of course, if similar technology extends throughout identification documents of all types. But although the State Department got an unprecedented 2,400 comments in response to this project, it's going ahead whether we like it or not. At this point, if you want it to change Americans will
have to lobby their Senator and/or Congressman and hope he pays attention.
He may not. Because the thing is, at the moment this is truly a minority issue. It may become less so if airlines start asking for passports from domestic travelers. As my European friends like to remind me as evidence of how unsophisticated and provincial Americans are, only 23 per cent of the population have passports. The 23 per cent doesn't, by the way, represent the actual percentage of native-born US citizens who have passports. According to Moss, there are 62 million US passports
currently in circulation, representing ten years of successful applications. Of those, five to ten million were issued to newly naturalised immigrants, who almost always want to apply for a passport as soon as they get citizenship so they can go back home and visit family. Another chunk of those passports were issued to the US-born children of illegal immigrants, since their parents have a strong interest in proving those kids' right to be here and go to school. So the proportion of
native-born US citizens who apply for passports is a lot smaller than it first appears, perhaps around 10 percent. Americans, without leaving the US, can experience as great or greater geographical diversity as the passport-bearing European; what they miss is a certain amount of cultural diversity.

So, basically, if you're an American and your passport, like mine, will expire shortly, now is your chance to be one of the last to get a non-chipped passport. That will buy you time while they find out whether the privacy advocates' warnings are correct and how to deal with the security risks. Ten years ought to be long enough to get the bugs out.

Wendy M. Grossman's Web site http://www.pelicancrossing.net/ has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series
http://www.pelicancrossing.net/nwcols.htm. She has an intermittent blog
http://www.livejournal.com/~wendyg

2005 Breakthrough Publishing Ltd.
http://www.theinquirer.net/?article=22552

Botswana to offer offshore insurance and bank accounts

PARLIAMENT - Parliament has passed the International Insurance Bill that seeks to regulate offshore insurance and related services, to be offered in the Botswana International Financial Services Centre (IFSC).

Tabling the bill, finance and development planning minister Baledzi Gaolathe said companies operating under the IFSC were restricted to conducting non-domestic business in non-Pula currencies.

"Therefore to be licensed to do business under the IFSC, insurance companies cannot be regulated and supervised under the Insurance Industry Act of l987, because it is concerned solely with insurance companies serving only the local or domestic market, hence the need for the proposed bill," he explained.

Giving background to the bill under the IFSC legislative framework, Gaolathe said three pieces of legislation were enacted in l999 to facilitate and regulate the activities of the IFSC, excluding insurance and related services.

These pieces of legislation are the Income Tax (Amendment) Act, the Collective Investment Undertaking Act and the Bank of Botswana (Amendment) Act.

The International Insurance Bill has six parts divided into 32 sections.

Part one of the bill deals with preliminary matters, such as the title and definitions of terms that are used in the bill.

Part Two describes the procedure for the appointment of a regulatory authority and the regulator's responsibility to promote the maintenance of orderly conduct of international insurance business and related services.

The Registrar of Insurance, appointed under provisions of the Insurance Industry Act will also serve as the regulatory authority under the bill.

Further, the registrar is authorised to co-operate with other regulatory authorities in Botswana and internationally, in order to discharge his or her functions efficiently and effectively.

Part Three of the bill deals with the terms, conditions and procedures pertaining to registration and licensing of international insurance firms in the decision making process related to such registration and licensing.

These terms and conditions are intended to ensure that firms are credible and have the capacity to conduct business of insurance and related services in accordance with international standards required by the legislation.

Gaolathe said the bill imposes certain obligations on international insurance firms and gives the regulatory authority powers to deal with any issues or problems that may arise from time to time.

As circumstances change or demand, the regulatory authority is empowered to amend or rescind conditions of registration of an international insurance firm, such as the amount of capital that the companies are required to carry and the asset to liability ratios.

He or she can also impose new conditions such as the organisational structure of the firm.' Further, the registrar is authorised to issue a code of practice, which will provide guidance to auditors and international insurance firms regarding duties and obligations of auditors.

Part VI of the bill deals with the enforcement of the provisions of the law. It provides details on the authorisation of officers who may be conferred with wide ranging powers of authority, search and seizure, with warrants, or in certain cases, without warrants, in order to efficiently expedite enforcement of the provisions of the law, as well as other powers.

Tonota South MP Pono Moatlhodi supported the bill, saying it would go a long way to attract foreign investors to Botswana and contribute towards economic diversification.

