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Jul
6

Tuesday’s Daily News Digest

Scott Fahey

Swiss accounts no longer an airtight option for corrupt Indonesian officials
The Jakarta Post, July 6, 2010

MEA to seek details of Hasan Ali’s Swiss accounts
Economic Times, July 3, 2010

As Oil Industry Fights a Tax, It Reaps Subsidies
New York Times, July 3, 2010

We’re no longer a tax haven
Cyprus Mail, July 3, 2010

HSBC Clients With Asian Accounts Said to Face U.S. Tax Probe
BusinessWeek, July 6, 2010

IRS Closing In On Offshore Accounts
Hartford Business Journal, July 5, 2010

$250m tax bill puts Toyota in the red
Sydney Morning Herald, July 6, 2010

Teddy Bear Sales Used in L.A. Money Laundering Scheme
Wall Street Journal, July 3, 2010

Ghana is not prepared to combat money laundering and terrorist financing- Report
Ghana News Agency, July 5, 2010

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Jul
6

Political, Drug-Related Assassination in Mexico: Another Gunshot to Mexican Economic Growth

Karly Curcio

Photograph by Will's Online World Paper Money Gallery

On June 28th, only six days before the election for governor of the Mexican state of Tamaulipas, favored candidate Rodolfo Torre, was shot and killed by masked gunmen.  Torre was a member of the Institutional Revolutionary Party (PRI) whose main message commanded a fight against Mexico’s crippling drug activity. Drug-related violence and corruption continue to stifle efforts at economic and political stability and development in the country.

Mexico’s largest economic challenges are primarily reducing poverty and creating jobs, both of which are extremely hard to tackle with continued political violence and little trust by investors in the stability of Mexican markets.

According to the US Department of State 2010 International Narcotics Control Strategy Report, Mexico is a major source of and a transit country for drugs entering the U.S. Approximately 90 percent of the cocaine that enters the US market is trafficked through Mexico. Clearly, the drug-related violence in Mexico is not only a problem for the country’s own political stability and economic development, but also a threat to U.S. security.

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Jul
2

Friday’s Daily News Digest

Scott Fahey

Spain investigates 3000 secret bank accounts
Telegraph, July 2, 2010

Ex-UBS Client Zaltsberg Admits Hiding $2.6 Million
Bloomberg Businessweek, July 1, 2010

UAE seals tax agreement with Germany
Gulf News, July 2, 2010

Mexico to Impose Dollar Limits for Exchange Houses
Bloomberg Businessweek, July 1, 2010

Editorial: Guatemala at risk
Los Angeles Times, July 2, 2010

UK firm Octel bribed Iraqis to keep buying toxic fuel additive
Guardian, June 30, 2010

Graft main obstacle to business in Nigeria: study
Reuters, July 1, 2010

Smith & Wesson Says It Is Under DOJ Investigation
Dow Jones, July 1, 2010

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Jul
1

Thursday’s Daily News Digest

Scott Fahey

Tax Offshore Wealth Sitting In First World Banks
Forbes, July 1, 2010

Sarkozy government under fire in tax evasion row
AFP, June 30, 2010

Senate chairman starts probe of Transocean’s taxes
Associated Press, June 30, 2010

Change in IRS rules could block rewards for whistleblowers
The Washington Post, July 1, 2010

Mauritius tax treaty may be changed
Bloomberg UTV (India), June 30, 2010

Minister’s tax transfer pricing proposal short of expectations
Business Daily (Kenya), Jul y 1, 2010

Bermuda, US join to tackle money laundering
The Royal Gazette (Bermuda), July 1, 2010

Senate goes tough on money laundering
The Guardian (Nigeria), July 1 2010

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Jul
1

Is there a place for morals in finance?

François Valérian

Photograph by DTR

If we believe Plutarch, Solo abolished debt or reduced debt interests in Athens in the 6th century BC, but having informed three friends of his project, he had the discontent to find out that those friends had borrowed to purchase vast amounts of land shortly before the new law was enacted. Insider trading, fraud in finance, dissymmetry of information, lack of transparency have probably always been components of money dealings. They did not emerge in 2008, and ethics has never formed the golden rule of finance; nor has immorality, since finance is what human beings make it.

