Offshore Asset Protection BLOG - Bob Bauman

Big Wind Blows OECD Windbags Off Course

But for Category 4 Hurricane Jimena and its well-timed 150 mph winds, hundreds of delegates to yet another meeting of the Organization for Economic Cooperation and Development (OECD) would be clinking glasses, lolling in the sun and spending your hard earned tax dollars at the posh Mexican Pacific coast resort of Los Cabos.

And whenever and wherever there is an OECD gab fest, (this one billed as the "5th OECD Global Forum on Transparency and Exchange of Information"), you can be certain our friends and colleagues from the Center for Freedom and Prosperity (CF&P) will be there to set straight the OECD distortions and to promote the benefits of global tax competition, fiscal sovereignty, and financial privacy.

Mexico City Overnight

As it is, both the 70 or so OECD delegates and the CF&P board chairman Dan Mitchell, of ther Cato Institute, who e-mailed me late Monday, made their way overnight to Mexico City, where hurricanes are not usually a threat, although major earthquakes are not unknown. CF&P President Andrew Quinlan also will attend the OECD meeting.

The head of OECD head Angel Gurria, a former Mexican leftist politician of mediocre repute, the secretary-general of the OECD, will lead the two day talks, yet another session aimed at forcing tax havens to share individual's tax information with all the world's tax collectors.

In an op-ed article in the UK Guardian Tuesday (The end of the tax haven era) Gurria (left) crowed: "The era of banking secrecy for tax purposes will soon be over. In tomorrow's world, there will be no more havens in which to hide funds from the taxman."

Decade of Blacklists

In case you missed the several hundred articles about the OECD I've authored in the last decade, here's short refresher course.

Beginning in 1998, the OECD has worked feverishly on behalf of the high tax welfare state governments that pay their salaries, the aim being to destroy tax havens by trying to hinder the flow of jobs and capital to low tax jurisdictions.

The Center for Freedom and Prosperity, with which the Sovereign Society is associated, was founded in 2000 to defend against these radical left-wing attacks on financial freedom.

The OECD, advocate of more taxes, is itself a tax-exempt Paris think tank, mainly financed by the U.S. government (25%). Although it has produced some useful research, it has served as the chief political propagandist for leftist attacks on tax havens, financial privacy and low taxes and tax competition in general.

Clumsy Bully

The OECD plays the bully with repeated clumsy attempts to crush tax havens and force a uniform system of high taxes worldwide.

In pursuing its dictatorial goals the OECD is doing the bidding of its 30 member nations, many of which, like France and Germany, (and the U.S. under Obama) are high tax, socialist welfare states bent on ringing every last dollar, pound or euro out of taxpayers to finance continuing deficits and statist economies.

The OECD instrument of choice in their pro tax campaign has been the use phony blacklists of nations with low taxes. At the G-20 London meeting in April 2009 the OECD added gray lists and white lists, fictitious gradations to measure obedience by tax havens to OECD and G-20 orders.

Now the OECD is sailing with new speed as the PR arm of the G-20 nations who decided to blame tax havens for the world recession, thus justifying forcing havens to weaken their bank secrecy and financial privacy laws.

They Know Best

With an almost religious fervor, OECD bureaucrats presume to tell people and governments how they should conduct themselves by, as they claim, "setting standards and creating values for the entire world."

A tall and very presumptuous order for the OECD's 2000 bureaucrats, the salary of everyone of whom is tax exempt because of their coveted diplomatic status. Housed in a fine Parisian mansion that once belonged to the Rothschild family, the Château de la Muette, (left) the OECD's annual budget of over is $300 million, U.S. taxpayers footing 25% of the cost.

If nothing else, the OECD loves to hold meetings at your expense. No doubt the Mexico City gathering will carry out their pre-arranged agenda and issue the usual statements attacking tax havens, personal and financial privacy and advocating more taxes.

Freedom Fighters

At least we will have a voice in the persons of Dan Mitchell (left) and Andy Quinlan of the CfP.

Cato Institute's Dan Mitchell further explaines that: "High-tax nations will now move the goal posts and make further demands for things such as unlimited information sharing, special rules for monitoring high net worth individuals, and harmonization of corporate taxation."

The battle for financial privacy and freedom continues.

You Can Help

You can be certain the Sovereign Society will do its part, as will the Center for Freedom and Prosperity.
You can help too, by sending a generous contribution to the CFP that will help them continue their vital work.

 The Sovereign Society is a recognized voice in the complex offshore world.  Join the Sovereign Society and keep informed.

Return to Los Cabos

You, too, can hear and meet Dan Mitchell at the Sovereign Society's 3rd Annual Offshore Advantage Seminar: A Beginner’s Guide to the Offshore World, November 4, 2009 – November 7, 2009, at the Westin, Los Cabos, Mexico. (We guarantee good weather! No hurricanes! I’ll be there personally to make certain.)

Twenty-one of the world’s most respected offshore masterminds -- with over 325 years of collective knowledge in private offshore banking, global investments, and asset protection - will assemble in Los Cabos for four days of closed-door mastermind meetings.

A select group will be given a rare "insider’s look" as these experts reveal their time-tested strategies for protecting privacy and capital in today’s volatile markets, economy and new era of populist politics.

For full details on our Los Cabos meeting agenda and tactics to be revealed, click here.

 

UBS vs. IRS: Swiss Reputation Lost

Recently I asked you, readers of my blog, to email me your comments for publication on my blog page following each entry.

Until now our Sovereign Society blogs haven’t published readers comments, but now we do. And I welcome your comments, pro or con. We want to know what you think.

Easy on the Swiss

In response to my blog entry, Teeing Off on Obama's Cynicism, Hypocrisy, Tony, responded: " I am terribly grateful for your excellent sense of right and wrong as it pertains to the sovereign individual. Keep up the good work!!"  

But he added: "With very great respect, I believe that you have been much too easy on UBS, Obama, and the Swiss Government. None of them have the slightest interest in anything but their own immediate selfish interests. They are nothing more or less than power-hungry, greedy, treacherous, lying thugs." (You can read Tony's full comment at the bottom of the blog page on which my article appeared).

Questionable at Best

Tony also touched upon several important background points I've commented on during the last year, as the UBS debacle gained momentum and worldwide notice. Comsider these points:

** In February 2009, UBS and the Swiss government violated due process of law when they handed over to the IRS the names of an accused 250-300 account holders, without permitting any appeal of this action as Swiss law allows;

** In August 2009, the Swiss government and UBS caved in to IRS demands and abrogated the existing U.S.-Swiss tax treaties by not demanding specificity with respect to the release of a reported 4,500 UBS American client names.