Francistown West MP Tshelang Masisi said Botswana, through the IFSC, should work hard to make its service sector one of the best in the region, adding that the country's political stability was a bonus. BOPA

Republic of Botswana

Offshore banking in India's Special Economic Zones yet to take off

By S.P.S Pannu
New Delhi, April 18: The policy turbocharge has failed to ignite the fortunes of the country’s special economic zones, which have seen their share in the overall export basket go up by a mere 0.5 per cent to touch 5.26 per cent during April 2004 to January 2005 from 4.72 per cent during 2003-04.

Official statistics with The Telegraph show that exports from SEZs during the April-January (2004-05) period were valued at Rs 14,440 crore compared with Rs 13,854 crore during the entire previous financial year.

While there has been an increase in the value of exports over the previous year, there is no evidence of the big leap. These SEZs have been set up on the Chinese pattern but they have not yet picked up the growth momentum of the original model.

As many as 11 SEZs are currently in operation. These include Falta and Salt Lake in Bengal, Kandla and Surat in Gujarat, Santa Cruz in Mumbai, Cochin, Chennai, Vizag, Indore, Jaipur and Noida in Uttar Pradesh.

Foreign investment, including those by NRIs, worth Rs 423 crore has flowed into the units located in these operational SEZs. Around 98,620 people are employed in the SEZs.

As part of its efforts to boost SEZs, the government has allowed 100 per cent foreign direct investment (FDI) through the automatic route for manufacturing units located in these zones. Duty-free import of goods for the development, operation and maintenance of SEZs has been permitted and various tax exemptions have been extended to them. Supplies from the domestic tariff area to SEZ units are treated on a par with physical exports and are exempted from service tax and central sales tax.

Offshore banking units have also been allowed to operate in these zones in order to smoothen international financial transactions.

The government has also given its approval for setting up another 33 SEZs. These are coming up in the private, joint sectors or entirely on the initiative of the state governments. Salt Lake electronic city in Calcutta and Kulpi are the proposed new SEZs for Bengal that figure on this list. Paradip and Gopalpur in Orissa, Ranchi and Vizag have also got the government's approval. Another five SEZs have been proposed for Tamil Nadu and six for Gujarat.

The government also intends to enact a more liberal legislation for SEZs covering all aspects of their establishment, operation and fiscal regime.

The objective is to have more liberal labour laws as well so that these units can function in an environment that will enable them to compete in the global market.

The group of ministers is already reported to have recommended the proposal for the introduction of a special economic zones bill in Parliament.

telegraphindia.com

Offshore companies opt for expansion in Canada

By HARIS ANWAR
The Indian firms that sprang up to provide cheap, offshore information technology services are themselves going global, and Canada is becoming a popular destination.

The competition in Canada's nascent outsourcing market has heated up, with major Indian players -- including Satyam, Tata Consultancy, Infosys and Wipro -- using Canada's competitive advantage to capture a slice of the rapidly growing global outsourcing market.

"It has really been the last 12 to 18 months when major Indian players have set up more permanent offices in Toronto. . . . We're seeing clients looking at more strategic endeavours with Indian-based firms and pursuing them quite actively," said Robert Scott, IT advisory leader at PricewaterhouseCoopers LLP Canada.

The Indian companies developed their skills in IT outsourcing by supplying services for mostly U.S. companies that were looking to cut costs. Initially, the services were basic ones such as call centres. As the work being sent offshore has become more sophisticated, the established Indian companies have adapted, but they have done so partly by subcontracting to places with existing IT infrastructures like Singapore, Israel and Canada.

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The more sophisticated work falls into a category known as business process outsourcing, or BPO. It typically includes staff functions such as human resources, finance and accounting, and customer contact centres, or specialized tasks such as processing insurance claims or banking payments.

Because such work can be critical to a company, U.S. clients often prefer to have it done closer to home, or "near shore," and Canada, with its stability, geographical proximity and cultural similarities is a natural fit.

"There is more demand for a global model rather than a single-country model. And I see all the traditional benefits are positioning Canada as a dominant player," said Alaisdar Graham, managing director of the Canadian arm of Boston-based computer services company Keane Inc., which earned $910-million (U.S.) in revenue last year. The Canadian unit's contribution to Keane's sales has grown 100 per cent in the past two years.

Business process outsourcing is projected to reach $133.7-billion (U.S.) worldwide in 2005 with a major chunk coming from U.S. companies, an 8-per-cent increase from $123.8-billion in 2004, according to research firm Gartner Group.

Companies such as Keane, which also has Indian roots, stand to gain the most from this emerging phenomenon. "We operate in a seamless global delivery model, which means we can spread our work around the globe according to the customers' risk preferences," Mr. Graham said.

He explained that work flow in the global outsourcing model can be distributed between Canadian and Indian operations, with design and project management done in Canada and second-tier jobs in India. For example, Sun Microsystems of Canada Inc. has recently signed a contract with Indian outsourcing giant Wipro to move about 100 Java application development jobs to India because it was unable to find enough developers in Toronto to keep up with the growing demand.

