Links - Feb 7
** Also see our searchable archive of past story summaries; and Offshore Watch for more stories. ** With particular emphasis on the Guardian investigation
Creative accountants
Feb 7 (Guardian) - On 18 February 2002, Ernst & Young mounted a confidential slideshow for Nikki Maynard and her tax team at Prudential, the big insurance company. It was a sales pitch. Project Toms ("tax-efficient off-market swaps," outlawed in 2004) was one of the most notable of the avoidance schemes peddled by the "big four" accountancy firms. Accountants were looking at making £15m out of their ingenious "opportunity". The government faced losing a total £1bn.
Gilt-edged profits for profession's 'big four'
Feb 7 (Guardian) - On the "big four" - KPMG, PWC, E&Y and Deloitte. Revenue chief Dave Hartnett described the previous E&Y regime as "probably the most aggressive, creative, abusive provider" of avoidance schemes. A 2005 internal HMRC study concluded that 50% of the big four's tax fees came from "commercial tax planning" and "artificial avoidance schemes", suggesting they bring in around £1bn a year. Internal emails: “... perhaps a point to gloss over ..." or “please do NOT include reference to the dividend.” Unlike in the US, HMRC has never prosecuted any of the major accountants over their tax schemes.
Barclays: The bank that bought a pipeline
Feb 7 (Guardian) – Short video describing a deal between the Irish gas board and Barclays that deprived the British exchequer of £30m, regarding a pipeline under the Irish sea. The money went in a circle via a gas board company in Jersey, and a Barclays subsiidiary in the Isle of Man. The cash ended up at Barclays bank, but the UK had to give Barclays a £30m tax allowance.
Sheltering cash: the intricate schemes drawn up by KPMG
Feb 7 (Guardian) - A flock of over 60 British millionaires bought blueprints of an “eye-wateringly elaborate” KPMG device sheltering a total £156m. Cash was loaned to specially-created trusts, and the resultant IOUs then traded to banks at an apparent loss. The "loss" was claimed against personal tax bills. A tribunal ruled them “entirely artificial.” In the same year as another scheme where KPMG was accused of “acting out a charade” KPMG UK’s boss was paid £3.6m and given a knighthood for "services to accountancy". The separate US arm of this global accounting empire has seen criminal indictments. Not in Britain. "At some point," the IRS protested, "such conduct passes from clever accounting and lawyering, to theft from the people".
The tax gap debate: Labour MP makes a stand in Commons
Feb 7 (Guardian) - The long-standing anti-tax avoidance campaigner and Labour MP Austin Mitchell Austin Mitchell wants the government to decline aid to banks that conjure tax avoidance schemes. Mitchell calls on the government "to decline to provide financial support to banks engaged in devising, marketing and implementing tax avoidance schemes that have no economic substance".
Could the banks bail-out carry tax conditions?
Feb 7 (Guardian) - Is there any attempt being made to ensure that companies receiving assistance from British taxpayers are paying corporate tax back into the UK coffers? I would also argue that the same should apply to the individual tax affairs of their employees.
The tax gap debate: A call for more Revenue resources
Feb 7 (Guardian) - The shortage of tax investigators is a real problem - and it's getting worse. Stop firing and start hiring, a union says
What if tax avoidance had to be publicly disclosed?
With corporate reputations on the line, there would be a commercial pressure not to avoid tax. This is a job for government.
The tax gap debate: Principles, what principles? A KPMG update
Can you help us pin down the tax principles of the country's third biggest tax adviser?
Picture gallery: Zug, Switzerland
Feb 7 (Guardian) - Some pictures of one of the world centres of tax dodging (and crime.)
Labour candidates challenge City bankers' elite that runs Square Mile
Feb 6 (Guardian) - Labour is to fight to break the grip of a bankers' elite controlling the City of London by putting up for the first time a slate of party candidates to run the Corporation of London, the unusual democratic body that lobbies on behalf of the City and runs the Square Mile's amenities. It will be the first time Labour has put up candidates for the corporation's governing body, but Labour believes the regulatory failure revealed by the credit crunch demands breaking the old boys' network running the City.
Brown's VAT cut was a mistake, says Sarkozy
Feb 7 (FT) - Relations between Britain and France nose-dived yesterday after the French president, Nicolas Sarkozy, called Brown's VAT cut a "mistake" that had "absolutely not worked", while defending his decision to reflate the French economy with greater spending on infrastructure. On Tuesday the Dutch finance minister, Wouter Bos described Brown's VAT cut as "not a very wise thing to do", adding: "it does put pressure on other countries to do the same." There is irritation in Paris about Brown’s reluctance to consult with his EU counterparts and co-ordinate bank support measures and stimulus plans. Sarko: “Co-ordination is absolutely indispensable.”
