Bankster Crime wave, part 4 How to take over a country

We know that the City of London has always
been a financial cesspool. But the monster
is now reaching out to other countries in the
West that enjoy the rule of law (the one which
says that the rich have no laws).
So, the future Euro banking centre will likely
be in Ireland now that it has been taken over
by the Troika, in the name of broke German
banks that are looking for refuge.

Ghost companies hang out together in the Shadow World.

checkit:  Irish times

No desks. No staff. No tax. Ireland’s shadow banks

Ireland’s unregulated and barely visible ‘shadow banking’ industry is 10 times the size of our GNP. Is it a benefit or a threat to the economy?

Carl O'Brien, Caelainn Barr

Sat, May 11, 2013, 08:40

First published: Sat, May 11, 2013, 01:00

So many companies are listed in the marble-tiled, plant-filled foyer that there are no brass plates or printed guides. Instead, it takes a computer to search through them all. This is 5 Harbourmaster Place, a Celtic Tiger-era chrome-and-glass building at the edge of the International Financial Services Centre, in Dublin.

It might not look big enough to house them all, but this modest-sized building is home to about 250 companies. One is Orpington Structured Finance I. It has gross assets of €1.7 billion, which would make it one of the most valuable firms in Ireland. Except it has no employees. It has no buildings or machinery. Nor does it pay any tax.

It is one of hundreds of so-called financial-vehicle corporations, which are companies set up to house or trade in securitised investments, in other words to package and resell loans.

It’s part of a much wider area of financial activity known as shadow banking, a term coined five years ago when the US economist Paul McCulley defined the area as the “whole alphabet soup of levered-up non-bank investment conduits, vehicles and structures”.

The term spread almost as fast as the financial crisis, and regulators and governments have been mobilising ever since to try to map this largely uncharted world.

It’s big business: the total value of assets in the Republic’s shadow-banking sector, at €1.7 trillion, is almost 11 times the State’s gross national product, which is the total value of all products and services produced in a single year.

Supporters of low taxes and multinational-friendly policies say these companies help create much-needed jobs in a country with 14 per cent unemployment and stagnant growth. The wider IFSC employs an estimated 32,000 people, for example, and contributes about €1 billion in corporation tax. Of those employees, about 1,000 work in companies linked to the securitisation industry. If Ireland weren’t courting this kind of business, the argument goes, it would end up in rival jurisdictions, such as the UK or the Netherlands.

But detractors question whether the benefits really stack up.

Much shadow-banking activity is set up to attract little, if any, tax. This reliance on aggressive tax avoidance, critics say, distorts the country’s industrial policy and leaves it vulnerable to appealing changes in tax rates around the world.

 Moral argument

 There is also a moral argument: companies and people who don’t pay a fair proportion of tax shift the burden on to those who do. At a time when PAYE workers and the middle classes are bearing the brunt of tax increases, many grumble that corporations are able to escape without paying their share.

On Tuesday, at a meeting of the EU’s finance and economics ministers, issues such as aggressive tax avoidance and profit-shifting across borders will be out of the shadows and in the spotlight.

In its role as president of the council of the European Union, the Government says it is leading efforts to tackle this area.

Yet Ireland has been under pressure from some of its neighbours to tackle its low-tax regime and plug loopholes such as the “double Irish”, which allow Google and other US multinationals to lower their tax liabilities dramatically.

Although Ireland has avoided being labelled a tax haven by international bodies such as the Organisation for Economic Co-operation and Development, some academics say it deserves the name.

Nicholas Shaxson, an associate fellow of the UK think tank Chatham House and the author of Treasure Islands , a book about the offshore system, says Ireland is a tax haven by his definition in light of the country’s regulation of financial services.

“What I have seen in Ireland does fit so closely the pattern I’ve seen again and again in tax havens, which is this willingness to do what the financiers want, really not ask any questions, and to have all sorts of measures for keeping Irish democracy out and keeping debate out of the way,” he says.

“That’s by either doing things behind closed doors and the shaping of a national consensus that ‘this is the goose that lays the golden egg and we mustn’t do anything to trouble it’ . . . to arguments that all this stuff is going to go overseas if we touch it, so let’s not rock the boat.”

Shaxson calls this “the captured state”: a world in which policymaking has been largely taken over by financial interests that can pick and choose between jurisdictions and in effect write the laws they need. “That happens in its purest form in the very small tax havens where there is just no local democracy to do anything. There is a little bit of a counterweight but it isn’t very strong in Ireland.”