Mr. Scott of PwC Canada, whose company provided consultancy services for this project, said the competition was strong with bidding from five vendors.

"This was an excellent example of global sourcing," Mr. Scott said. "What it does is free Toronto developers to do the development work instead of application management . . . that needs to be very cost effective."

Because the Canadian market is relatively new, data on the size and the number of people it employs are sparse. PwC is working to fill that gap with a study of the industry that it expects to release in May.

Sunjay Tugnait, the head of Satyam's Canadian operations, said his firm has recently won a roughly $20-million outsourcing contract, which will move its client's entire business processes to Satyam's development centres, including one in Mississauga. Satyam has grown to 140 employees in Canada from four in less than two years.

theglobeandmail.com

Ireland to lose tax haven status for artists

Maurice Chittenden

MILLIONAIRE British rock stars, painters and authors face losing a tax haven an hour’s flight away in Ireland.

Britons buying a home in the republic and spending less than 90 days a year in Britain can claim an artistic tax exemption. It means they can avoid paying tax on royalties from albums, scripts, books and paintings.

The scheme, designed to help struggling Irish writers and poets, costs the Irish state at least £20m a year. Now pressure from the European Union and public opinion has forced Dublin to review it.

The Irish government is setting up an inquiry team to examine tax breaks given to artists and others.

Native beneficiaries have included the Corrs, Samantha Mumba and U2, while Britons who have latched on to the scheme have included the novelist Frederick Forsyth, the rock bands Spandau Ballet and Def Leppard, and the singer Lisa Stansfield. The latter still has a home in the republic.

John Simpson, the BBC’s foreign affairs editor, has returned to Britain after seven years’ “tax exile” in the republic during which he wrote three books.

Irvine Welsh, the Scottish author who wrote Trainspotting, has moved to Dublin to write his next novel, Bedroom Secrets of the Master Chef, while his girlfriend studies at university there.

An insider said: “It is one thing to support artists struggling in a garret and another to let pop stars like U2 off the hook for album royalties.”

The inquiry team is likely to recommend that tax breaks are capped at a realistic level above which nobody can be said to be struggling. This could mean paying taxes on royalty payments on records and books once they have reached €100,000 (£68,600) a year. Proceeds from the sales of paintings and sculptures would be similarly taxed.

The artistic tax exemption scheme was introduced in 1969 by Charles Haughey when he was finance minister. Its supporters say its legacy has been to give Ireland a worldwide reputation as an artistic centre. Critics say it is open to abuse.

Joan Burton, a member of the Irish parliament and finance spokeswoman for the Labour party, said:
“There has been quite a flow of British people who have come here. Some have just resided here during the high point of their earnings and then returned home. The major earners are people who have royalties from songwriting like Bono.”

The Department of Finance in Dublin confirmed that the tax exemption was to be reviewed. Under the scheme, the republic’s taxmen have to determine whether books, records, paintings and plays have “cultural or artistic merit”.

The Irish Revenue Commissioners have published a list of 1,512 people who did not pay any tax on their artistic earnings between 1998 and 2002. It includes Welsh, Simpson, the singer Sinead O'Connor, the singer Elvis Costello and his former wife Cait O’Riordan of the Pogues. Pauline McLynn, the actress who played Mrs Doyle in the Father Ted comedy series, claimed the exemption on four works of fiction.

Mary Cloake, director of the Irish Arts Council, defended the scheme, saying: “Brand Ireland is based to a large extent on our creative and artistic output.”

Both Welsh and Simpson say their decision to move to Ireland was motivated by other reasons, but that the tax exemption scheme has proved a bonus.

Welsh, who has lived in London, Amsterdam, Chicago and San Francisco in recent years, said he had become fed up with moving about and wanted to be in one place “to sit down in front of the fire with my pipe and slippers”.

Simpson, who wrote his autobiography, Strange Places, Questionable People, and other books at his home in Dalkey, near Dublin, said: “The scheme is marvellous. What other country has a literary bureau in the tax system which goes through a book and decides whether it has artistic merits?”

Copyright 2005 Times Newspapers Ltd.
www.timesonline.co.uk

Private investors to get access to Lloyd's insurance syndicates

By Grant Ringshaw (Filed: 17/04/2005)

CBS Private Capital, one of the leading Lloyd's of London members agencies, has drawn up plans to create an innovative low-cost fund giving private investors access to the London insurance market.
HP Brand Enterprises

The fund, to be launched in June, will create a mechanism for high net-worth investors to invest in Lloyd's underwriting syndicates on a limited liability basis. CBS has called in Keefe, Bruyette and Woods, the investment bank, to advise on the fund's structure and launch.