What emerged in 2008 is that the greed of a relatively small number of individuals could bring about a massive, sudden and global economic crisis. That was new, even if we compare it with the Great Depression, caused by a long-lasting and global speculation on all financial markets. It is now clear that greed has to leave the driver’s seat that it used to have in several institutions, and that the markets have to be protected from those institutions which would still be badly managed.

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Jun
30

Wednesday’s Daily News Digest

Scott Fahey

Post G20 Toronto Summit Analysis: Official Statement is Heavy on Promises, Short on Action
Task Force on Financial Integrity and Economic Development, June 30, 2010

Egypt no. 2 in Africa in smuggling money
Bikya Masr (Egypt), June 30, 2010

Op-ed: Time to act on tax transparency
Guardian, June 30, 2010

India joins select club to counter financial frauds
The Hindu, June 30, 2010

Overseas outsourcing of U.S. jobs must stop says Central Valley congressman
Central Valley Business Times, June 29, 2010

US Charges 18 in Money-Laundering Case
Voice of America, June 29, 2010

SEC Fines Telecom Firm $300,000 for Violating FCPA
Main Justice, June 29, 2010

FACTBOX – Six major corruption scandals in India
TrustLaw, June 30, 2010

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Jun
30

Gold Mining in Mali: Who Really Profits?

Maria Victoria Garcia Ojeda

A new IMF working paper entitled “Mining Taxation: an application to Mali” analyses the structure of the mining taxation system in Mali. It follows the regressive path set forth by the World Bank, consisting of attracting Foreign Direct Investments (FDI) by lowering royalty taxes in the gold mining sector at the expense of lower government revenues collected through these royalties.

International gold prices have sharply escalated in the last decade, yet International Financial Institutions (IFIs) are still advising African countries to lower profit taxes and royalties to gold mining firms. They are overlooking the issue of transfer pricing abuse by companies in the extractive sector, a practice consisting of selling goods and services between branches of the same company at knockdown prices in order to shift money out of the country and dodge taxes. This practice deprives developing countries from as much as USD 160 billion of lost tax revenues each year.

Consequently, African countries have lost millions of dollars in government revenues that could have been used to combat poverty and achieve the Millennium Development Goals (MDGs).

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Jun
29

Tuesday’s Daily News Digest

Scott Fahey

US Insurers Defend Neal Bill
Tax-News.com, June 29, 2010

Banks Financing Mexico Drug Gangs Admitted in Wells Fargo Deal
Bloomberg, June 29, 2010

Chinese crime networks targeted by raids in Italy
Guardian, June 28, 2010

Zambia: Anti Money Laundering Unit unearth scam involving over K2bn fake claims
Lusaka Times, June 29, 2010

Afghan Aid on Hold as Corruption Is Probed
Wall Street Journal, June 28, 2010

Opinion: Will corruption kill the euro?
Statesman Journal, June 29, 2010

Technip to pay $338 million in bribery settlement
Houston Chronicle, June 28, 2010

Aquino to probe Arroyo in Philippines ‘truth commission’
AFP, June 29, 2010

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Jun
29

Aid: What is it Good for?

David McNair

Today in the UK’s Guardian newspaper, Armando Barrientos argues that rather than the “aid industry” (as he describes it), transferring money and resources directly to the poor would be much more effective.

Photo: Erik Hersman

This is an appealing argument. If poverty is at heart a lack of power, then providing cash, without conditions, to the poor restores some of that power. After all, aren’t those in poverty best placed to know their needs? Initiatives such as the Basic Income Project advocate that a small amount of money should be granted to all without means test of conditions. Trials in Namibia have shown that this can reduce poverty and inequality dramatically.

But while this argument is appealing, it should not be made in isolation. What good does it do if the poor have more money on essential goods, when there is no provision for education to help them lift themselves out of poverty? If there are no roads or electricity to help them start a business and create jobs?