Others go further still. Dr Conor McCabe of the Equality Studies Centre at University College Dublin, who is a campaigner in the area of tax justice, says companies can ride roughshod across competing jurisdictions, extracting what they want and contributing little. “They want all the pluses of a modern democracy while seeking to reduce their obligations to zero. They are behaving like parasites,” says McCabe.

The financial services sector insists Ireland has benefited hugely from its competitive tax regime through large-scale employment and investment.

“Ireland is not a tax haven. It has an excellent network of treaties with other jurisdictions and operates a simple and transparent corporation-tax system,” says Fergal O’Brien, the chief economist with the employers’ group Ibec, which represents financial services.

 

Bankster Crime wave, part 3 Machines cannot front-run

It takes a human to program an HFT machine to trade
before the secret trade information is presented
to the rest of the public, outside of politicians
and their bankster buddies.

So, they get all the profits.



The Facebook IPO had that , and many other
broken laws to account for.
Again, no charges.

Checkit: Nanex 

~ 15-May-2013 ~ You are not Fooling Anybody

RT Prime Interest:

    HFT is also prevalent in futures, and so in that regard, Bart Chilton, a commissioner of the CFTC, has said he wants to put a Good Housekeeping Seal of Approval on every algo. And this seems maybe a little unfeasible, what are your thoughts on how to reign in some of the damage that you see these algos posing?

Hunsader:

    OK. Bart, listen. I don't understand why it's taking you this long to find these things [manipulation], they're so obvious to us, who have been in the industry for a long time, and they are obvious to traders who work with and see market data. There is no excuse for this, these are just blatant, and it's getting even more blatant, the manipulation going on.

    You know you can talk all you want, but when Adam Clark-Joseph puts out a paper that shows the top HFT's take liquidity 59% of the time, and they are successful by using exploratory trading, which is a manipulative strategy, and when that paper comes out of the CFTC's academic program, using CFTC data, and your response is to curtail or severely curb academic's access to this data, you are not fooling anybody.

Bankster Crime wave, part 2 Send in the Mystery Machine

I am here doing my duty , echoing the hard
work of investigators in the Sam Spade
mould, who discover economic crime and
yet the police refuse to get their man, unless
he has stolen a water bottle.

There are ghost companies. They are located
in a country for tax reasons and don't even need
to rent an office, or even buy a chair. They are
represented by a post box.

It was like the Apocalypse when Nicholas Shaxson
showed his Youtube audience that Boots, a UK
retail pharmacy institution had been "reduced" to
a post box on the side of a building in some
Swiss city.

Investigator vs police

Investigator: Okay, so I located the box. Who does it belong to?
Police: Dunno
I: Where is the company registered?
P: Dunno
I: Some info was leaked from a tax haven by ICIJ
P: Dunno. What about it?
I: We found out who the post box belongs to
P: Whataboutit?
I: Let's arrest them
P: They're in the Caymans
I: NO, you moron. The company is registered there. They are
 having lunch in Bloomsbury, right now.
P: They'll get indigestion
I: They're breaking morality laws
P: But no legal ones right?
I: Perhaps
P: Go to your member of parliament, den
I: Right. Go back to sleep

checkit:  Tax justice

Where there's muck, there's brass plates: on the trail of UK ghost companies

The UK's investigative and satirical magazine Private Eye has produced a major new investigation into corporate crime, handled via the United Kingdom. The subtitle of the piece 'how UK ghost companies made Britain the capital of corporate crime" is quite apt, notwithstanding the best efforts of jurisdictions like New Zealand to outdo the UK.

The article is not online, unfortunately, so if you're in the UK you'll have to go out and buy a copy on the newsstands - it's available now. There's far too much in here to give it full justice, but a couple of paragraphs should give a sense of what's going on here:

    “Limited liability partnerships”, of which Vector Aerospace LLP was one, joined the lexi- con of British corporate law only in 2000 as a result of heavy lobbying from Britain’s big accountancy partnerships, which wanted to limit their liability for carrying out dodgy audits without becoming limited companies and so incurring extra taxes. [See Treasure Islands, and the Ratchet chapter, for the extraordinary story of how the accountancy firms got Britain to enact its LLP laws.] The new corporate vehicle allowed them to have it both ways by stipulating that an LLP would have limited liability but would not be a taxable entity itself (see Partnerships in crime).