The plan is an attempt to attract private funds into Lloyd's using a low-cost and lower-risk structure. One possibility could be a partnership structure and unregulated investment scheme based in an offshore centre such as Guernsey.

CBS currently manages £760m of premium capacity for investors - about 5 per cent of Lloyd's total capacity - with an average exposure of £1m per individual.

The company believes that, in a few years, the fund could raise between £400m and £800m in capital - equivalent to more than £1bn in underwriting capacity or up to 10 per cent of the Lloyd's market.

CBS believes the fund is the first new way for private investors to gain access to Lloyd's of London since the so-called spread vehicles of the mid-1990s. These were swallowed up by the creation of quoted corporate integrated Lloyd's investment vehicles such as Amlin and Brit Insurance.

Research by CBS shows that many sophisticated investors are keen to invest in Lloyd's but have been put off by high costs and unlimited liability.

The number of private investors - or Lloyd's Names - has plumetted since the early 1990s when the market came close to collapse after it was hit by asbestos-related claims. In five years, Lloyd's losses climbed to almost £8bn. There are now thought to be only 1,600 Names conducting business on an unlimited liability basis - down from a peak of 32,000 in the late-1980s.

CBS will manage the underwriting process and selection of syndicates, while a series of blue-chip fund managers are likely to manage investment assets held in the fund.

Offshore advice for British expatriates

If you are working abroad for several years, don't forget the finances. You have a golden opportunity to do some serious saving. The longer you stay in this situation, the more opportunities there are for maximising your wealth.

Enhanced earnings. An employer may pay an overseas allowance, bonus, utility bills, school fees, travel allowances, etc, and it is all for a good reason. They believe in their ``return on investment'' in you. You deserve the perks, so let's see how you can make these work harder for you.

Tax relief. Very simply put, moving overseas and becoming ``non-resident'' can reduce or negate income tax. Staying overseas and becoming ``not ordinarily resident'' can mitigate capital gains tax, and changing your ``country of domicile'' can negate inheritance tax on your estate.

What is ``offshore?'' One common myth is that ``offshore'' is ``based in `questionable' tax havens''. The offshore companies that are members of the AILO (Association on International Life Offices) operate from some of the world's most highly regulated jurisdictions. The Republic of Ireland and Luxembourg, like the UK, are full EU member states, and the Isle of Man and Channel Islands are UK dependent territories. These jurisdictions have been thoroughly scrutinised by global monitoring bodies and have received recognition for their strong regulatory controls and investor protection measures.

What's available? Offshore bank accounts, for a start. These are not an exclusive club for the rich. They are legal and above board, and quite often the subsidiary of a high street bank in the UK. You can keep the account even if you do move back to the UK or another country. Setting up the account is a formality even if you don't have an existing UK bank account.

Regular savings offshore. This is what makes you rich. If you do not have enough emergency cash in the bank, then please, raid the lump sum first. You can take advantage of your residence status to regularly invest in funds that are not available from the UK. Regular savings reduces risks and smooths out the peaks and troughs of volatile markets by ``unit cost averaging''. The whole policy is totally tax free while you are overseas and you can enjoy such tax benefits as ``gross roll-up'', ``time apportionment'', and ``top slicing'' even if you are repatriated.

Lump-sum investments. Whatever stage of offshore investing you have achieved, there will come a time when you may want to invest a lump sum, transfer existing investment assets or effect a combination of both.

Personal portfolio bonds have been around for a number of years and can achieve all of the above and more. Principal benefits are:

FAdministrative simplicity by having multiple investments in one ``wrapper''.

FInvesting in worldwide assets that may not otherwise be available.

FAccessing funds cheaper than if you approached the fund provider directly.

FAffordable access to funds that would otherwise have a prohibitive entry level.

FVirtually all tax implications in most jurisdictions can be reduced or negated.

Protection of assets. Wherever the world takes you, the taxman will still be there. Whether you repatriate to the UK or to another tax jurisdiction, all of the above can be further protected from prying eyes with the correct use of trusts, offshore companies or even private foundations.

Your protection. Depending on your financial responsibilities, your life and/or others lives may need to be insured. Both ``whole of life'' and ``term assurance'' are available in the ``offshore'' market to give the portability required by expatriates. These can also be ``written in trust'' to enhance benefits in different tax jurisdictions and even used as specific financial instruments in certain circumstances.

Your health. If you are in a situation (or partial situation) where your benefits package has been totalled up and paid as a cash sum, then for your own peace of mind you may want to put back the statutory benefits enjoyed in the UK. The NHS does not extend to Asia, and bespoke medical cover is available should the worst happen to you or a family member.

Who to talk to? Choose an independent financial adviser who will listen to you, and conduct an analysis of your individual circumstances regarding flexibility, accessibility and attitudes to risk. From this professional approach we can tailor-make a solution to your particular needs. Sometimes there is little obvious regulation of overseas financial advisers, so a brokerage with a registered office, membership of a regulatory body such as OFTA, and agencies with multi-national institutions will help to put you at ease.