Tony believes that the settlement agreement between the IRS and UBS is another example of the Swiss government making a mockery of Swiss law, and he may well be rght..

Appeals Mockery

For example, in the so-called "appeals process" the Swiss government is requiring U.S. persons to notify the U.S. attorney general if they wish to prevent their confidential account information (previously guaranteed as secret by UBS as well as the Swiss government and law) from being released to the IRS.

Try to appeal and the Swiss government will give account details to the U.S. Department of Justice, just as they did previously, even though UBS American account holders sued in a vain attempt to maintain their privacy and enforce Swiss law.

Closer Look

Tony's points made me take a closer look at what the IRS-UBS-Swiss government agreement and what it entails. At the time al parties also made public declarations that make interesting reading.

Freedom and Privacy at Issue

I previously wrote about the deal. However, after further research, especially a review of the IRS official statement and related documents.

I think anyone interested in the future of bank secrecy in Switzerland, (if indeed there is any such future), should consider what the Swiss government in fact has agreed to do.

Threat of Future IRS Attack on Other Banks

** The deal suspends the immediate enforcement of that broad "John Doe" summons under which the IRS demanded upwards of 52,000 UBS client names.

However the underlying summons remains in effect in court and can be reactivated if the IRS concludes "...the results are significantly lower than expected and other measures fail." At that point the IRS can start all over by resuming enforcement of the John Doe summons.

Score one big one for the IRS, and for the continuing threat that will be held over both UBS and the Bern government.

** The IRS claims that "the Swiss Government has agreed to review and process additional requests for information for other [Swiss] banks regarding their account holders to the extent that such a request is based on a pattern of facts and circumstances equivalent to those of the UBS case."

Swiss Admission; IRS Bluff

On Aug. 27 Switzerland’s chief negotiator in the UBS case admitted that the IRS may request names of American clients from other banks after the Swiss government agreed to hand over UBS account details. "It is possible that the IRS will ask for more data on U.S. customers at other Swiss banks," Michael Ambuehl, (above right) who led discussions for the Swiss foreign ministry, said.

 This echoes the statement of IRS Commissioner Douglas Shulman (left) who said that the IRS plans to target more Swiss and other offshore banks, law firms and entities that help Americans hide assets.

Ironically, the IRS admitted that it never really wanted all 52,000 UBS clients names, but used that number as scare tactic and ploy to gains access to the smaller 4,500 account holders with larger deposits.

Faces Saved, Butts Covered

With cunning maneuver, the Bern politicians used the existing Swiss-U.S. tax treaty as the process vehicle to accomplish this questionable deal. That trick avoids the very real threat of a national referendum in which the deal might well have been defeated by angry Swiss voters rightfully protesting U.S. violation of their national sovereignty.

All of which makes a mockery of those pious statements by Swiss president, Hans-Rudolf Merz, (right) about Swiss bank secrecy having been preserved -- under glass in a museum?.

History Will Judge

I think history will see this as a classic case of political face saving and butt covering by the Swiss politicians who surrendered to the IRS.

The IRS, good at bluffing and threats, and high tax U.S. politicians, were the big winners.

Losers were the 4,500 U.S. clients abandoned cavalierly by both the tax-evading UBS and a highly nervous Swiss government willing to abandon principles and avoid a fight – but a great coast.

But then we really shouldn’t feel too sorry for Americans who evade taxes and violate the law.

The real losers were thousands of honest Americans and others who seek true financial privacy because their own governments have destroyed it.

What do you think? Send me your comments at info@sovereignsociety.com

* The Sovereign Society is a recognized voice in the complex offshore world. Join the Sovereign Society and keep informed.

Bank You Very Much

Beginning in 1921, bank failures in America increased significantly. There were far too many banks and they were virtually unregulated.

Taking note of this disturbing trend in a 1923 speech to the American Bankers Association convention in New York City, the late, great American humorist, Will Rogers of Oklahoma, (left) didn't mince his words.

He told the assembled money men: "You have a wonderful organization. I understand you have ten thousand folks here. And if you count the ones in the various federal prisons, it brings your total membership up to around thirty thousand."

New Nadir
Ten years later the Great Depression lowered Americans' opinion of bankers to what was then a new nadir. 10,000 banks failed between 1929 and 1933, 40% of the1929 total, certainly not just because of bankers, but with their significant help.

It is no exaggeration to say that today Americans' opinion of bankers and associated financial "service" people is lower than it's ever been, with good reason.

And it seems the bankers, with their multi-million dollar bloated bonuses paid out of billions in taxpayer financed bailouts, don't really give a damn about we the people.

A Free Market Libertarian
Readers of this blog for the last two years know that yours truly is an avowed free market conservative, a libertarian generally comfortable with laissez fare economics --  as my voting record in the Maryland State Senate and the U.S. House of Representatives proves.

But when it comes to the management of the likes of the Bank of America and American Express, my patience is at an end. My recent experience with both behemoth corporations prompts me to give a ringing  endorsement to poet Robert Frost's sage observation that: "A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain."

Exhibit A: Lack of Evidence
I didn't chose Bank of America -- they chose me. Years ago when I moved to Florida, friends said Barnett Bank, the state's largest, was the place to be. And they were right; good service and low fees. Several mergers and a decade later, in 1997 my bank (first Barnett, then NationsBank) morphed into Bank of America.

(For the record, as of this date, Bank of America has received $52,500,000,000 in taxpayer paid bailout funds and repaid zero. At 9% interest, revenue to the government has been: $1,114,305,555. BoA got 9% of total bailout funds committed and 29% of all funds given to the banking industry). 

I have several accounts, a mortgage and credit cards with BoA -- cards a faceless bank staff begged me to accept with available credit they increased without my asking. During the decade BoA has had my business I've paid my bills on time and never used all my credit.

But a few months ago I got a written notice saying the bank were cutting my available credit by a whopping two thirds.

When I finally got a human voice on the phone, the lady insisted "recent information from credit reporting agencies" indicated I had not paid my all my bills. When I pointed out there was no such information, and that I was reading from the combined credit agencies web site that proved that assertion, the BoA lady went off the line to "speak to a supervisor", then came back and raised my card credit by a third, a net loss of one third.

 
A good friend and associated of mine, who has a higher net worth much than me, also had their available card credit amount cut arbitrarily, as I gather many thousands of others have also.

Thus an abrupt unpleasantness, after years of banks begging millions of people to take their credit cards, inundating all of us with scores of glossy appeals in the mails.