Local blog sites shutting down
Feb 6 (Channelislandsforum) - Does anyone have concerns about the fact that local bloggers are going off air one by one? It has been alleged that some have been threatened. . . . . Anything about finance, rich people, taxes, big business, the establishment in the states etc if it is negative is not allowed to stand and this has been proved by the resultant bans of the people posting these type of posts under the pretext of trolling or upsetting others delicate feelings.
Tax exile peer halts donations to Tories to spare Cameron's blushes
Feb 5 (Daily Mail) - Lord Laidlaw of Rothiemay has lent or donated around £5million to the party, even though he is based in Monaco to avoid paying tax in Britain. Now the 66-year-old peer - caught taking part in an orgy with prostitutes last year - has decided to end his financial backing 'until he has sorted out his tax issues'.
It’s the economy, stupid
Feb (Mark Thomas) – Radio download. The comedian Mark Thomas chats with various figures – former City of London trader Sargon Nissan, UK Labour Party MP Austin Mitchell, some activists and Dr. Paulo dos Santos. Exploring what went wrong with the economy.
Paradis fiscaux: "revoir nos relations avec Andorre et Monaco" (Sarkozy)
Feb 5 (AFP) – Sarkozy wants to review France’s relations with Andorra and Monaco, and ask questions of Luxembourg, with questions about tax havens and the economic crisis. In French.
Thousands of hedge funds in offshore tax havens are expected to fold in 2009, warn Zolfo Cooper
Feb 5 (Accountancy Age) - The head of restructuring giant Zolfo Cooper expects thousands of hedge funds to fold in 2009. Simon Freakley told Accountancy Age that the company, which has handled the administrations of stricken airline XL Leisure and furniture retailer MFI, was preparing for a surge in activity in offshore tax havens.
Julius Baer confirms trading incident
Feb 6 (Reuters) - Swiss bank Julius Baer confirmed on Friday it had suffered a "minor trading incident" last year as its shares slid sharply on news of an anonymous letter to Swiss authorities claiming employees had parked loss-making securities to avoid having to write down "several millions in losses."
Creative accountants
Feb 7 (Guardian) - On 18 February 2002, Ernst & Young mounted a confidential slideshow for Nikki Maynard and her tax team at Prudential, the big insurance company. It was a sales pitch. Project Toms ("tax-efficient off-market swaps," outlawed in 2004) was one of the most notable of the avoidance schemes peddled by the "big four" accountancy firms. Accountants were looking at making £15m out of their ingenious "opportunity". The government faced losing a total £1bn.
Gilt-edged profits for profession's 'big four'
Feb 7 (Guardian) - On the "big four" - KPMG, PWC, E&Y and Deloitte. Revenue chief Dave Hartnett described the previous E&Y regime as "probably the most aggressive, creative, abusive provider" of avoidance schemes. A 2005 internal HMRC study concluded that 50% of the big four's tax fees came from "commercial tax planning" and "artificial avoidance schemes", suggesting they bring in around £1bn a year. Internal emails: “... perhaps a point to gloss over ..." or “please do NOT include reference to the dividend.” Unlike in the US, HMRC has never prosecuted any of the major accountants over their tax schemes.
Barclays: The bank that bought a pipeline
Feb 7 (Guardian) – Short video describing a deal between the Irish gas board and Barclays that deprived the British exchequer of £30m, regarding a pipeline under the Irish sea. The money went in a circle via a gas board company in Jersey, and a Barclays subsiidiary in the Isle of Man. The cash ended up at Barclays bank, but the UK had to give Barclays a £30m tax allowance.
Sheltering cash: the intricate schemes drawn up by KPMG
Feb 7 (Guardian) - A flock of over 60 British millionaires bought blueprints of an “eye-wateringly elaborate” KPMG device sheltering a total £156m. Cash was loaned to specially-created trusts, and the resultant IOUs then traded to banks at an apparent loss. The "loss" was claimed against personal tax bills. A tribunal ruled them “entirely artificial.” In the same year as another scheme where KPMG was accused of “acting out a charade” KPMG UK’s boss was paid £3.6m and given a knighthood for "services to accountancy". The separate US arm of this global accounting empire has seen criminal indictments. Not in Britain. "At some point," the IRS protested, "such conduct passes from clever accounting and lawyering, to theft from the people".
The tax gap debate: Labour MP makes a stand in Commons
Feb 7 (Guardian) - The long-standing anti-tax avoidance campaigner and Labour MP Austin Mitchell Austin Mitchell wants the government to decline aid to banks that conjure tax avoidance schemes. Mitchell calls on the government "to decline to provide financial support to banks engaged in devising, marketing and implementing tax avoidance schemes that have no economic substance".
Could the banks bail-out carry tax conditions?
