Monday, November 02, 2009
"WHO KNEW?": WILMINGTON NAMED WORLD'S WORST HAVEN
Wild Protests in Geneva, Vaduz, and Guernsey James S. Henry
"WHO KNEW?": WILMINGTON NAMED WORLD'S WORST HAVEN
(Geneva) Thousands of angry private bankers from Switzerland, Liechtenstein, and the Channel Islands have taken to the streets to denounce Delaware's official designation as the world's worst "financial secrecy center" by the heretofore-renowned international critic of tax havens, TJN International.
"Surely this is one contest that we deserved to win," said a leading Geneva private banker. "We feel like Chicago after the Olympics selection."
A Guernsey banker echoed his sentiments. "I smell a rat. Just because the US VP is from Delaware, the fix must have been in. Our assets have been flowing out since 2005. Now we know where they've gone."
"Wilmington. Who'd' a thunk it?"
For the past few years jurisdictions like Switzerland, Liechtenstein, and the Channel Islands have indeed been competing vigorously for the prize of the "world's worst haven."
According to Dubios Pictet von Hentsch, another long-time Swiss banker, "I don't know what they want from us. We have tried everything -- including having many senior bankers from our largest banks get indicted and convicted for helping thousands of wealthy foreigners evade taxes!
"This was supposed to be OUR YEAR!"
"We've also been laundering all those smarmy Euros for decades! This is the thanks we get? Meh! "
"What's happened to "pay-for-performance" in financial services?"
A Vaduz-based private banker from BIL, the legendary Liechtenstein private money-laundering bank owned by the Crown Prince's family, also expressed shock and dismay.
"We're just a tiny developing country (even if we do happen to have the world's highest per capita income.) How's our Crown Prince supposed to feel after this? After all our efforts to help wealthy foreigners all over the planet evade taxes over the last decade, we lose to...Wilmington? Meh!"
"All the really dirty money has been flowing to an even tinier, more obscure place than we are: this place called Wilmington. And we didn't even know about it. We are obviously a little embarrassed."
A Singapore banker commented, "Wilmington? Uh, where is that, exactly? Surely If its number one, it must be packed with non-doms, wealthy sheiks, fancy hotels and shops, and of course lots and lots of ultra-ancient, ultra-discrete private banks, law firms, and accounting firms."
"How is the skiing and the diving, by the way? Not good? Meh!"
Other sources confirm that until it was disclosed by TJN, Wilmington's role in global financial chicanery was one of the world's best kept secrets.
"Apparently all the truly sophisticated dirty money goes there," said a Panama lawyer.
"It's a facade-- purposefully understated, if you will."
"I tell you, you Americans are something else. For years you have been pointing the fingers at the rest of us, while secretly preparing this bid.
Now it turns out to be you who are the real winners. Meh!"
THE WAY THE WORLD WORKS
The Luxembourg private banker agreed to expand a bit on why he thinks the first prize for Wilmington is just so unfair.
"Ok, sure, yeah, everybody has known for some time that First World countries like the US, the UK, Switzerland, Austria, the Netherlands, and Luxembourg are the world's largest ultimate havens -- at least since that book Banqueros Y Lavadolares (1996) laid out the whole story. Foreign money has been flowing out of higher-tax places and developing countries for decades.
"Part of it is just natural risk-diversification. For example, what moron wants to keep all his hard-earned shekels in a place like Mexico? The place is a cesspool of corruption, on the front lines of the drug wars, with lots of kidnappings, and the courts for sale to the highest bidder. You wanna keep all your money there or pay taxes to a government like that? Knock yourself out."
"But it isn't just a question of diversifying away from country risk, because that doesn't explain why all the money gets invested in FIRST WORLD banks.
We First World havens also worked really hard to become the world's top laundromats, so the money would come here."
THE BEST TAX CODE THAT MONEY CAN BUY.......
"First of all, we got the tax laws right, hiring the best lawyers on the planet to design them to attract capital flight and tax evasion, as well as any criminal proceeds that happen to come along for the ride.
None of these rich countries wealthy foreign investors on, say, the interest income they get from, say, bank deposits at UBS or HSBC or Citigroup, or our 200 offshore banks in Luxembourg. And sure we'll respond if the US Department of Justice comes a callin'."
"But we sure as hell don't report this income to, say, the Mexican IRS.
"So all the wealthy foreigners from developing countries investing in First World banks?"
"There are no big customers secrets! The banks know who they are!
"We have to. They are all our private banking clients!"
"So Angel Gurria can keep his lousy foreign accounts in New York and Geneva, we ain't gonna tell nobody."