The author is a senior consultant with Barclay Carrigan International. Questions can be directed to a Barclay Carrigan International consultant on 02-653-1971 or by e-mail via

info@barclaycarrigan.com
Bangkok Post

Zimbabwe gets tough on money laundering

by Alfonce Mbiwo

Harare - Zimbabwe's stricken economy, once a haven for illicit currency transactions, is looking to tighten the noose on endemic money laundering.

Zimbabwe has enacted a tough law that compels lawyers to act as whistleblowers on their clients by recording, disclosing and reporting information about clients suspected of money laundering in trust accounts they hold on behalf of their clients.

The Reserve Bank of Zimbabwe says money laundering has become rampant in the country due to absence of regulations and corruption within the financial sector.

Lawyers in the country say the Bank Use Promotion and Suppression of Money Laundering Act compromises them in upholding legal ethics and confidentiality between lawyers and their clients.

Fact is, lax laws and poor foreign currency inflows have seen the country become a major gateway for money laundering in the region.

According to a 2002 study by the National Economic Consultative Forum (NECF), a Zimbabwean think-tank, money laundering cost the country US$1bn over a six-year period.

The same forum predicted that the country was losing at least US$1m every month to this criminal behaviour, raising alarm about the country's anti-money laundering laws.

Southern Africa haven for launderers

Money laundering has been prevalent in various forms in Southern Africa, notably in the Democratic Republic of Congo, Malawi, South Africa, Botswana and Zimbabwe, for some time.

However, the assault on Zimbabwe started with the currency collapse in 1997, which gave way to trade on the parallel market.

"The inclination of retail businesses in many countries to conduct transactions in cash facilitates the local laundering of funds.

"It is convenient for criminals to purchase commodities without fear that the source of the cash will be detected," noted Charles Goredema of the South Africa-based Institute of Security Studies in a report on money laundering in the region.

Large amounts of cash, some of which are derived from drug trafficking, regularly change hands in the commercial districts of Mozambique and Zimbabwe.

Until the Zimbabwean government banned bureaux de change in November 2002, illegal forex trade was convenient and difficult to trace.

It meant that anyone within the region could move money into Zimbabwe and out without complications. The situation compelled the US to watch Zimbabwe in case it was used to money to fund terrorist activities.

Asset management route

Asset management companies sprouted in 2002 and, with no law binding their operations, they dealt in forex currency.

They soon became targets of regional and international criminals who moved funds into the country under the guise of investments.

They also enabled many Zimbabweans to externalise foreign currency.

According to the NECF, at least US$1bn was externalised by Zimbabweans between 2002 and 2003. Their speculative actions also drove trade on the Zimbabwe Stock Exchange to new heights.

In 2001, three commercial banks were fined by the Reserve Bank for dealing outside the controlled exchange rates but the bottom fell when Gideon Gono took over as governor of the central bank.

His tough stance led to the closure of one of the largest asset management companies, ENG Capital, which left many companies exposed to the tune of Z$115bn.

The fall-out has led to the closure of three other commercial banks, Trust Bank, Barbican Bank and Royal Bank, which were later amalgamated into the Zimbabwe Allied Banking Group to avoid a total collapse of the sector and to safeguard investors funds.

Criminals flee country

Several others are still under curatorship and could be forced into the ZABG should they fail to recover. Many of the owners of the banks fled the country to lead a life of comfort overseas from their externalised funds.

In the period between 2002 and 2004, real estate companies preferred clients to pay in foreign currency, with the funds deposited in offshore accounts.

"Only one country in the sub-region, South Africa, featured among the likely destinations of funds thus externalised. Others were the United States, the United Kingdom and Canada.

"It appeared that in the destination countries, the foreign currency payments were made through the banking system," said Goredema.

"It is not always practical or prudent to completely outflank the banking system in an outgoing laundering scheme. Some funds are inevitably transferred through intermediaries in the financial services.

"A proportion of financial services intermediaries may facilitate transfer of illicit funds unwittingly, but some will do so knowingly, even as principal beneficiaries," he said.

Government part of conspiracy

While lawyers in Zimbabwe fight against the new law, the government feel that they have been part of a conspiracy to launder money on behalf of their clients.

In one case, the late Roger Boka, a local businessman who pioneered the first indigenous merchant bank in the country, opened and operated several personal accounts at foreign banks in Botswana, South Africa, the UK, the US, Germany, Luxembourg and France.

The transactions were either carried out personally and sometimes through his lawyer, amounting to at least US$21m.

