USA and UK ruined. Tax Havens to close down

Tiny tax havens singled out for naming and shaming

4:00AM Friday Mar 06, 2009 By Catherine Field

Wall St meltdown

PARIS - France and Germany are leading a charge for a Group of 20 summit to blacklist tax havens and offshore finance centres blamed for scams and dodgy investments.

Their plan is fuelled by anger at the tiny, well-heeled territories fingered as a cause of the global recession and their mood is now strongly mirrored in Washington.

Jurisdictions that cast a veil of secrecy over foreign bank accounts or refuse to co-operate with regulators will be named and shamed and open to retaliation, according to the Franco-German plan.

"We want to act with determination against unco-operative places in fiscal, prudential or money-laundering matters," French Economy Minister Christine Lagarde said in Paris this week alongside her German counterpart, Peer Steinbrueck.

They called for a trio of watchdogs - the Financial Action Task Force on Money-Laundering, the Financial Stability Forum and the OECD - to define the criteria of "non-co-operation" and name pariah countries.

Their blueprint will be put to the April 2 London summit, where 20 major and emerging nations will debate a stimulus for the global economy, controls on "shadow banks" such as hedge funds, and beefing up banks' capital requirements.

The Franco-German plan would require G20 states to tear up bilateral treaties with countries "that refuse to incorporate the highest standards of the OECD and the United Nations", said Lagarde.

Banks and insurers would also be required to disclose, in their annual reports, their use of tax and regulatory havens.

The size of these commitments would determine their level of capital requirements. In other words, the company would have to build a stronger safety net if it decided to invest through these riskier vehicles, and would thus incur a higher financial cost by having to set aside more capital.

The Paris-based Organisation for Economic Co-operation and Development (OECD) calculates that between US$5 trillion ($10 trillion) and US$7 trillion are salted away by individuals or companies to evade taxes or political instability in their home countries.

At present, only three places - the European micro-states of Andorra, Liechtenstein and Monaco - feature on its list of "unco-operative" tax havens.

At the weekend, French President Nicolas Sarkozy was asked whether Switzerland would also be appropriate for that list. "Based on the actual state of things and on the rules, it could be, yes," he said, in remarks that left Switzerland reeling.

France and Germany have campaigned for years for international tax loopholes to be closed up. Germany alone believe it misses out on 30 billion ($75 billion) in tax revenue each year through evasion.

Efforts to close tax havens in the European Union have in the past run into opposition from Austria, Belgium and Luxembourg.

The three countries claim exemption from European Union rules under which member-states swap information about bank accounts held by each other's citizens in order to avoid cross-border tax evasion.

Instead, the trio deduct a withholding tax, now 20 per cent but set to rise to 35 per cent beyond 2011, on interest from bank deposits held by other EU nationals. They send the tax back to the holder's country, but do so anonymously.

But change is coming, driven by the enormity of the financial crisis and governments' need to claw every cent of tax revenue, especially from those perceived as fat cats.

Belgium says it is considering automatic exchange of tax data with other EU states. The finance ministers of Austria, Luxembourg and Switzerland, which is not an EU member, will meet on Sunday to co-ordinate a response.

In Washington, which estimates it loses US$100 billion each year from tax haven abuse, the Obama Administration has vowed to pry open "secrecy jurisdictions" and is besieging the tax fortress of Switzerland, pressuring the Swiss bank UBS over accounts held by rich Americans.

In January, a report to the US Congress said more than 80 per cent of the top 100 publicly-listed US corporations had set up units in territories with low or zero tax, including financial giants that have been bailed out by the taxpayer at a cost of hundreds of billions of dollars.

British Prime Minister Gordon Brown has traditionally defended Britain's light-touch financial market and protected UK havens such as the Isle of Man, Jersey, Gibraltar and the Cayman Islands.

But, if his words are true, Brown has become a convert to cracking down on black money. Last month, he spoke of the hope for "a global deal, a grand bargain".

"We want the whole of the world to take action," Brown said. "That will mean action against regulatory and tax havens in parts of the world which have escaped the regulatory attention they need. The changes we make will have to apply to all jurisdictions around the world."

========== BASHIR BUSH ===========

George Bush could be next on the war crimes list

4:00AM Friday Mar 06, 2009

THE HAGUE . George W. Bush could one day be the International Criminal Court's next target.

David Crane, an international law professor at Syracuse University, said the principle of law used to issue an arrest warrant for Omar al-Bashir could extend to former US President Bush over claims officials from his Administration may have engaged in torture by using coercive interrogation techniques on terror suspects.

Crane is a former prosecutor of the Sierra Leone tribunal that indicted Liberian President Charles Taylor and put him on trial in The Hague.

Richard Dicker, director of the International Justice Programme at Human Rights Watch, said the al-Bashir ruling was likely to fuel discussion about investigations of possible crimes by Bush Administration officials.

Congressional Democrats and other critics have charged that some of the harsh interrogation techniques amounted to torture, a contention that Bush and other officials rejected.