Exhibit B: Wrong Ratio
A few weeks ago one of my adult children emailed me: "How's this for fun?  I made a large payment yesterday on my American Express card and overnight they CANCELED it because they said my 'balance to limit ratio was too high' and too many inquiries in the last 12 months. The financial industry in this country is SCUM.'"

The reason for the multiple inquiries about my child's account?

He had return to America after a 20-year absence living and working abroad where he managed millions of dollars in business and charitable accounts. In spite of having good credit abroad, including a mortgage, American banks and businesses treated him as if he had no credit record at all. Family members had to co-sign for an auto purchase.

My Dear Sir 
My son is not one to go quietly into that night or that day.

He wrote a stinging email to AmEx CEO, Kenneth I. Chenault, (left) part of which I quote:

" I do not object to your withdrawal of the credit facility; that is your right as a lender. Nor do I object to your use of credit evaluation algorithms rather than common sense in making the decision to do so (I only arrived in the US to work for a charity 18 months ago, so my overall credit lines are low, resulting in a higher than usual credit utilization rate).

"I am aware that your industry long ago ceased to have any concern or interest in the specific circumstances of its “clients” as actual human beings. No, what I object to is your cynical, deceitful, abusive tactic of deliberately waiting until I had made a substantial payment and then canceling the account without warning.

" I note that you received a salary, bonus, and “perks” of $8.6 million in 2008, the same year my tax dollars contributed to a $3.4 billion “bailout” of your company (which you were supposed to use to extend credit to people like me, but oh, well). Your earnings were approximately 10,700 times greater than the measly little credit line you just withdrew. Enjoy your money."

Do Leave Home Without It
(American Express last fall received from the government $3,388,890,000 in TARP funds and repaid the full amount on Jun 9, 2009. The U.S. Federal Reserve gave AMEX permission in Nov. 2008 to become a bank holding company in order to qualify for TARP funds).

It appears that AmEx acted in my son's case on the day before major parts of the new "Credit Card Accountability, Responsibility and Disclosure Act" recently enacted by Congress. U.S. banks have figured out that they stand to lose big bucks in interest and fees because of limits imposed by this new federal law.

Though many lenders are cutting credit lines, AmEx has ruffled more than a few feathers. Nearly 3/4 of small business cardholders have a negative or very negative opinion of the company, according to a study from market research firm Powerfeedback. Sixty-two percent say they wouldn’t recommend AmEx to a friend or family member.

As Bill Buckley Was Wont to Say: "Mirabile dictu!"
A few days later my son emailed me: "Now, I'm not sure whether to laugh or cry at this one – I got a call from the CEO’s office at Amex in New York saying that my email had got through straight to his inbox somehow, he’d been struck by the unfairness etc. of it all, and called a meeting with some of his senior managers to hold my case up as an example of why they need to change their business practices, and presto! My account has been reactivated…and increased in credit amount by 70%!"

I replied that such events must flow from "the power of well written words -- and possibly a providential mistake in email routing."

Lack of Imagination
It was the late Oscar Wilde (1854 - 1900) (below) who observed: "Anyone who lives within their means suffers from a lack of imagination." No doubt in the Victorian era of bank drafts, credit cards would have been considered highly unacceptable, even irresponsible.

It strikes me that both of the exhibits I cite are typical of an age in which banks are managed by computer software programs reflecting the policies of corporate idiots. ("Garbage in; garbage out.")

No longer is the customer right -- even part of the time. The collective attitude seems to be that the customer is never right -- and thus, expendable.

Yet another reason, dear reader, to bank offshore -- before Obama and his U.S. banker buddies outlaws that too.

PS: For helpful advice on managing your credit cards, click here.

If you would like to defend a bank, or comment, send me an email at info@sovereignsociety.com

* The Sovereign Society is a recognized voice in the complex offshore world. Join the Sovereign Society and keep informed.

Oldest Swiss Private Bank Says No to IRS Demands

Under the heading "Yankees Go Home," I predicted last month: "Swiss bankers have concluded they don't need or want Americans any more, with all the costly and legally dangerous U.S. government red tape."

I explained in detail then about the greatly expanded Qualified Intermediary (QI) rules the U.S. Internal Revenue Service wants to impose on all foreign banks that do business with U.S. persons.

I said then: "Tens of thousands of Americans already are suffering because of what can best be described as a diabolical 'financial apartheid' -- disruptive rules being imposed on Swiss and other offshore banks by the U.S. Internal Revenue Service (IRS) and the U.S. Securities and Exchange Commission (SEC)."

Call from Zurich

This morning I received a phone call from Rob Vrijhof, (right) our long time investment and banking associates in Zurich and a member of the Sovereign Society Council of Experts. Rob called my attention to the announcement today by the venerable Wegelin & Co., Switzerland’s oldest private bank, that it will stop doing business in the United States and with Americans.

Founded in 1741, the St. Gallen-based bank, said their decision was in response to stricter measures introduced in the U.S. against tax evasion and projected changes in U.S. estate tax laws which could make some non-U.S. citizens liable for U.S. taxes if they inherit U.S. securities.

The bank did not mention new U.S. government demands that offshore banks giving investment advice to U.S. persons must register and qualify under SEC rules, a blatantly illegal attempt to extend American law well beyond its normal jurisdictional area which ends at the U.S. border.

So drastic have the IRS/SEC extraterritorial measures become that even members of the U.S. Congress have protested they go to far.

"Untenable Position"

In  letter to investors the Wegelin bank said Swiss banks were being forced into "an untenable position," expected by the IRS to know which clients were liable to pay U.S. tax that Wegelin called "an impossible undertaking,’ given the lack of clear definitions in the IRS proposed rules. "The danger of inadvertently making false declarations to the U.S. tax authorities will be too great," it explained.

The bank let the United States have an added zinger, saying it believes the U.S. government overestimates its attraction as a financial center, thus Wegelin is advising its clients to pull out of all U.S. securities investments.

The decision comes a week after U.S. tax authorities reached a deal with the Swiss government which under which UBS will surrender details of 4,500 of its U.S. clients suspected of alleged tax evasion.

More to Come?

Wegelin & Co. is Switzerland’s oldest bank. It operates in nine locations throughout Switzerland, has over 450 employees, and currently manages client assets of over CHF 20 billion (US$17.9 billion).

As a limited partnership, Wegelin & Co. is one of the few Swiss private remaining banks whose managing partners bear unlimited liability. Wegelin & Co. specializes in asset management for private and institutional clients.

But if Wegelin & Co. has opted out, can others be far behind?