You see -- even if the US IRS knew the "beneficial owners" of every offshore account in Luxembourg, and New York, and London, and Wilmington, the income these owners earn isn't taxable here. And under the rules we've set, no First World government is going to turn over this information to some no-count Third World country Hey, there's big bucks at stake! "
"It isn't about "secrecy," my friend. It's about tax laws and the people who write them. Or at least that's what we always thought -- until now!"
....WRITTEN BY PRIVATE BANKERS
Number two, we build a vast global pirate banking industry. We put together top fifty most powerful First World Banks, law firms, and accounting firms in the world, and unleashed them on the developing world, where most of this
"Who do you think made all these tax and banking laws, Elwin? Did they just sorta pop up?"
"Naw, this haven stuff is a big business.
"So our lobbyists went to work and designed all these tax laws, plus the banking laws that accomodated them. If we don't get it done with lobbyists, we get a Treasury Secretary or two -- like Robert Rubin, who came from Goldman Sachs and went back to work at Citigroup, or former US Senator Phil Gramm, who was Chairman of the Senate Banking Committee for five years before he left the Senate to become Vice Chairman of UBS.
"Understand one thing: the City of London, Geneva, Zurich, and New York City would barely exist without this offshore banking/ investments businesses. Naturally Singapore and Hong Kong and Dubai now want a piece of action."
THE IRRELEVANCE OF "SECRECY" TO TAX JUSTICE
"You see, my friend -- that's why we're so troubled by Wilmington's victory here.
We don't understand how all the pure "corporate secrecy" in the world has anything necessarily at all to do with being an outstanding tax haven -- or the flip side, with taking money out of poor countries and keeping it outside, tax free. Or with "tax justice."
"We always thought: we take care of the tax laws and have an aggressive private banking industry, then we will win."
On the other hand, you could have all the most perfect information on beneficial owners in the world, and if you can't get First World governments to either (a) tax foreigners on their investments or (b) share the information with developing countries, it won't matter. "
REDOMICILIATION - WAH?
"But now, according to this index, it isn't enough for us havens not to tax foreigners. It isn't enough for us to have the world's most aggressive private bankers."
"Now we gotta get down and compete with Wilmington Delaware on all the 14 technical/legal factors in this stupid index! You look closely at this fancy index, which took two years to complete.
"You find, for example, that Luxembourg lost first place to Delaware just because Delaware corporate law allows redomiciliation and ours doesn't?
"What private banking client ever heard of redomiciliation in Delaware? Of redomiciliation anywhere? Tax rates? Sure. Information exchange? Sure. Great private banking services? Absolutely. Redomiciliation??
Are you shitting me?"
"Any corporate lawyer worth his salt knows you can accomplish the same thing in lots of other ways."But now that CNN is talking about it, you're gonna have every two bit crook in the world running around saying "Redom....redom....Nah nah nah-nah nah...You ain't got it, we're heading to Wilmington!"
Who are they working for, the Delaware Secretary of State?"
A NEW DAY DAWNS IN WILMINGTON
Meanwhile, in Wilmington, the town's 72,000 residents woke up this morning to discover that the world had literally shifted under their feet.
"Our cover has finally been blown," said one local banker. "I'm not sure this is a prize we wanted to win. Certainly it comes as a huge surprise to most of our community -- except for the tiny, carefully selected group that have been in on the secret. "
"The VP was not one of them, so we think he's in the clear. Hopefully."
"TJN really knows their stuff. I think they even sent a small squad of undercover investigators here last summer -- a group of Brits, mainly.
"We immediately suspected them of being up to something, but we didn't know until now just how much sleuthing they were doing. We thought they were here for the nightlife, the boys and girls. It never pays to try and fool those folks."
"After all, after having had a hand in the design of offshore havens in Anguilla, Antigua, Aruba, Bahamas, Barbados, Barbuda, Belize, Bermuda, BVI, the Cayman Islands, the Cook Islands, Cyprus, Gilbraltar, Guernsey, Hong Kong, the Isle of Man, Malaysia, Mauritius, Nauru, Niue, St. Kitts, St. Lucia, St. Vincent, Singapore, the Turks and Caicos, and the UAE, they really know a good haven when they see one."
"Naturally our heart goes out to all the other secretive financial centers in the world. It's never fun to go to bed one night thinking you were number one, and discover that some tiny town that no one has heard of has beaten you to a pulp."
"The downside? Well, it'll probably be much harder to be a secretive financial center, obviously. And now we'll have all those smarmy Euros, plus a lot of Florida cosmetic surgeons coming here with their bags of cash. Meh!"
"Personally I'm already thinking about moving to Wyoming."
(c) JSH 2009