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Jun
28

Monday’s Daily News Digest

Scott Fahey

Corruption Suspected in Airlift of Billions in Cash From Kabul
Wall Street Journal, June 25, 2010

Jersey court jails former Nigerian dictator’s business associate
Guardian, June 27, 2010

Switzerland Starts to Come Clean
New York Times, June 27, 2010

Lord Kinnock son accused of tax evasion in Denmark
Telegraph, June 26, 2010

Manuel Noriega goes on trial in Paris
Guardian, June 28, 2010

Fleeing Official Flings $320,000 From Car Window
The Moscow Times, June 28, 2010

India seeks UAE help to probe alleged scam
Khaleej Times, June 28, 2010

Canadian pleads guilty to UN fraud
The Globe and Mail, June 25, 2010

Va. Man Gets 3 Years for FCPA Violations
Main Justice, June 25, 2010

U.S. FCPA to Target Corruption at China Subsidiaries
China Briefing, June 28, 2010

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Jun
28

Taxes and Transparency: The Way Forward for Africa

Ilmari Soininen

While Asia and Latin America have seen dramatic reductions in poverty over the last several decades, Africa remains as poor, by some accounts even poorer, than fifty years ago.  Indeed, of the 26 countries classified with “low human development” by the UN Development Program, all but two are in Sub-Saharan Africa.  For decades, billions of dollars in foreign aid have been channeled to the continent, but have had little effect on alleviating poverty.  Building strong institutions, solid infrastructure and a vibrant private sector requires things far more intangible than simply dollars.  But let us not kid ourselves: dollars will be needed – and a whole lot of them, to get Africa on the track to prosperity.

The recently published 2010 African Economic Outlook by of the OECD and African Development Bank, focuses on an important facet of finance for development: taxation.  According to the report, tax revenue accounts for about 22% of Africa’s GDP, compared to 35% for OECD countries.  Further, in Africa’s lower-income countries, taxation accounts for only 15% of GDP.  This means that without enough tax revenue these African governments are not able to provide or maintain even the most basic of public
goods and services needed to develop.

The Outlook report specifically identifies abusive transfer mispricing as a significant problem in Africa’s taxation system.  Multinational firms engage in abusive transfer pricing when they under-value goods shifted to parent entities out of the continent to avoid taxes.  Trade mispricing, which broadens the definition to include non-affiliated partners, is even larger.  A GFI report estimates that tax revenue due to trade mispricing averaged up to USD 4 billion annually between 2002-2006.   Ethiopia, for instance, Africa’s second most populous nation, by a GFI estimate lost 16.2% in tax revenue from trade mispricing.  In the interim perhaps this is a good thing, given the fact that Ethiopia spends three times more on defense than on health and education.

Looking forward, however, the ability of a government to finance its’ own development is extremely important.  Botswana, one of the few middle income countries in Africa, was able to quickly develop by harnessing its immense mineral wealth and investing prudently in education, health and infrastructure.  Unfortunately, Botswana is a rare exception to the rule of bad governance and squandered natural resource wealth prevalent in Africa.

Not only are the African countries losing big in tax revenue, they are losing ever bigger in money simply flying out of the country by illegal methods. Looking at total illicit outflows from the continent between 1970 and 2008, GFI estimates that Africa hemorrhaged close to a trillion dollars during this period.  This is most likely an underestimate.  The true number could be double that.  What’s certain is that Africa remains a capital-poor continent and huge investments to build and strengthen infrastructure and institutions is vital for its economic growth.   Improving Africa’s ability to tax through transparency and better governance – both multinational corporations and its own citizens – is a vital step forward for sustained development.

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Jun
25

Friday’s Daily News Digest

Scott Fahey

Corruption fight begins at home
Boston Globe, June 25, 2010

Guatemala’s Colom to Name Edgar Balsells as Finance Minister
Bloomberg Businessweek, June 24, 2010

Company convicted of tax evasion
The Straits Times (Singapore), June 25, 2010

Company director jailed for tax evasion
Stuff (New Zealand), June 25, 2010

Transfer Pricing As Tax Avoidance
Forbes, June 25, 2010

Ecuador Ctrl Bank Chief: Nation Removed From Task-Force List
Dow Jones, June 25, 2010

West’s financial system must stop flow of dirty money
The Guardian, June 25, 2010

Terror States at Issue in Weatherford FCPA Probe
Main Justice, June 24, 2010

Afghanistan vows no corruption over mineral riches
AFP, June 25, 2010

Philippines has to punish corrupt – campaigner
Reuters, June 25, 2010

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