The lawyer, a senior partner in a law firm in Harare, was a director on the board of the bank and a signatory to the bank's account at the Zimbabwe Banking Corporation.

The firm acted as corporate secretaries for the bank and as legal advisors to both the bank and the Boka Group of Companies. The main business specialities of the group were tobacco and gold marketing.

The lawyer disappeared from Zimbabwe shortly after the death of Boka, by which time he had already been charged with violating the Prevention of Corruption Act and the Companies Act.

It was later discovered that the lawyer also operated a foreign bank account in England. None of the foreign funds appear to have been repatriated.

Police trained to spot laundering

To help fight money laundering, the Zimbabwe Republic Police is now offering training in basic accounting for its of- ficers.

The RBZ also plans to set up a Financial Intelligence Unit to monitor financial dealings of all financial institutions. It will monitor suspicious transaction and coordinate anti-money laundering efforts in the country.

Under the proposed guidelines, financial institutions would be required to appoint a money laundering reporting officer whose duty would be to identify customers who could be involved in money laundering.

The banks would be prohibited from allowing the opening of accounts via the internet or through the postal service.

In addition, banks whose customers want to engage in correspondent banking would be required to locate the respondent bank and the bank's regulations, which should include anti-money laundering measures.

The purpose of the account and the identity of the third party using the services would also be required in correspondent banking.

news24.com

Reasons for investing offshore

Nic Andrew, the head of Nedcor Retail Investments, says the primary benefits of diversifying your investments offshore are:

# Greater diversification, which reduces risk. Investing in international markets gives you access to countries, currencies, asset classes and industries that are not available in South Africa.
# Reduced emerging market risk. South Africa is an emerging market, albeit with pockets of First World industries. By world standards we are a "small" economy, with a relatively illiquid and volatile stock market. South Africa represents less than one percent of the world's gross domestic product and market capitalisation.
# Reduced currency risk. Economic theory states that you can expect a currency to depreciate in line with the differential between its inflation rate and those of its major trading partners. Although South Africa's inflation rate has fallen substantially, it still exceeds those of its major trading partners and, coupled with the emerging market risk factor, one would expect, over time, the rand to once again depreciate against these currencies.

Andrew says the long-term average depreciation of the rand against the United States dollar since 1964 is 5.3 percent a year. This period includes the more recent strong appreciation of the rand - since 2002, it has appreciated by over 50 percent relative to the dollar.

While the rand can be volatile over the short term, over the long term it conforms quite nicely to the inflation-differential model.

# Maintenance of "hard" currency spending power. It is important that South Africans travelling abroad, or who purchase imported items, such as cars, electronic equipment or, in fact, any product or service priced in an international currency, ensure that they maintain (and grow) their spending power in real terms.

Historically it can be shown, Andrew says, that an offshore allocation improves both the return and risk characteristics of a portfolio over the long term.

persfin.co.za

Ireland to target offshore bank accounts and life assurance

Frank Daly, chairman of the Revenue Commissioners, occupies the former office of the chief secretary in Dublin Castle, the room from which Ireland was ruled by the English.

The current occupant might be as unpopular with reluctant Irish tax-payers as its former resident. However, Daly dismisses any suggestion that the association with the castle's past or any lingering post-colonial sense of civic irresponsibility might still be reasons why some Irish citizens continue to evade tax.

“We are a long time from 1923,” said Daly. “Whatever way that might have coloured people's attitudes to paying tax in the past, there is no excuse for it now and there was no excuse for it even 20 years ago.

“People will put forward that theory and the high marginal tax rates of the 1980s as excuses, and they will put forward everyone's predisposition to minimise their taxes, but none of these excuses tax evasion.”

Daly said the net effect of tax evasion was to damage the country.

“It is ultimately robbing your neighbour,” he said.

“Tax evasion has a number of consequences. Either services are not delivered as they should be, or there is no money to deal with hospitals, schools or infrastructure.

“Or it effectively narrows the tax base. This means other people have to pay more because if you take it that you need a certain level of taxation to deliver what you want to do in the country - and if some people are not paying their fair share than others - then by definition they will have to pay more.”

The battle to change people's minds about paying tax and encouraging compliance is Daly's goal. The major tax investigations have not just raised the issue of compliance and the spectre of the wide-ranging powers now available to the Revenue; they have also taken in massive sums of money.

Investigations into bogus non-resident and offshore accounts, which revealed spectacular instances of institutional tax evasion in late 20th century Ireland, have brought in more than €1.5 billion in back taxes, interest and penalties.

They have also revised the Revenue's image of the early 1990s as a toothless tiger when it comes to widescale tax abuse.

Now Daly and a team of 30 Revenue officials are turning their attentions to life assurance products. Some €33 billion was lodged in single premium policies between 1988 and 2001. It's anyone's guess how much of that money went undeclared.

