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Wednesday’s Daily News Digest

Scott Fahey

Bank Hit With Sanctions in Suit Over Terrorist Aid
New York Times, July 13, 2010

German Credit Suisse branches raided in tax probe
AFP, July 14, 2010

Finmeccanica CEO Questioned in Money-Laundering Probe
Wall Street Journal, July 14, 2010

UN’s internal watchdog faces leadership vacuum
Associated Press, July 14, 2010

Nuhu Ribadu And 2011: Despite His Imperfections
Sahara Reporters, July 13, 2010

Stop ‘everyday’ bribery, Medvedev tells Russians
AFP, July 14, 2010

DOJ FCPA Probe Focusing on Payments in Foreign Drug Trials
Main Justice, July 13, 2010

The Cost of Corruption
The Huffington Post, July 13, 2010

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Reaching the millennium goals: The European Parliament calls on EU member states to make progress on aid and capital flight

Marta Ruiz

On 15th June the European Parliament passed a resolution on progress towards the achievement of the Millennium Development Goals (MDGs): mid-term review in preparation for the UN high-level meeting in September 2010. This resolution sets out a number of recommendations for EU Member States ahead of the summit. It acknowledges that all eight MDGs are currently off-target” and asks member states to adopt a leading, ambitious and united position to meet the MDGs before the 2015 deadline.

Photo: WL

Overall, this resolution is more ambitious than the position adopted by EU Member States in the June Council Conclusions on development and follows the path of other parliamentary resolutions such as the Guerrero and Domenici reports. However, the report on MDGs as adopted by the Development Committee was watered down in the vote held in the plenary session of 15th June. The proposals of an interest-free moratorium and a tax on currency and derivatives transactions to fund the MDGs were rejected by the plenary.

The resolution’s call “not to broaden the definition of Official Development Aid (ODA) or count debt cancellation or other non-ODA financial flows as aid spending” is welcome at a time when the European Commission and Member States are attempting to further inflate ODA through “ODA+” or “whole-of-country “approaches. In this sense, the resolution’s insistence that climate funds should be “genuinely additional to existing aid commitments” is a welcome one. Furthermore, while the resolution reaffirms Member State obligations “to meet their 0.7% aid promises by 2015 at the latest”, it does not note their failure to collectively meet the 2010 targets, nor is there an analysis of how to bring this about or of how to avoid non-compliance in the future.

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A Bitter Battle of Self-Preservation

Ann Hollingshead

In October of last year I wrote about Roman Polanski, a sex offender turned movie director, who has lived in Europe since 1978 when he fled the United States (see: Confessions of a WaPo Reader).  Swiss authorities took Polanski into custody last fall in Zurich and it looked as though European authorities might extradite Polanski to the United States. That October I argued that the arrest was a move to sooth U.S.-Swiss relations in the wake of the IRS inquiry into Switzerland’s largest bank, UBS.  I noted it was a part of a growing trend toward accountability and transparency worldwide.

I need to retract that relatively strong statement, though perhaps not wholly.

About a month ago, the Swiss Parliament voted to allow UBS to disclose 4,450 tax evading American names to the IRS, which had been part of a settlement between the U.S. Department of Justice and the Swiss bank.  Many hypothesized that this historic vote could lay the groundwork for more legal action by the U.S. against another bank.  Top contenders appear to be Credit Suisse, Switzerland’s second largest bank, and HSBC, which is based in London, but has extensive Swiss operations under its Private Bank.

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Tuesday’s Daily News Digest

Scott Fahey

Editorial: Big Oil’s Good Deal
New York Times, July 11, 2010

Argentina calls for regulation of international finance
Agence France-Presse, July 12, 2010

Tax Intels to Work on Tax Havens
VIVAnews (Indonesia), July 13, 2010

TL 17 mln in tax loss uncovered due to fraud in oil sale
Today’s Zaman (Turkey), July 13, 2010

French Labor Minister Quits Party Post
New York Times, July 13, 2010

Strong Regimes Needed To Stem Money Laundering, Terrorist Financing
Bernama (Malaysia), July 13, 2010

S’pore is full participant in global process to fight illicit money: PM Lee
Channel NewsAsia (Singapore), July 13, 2010

Russia Falling Short of Anti-Corruption Plan
Vedomosti, July 13, 2010

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Pressure or potential? If I worked at the International Accounting Standards Board

David McNair

Photo: Antxon

If I were based at 30 Cannon St in the heart of the City of London, I’d be feeling somewhat under pressure as I made my journey to the state-of-the-art building. Members of this task force have long argued that the IASB, a private company registered in the US state of Delaware, has the potential to transform the way that companies operate to make them more accountable to government’s civil society, to challenge corruption and to help poorer countries to raise revenue to pay for education and healthcare for the world’s poorest people.