Feb 7 (Guardian) - Is there any attempt being made to ensure that companies receiving assistance from British taxpayers are paying corporate tax back into the UK coffers? I would also argue that the same should apply to the individual tax affairs of their employees.
The tax gap debate: A call for more Revenue resources
Feb 7 (Guardian) - The shortage of tax investigators is a real problem - and it's getting worse. Stop firing and start hiring, a union says
What if tax avoidance had to be publicly disclosed?
With corporate reputations on the line, there would be a commercial pressure not to avoid tax. This is a job for government.
The tax gap debate: Principles, what principles? A KPMG update
Can you help us pin down the tax principles of the country's third biggest tax adviser?
Picture gallery: Zug, Switzerland
Feb 7 (Guardian) - Some pictures of one of the world centres of tax dodging (and crime.)
Labour candidates challenge City bankers' elite that runs Square Mile
Feb 6 (Guardian) - Labour is to fight to break the grip of a bankers' elite controlling the City of London by putting up for the first time a slate of party candidates to run the Corporation of London, the unusual democratic body that lobbies on behalf of the City and runs the Square Mile's amenities. It will be the first time Labour has put up candidates for the corporation's governing body, but Labour believes the regulatory failure revealed by the credit crunch demands breaking the old boys' network running the City.
Brown's VAT cut was a mistake, says Sarkozy
Feb 7 (FT) - Relations between Britain and France nose-dived yesterday after the French president, Nicolas Sarkozy, called Brown's VAT cut a "mistake" that had "absolutely not worked", while defending his decision to reflate the French economy with greater spending on infrastructure. On Tuesday the Dutch finance minister, Wouter Bos described Brown's VAT cut as "not a very wise thing to do", adding: "it does put pressure on other countries to do the same." There is irritation in Paris about Brown’s reluctance to consult with his EU counterparts and co-ordinate bank support measures and stimulus plans. Sarko: “Co-ordination is absolutely indispensable.”
Local blog sites shutting down
Feb 6 (Channelislandsforum) - Does anyone have concerns about the fact that local bloggers are going off air one by one? It has been alleged that some have been threatened. . . . . Anything about finance, rich people, taxes, big business, the establishment in the states etc if it is negative is not allowed to stand and this has been proved by the resultant bans of the people posting these type of posts under the pretext of trolling or upsetting others delicate feelings.
Tax exile peer halts donations to Tories to spare Cameron's blushes
Feb 5 (Daily Mail) - Lord Laidlaw of Rothiemay has lent or donated around £5million to the party, even though he is based in Monaco to avoid paying tax in Britain. Now the 66-year-old peer - caught taking part in an orgy with prostitutes last year - has decided to end his financial backing 'until he has sorted out his tax issues'.
It’s the economy, stupid
Feb (Mark Thomas) – Radio download. The comedian Mark Thomas chats with various figures – former City of London trader Sargon Nissan, UK Labour Party MP Austin Mitchell, some activists and Dr. Paulo dos Santos. Exploring what went wrong with the economy.
Paradis fiscaux: "revoir nos relations avec Andorre et Monaco" (Sarkozy)
Feb 5 (AFP) – Sarkozy wants to review France’s relations with Andorra and Monaco, and ask questions of Luxembourg, with questions about tax havens and the economic crisis. In French.
Thousands of hedge funds in offshore tax havens are expected to fold in 2009, warn Zolfo Cooper
Feb 5 (Accountancy Age) - The head of restructuring giant Zolfo Cooper expects thousands of hedge funds to fold in 2009. Simon Freakley told Accountancy Age that the company, which has handled the administrations of stricken airline XL Leisure and furniture retailer MFI, was preparing for a surge in activity in offshore tax havens.
Julius Baer confirms trading incident
Feb 6 (Reuters) - Swiss bank Julius Baer confirmed on Friday it had suffered a "minor trading incident" last year as its shares slid sharply on news of an anonymous letter to Swiss authorities claiming employees had parked loss-making securities to avoid having to write down "several millions in losses."
posted by TJN at 3:31 am
2 Comments:
KPMG KPMG KPMG. If I were a KPMGer, I would be worried about this blog post and the pending investigations you know are coming. KPMG is partially responsible for the desecration of the financial system or worse, KPMG helping turn the U.S. into the next Japan. The U.S. would be lucky to be a Japan 2, though it seems highly unlikely the U.S. can even achieve such wonderful economic success that has seen the Nikkei decline from over 30,000 to 7,000.
The U.S. unlike Japan is a 70% debt financed consumption based economy unlike Japan which is a savings and production based economy. It took Japan 20 years to arguably rid all its banks fraudulent financials of there bad debts. Everyone knows the financials of the banks are fraudulent but no one seems to care, why? The answer can only be the accounting firms are well connected to the global social fascist cabal.
