GFI in the News
Tax Dodging Jeopardizes Society at Home and Abroad
The Huffington Post, April 17, 2012
By Clark Gascoigne and Heather A. Lowe
Highways, schools and law enforcement. Firefighters, courts and national security. These are just some of the many, essential public services that are funded by our tax dollars, and it is because we cherish these services that we head to the post office every April to send Uncle Sam our tax returns — at least, most of us do.
A recent column in The Baltimore Sun detailed how major American corporations like Apple make use of offshore tax havens and creative accounting techniques to legally avoid paying taxes in the United States, while still racking up record profits. An accounting technique called abusive transfer pricing, allows multinationals to artificially move profits out of high-tax jurisdictions like the United States, and into low- and no-tax countries like the Cayman Islands, Ireland and Switzerland.
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Extractive Industries Transparency
Unclear as oil
The Financial Times (Editorial), April 16, 2012
Extracting oil in autocratic states is a murky business. A Financial Times investigation has revealed that three powerful Angolan officials have held concealed interests in a venture with Cobalt International Energy, an explorer.
Two of the officials have gone on the record to deny any wrongdoing, saying they have abided by Angolan law. Whether or not that is the case, there is an apparent conflict of interest. Were it not for the autocratic nature of Angola, one would expect their dealings with Cobalt to be the subject of an investigation.
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Corruption
Corruption Nation: Why Bo Xilai Matters
The New Yorker (blog), April 16, 2012
By Evan Osnos
In December, 2006, police in the Chinese territory of Macau arrested Ao Man Long, the region’s secretary for transport and public works, who had been collecting kickbacks over a period of seven years. Investigators found that he and his family had received more than a hundred million U.S. dollars, which he had detailed in a collection of “friendship notebooks.” The indictment itemized so many individual bribes that reading it aloud at his trial took seven hours. Ao was sentenced to the maximum penalty—twenty-eight-and-a-half years—and the judge said that, were a sentencing limit not in place, the scale of the offenses merited a prison term of three hundred and sixty years. For taxpayers, it was not a victimless crime: a major bridge in Macau, for which Ao is said to have received $1.7 million in kickbacks, was reportedly built of such poor quality that it may be need to be overhauled only seven years after it was built.
The astonishing thing about the Ao Man Long case is that it is not astonishing. The scale, the audacity, the damage to the public good—all of it is in keeping with a pattern of epic corruption that has become the most dangerous side effect of, and threat to, China’s boom. It is not just a Macau problem. (I wrote about the explosive effects of Macau’s rise in “The God of Gamblers,” in the April 9th issue of The New Yorker.) On the contrary, the Ao case is a good example not because it is extraordinary, but because it was adjudicated in a Western-style courtroom (Macau uses the Portuguese system), so the details are public. But Macau is just the end of a public-cash pipeline that begins in China.
Poor governance hindering Congo growth: World Bank
Trust Law, April 12, 2012
By Jonny Hogg
Democratic Republic of Congo’s fragile post-war economic growth is being slowed by poor governance, a lack of transparency and heavy informal taxes on companies, the World Bank said on Thursday.
The vast central African country is the continent’s second largest copper producer and has large resources of arable land, but remains mired in poverty after decades of dictatorship and back-to-back wars that left several million people dead.
Global Witness Calls For Libya To Learn From Gadhafi-Era Audit
The Wall Street Journal (blog), April 16, 2012
By Samuel Rubenfeld
International anti-corruption group Global Witness said Libya’s new government should learn from an audit conducted by the former regime into mismanagement and graft in the country’s oil sector.
The audit, obtained by Global Witness and released on its website, outlines mismanagement to the tune of millions of dollars by the National Oil Co. and the government of Col. Moammar Gadhafi, who was toppled last year. The protests that led to his removal from power were in part fueled by rampant corruption in the oil sector, which makes up nearly all of government revenue.
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Shell Corporations
Cyprus link to Greek scandal
The Cyprus Mail, April 14, 2012
By George Psyllides
A former Greek minister arrested this week on money laundering charges appears to have a Cypriot connection through two offshore companies allegedly used for transferring kickbacks.
Akis Tsohatzopoulos’ arrest on Wednesday is the most high-profile case yet against a politician over scandals spanning decades in the debt-laden country.
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Tax Havens
Revealed: Ex-Conservative minister Lord Blencathra paid to lobby for island tax haven
The Independent, April 17, 2012
By Melanie Newman and Oliver Wright
A former Conservative minister with close links to the Government is sitting as a peer in the House of Lords while simultaneously lobbying on behalf of a Caribbean tax haven.
Lord Blencathra, a former MP and Tory chief whip, is being paid by the Cayman Islands government to represent the interests of its financial services industry – despite also being able to vote on legislation affecting the territory.
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Money Laundering
FATF Mandate Extended To 2020
Tax-News, April 16, 2012
By Ulrika Lomas
Ministers from nations party to the Financial Action Task Force’s (FATF) 40+9 recommendations are to extend the organization’s mandate to 2020, to allow the agency to continue its role of protecting the integrity of the international financial system through the development and enforcement of its anti-money laundering and terrorism financing standards.
The FATF Ministerial Meeting, which is to take place on the margins of the 2012 International Monetary Fund/World Bank Spring Meetings on April 20, 2012, will see FATF’s tenure extended by eight years.
Money launderers constantly evolving
AML, April 16, 2012
The schemes used by cartel financiers are constantly evolving as authorities find new money-laundering methods and take steps to shut them down.
When Congress passed the Patriot Act in 2001, it put in place reporting requirements for cash deposits that forced money launderers, including those for Mexican cartels, to change their tactics, said Jim Dowling, managing director of the Dowling Advisory Group and former Anti-Money Laundering Advisor to the White House Drug Policy Office.
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Drug Money
Colombia calls for global drugs taskforce
The Guardian, April 14, 2012
By Ed Vulliamy
The government of Colombia pushed on Saturday for the most far-reaching change to policy on drugs since US president Richard Nixon declared war on narcotics four decades ago.
Hosting the sixth Summit of the Americas, for which 33 leaders of the hemisphere’s 35 nations – including President Barack Obama – have assembled in Cartagena, President Juan Manuel Santos proposed the establishment of a taskforce of experts, economists and academics to analyse the realities of global drug addiction, trafficking and profiteering, with a view to a complete overhaul of strategy.