Already the IRS plagued UBS (for selfish reasons) has abandoned it U.S. customers, as has Credit Suisse. Reports say that some Swiss private banks still are willing to serve American clients, and we know that to be true. British bankers also have been dicussing a ban on U.S. clients.  

We Can Help You

The Sovereign Society now have in place agreements with reputable Swiss private banks willing to accept new accounts from those who identify themselves as our members.

These arrangements are in full compliance with IRS and SEC rules and with other U.S. laws. A U.S. client must sign an IRS Form W-9 that allows the offshore bank to report required information to the IRS.

As it has been since our founding 11 years ago, our staff is available to assist in opening a Swiss or other offshore account.

Take advantage of these special Swiss banking arrangements -- sign up here for Sovereign Society membership. Once you are a member, you can contact us for help via email at info@sovereignsociety.com

Teeing Off on Obama's Cynicism, Hypocrisy

Guess who President Barack Obama is paling around with this week during his Martha's Vineyard vacation?

Would you believe Robert Wolf, president of UBS Investment Bank and chairman and CEO of UBS Group Americas?

President Obama tees off his round of golf Monday as, from left, his friend Eric Whitaker, presidential aide Marvin Nicholson and UBS Americas president Robert Wolf await their turn.

Yes, dear readers, that is indeed the same Swiss bank that has been in the news constantly during the last year, in a not good light, what with its staff admittedly assisting thousands of American UBS account holders to evade what the IRS claims is billions in taxes owed.

But if you're surprised that these two presidents -- one of the U.S. -- the other of UBS -- are golfing buddies, you haven't been reading my blog.

UBS Skeleton in Obama Closet

A year ago, on July 25, 2008, I exposed Obama's close ties with UBS' Wolf, who turned out to be one of the President's leading fund raisers in the 2008 presidential race.

Again on October 23, 2008, in a blog entry entitled "Obama Says: Shut Down All Tax Havens" I commented on the crass hypocrisy of Barack Obama when I wrote the following:

"The Chicago style political cynicism of Obama in denouncing offshore financial activity and tax havens is breathtaking -- as is the eagerness of bankers and Wall Street to appease him -- and prostitute themselves.

"Example: In September Obama released an Internet and TV ad mocking John McCain for visiting Bermuda in 2006, vowing to preserve the tax haven there, then taking money from the insurance industry. McCain did indeed tell the local Royal Gazette last year: "The industry, the re-insurance that’s had such phenomenal success has been good for both nations. I would oppose any measures that would upset that." Obama claimed that insurance CEO’s and lobbyists then donated $50,000 to McCain."

But Obama's TV ad never mentioned that he also received plenty from the insurance industry, ranking as one of its top recipients, with $1,290,434 in the 3rd quarter 2008 election cycle alone.

Obama Pretends

Similarly, at a U.S. Senate hearing in July 2008, then Sen. Obama praised Sen. Carl Levin's anti-offshore attacks, claiming: "Ordinary Americans pick up the slack for tax cheats who hide assets in offshore tax havens, often with the help of foreign banks like UBS and LGT." But in issuing his ringing anti-tax haven statement critical of UBS, Obama said nothing about one of UBS' most prominent executives, Robert Wolf, CEO of UBS Americas.

Levin Gives Wolf a Senate Pass

In deed, missing from the roster of witnesses before Sen. Levin's July 2008 subcommittee hearing was that very same Robert Wolf, in spite of the fact that he is CEO of UBS America.

But then by the hearing date Wolf had already collected and bundled more than $370,850 in campaign contributions for Obama, making UBS Obama's fifth largest corporate donor in his 2008 presidential campaign.I guess UBS Wolf didn't qualify as a lobbyist, since candidate Obama pledged never to take cash from lobbyists.Keeping the Wolf Away

Judi McLeod of Canada Free Press revealed how Obama shamelessly and personally courted his future golfing buddy, Wolf. She wrote:

"Wolf was 'wowed' by the Senator from Illinois when he first met in December 2006. "He handed Obama his card and said, "I’d like to get to know you more." (John Heilemann, New York Magazine, April 16, 2007). Obama phoned the next day. "When we hung up, he said, `I’ll call you after the holidays,’ and I’m thinking, Yeah, right, he’s gonna call me," Wolf says.

But call Obama did -- both then and now.

"The next week they had dinner in Washington, just the two of them, on the night that George W. Bush gave his speech announcing the surge of additional troops into Iraq. "I felt so honored to be sitting down with him for two hours on an occasion like that," Wolf recalls, "knowing that he was going off to be interviewed on television later."

Buddies Linked Before the Links

Ah, what a difference a year makes!

This week President Obama played five hours of friendly golf with the same Robert Wolf, not just an early financial backer of Obama’s presidential campaign, but one who in total raised almost $400,000 starting back in 2006.

In February this year Obama appointed Wolf to the White House’s Economic Recovery Advisory Board. (See above) One might ask: "Economic recovery for whom"?

Wolf’s presidential appointment came within days of UBS agreement to pay a $780 million fine to settle U.S. civil and criminal charges related to its tax evasion help given its American clients.

But did UBS really pay that fine or did Americans taxpayers foot the bill? UBS received $2.5 billion of your tax dollars in a once removed backdoor bailout from bailed out insurance giant AIG.

Sen. Olympia Snowe, R-Maine, (left) at the time said, "It looks like we’re simply laundering this money through AIG." UBS, the bank that sheltered wealthy tax dodgers, was actually bailed out by hardworking U.S. taxpayers.

Let's Make a Deal

I know I'm tired of talking about UBS, but it is a matter of judicial record in the Miami court case filed by the IRS against UBS, still pending, that UBS admitted under oath that its employees made a concerted effort to open numerous accounts in Switzerland for wealthy U.S. clients, employing practices that "facilitated and resulted in tax evasion by U.S. clients."

Do you think the president knows he is relaxing with a known instigator of U.S. tax evasion? Is the sky up?

And was the U.S. really ready to go to war with Switzerland over the UBS scandal -- or was that just a show to make Americans think Obama is a brave fighter against tax evasion?

As part of the settlement of the case, UBS agreed to share client account information with the IRS. The Obama Justice Department made a big deal of demanding the names of an alleged 52,000 American accounts. But when the deal was struck, only 4,450 client names will be surrendered.

Politics Chicago/Washington Style

Do you suppose may be someone in the White House might have had a friendly discussion about the UBS settlement with someone at UBS? Perhaps at a very high level? Axelrod? Emanuel? Bo?

As Wolf was preparing for his golf game with Obama, former UBS employee and IRS informant, Bradley Birkenfeld, (left) was sentenced to 40 months in prison for facilitating offshore tax evasion through UBS banking schemes, even though he assisted federal investigators in exposing the bank. (Sentence does not begin until next year and could still be reduced).