“People are concentrating on this €33 billion,” said Daly.

“There is a slight difference with the people who invested in offshore assets; 95 per cent of those people did it by and large solely to evade tax. That was not the position of the single premium policies.

“These policies were quite legitimate products. People invested after-tax income or maybe retirement lump sums which are not taxable. We are not interested in those.

“We are only interested in the people who know quite clearly that they got a big lump of money, which they know had not been taxed, and put the money into this product.”

Daly said he did not think there would be as high a percentage of tax evasion in the life assurance policies as in offshore assets. He said that it would be May 23 - the deadline for people to come forward and disclose ‘hot' life assurance products - before the scale of the investigation was known.

“I would say to anybody who has looked at the parameters of the investigation: only the individuals know where the money came from,” said Daly. “If you have a tax problem, come and talk to us, or go and talk to your tax adviser. But above all else make use of the voluntary disclosure deadline by May 23.

“The reality is that if you don't come in voluntarily, we will be pursuing you. Don't have any doubts about our ability to do that.”

The Revenue is looking not just at the source of the money invested in single premium products since 1980, but also at the money that went into unit-linked, tracker and guaranteed-growth bonds. The focus initially will be on investments worth €20,000 or more.

Responding to the criticism by the accountancy profession that it has been given too little time to help clients to make declarations before the July 22 payment deadline, Daly said he recognised accountants were “busy people'‘ but that there was “no perfect time'‘ for the disclosure scheme.

This carrot-and-stick approach adopted by Revenue in voluntary disclosures has been remarkably effective when the tax yield from the bogus accounts and offshore clean-ups is compared to the level of resources committed to the two investigations and the time taken to recover the money.

In the latest investigation, the carrot is a disclosure. If you come forward before May 23 and pay your outstanding tax liabilities by July 22, you won't have to pay as much in penalties or be named and shamed in the Revenue quarterly defaulters' list, which is published in the media.

Stay in the shadows and the stick will come out: Revenue will use the powers of the latest Finance Act to take the insurance companies to the High Court, forcing them to spill the beans and hand over the identities of those who didn't disclose their hot money. It's a high-risk game.

Handing over up to four or even five times the tax owed (when you include the severe interest and penalties) must have left some who came forward with bogus and offshore accounts wondering why, after losing their nest-egg, they hid the money in the first place.

The prospect of getting caught has proven too scary for a lot of people. Many bogus account holders ignored the November 2001 voluntary disclosure scheme and paid the price. This was reflected in the second major investigation last year: large numbers of offshore account holders did not take the same risk and came forward with the cash.

“I wouldn't agree that we scare the life out of people,” Daly said. “I would hate to think that that is the sort of business that we are in. We start from the premise that people should pay their taxes.

“And it is quite legitimate for us to point out to people that may not have that there are consequences to this.

“Here is a way of dealing with it. I don't regard that as scare tactics. It is a way of doing business. It is hugely effective. It is a huge value-for-money exercise.”

The financial benefits are clear to see. Minister for Finance Brian Cowen was expecting a large deficit in the exchequer returns for 2004.

However, due partly to the €700 million collected from offshore accounts, the state's bank account was left in the black for the year.

“I keep saying it's not about the money,” said Daly. “But no one believes me, and maybe they are right. The strategic objective is to prove that we can deal with evasion. The real performance indicator is that we won't be finding these sort of schemes again, because they will not exist.”

Given the number of unknowns involved in the single premiums investigation - how much unpaid tax was lodged in these life assurance products and how many people are involved - the Revenue is preparing to investigate initially a sample of the policies to see what it uncovers.

To do this, it is relying on this year's Finance Act. The Finance Act 1999 was groundbreaking in that it allowed the Revenue get past the front doors of the country's banks for the first time to see what was lurking inside. The Finance Act 2005 will have a similar effect, but this time the doors of the life assurance companies will be opened.

The sampling exercise will help the Revenue ground the affidavits which will pave the way for the investigating exercises that are Section 908 ‘John Doe' court orders. These hugely effective trawls are so named because Revenue doesn't know the identity of the person it is looking for, but it has a broad idea of the type of person the tax evader might be and the type of products they used.

“The sampling will involve a number of institutions,” said Daly. “We will do it on the basis of risk, the size and type of products, and looking at the information that has come to us in the other two investigations.”

The Revenue has already amassed profile information from the people who came forward in the bogus and offshore accounts and declared ‘hot' single premium policies as well.

“Every investigation throws up a little bit more information, and gradually you build up a comprehensive picture of the type of evasion and the places where people hid money over the years,” Daly said. “That is everything from the bogus account with an address in Camden Town to a trust account in Jersey or an offshore account in Guernsey or the Isle of Man and now in single premium policies.”