But today, the UN published a report suggesting the IASB could make a major contribution towards a more sustainable future for us all – by requiring that listed companies disclose their environmental and social impacts alongside financial statements. Of course, the technocrats will argue that it’s all too complicated. Compliance costs would be huge, there would be so much information that it would be difficult to interpret, it would impact investment and would make things worse; but we’ve heard these arguments before in relation to country-by-country reporting.

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The Corruption Tango

Ilmari Soininen

No nation with which I am familiar has descended so deeply into this suffocating abyss [of corruption] as Nigeria.” -Raymond Baker

Africa’s most populous nation, recently welcomed home Nuhu Ribadu, its respected former corruption czar, after an 18 month exile in Britain.  Ribadu ran Nigeria’s Economic and Financial Crimes Commission (EFCC) from 2003 to 2007 before deciding to leave the country, fearing for his life.  He uncovered vast corruption, initiating over a thousand cases and winning an impressive share of convictions.  In one case, he investigated the inspector general of the police service, seizing $150 million in assets and securing a six-month prison sentence for his former boss.  In another, a governor was found to have siphoned three quarters of the state’s revenue into his own pockets.

Such examples illustrate the general perception of the level of corruption in Nigeria – the big men in government stealing much of the nation’s wealth.  When asked which sectors they considered most affected by corruption, 63% of Nigerians answered political parties.  Only 5% of respondents answered the business or private sector.

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Monday’s Daily News Digest

Scott Fahey

Revenue sheds light on details of complex tax avoidance schemes
The Post (Ireland), July 11, 2010

Greek taxman takes aim at island holiday villas
Reuters, July 9, 2010

Column: Drug cartels may cash out in Mexico, cash in on Las Vegas
Las Vegas Review-Journal, July 11, 2010

Money laundering: EFCC to quiz ex-governor Attah tomorrow
Nigerian Tribune, July 11, 2010

Sat night ‘drama’: Hawala agents held, freed in 8 hrs
TNN (India), July 12, 2010

Spreading the gospel of good government
Edmonton Journal, July 11, 2010

GCC oil firms accused of receiving kickbacks
Emirates Business 24/7, July 11, 2010

China: government officials must report incomes
AFP, July 11, 2010

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Friday’s Daily News Digest

Scott Fahey

Mass Leak of Client Data Rattles Swiss Banking
Wall Street Journal, July 8, 2010

Experts meet in Caracas to discuss money laundering
El Universal (Venezuela), July 8, 2010

Corruption in Nigeria: A prodigal policeman returns
The Economist, July 8, 2010

Visa Ban: U.S. Compiles List Of Corrupt Nigerians
Daily Independent (Nigeria), July 8, 2010

Court to track money flow in alleged bribes on Argentine exports to Venezuela
El Universal (Venezuela), July 8, 2010

Halliburton: Unmasking The Masquerades
Daily Independent, July 8, 2010

From Communism to Mistressism
The Epoch Times, July 9, 2010

Bihar to seize properties of corrupt officials
Sify (India), July 9, 2010

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Marshall Islands, Oil Spills, and the Efficient Level of Precaution

Ann Hollingshead

Two days ago, BP announced that it has (so far) spent $3 billion on cleanup and containment in an attempt to mitigate the damage done by the explosion of the Deepwater Horizon and the ongoing oil spill in the Gulf of Mexico.  And this is not including the $20 billion it set aside to compensate business owners, fishermen, municipalities, and other parties who are suffering under catastrophic costs from spill-related damages.  This monumental amount of money got me thinking about the Economics of oil spills.  In particular, how does the financial liability associated with an oil spill’s damage effect the level of precaution a company will take to prevent such a tragic event?