    The new hybrid had great appeal: not just to respectable accountants, but also to those who were up to no good. For if an LLP’s members can also claim that they are not taxable in the UK, there is nothing to trouble the taxman and no inconvenient questions will be asked by the authorities about what the LLP is up to.

This is pure tax haven activity, and Britain is rapidly heading down this road. One last TJN-related section from the story:

    "In 2009/10, a study by campaigning accountant [and a TJN Senior Adviser] Richard Murphy found that of the 2.6m companies on the UK companies register, just 69 percent were even asked for a tax return by the authorities and only 45 percent actually submitted one. While it is impossible to measure precisely how many of Britain’s ghost companies are part of interna- tional criminal networks, it is in these helpfully crowded and murky waters that some of the world’s most serious organised crooks swim undetected."

. . . . and much, much more: this is just a taster. You can see the authors, Andrew Bousfeld and Richard Brooks, in a short video clip here. Among other things they watch a postman stuff large quantities of letters through a letterbox, and they're clearly visible through the glass door.

"All these letters have landed face down," Brooks says ruefully: "that's what you call tough sh*t."

The text piece finishes like this:

    "Epic levels of money laundering, illicit arms dealing, frauds, counterfeiting and government corruption are the result, all thriving on emasculated British company law and political and official indifference. A clean-up is indeed badly needed. Right here and right now."

Bankster Crime wave, part 1 The City of Mamon

The articles get ever more eloquent and well-
referenced and yet nothing can make the
government move to stop the crimes caused
by the bankers.

Well, if we don't fight, austerity is going to be our
undertaker.

So, I can only echo the work of the brave people
at the coalface of white collar crime.

In this first one, we see how the City of London,
that is the head of the British offshoring
octopussy, and then some, actually runs the country.

Read 'em: Rowans blog

The City of London and the Offshore sector - The Enemy Within

The City of London, the world's biggest tax evasion facilitator and money laundry has just been given some more good news, courtesy of George Osborne and the Coalition Government. The Chancellor of the Exchequer has just sent them a lightly coded message that their offshore revenue stream is guaranteed for the foreseeable future!

George Osborne has just chaired a G7 ministers' meeting at which the question of tax evasion and aggressive tax avoidance was on the agenda!

The Huffington Post reports that "...Osborne G7 Talks Sees Chancellor Criticised After Dodging Details On Tax Avoidance..."

Regular readers of this blog will recall my observations last week ("Lies, Damned Lies, and Civil Service Misinformation") about the likelihood of the UK Government doing anything too aggressively to challenge the offshore-sector and its control of the tax evasion/aggroidance (my shorthand for aggressive tax avoidance schemes) industry !

And so it has proved

George Osborne has now been criticised for failing to set out any concrete steps to promote economic growth or tackle tax avoidance during G7 talks, despite his insistence that the meeting with finance ministers and central bank chiefs was "successful and constructive."

Using such weasel words, and playing up the meeting for all it's worth, Osborne sought to make a great deal of how the meeting had made real steps in the debate on fiscal evasion issues.

....

Mr Osborne said British overseas territories "need to do more" to end tax evasion.

Well, that's like saying the Taliban needs to do more to encourage greater female emancipation in Afghanistan!  Ambitious, possibly; desirable, certainly; but ultimately futile and illusory!

Asked about the future of tax havens such as Jersey or the Cayman Islands, he said he had already been "very tough" in his message to them but wanted to see more action.

"...Of course we would like these jurisdictions to do more..," he said.

"...We want them to commit to some of the existing agreements that are in place on tax information and transparency and we have these initiatives which we are pursuing in the G8, for example around beneficial ownership, which we would also expect all jurisdictions to be able to sign up to..."

None of these comments amount to a row of beans in reality. He can send all the tough messages he likes, he can want them to do more, and sign up to vague initiatives about beneficial ownership, but this isn't going to change the reality of the situation that the offshore sector survives and thrives because wealthy people put their money there secure in the knowledge that it will be secure and kept in complete confidence

I have already discussed the futility of these plans at some length in a previous blog and nothing I read here from Osborne is going to change my views one iota. Because then comes the reality interlude, when the real world politique creeps in! He says;

"...Of course you have to respect that many of these territories have important industries and we don't want to unnecessarily damage them..."