God of Thieves & Merchants

I quote approvingly from the web site www.democracynow.org that wryly notes:

"Above the entrance to UBS headquarters in Zurich is a bust of the Greek god Hermes -- not only the fleet-footed messenger of the gods, but also the god of thieves and merchants. The symbolism is striking. Whether or not Wolf won his golf game against Obama, UBS has clearly scored a hole-in-one."

In With the Same Old?

So much for his mantra of "change" and that glittering "new era" in open politics candidate Obama repeated as nauseam.

We don’t begrudge the president his offshore banker friend at UBS – but he certainly has no right to try and block all Americans from having their own legal dealings with offshore banks of their choice.

*** Think i'm too rough on our President? Or not rough enough? Send me an email and share your views about our golfing president: info@sovereignsociety.com

Tax Terrorism & Fear -- Official IRS Policies

In 1757, one of the patron saints of conservative political philosophy, Edmund Burke, (below left) wrote: "No passion so effectively robs the mind of all its powers of acting and reasoning as fear."

Two centuries later, America's newly elected president, Franklin Delano Roosevelt assured, a shaken America at his 1933 inauguration during the depths of The Great Depression that: "The only thing we have to fear is fear itself."

In 1776, John Adams of Massachusetts, (below right) that fiery leader of the American Revolution, and second U.S. president, correctly observed: "Fear is the foundation of most governments.' Adams spoke of a tyrannical English king, but his words could be the official motto of the U.S. Internal Revenue Service.

IRS + UBS = Fear

Over the weekend Swissinfo.com published the views of Columbia University law professor John Coffee (below right) concerning the U.S.- Swiss settlement of the UBS tax evasion scandal. Coffee said that, in his opinion, creating fear in U.S. taxpayers was always the goal of the negotiations between the Swiss and U.S. governments, and that the court case brought in Miami against UBS was less about the bank than about instilling fear in all American taxpayers.

"The Internal Revenue Service was targeting American taxpayers who try to avoid paying tax," Coffee said. "The U.S. wants to scare and intimidate U.S. taxpayers into the voluntary disclosure program. It's all about a law enforcement strategy to intimidate people into voluntary disclosure."

All the views expressed above are in accord with those of Dr. Bradford DeLong, an economics professor at the University of California at Berkeley who was Deputy Assistant Secretary of the U.S. Treasury for Economic Policy from 1993 to 1995, by appointment of then President Bill Clinton. From that, I assume that Dr. DeLong may be a Democrat, or at least sympathetic to the doctrines of Clintonomics.

Random Terror

Commenting about tax policies, DeLong (below)nwrote: "The IRS's comparative advantage is using random terror to elicit voluntary compliance with the tax code on the part of relatively rich people."

Pause a moment and consider that the dictionary defines "terror" as an "intense, overpowering fear." It also suggests the word applies to "one that instills or has the ability to instill intense fear," as in, "violence committed or threatened by a group to intimidate or coerce a population, as for political purposes." The brutal sound of jackboots in dark streets comes to mind -- then that fateful knock on the door.

Professor DeLong may be right. "Random terror" indeed may be the traditional weapon used by the IRS in the UBS or any other tax case.

Columbia's law professor Coffee adds: "With the deal, the IRS can keep up their pressure on tax frauds and even increase it." He noted, as have I, that UBS clients who may be tax law violators have until September 23rd under an announced amnesty to contact the IRS if they want to face reduced penalties. Coffee told swissinfo. "No one can feel safe."

For the IRS, the strategy is to intimidate tax cheats into turning themselves in, professor Coffee believes, is "much more cost effective than dragging people through the court system." The tax section of the U.S. Dept. of Justice also lacks the personnel to pursue thousands of tax cases each year

Incomprehensible Tax Laws

So, friends, it isn't enough that the IRS feels it must resort to tax terrorism to collect what it claims is do from UBS clients.

That's bad enough, but just trying to understand the U.S. tax code is terrifying to all of us, what with the possibility of late interest, fines and even prison. Think what your immediate reaction would be if you got an IRS audit notice.

Aside from the injustice of taxes being spent for purposes with which we may disagree, the forced operation of the U.S. tax system itself is a major drain on the economy amounting to a national scandal.

Add up all costs of tax compliance (accountants, lawyers, etc.) and Americans pay over $100 billion annually, a cost figure that does not even include actual taxes paid! The administrative costs of the bloated 110,000 employee-IRS bureaucracy alone exceeds $10 billion a year. And now Obama's IRS wants still more money and more bureaucrats!

When the first national income tax became law in 1913, the entire Internal Revenue Code fit into a slim volume with 173 pages. Today, the IRC contains over 20,000 pages of laws, regulations, advisories and rulings. Forms, instructions, orders and notices take many thousands more pages.

Tax Gestapo

A few years ago congressional hearings on the IRS exposed publicly what many Americans knew already: the IRS too often conducts its affairs like a financial Gestapo, running roughshod over citizens rights.

One after another, witnesses offered proof of how ruthlessly the IRS had used its unbridled powers. This agency viewed all taxpayers as adversaries, assuming them guilty until they could prove otherwise. It snatched property, seized bank accounts and turned people out of their homes, often without regard to due process of law. Much of this activity was carried on in secret with little accountability.

In her book, Unbridled Power, (Harper Business Books, NYC, 1997) Shelley L. Davis, joined the many who have said that "IRS reform is long over due." She ought to know. She served as official historian of the IRS -- until she began to ask too many difficult questions. Then she was fired.

Tax Tyranny -- So?

Another Massachusetts patriot, James Otis, (right) was known as "the firebrand of the American revolution." His most famous utterance, in 1761, became the watchword of that revolution: "Taxation without representation is tyranny."

One need only consider the triple trillion dollar deficits of the current White House and Congress to realize we have long since passed into the tyranny of which Otis spoke.

* The Sovereign Society is a recognized voice in the complex offshore world. Join the Sovereign Society and keep informed.

Swiss Bank Secrecy Deal: Liberty, Privacy Are the Issues

"Names Deal Cracks Swiss Bank Secrecy" That's the headline in The New York Times giving details of the agreement between the Swiss government, UBS, one of that nation’s largest banks, and the U.S. Internal Revenue Service (IRS).

The deal means that UBS will turn over information on about 4,500 American clients suspected of using UBS accounts for tax evasion.