How will the recessions ever end as long as the financial statements remain fraudulent? The balance sheets and business models are crap and everyone knows, why continue the charade? All the accounting firms are paid by their corporate masters to issue fraudulent financial statements, there can be no doubt all the banks like Citi are bankrupt yet KPMG keeps signing off on its fraudulent financials, why?
Why does anyone believe any of the fraudulent financial statements? Why does anyone listen to anything KPMG or other auditors have to say? Most of the banks are bankrupt yet the financials keep rolling out, no problem. As an angry Citi investor, I have tried to piece together how I lost most of my money.
KPMG audits many of the financials with all their SIV creations which are used to off load bad loans so the losses don’t have to be recognized on the financials in an Enronesque fashion like KPMG’s client Citi (which is bankrupt).
Of course KPMG’s never ending quest for fees does not stop with fraudulent financials, it also purveyed what Mike Hamersley would describe as fraudulent corporate tax shelters (not withstanding Hamersley’s willing participation in many of them) used by most of KPMG’s big banks including Citi, like the REIT transaction which eliminated tax on real estate loans; back to back loans or rate swaps creating interest deductions; financing arrangements generating noneconomic foreign tax credits; the list goes on forever. All KPMG’s big banks used the strategies to eliminate taxes and create what Hamersley would describe as fraudulent book income (except of course for Hamersley’s own tax shelters).
Tim Flynn is a banking guy and was brought in to purportedly clean up KPMG in 05. Yet Flynn prior to his appointment as KPMG CEO was a high level KPMG audit partner before taking over for O’Kelley and had most of his clients involved in all the fraudulent accounting and questionable tax shelters (which according to Hamersley were fraudulent).
There can be no doubt about the fraud as beginning as early as 2003 many were predicting the implosion that would result from the unsustainable lending patterns of KPMG’s banking clients. In fact, most of KPMG’s banks are bankrupt, what to do?
Flynn decided to throw a bunch of tax partners having nothing to do with all KPMG’s bankrupt banks under the bus for individual shelters which were miniscule in relation to all KPMG’s failed fraudulent audits.
Flynn hired Bennett and Holmes to do his dirty work and assist with the DOJ. Flynn had Bennett and Holmes lie to the DOJ according to an email wherein Joe Loonan KPMG’s head lawyer stated that he did not know if any of the allegations were true (“freedom is just another word for nothing left to lose”). Then to seal the deal Flynn denied legal fees to the tax partners he threw under the bus to the DOJ, even Ernst and Young paid its partners legal fees. Why would Flynn do this after O’Kelley had promised to pay the legal fees?
One can only infer to hide the greater tragedy at KPMG, all of the failed fraudulent audits (not to mention after Flynn cut his deal, KPMG was awarded the audit of the DOJ). If I were a KPMGer, I would not only be extremely concerned about all the civil litigation that is coming for the fraudulent audits but the potential criminal actions that must be coming once the books are scoured (which you know they will be in the civil litigation plus the fraud is relatively easy to discern) because KPMGer’s must know by now the first thing Flynn will do is throw you under the bus and cut off legal fees.
As a decimated Citi investor I am looking for any KPMGer to come forward and tell the truth.
Angry Citi shareholder
KPMG and FTB do you know about this? On May 24, 2000 at 3:33pmpst one of your high level tax shelter lawyers, Mike Hamersley sent an email to Vera Ellich of KPMG, advising her that their KPMG client had substantial authority to take a sham paper loss if the client sold stock of a subsidiary to the client’s lawyer for one dollar. This was outright tax fraud. Further, on June 12, 2000 at 10:18ampst, Vera Ellich sent an email to Mike Hamersly containing copies of the documents effecting Hamersley’s fraudulent plan back to 1999 for his review, a classic case of backdating a fraudulent transaction. Also, February 9, 2003, at 1:18 pm Richard Smith of KPMG sent Steve Gremminger of KPMG an email stating that Mike Hamersley had disseminated confidential information to his wife, who worked at Latham and Watkins in clear violation of Section 7216, a criminal statute. In the recent KPMG case, it was also confirmed that Hamersley violated Sections 7216 and 7212 by illegally disclosing confidential information to various parties. Ask Hamersley for all his emails which he illegally late at night obtained in violation of KPMG protocol and stole many for his any personal gain when he sued KPMG (or ask KPMG for the emails, they all still exist). As an aside, Hamersley’s fraudulent activities did not stop there, when he obtained his KPMG settlement based on all his lies and theft, Hamersley failed to report the settlement as income under a twisted analysis of Section 104 (or at a minimum conspired to do so as he discussed doing so with several witnesses). How can the FTB employ Hamersley in their tax shelter division when he did not even bother with legal tax shelters but rather engaged in outright fraud and likely continues this sham life of being a crusader? Much more evidence against Hamersley exists related to his fraudulent activities and will likely be disseminated over time.
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