July 30, 2002

In This Issue:
* COMMENT: Breathtaking Hypocrisy

* OFFSHORE: US Rejects EU - Swiss Benefit. Inside Story of US EU 'No'. UK Claims Irish Tax Haven. Jersey Bad PR. Gibraltar Will Vote. Russia Special Report. US Stiffs Bahamas Bank Proof. Uruguay in Trouble. Latin Left Turn? New Zealand Election. Saudi Passports Gone.

* WEALTH: Big US Life Insurance Tax Loophole. US Tax History. IRS Investigates Law Firms. US Helped Terror Cash Flow. Japan Seeks Taxes Offshore. UK Financial Fraud. Sports Millennium Fund Sued.

* COMMENT: Breathtaking Hypocrisy

Dear A-Letter Reader:
'The hypocrisy of these corporations is breathtaking,' huffs US Rep. Richard Neal (D-Mass), who proposed legislation to deny US tax benefits to corporations that move their formal incorporation to offshore headquarters to cut their taxes and increase shareholder profits. How dare Americans exercise legal corporate rights to reduce taxes!

As a former US congressman myself, I suggest that the current collective anti-offshore, anti-business insanity gripping Capitol Hill goes well beyond 'breathtaking hypocrisy' -- it's so much bovine fecal matter. And the unprincipled politicians of both parties who shovel it feverishly as fall elections near, know their cheap shots are at the expense of truth.

Spurred by myriad accounting and business scandals, frightened congressmen are outbidding each other in indiscriminate attacks on CEOs, business or any other random target these pols think will make them look good with voters they can fool by the Nov. 5th election.

Here are a few of last week's grandstanding ploys America's elected 'representatives' have managed to perpetrate without laughing:

* A Democrat amendment forbids the newly created Homeland Security Dept. from contracting with companies that move to offshore headquarters to avoid US taxes. The restriction sailed by 318 to 110. Democrats are working to extend the contract ban to the entire federal government. We are supposed to ignore the fact that it is the Congress that wrote the tax law that made such offshore moves totally within the law.

* Not to be outflanked by the Left, so-called conservative US House Republican leaders introduced civil forfeiture legislation 'to seize the mansions and yachts of corrupt corporate executives.' This from the party that two years ago voted to curb rampant government forfeiture abuse that has confiscated over $8 billion in the last 20 years.

* And in Kooky Kalifornia, the left-wing state treasurer used his power to create his very own blacklist of US corporations that have moved offshore, banning billions in state pension and other investments in the companies that he will decide must be shunned.

I would not usually quote my former House colleague, US Rep. David Obey (D-Wis), but this time dyspeptic Dave hit the nails squarely on their empty heads: 'Nothing is more pitiful or more funny than a flock of repentant politicians in full flight,' he said.

He was referring to asinine Republican plans to confiscate mansions, but he could just as well have been describing his fellow Democrats' frenzied demagoguery aimed at fully legal offshore re-incorporation.

Now we know why some sage once advised that two processes, the viewing of which should be avoided at all costs, are sausage making and law making. Fortunately, we can choose not to consume sausage, but we all have to live with 'laws' that are enough to make you vomit.

That's the way that it looks from here.
BOB BAUMAN, Editor

COMMENT LINKS:
* Democrats win campaign season effort vs. offshore corps. AP.
LINK: http://www.arkcity.net/stories/072702/com_0003.shtml
* GOP eyes seizing mansions, yachts of corrupt executives. Wash. Times.
LINK: http://www.washtimes.com/national/20020727-566014.htm
* California Treasurer seeks tax shelter blacklist. SF Chronicle.
LINK: Click Here.
* Calif. Funds Urged to Bar Tax Haven Investments. Wash. Post.
LINKS: http://www.washingtonpost.com/wp-dyn/articles/A2596-2002Jul25.html
* Pressure on Companies Using Tax Dodge. NY Times.
LINK: http://www.nytimes.com/2002/07/27/business/27TAX.html

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* OFFSHORE *

E.U. TAX DIRECTIVE DEATH HELPS SWISS BANK SECRECY
ZURICH. European Union attempts to force Switzerland to give up banking secrecy may fail as the US government says no to the EU tax plan.
LINK: http://www2.swissinfo.org/sen/Swissinfo.html?siteSect=111&sid=1243673

* Swiss National Bank cuts rate to weaken strong Swiss franc.
LINK: Click Here.

* $4.8 million from Swiss bank accounts surrendered; jail avoided.
LINK: Click Here.
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* The Center for Freedom & Prosperity gives the inside story on the Bush administration's rejection of the EU savings tax directive.
LINKS: http://www.freedomandprosperity.org/Articles/wsje07-25-02b/wsje07-25-02b.shtml
http://www.freedomandprosperity.org/Articles/bna07-25-02/bna07-25-02.shtml
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BRITISH TAX COLLECTORS CLAIM IRELAND IS TAX HAVEN
LONDON. UK Inland Revenue declares low tax Ireland a tax haven, excluding it from double taxation treaty rights.
LINK: Click Here.
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JERSEY WARNED OF BAD P.R.
ST. HELIER. Consultant says Channel Island's image drives away talent.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=8912
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GIBRALTAR OCTOBER REFERENDUM SET
In spite of UK and Spanish opposition to a vote, the Rock will vote on its own future in October, rejecting split sovereignty.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=8928
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RUSSIA: NEW INVESTMENT FRONTIER?
Oil, banking, farming, the nation's economy is humming. Business Week's International Edition special report.
LINK: http://www.businessweek.com/magazine/content/02_31/b3794013.htm
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BAHAMAS TERRORIST BANK? WASHINGTON WONT PROVE IT.
NASSAU. Attorney for Bank Al-Taqwa demands proof of US charges of terrorist cash, and Washington says just believe us.
LINKS: http://www.thenassauguardian.com/news_display.php?prid=8241&src=nassau
http://www.tax-news.com/asp/story/story.asp?storyname=8923
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URUGUAY UP AGAINST THE WALL
MONTEVIDEO. The 'Switzerland of South America' sees US$5 billion in bank deposits (33% of total), flee in the last 6 months.
LINK: Click Here.

* Is Latin America turning left politically?
LINK: Click Here.
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NEW ZEALAND LABOUR KEEPS MINORITY CONTROL
AUCKLAND. Another minority coalition; Labour gets only 41%.
LINK: Click Here.
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THOUSANDS OF SAUDI PASSPORTS GONE
RIYADH, Saudi Arabia. 5,610 Saudi passports stolen or lost in 8 months.
LINK: http://www.arabnews.com/Article.asp?ID=17188

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* WEALTH *