It also means the IRS has been forced to back away from its fishing expedition demands for the names of all 42,000 UBS American clients, apparently based on the supposition that any American with a UBS account is evading U.S. taxes. (Under the terms of the deal the IRS reserves the right to reopen its fishing expedition lawsuit if progress is not to its liking).

Intentional Scare Tactics

According to The Times: "The agreement is likely to unnerve American customers of UBS who do not know if their names will be divulged, and could deter others from opening Swiss accounts in the future."

On that second point, we hope not.

We don't really care if illegal tax evaders are nervous. They should be.

But we certainly hope that honest, tax paying Americans (and others) who desire real financial privacy, true asset protection and expert investment advice will continue to employ Swiss banks, investment advisors, insurance and annuity specialists -- and not be scared away from the very real benefits offered by the world's leading offshore financial center.

UBS Criminals Help IRS Bullies

Frankly, I’ve written so much about the UBS mess over the last year that I am sick of it -- and of the greedy, crooked UBS officials and staff that stupidly thought that they could use Swiss bank secrecy law to cover their illegal tax evasion advice, while running up fat fees for themselves and billions in deposits for UBS.

This thoughtless criminal activity not only added to the instability of UBS, already $50 billion in the hole because of bad investment exposed by the global recession, but their conduct needlessly called into question the admirable privacy policies and bank secrecy laws of the Swiss government. UBS tarnished not only its own reputation, but that of a major nation and of its people.

(The canny Swiss government announced Thursday that it is selling its $5.6 billion bailout stake it gave UBS last October at a profit of about $1 billion).

Worst of all, what UBS did allowed the tax bullies at the IRS to: 1) smear thousands of honest Americans who bank offshore; 2) attempt to scare away thousands more who could benefit by doing so; 3) pretend to extend U.S. tax law jurisdiction to the entire world; 4) use blatant economic blackmail against not only an errant bank, but against a friendly country that has long been a faithful ally and against its 7.6 million people.

The agreement lifts the threat of U.S. criminal prosecution against UBS, the world's number two wealth manager by assets. The IRS was not only willing to risk endangering the bank's existence, but it could have dealt a major blow to the Swiss and U.S. economies. (UBS has 20,000 American employees).

Bank Secrecy Law Still Lives

You can expect that the left wing, anti-tax haven crowd will play this as the death, not only of Swiss bank secrecy,but the beginning of the end for all offshore financial centers. Don't they Wish! IRS Commissioner Doug Shulman (left) crowed: "It's a real sense that the world of bank secrecy is eroding."

The Financial Times declared "US wins UBS accounts deal" adding "Hole blown in famed Swiss bank secrecy." FT suggested that the deal could open the door to "fishing expeditions" and attacks on other Swiss banks. The press consensus in Switzerland seems to be that the IRS-UBS deal is the "best of all bad solutions."

Swiss government officials stressed that the deal is in line with existing bank secrecy law, notably the Swiss-U.S. double taxation treaty. Under the deal UBS clients accused of fraud or tax evasion will have right to appeal to the Swiss Federal Administrative Court. (See the video statement by the Swiss president, Hans-Rudolf Merz).(right)

Tax Fraud Definition Expa

As I have explained before, the Swiss bank secrecy law has never been absolute.

That law distinguishes between tax avoidance, tax evasion and tax fraud. Unlike in the United States, tax evasion is a civil, not a criminal offense under Swiss law, but tax fraud is a crime. In selected past cases the government has waived bank secrecy based on tax fraud. This time they really did waive it -- to the tune of 4500 names.

UBS will give the names to the Swiss tax authority, which will forward them to the I.R.S. Under a new tax treaty with Switzerland, it could take more than a year for most of the names to be disclosed. In coming weeks the bank will start to notify clients, who can appeal the disclosure in Swiss courts.

It is not clear how UBS will decide which clients to unmask, though American officials have said that they are interested only in the biggest accounts, some containing hundreds of millions of dollars and accounts that made use of offshore entities and sham corporations.

Swiss Banks Still Available

Whether all this will change the Swiss banking industry’s culture of secrecy based on law is doubtful in my opinion.

But the IRS has made clear that their pursuit of tax evaders will not stop at UBS. Some smaller, centuries-old private Swiss banks, however, are stepping up their efforts to attract American money, given the importance of foreign clients to the nation’s financial institutions.

Understand that the Sovereign Society does not condone tax evasion in any form, a point we have made repeatedly in our publications throughout for our entire existence.

Of course there is a simple way for you to avoid personal tax troubles - file the proper IRS reports on time and pay your taxes when they're due, as often have explained

Help for You

At the Sovereign Society we saw this coming. We meet regularly with Swiss and other offshore banker and have agreements with reputable Swiss banks willing to accept new accounts from those who identify themselves as Sovereign Society members

These arrangements are in full compliance with IRS and SEC rules and other U.S. laws. U.S. clients must sign an IRS Form W-9 that allows an offshore bank to report required information to the IRS.

As it has been since our founding 11 years ago, our staff is available to assist in opening a Swiss or other offshore account. Take advantage of these special Swiss banking arrangements and the advice of our Swiss advisors -- sign up here for Sovereign Society membership. Once you are a member, you can contact us for help via email at info@sovereignsociety.com

Last Word: The Real Issue is Liberty

We at the Sovereign Society believe that personal and financial privacy is an inherent human right, a requirement for maintaining the human condition with dignity and respect.

In all this ruckus about UBS and the IRS, the really basic issues are preservation of our personal freedom and liberty versus complete government control of our lives and our fortunes.

** The Sovereign Society is a recognized voice in the complex offshore world. Join the Sovereign Society and keep informed.

Bob Novak: Prince of Light

Reporter, patriot, skeptic of the powerful" -- that's what The Wall Street Journal, his former employer, said today about Robert David Sanders Novak, better known to his many friends (and enemies), as "Bob." He died at home in Washington, D.C. early Tuesday after a battle with brain cancer.

It is not too much to say that he was among America's greatest political reporters.

I was fortunate to count Bob Novak as a friend. One of America's most influential journalists, he relished his "Prince of Darkness" public persona. "He was someone who loved being a journalist, loved journalism and loved his country and loved his family," Novak's wife, Geraldine Novak said.

Capitol Hill Correspondent

In 1957, Bob was transferred from Chicago to Washington, D.C. where he reported on Congress; he left the Associated Press to join the D.C. bureau of The Wall Street Journal in 1958, covering the Senate, and in 1961 he become their chief congressional correspondent.

At the time I had been on the House of Representatives Republican Floor Staff, starting as a page boy in 1953, and working up to head the House Republican Cloakroom legislative staff.