Daly believes tax evasion is no longer regarded as a badge of honour for rogue businessmen and errant cash-rich individuals. He said in some cases the Revenue has been offered extra money by individuals trying desperately to avoid appearing in the tax defaulters' list.

“As a society, sometimes it takes us a long time to evolve,” he said. “I would hope that we would eventually get to the stage where tax evasion is as unacceptable as drink driving is now.”

But Revenue has been criticised for teaching the lesson of tax compliance with an iron rod. Many bogus and offshore account holders who have been hit with huge tax bills were close to retirement or older and couldn't afford to pay.

But the same rules apply to all tax defaulters, rich and poor.

“People say tome from time to time that isn't it unfair to be going after people; they did this 20 to 25 years ago and it puts a very big burden on them now,” said Daly.

“I can understand that, but isn't it also unfair on all the people who over 20 years struggled to pay their taxes, sometimes with great difficulty? Isn't it also unfair on the people in business who did the right thing and maybe suffered because some competitor down the road had a competitive advantage simply because he or she wasn't paying tax? Fairness is a very broad concept.”

As for other investigations, Daly said the Revenue was continuing to look at the money used by Irish residents to buy foreign properties and the use of offshore credit cards. But as far as he is concerned, there are no other major nationwide tax scams out there.

“I hope that this is the last of the major investigations, but I couldn't sit here this morning and say I am absolutely sure of that,” he said. “As of now, we are not aware of any other big scam.”

The Sunday Business Post

Greece to welcome offshore investment

Economy and Finance Minister Giorgos Alogoskoufis yesterday called on shipowners to invest in Greece, acknowledging the importance of merchant shipping for Greece's economy and its contribution to the country's current account.

Alogoskoufis addressed the shipowners in a meeting at Piraeus Marine Club.

Introducing Alogoskoufis, club president Yiannis Xylas had insisted on the shipowners' desire to invest, but which was thwarted by red tape and the state machinery's slowness to respond, inefficiency and corruption.

"It would be an unforgivable mistake for the country to miss this chance. Of course, we did not expect all those things that were not accomplished over a number of years to happen within 12 months [the period the conservative government has ruled]. But, we think it is now time to implement a more efficient economic policy," said Xylas.

Alogoskoufis said the government was making an effort to put the economy back into shape without seeking publicity or making flashy moves to elicit approval for transient results.

"We are attempting deep and widespread reforms, we are looking forward, we have no illusions and we do not wish to live on borrowed money by mortgaging the future of young people. The actions taken by the Karamanlis government are future-oriented and do not aim at keeping things as they are for the sake of keeping power. We want to count on the help of shipowners, who have adapted smoothly to the challenges of globalization and do not fear competition because they have been used to being the best globally," Alogoskoufis said.

The minister said the Greek economy ought to rid itself of its inward-looking mentality and limited competitiveness, elements encouraged by an ideology that put too much emphasis on reliance on the state and bred tangled interests and corruption.

"The vague legal framework in place until recently was a strong counterincentive (to investment)," said Alogoskoufis, adding that the new law on investment incentives was "clear, simple and effective."

Asked about the forthcoming law on public-private partnerships, Alogoskoufis replied that ports will fall under its purview, but that some special legal provisions concerning the Piraeus and Thessaloniki port authorities - both of them listed on the Athens Stock Exchange - needed to be made.

The minister also referred to several changes soon to be made in laws that would further help "serious investors." These include a further simplification of the tax code and important changes in bankruptcy law. He also hinted at changes in the status of offshore companies.

"We do not promote companies, but investment projects," said Alogoskoufis, calling on shipowners to invest in tourism, real estate, sports installations built for the Olympics, marinas and golf courses.

Shipowners remarked that they were not asking for special treatment or tax breaks, only for a business-friendly environment.

Kathimerini

"Offshore Credit Cards Only" policy dropped

(WEB HOST INDUSTRY REVIEW) -- A recent decision by the World Trade Organization will allow US gamblers to roll the dice in the Caribbean’s online casinos.

A three-person WTO panel ruled last November that US federal and state laws were in violation of the general agreement on trade and services. This week, however, a WTO appeal panel sided with the US in its complaint that some restrictions were “necessary to protect public morals and maintain public order."

The problem, the panel reasoned, was that offshore gambling operations were not granted the same level of access as US-based outlets. "US restrictions on Internet gambling can be maintained," Acting US Trade Representative Peter F. Allgeier said. "This report essentially says that if we clarify US Internet gambling restrictions in certain ways, we’ll be fine."

Originally, Antigua and Barbuda had protested steps made by the US to prevent US-issued credit cards from being used for gambling, claiming it threatened the livelihood of its citizens. The US had argued that the credit card ban helped prevent money laundering, and protected vulnerable US residents.

thewhir.com