In Economics, we refer to these models as the “efficient level of precaution,” which is the market-predicted level of precaution that a company should take to prevent catastrophes (when the benefits outweigh the costs).  This model is often used for nuclear power plants.  Suppose there is a disaster in a nuclear facility and the facility leaks gallons of radiation. The burden of the cost of this radiation is placed on the citizens in the surrounding area; not on the plant.  This is called an “externality” because the costs are external to the responsible party.  However, if the injured parties can get full compensation for the company’s actions (through legal action, for example) then the costs are “internalized” and the company has an incentive to provide precautions against nuclear discharge, to the extent that the precaution costs less than the costs incurred to society.  If such a situation cannot exist, if costs cannot be fully internalized, then the situation necessitates government intervention and oversight.

The same can work for oil spills.  Let’s represent this graphically (you can click on the image to the right to see it in its full sized glory).

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Thursday’s Daily News Digest

Scott Fahey

Analysis: Asia next in line of fire for U.S. tax police
Reuters, July 7, 2010

US to access Europeans’ bank data in new deal
BBC, July 8, 2010

A Liechtenstein disclosure: Bulk of LDF assets can stay put
International Adviser, July 7, 2010

‘No need to have previous criminal records to go to prison in new money laundering bill,’ Alak
Buenos Aires Herald, July 8, 2010

Nigeria asks for Akingbola’s arrest, extradition
Next (Nigeria), July 8, 2010

Anti-money laundering bill suffers setback
Next (Nigeria), July 8, 2010

Singapore To Host Asia Pacific Meeting On Money Laundering
Bernama, July 8, 2010

Deutsche Bahn sacks employees in foreign bribery scandal
The Local (Germany), July 8, 2010

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What could possibly go wrong in Ghana?

Tax Justice Network

Following on from Ghana’s recent World Cup defeat at the hands (literally) of Uruguay’s Suárez, Khadija Sharife has just posted a blog on how Ghanaian people are probably becoming victims of cheating on a far larger scale, albeit not so visible on television sets around the world.

Ghana is entering into its era of oil production. Before end-2010 the Jubilee oil field, one of Africa’s biggest offshore finds since the start of this century, could turn Ghana into the continent’s fifth largest oil-producing nation, bringing in upwards of $800 million a year. Happy days.

But dig a little deeper, and you find the first signs of the resource curse are readily discernible. As Sharife reports, ownership of the Kwame Nkrumah MV 21, the Floating Production Storage and Offloading facility used in the Ghanaian production programme, is obscured through offshore special purpose vehicles in the Netherlands, a country widely used as a conduit for shifting profits offshore.

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India dislikes OECD info exchange standard

John Christensen

Recently we blogged our rather harsh response to the OECD’s claim that its deeply flawed information exchange standard is “universally endorsed.” As if any more evidence were needed in support of our argument, see this in India’s Economic Times.

India will pitch for deeper tax information exchange agreements at the G-20 to make such pacts more effective in facilitating the flow of crucial data on tax evasion.

New Delhi is expected to present a detailed paper on the issue at the forthcoming Seoul meeting, urging that domestic laws of countries must support such agreements for effective information exchange. “These agreements should ensure that there is actual flow of information and benefits for countries entering them (agreements) in checking evasion,” said a finance ministry official privy to the discussions.

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European Commission’s Tax Transparency Package keeps tax deals secret

Financial Transparency Coalition · March 18, 2015

The European Commission’s new measures to combat secret tax deals made between multinational companies and governments cannot be called ...

The world can’t afford to exclude developing countries from new anti-tax evasion system

Financial Transparency Coalition · March 16, 2015

BRUSSELS—Weeks after the shocking revelations of wide-spread tax evasion at HSBC’s Swiss branch, a new report from a European Commission expert ...

Leaked HSBC Records Shed Light on Culture of Corruption in the International Banking System

Global Financial Integrity · February 9, 2015

WASHINGTON, DC – Leaked HSBC documents revealed today by the International Consortium of Investigative Journalists (ICIJ) highlight a culture of corruption in the ...