I was active in the national Young Republicans and in 1960, a founder of Young Americans for Freedom (YAF), and later the American Conservative Union (ACU). Bob found out about my conservative youth activities and, as reporter, he would call me out to the Speaker's Lobby and question me about the nascent conservative movement.

Once when a congressman heard that Novak wanted to talk to me, he muttered something about "Reporters talking to staff when they rarely talked to me.

Novak in 2007 and as an AP reporter in 1958 in the House Press Gallery.

Source Not a Target

Later, during my eight years in Congress, it was not unusual for Bob to phone with questions about political and legislative developments or my congressional colleagues. Novak's Rule No. 1: "In my world, you have a choice; you can either be a source or a target."

I chose to be a source -- almost always off the record. The one time that I can recall when Bob quoted me in his column I was critical of something Jack Kemp (right) had done, and Jack never let me forget it.

Watching the comments from Fox News this evening all the speakers commented on the fact that Bob Novak was first and foremost a reporter who insisted on dealing in the facts, a rarity in journalism these days. In 1963 he teamed up with Rowland Evans to create the Evans-Novak Inside Report, a six-times a week newspaper column. The long running column has been described as "a form of foreign correspondence" that initiated America's heartland into the exotic political culture of the Nation's Capital.

Nice Guy

One irony of Bob's long and admirable career as a journalist is that he wasn't the curmudgeon he played on CNN and other TV shows. In person he was warm, loyal and generous to friends, even as he was fearless and unsparing toward the public officials he devoted his life to covering -- or uncovering.

Raised Jewish, Bob was introduced to Catholicism when our mutual friend, Jeffrey Bell, (right) Republican political consultant and former Reagan aide, gave him books on the Catholic faith. (Jeff achieved eternal gratitude from his fellow conservatives when he defeated the ultra-liberal U.S. Senator Clifford Case in the 1978 New Jersey Republican primary).

Bob credited his ability to withstand the shock of learning of his brain canvcer to his Roman Catholic faith. A secular Jew, he converted in 1998, with Democratic U.S. Sen. Daniel Patrick Moynihan, among others, in attendance. At a reception afterward, Moynihan, noting Novak's reputation as a heartless critic of programs for the poor, declared, "Well, Novak is now a Catholic. The question is: when will he become a Christian?"

Libertarian Conservative

When it came to championing low taxes and smaller government, Bob rarely deviated from the conservative script. He tended toward low-tax, small-government libertarian views, but his disagreements with mainstream Republicans and neo-conservatives, specifically his opposition to the Iraq War, earned him the label of being a "paleo-conservative"

In 2007 Bob expressed support for my former colleague and friend, Congressman Ron Paul's bid for the presidency.

Although I had not seen Bob in recent years, (except on television), I recall fondly our many discussions during my own time in public service. I first met Bob in 1961 and began a friendship that lasted nearly a half century.

I especially remember the summer weekend parties at the Novak's ocean front house in in Bethany Beach, Delaware, always a great informal gathering of interesting folks from all across the political and journalistic spectrum.

Few people attain the pinnacle of their professional and also are praised by both friends and foes. Bob Novak was that sort of rare human being, and he will be missed.

UBS-IRS Deal Weakens Swiss Bank Secrecy

The deal initialed last week between the U.S. and Swiss governments over the long running dispute concerning the giant Swiss bank, UBS, will involve disclosure to the IRS of the names of about 5,000 Americans with UBS accounts, the weekly newspaper NZZ am Sonntag reported in Sunday editions. Another Swiss weekly, Sonntag, said around 4,500 names would be handed over to the U.S. Internal Revenue Service (IRS)

No doubt UBS hopes this deal will end the pending lawsuit in which the U.S. Department of Justice and the IRS has sued UBS to disclose all 52,000 of its U.S. clients on the spurious grounds that any American who has a UBS account is suspected of tax evasion.

The unofficial and illogical attitude of the IRS has long been that any American with an offshore bank account is probably engaged in tax evasion or some other wrongful conduct. Apparently the presumption of innocence guaranteed by U.S. laws no longer applies to Americans with UBS accounts.

Tarnished Swiss Reputation

If the details reported by the newspapers are correct, no doubt the Swiss government will argued that this formally leaves Switzerland's cherished banking secrecy law intact, although many Swiss private bankers say it has been badly damaged, a view with which I concur.

An underlying fear of those who cherish financial privacy and private banking, is that this deal opens all Swiss and other offshore banks with U.S. clients to similar legal lynchings by the IRS.

Swiss banking expert Hans Geiger told Sonntag. "UBS...and the IRS, Switzerland and our market place have lost. Now it's clear that Germany and Italy will increase pressure." Swiss private banker Konrad Hummler, managing partner at private bank Wegelin, said Switzerland's private banking industry will suffer should UBS surrender client data to the IRS.

Sudden Expansion of ‘Tax Fraud’ Definition

NZZ am Sonntag said the deal would be based on the existing 1996 U.S.-Swiss double taxation treaty and therefore will not require any changes to Swiss law.

By using the treaty, the Swiss cabinet will be able to implement the deal directly, without going through parliament, where there is strong opposition to any compromise with the IRS. It would also avoid the possibility of petitioning the deal to a national referendum which many predicted conservative Swiss voters would reject as a U.S. attack on Swiss sovereignty, as indeed it is.

As a matter of historic fact, the Swiss bank secrecy law has never been absolute,as I have explained before.

Significant Difference

That law distinguishes between tax avoidance, tax evasion and tax fraud. Unlike in the United States, tax evasion is a civil, not a criminal offense under Swiss law, but tax fraud is a crime.

In selected past cases, (which the Swiss don't like to discuss), the Swiss government has waived bank secrecy based on tax fraud. Tax fraud may have occurred when UBS American clients submitted false documents or affidavits relating to their accounts. There is an established Swiss procedure under the existing U.S. tax treaty for the U.S. to obtain tax and other information and it has been used successfully many times and apparently is in play here.

But the Swiss will have a difficult time explaining why they suddenly agreed to expand the definition of tax fraud to include 5,000 UBS American account holders, from the UBS names they surrendered to the IRS earlier this year.

Under that previous agreement UBS divulged only the names of a limited number of U.S. clients (a reported 250-300 names), that the Swiss then said were the only ones that constituted tax fraud.

Suddenly that number has ballooned to the reported 5,000.

UBS Greed & Stupidity

UBS admitted its private banking managers conspired from 2001 to 2006 to defraud the IRS and agreed to pay US$780 million to settle a federal investigation into these activities. Under this latest agreement UBS will not pay an additional fine.