The prospect of the court ever trying Bush is considered extremely remote, however.

The US Government does not recognise the court and the only other way Bush could be investigated is if the Security Council were to order it, something unlikely to happen with Washington a veto-wielding permanent member.

- AP

=============================

www.guardian.co.uk/politics/blog/2009/mar/05/michael-white-darfur-bashir

http://news.google.com/news?q=Bashir+Bush

Does it matter that Bashir has been indicted for war crimes?

Does it matter that Omar al-Bashir, the president of the ancient, deeply-divided republic of Sudan, has finally been indicted for war crimes in Darfur, crimes against humanity too, by the International Criminal Court in The Hague? It's in the news this morning, though not very high up most agendas.

In my own mind, I'm genuinely torn between the urge to see the brute . victor of a military coup in 1989 . brought to account for the kind of treatment exposed in a new Guardian film, and uneasiness about the real world consequences.

Ten aid agencies, feeding an estimated 1.5 million people, were immediately expelled from the region by the Khartoum government yesterday, whose supporters also demonstrated against "the white man's court". No surprise there, then.

In his column today, the Guardian's foreign affairs pundit, Simon Tisdall, calls the ICC decision (it drew back from genocide charges) a momentous and historic moment in the drive to make heads of state accountable for their deeds. At the same time he is pretty sceptical about much happening. The Obama administration is cautious; so is Britain, which was briefly (1899-1956) Sudan's colonial ruler.

It's a good example of the clash between an idealistic, what-ought-to-happen view of politics and the harsh limitations on what actually does happen, imposed by practical considerations, not least differing views of the facts in the case . and who is right and wrong.

This ought to be straightforward. Many thousands among the pastoral tribes have died as a result of military action, hunger and disease since the rebellion against the central government first broke out in the 1970s, just as the first north-south civil war was ending, though that Arab-African conflict resumed for a further 20 years.

Darfur's sorrows have all been well documented, not least the brutal role of the Arab Janjaweed militia . black Arab Muslims killing black African Muslims. But the Bashir government denies most of it and sees the revolt as just that: a revolt to be put down by the central government.

As such the African Union and the Arab League have lined up behind Bashir, the same keep-out-of-our-affairs reflex that helps sustain Robert Mugabe. Thoroughly dishonest . understandable, if deplorable . it is a legacy of the colonial era, a version of FDR's remark about some Latin dictator of his day: "He may be a son of a bitch, but he's our son of a bitch."

It goes further than that. Both Russia and China (which has huge economic interests in Sudan), armed with UN security council vetoes, have signalled that they will block the UN route. The rebels have said they can no longer negotiate with an indicted leader. More will die, the hungry will go hungrier.

So there are ethics of principle and ethics of consequence. Does the threat of prison make it easier or harder to prise a tyrant's hands from the levers of power? Does it make for better behaviour, better politics?

In 1986, Ferdinand Marcos was eased out in Manila without plunging the Philippines into the chaos that Mugabe is now inflicting on Zimbabwe. In 2003 the Americans offered Saddam Hussein's family a safe exit to exile before the "shock and awe" bombing started over Iraq. That would surely have been the better option for all concerned.

Slobodan Milo.evi. of Yugoslavia and Charles Taylor of Liberia were also indicted in office, but no warrants were issued until after they were forced from power. Milo.evi. died in a cell in The Hague, Taylor is preparing his defence. Chile's Augusto Pinochet was hounded late in life by a leftwing Spanish magistrate, Baltasar Garzón.

What about concentrating on Spain's buried past, the dark secrets of the civil war, and leaving Pinochet to his own people, I recall asking at the time. Many Chileans were wary of reopening still-healing wounds. The Spaniards have been reopening their own since the Pinochet affair (at the instigation of the hyperactive Garzón; he must have been reading my stuff), none too happily.

That's the core issue, isn't it? Justice, but at what price? Plenty of Britons would like to see Tony Blair in a cell at The Hague; you can sign a war crimes petition here. Robert Harris even wrote a jolly thriller based on such a fantasy. But it's pretty safe to assume that rather more Brits, in all parties, would recoil from this divisive step.

Ditto the United States and George Bush: it simply wouldn't happen, and, as President Andrew Jackson remarked when crossed by the supreme court nearly 200 years ago: "The chief justice has made his ruling. Now let him enforce it."

What about something less ambitious, says the new Democrat-controlled Congress, inspired by yesterday's Brownian rhetoric about creating a better world, like voting to impeach Donald Rumsfeld for his wilfully incompetent management of the Iraqi occupation?

It's their country, their Pentagon. Even I could relish that. But you only have to think for 10 seconds before realising how much worse such a move would make things, how divisive and destructive, how much a distraction from more important matters.

As we speak Asif Ali Zardari, the president of Pakistan and Benazir Bhutto's widower, is demonstrating how to make a bad political situation worse by trying to carve up the opposition with the help of the courts. Hark, I hear the rumble of tanks.