Well, I should think not, and that is the underlying hidden message he has to send them, because these offshore areas generate a huge amount of money which the City of London, the enemy within, is waiting to receive. But at the same time, Osborne has to play the Perfidious Albion games! So he reverts to the default mode and trots out the shibboleths again.

"...But it is necessary to collect tax that is owed and it is necessary to reduce tax avoidance and the crown dependencies and the overseas territories need to play their part in that drive and they need to do more..."

"... We all agreed on the importance of collective action to tackle tax avoidance and evasion..," he said.

Well, no doubt they did, as they peeled their Plovers' eggs, and shovelled down the Boeuf a la Bordelaise! It's not difficult to agree to an assertion as bland as that, after all, ask yourself, what was being agreed to?

"It is incredibly important that companies and individuals pay the tax that is due and this is important not just for Britain and for British taxpayers but also for many developing nations as well."

You will note that the emphasis here is on the "...tax that is owed..." but expecting the crown dependencies and the overseas territories to do anything about it, has the same element of successful expectation as being the voting returning officer at the turkey farm when the Christmas vote is announced!

It is this kind of state-sponsored double-speak that makes the UK look positively mendacious. It is the kind of statement that is drafted by some clever young Treasury policy wonk who knows full well there isn't the slightest intention by anyone in Government to do the least thing about it

And why?

Because the UK Government is a hostage to the City of London and the City now ultimately determines all financial policies, and that is why I term them 'the enemy within'. The Government has quietly surrendered the lead role in defining the UK's future to the City of London, a non-elected, non-transparent, undemocratic group of elites, and the Government will dance to their tune.

This is why the Government's threats to break up the 'too big to fail, too big to jail' banks into small regional hubs is met by two fingers from Threadneedle Street! This is why the proposal to ring-fence the retail banks is met be a resounding raspberry from Throgmorton Avenue!

You see, the City of London no longer needs the UK, the boot is on the other foot, the UK needs the City! I used to believe that the Government was Sovereign, that Parliament was the final arbiter, and that confronted with a vague threat to 'take our business elsewhere' if too much pressure was applied to the City institutions to reform their game, was an empty threat, and I have previously urged the Government to call their bluff!

But I was wrong! The Government dare not call their bluff because the City of London isn't just a bunch of buildings inside four postal codes; it is a concept of enormous power, an exclusive entity, a very private members-only club into which outsiders are not invited to enter; it is a powerful clique which exerts huge influence and pressure; it is a Mafia! Even Her Majesty the Queen requests formal permission to enter the City of London on a special formal occasion (permission is always granted)!

The City doesn't exist to support this country, it exists for its own financial interests and the rest of us can go take a hike! It could, within a relatively short space of time, go offshore itself, indeed, it has already been described as the most powerful off-shore jurisdiction on earth! You don't need to be a palm-fringed island in the Caribbean to be an off-shore centre. The City has its own laws, and it only obeys those ones which Parliament enacts, when it pleases the suits so to do!

The amount of money that the City turns over each year is counted in Trillions of Pounds. As a fee, tribute, (bribe) to the UK Government to allow them to continue, the City contributes about 12% of the nation's GDP, in terms of the tax it agrees to pay on such profits as it sees fit to declare. The rest of its proceeds are very carefully squirreled away and are held in secure and confidential circumstances, and no-one is going to examine them!

The great financial crisis has brought the role of the City and its functions into greater notice and under more scrutiny, but we should not hold our breath hoping that Cameron or Osborne are going to do anything to bring this criminogenic enterprise to heel! They simply do not have the power to do it, and that is the problem.

When the Prime Minister or the Chancellor go down to the City to speak at their tables, you will note the degree of respect which is afforded to the men and women in fancy dress! They have to be respectful, because the City might take their ball away and go and play elsewhere, and they know that would be disastrous for them.

 So they pay lip-service to the conventions, and they make sure they protect the City from any attempts that somewhere called 'Brussels' might make to impose their will on the City of London. Transaction taxes! Not on your Nellie, monsieur. Capital adequacy rules! Only if everyone else is signed up to the same calculations, mein herr!  Anti-money laundering regulations! Now you are being fanciful, old boy!

In a time of the worst financial crisis any of us have ever experienced; at a time when we can see no light at the end of the austerity tunnel, the City of London continues to pursue its own path and writes its own pay cheque! Don't expect it to change its ways, because this is how it has always been done, the City of London is another country, and it is immune from the ordinary rules of engagement that attach to those outside the Square Mile.