NZZ am Sonntag said the names of those to be disclosed would be persons suspected of committing tax fraud under the terms of the double taxation agreement, which obliges Switzerland to provide help if Washington seeks it in a criminal investigation.

Accounts below a certain size will not be reported, but this limit will be kept confidential so that account-holders will not be sure whether they are vulnerable, it said. Already there has been a rush by nervous Americans offshore bank account holders who have failed to report those accounts to take advantage of an IRS tax amnesty that ends on September 23^rd.

Under the Swiss-IRS deal account-holders threatened with disclosure will be able to challenge the move in the Swiss courts, it said.

NZZ am Sonntag said the U.S. government had backed off from the original IRS demands because the U.S. Treasury Secretary, the tax evading Tim Geithner, did not want to provoke another financial crisis by pushing UBS over the edge.

Economic Blackmail

  

Ironically, the global recession and the weakening of the worldwide banking system allowed DoJ prosecutors to engage in a case of blatant blackmail against UBS and the Swiss government. The Swiss decision to release names came only after U.S. authorities threatened to withdraw UBS's American banking license.

If that happened or had the DoJ indicted UBS, it would have put the bank out of business in America with a loss of tens of thousands of UBS American jobs. It would also have caused a probable collapse of the bank itself, with major Swiss and global economic repercussions. (UBS' bad management lost over US$50 billion in the subprime mortgage crisis).

Bottom Line

There is no way to sugar coat the UBS mess and the back down of the Swiss government. We take pride in the fact that the Sovereign Society has warned against having UBS accounts for years.

We still believe that Switzerland, an historically reputable nation that manages over US$4 trillion in cash and assets for people all over the world, (and has done so successfully for centuries), offers some of the best financial and banking services in the world. But near absolute bank secrecy will no longer be a believable part of the Swiss appeal.

The Philippines as a Tax Haven?

As my previous blog entry (below) indicates, I do get interesting emails from readers and sometimes I learn a lot from them. Take the case of S.W., an expat Brit who generously sent me some valuable and potentially useful information about the Philippines, where he lives and works.

I doubt that most of we insular Americans even know where this 7,000 island Pacific archipelagos is located -- between the Philippine Sea and the South China Sea. And we know little about its nearly 100 million people. For comparison, that population makes it almost a third the size of the U.S. population.

The country was in the news recently because of the death of the former president, Corazon Aquino, (left) who in 1986 ended the 20-year rule of Ferdinand Marcos when a widespread popular rebellion forced him into exile and installed her as president.

Pleasantly Surprising Land

Admittedly, with a reputation for being chaotic and corrupt, the Philippines has an image problem. But most who make the journey there are pleasantly surprised by their beauty and by the friendliness of the people.

Most of the Philippines is laid back, stable and relatively safe. The locals are an exceptionally helpful bunch, transport is cheap, food is good, accommodations plentiful, and (for the mono-linguistic) English is widely spoken.

The Philippine Islands became a Spanish colony during the 16th century but became a de facto colony of the United States in 1898 following the Spanish-American War. Future U.S. president and Supreme Court chief justice William Howard Taft, (right)served as colonial governor general.

In 1935, the Philippines became a self-governing commonwealth under U.S control with a non-voting delegate in the U.S. House of Representatives. Manuel Quezon (below) was elected the first president and worked to prepare the country for independence after a planned 10-year transition.

Faithful American Allies

Soon after the December 7, 1941 Japanese attack on Pearl Harbor in Hawaii, in early 1942 the Philippines were attacked and occupied. There followed the horrific defense of Corregidor, the brutal Bataan Death March and U.S. General Douglas MacArthur's (below) memorable promise that: "I will return!"

U.S. forces and Filipinos successfully fought together during 1944-45 and on July 4, 1946, the Philippines attained independence from the U.S. In the ensuing years, presidents have been elected, impeached and defeated amidst constant government corruption, political turmoil, including street riots and attempted coups. All the while, the Philippine government, such as it has been, has faced threats from armed Communist insurgencies and from Muslim separatists in the south.

De Facto Offshore Financial Center

But that's history. What my email correspondent S.W. suggests is that the Philippines, while not a true tax haven, is in may respects, an ideal Asian offshore tax-free base with strong financial and banking privacy laws, easy international banking connections and a plentiful supply of English-speaking talent.

S.W. says that while not a "haven" it does have laws that are not well known "and people like myself take advantage of them."

With thanks to him, here's more of what S.W. wrote:

"I'm an IT (information technology) programer with clients in the UK and Europe mainly, and a small staff here. I'm currently on a tourist visa (visa on arrival that is renewed every two months up to two years) and whilst I cannot be employed, I can run my offshore business from here quite legally, and the low cost English literate staff are a big plus.

Tax Free Living

After 6 months you are classed as a resident, but resident foreigners do not pay local taxes on foreign source income, so I legitimately pay zero tax here and as a British Citizen who hasn't lived in the UK since 1967, I pay no taxes there either.

"My companies are in the BVI and Belize with a virtual office in Hong Kong for invoicing and mail delivery. (UK / EU clients are much more comfortable with a Hong Kong address than a BVI one).

Easing International Banking

"My banking is with a corporate multicurrency account with HSBC Hong Kong that comes with one of the most secure internet banking options available today. Locally I bank with HSBC in the Philippines which is not a local incorporated subsidiary, but rather an HSBC HK main branch operating in the Philippines as a foreign bank.

"Again, whilst UK / EU clients have no issue with transferring funds to Hong Kong, some do have issues with the Philippines or the Caribbean. HK has such a massive flow of mainstream funds, for import / export, investment in China, finance etc., transfers there do not seem to attract the focus of regulators in the manner that a transfer to Belize or BVI possibly might.

Strong Financial Privacy

S.W. also told me that one of the big pluses for foreigners doing business in the Philippines is that foreign currency bank accounts are given an extremely high level of secrecy under Republic Act 6426, (The Foreign Currency Deposit Act).

This law makes bank deposits absolutely confidential; they cannot be examined by any person or government official withiut written permission of the bank account holder. The law also exempts foreign currency deposits from attachment, garnishment, or any other order.

I should note that the Philippine government, (as Switzerland and other offshore centers), recently has agreed to allow limited tax information exchange under OECD Article 26, in an effort to get off the OECD "gray list."

Pacific Choices

So there you have it -- another possible Asian offshore base for your operations to add to established offshore centers such as Hong Kong and Singapore.

To find out a lot more about the Philippines and how you might establish a base there, you can pre-order my latest (7th) edition of The Passport Book. It has a full chapter on the Philippines with contact information.