offshoring money

The BCCI operation gave Osama bin Laden an education in offshore black finance that he would put to use when he organised the jihad against the United States. He would move money through the Al-Taqwa Bank, operating in offshore Nassau and Switzerland with two Osama siblings as shareholders….
But in the years after the collapse of BCCI, Khalid bin Mahfouz was still flush with cash. In 1992, he established the Muwafaq (“blessed relief”) Foundation in the offshore Channel Islands. The U.S. Treasury Department called it “an al Qaeda front that receives funding from wealthy Saudi businessmen.”  -Lucy Komisar
offshoring money–in detail:  (aug 2006)
There was genuine opposition to the Federal Reserve Act (passed Dec 1913), but it could not match the power of the bill’s advocates. Conservative Henry Cabot Lodge Sr. proclaimed with great foresight:
“The bill as it stands seems to me to open the way to a vast inflation of currency… I do not like to think that any law can be passed which will make it possible to submerge the gold standard in a flood of irredeemable paper currency.” (Congressional Record, June 10, 1932.)
6-8-07  The George H.W. Bush Justice Department 25 years ago balked at investigating and prosecuting the key players in the scandal of the criminal, terrorist-friendly bank, BCCI, and moved only, and in limited fashion, after New York District Attorney Robert Morgenthau forced its hand.

Bush had a strong reason to want Justice to block pursuit of the case: the CIA used BCCI for its “black ops,” including funneling some of the $2 billion Washington sent to client Osama bin Laden
12-20-02   Dar al-Mal al-Islami (DMI), the House of Finance of Islam. This Geneva-based bank is charged with distributing subsidies of the royal family in the Muslim world. DMI, founded in 1981 and with assets of an estimated $3.5 billion, also has connections to the bin Laden family: Its 12-member board of directors includes Haydar Mohamed bin Laden, Osama bin Laden’s half-brother, and Khalid bin Mahfouz. Bin Mahfouz was indicted by the United States in the notorious BCCI banking scandal, which defrauded depositors of $9 billion, and in 1995 paid a $225-million fine.
DMI and al-Shamal are not the only banks that link al-Faisal to Osama bin Laden. Al-Faisal’s DMI is also a major shareholder of al-Taqwa, the bank registered in the Bahamas and based in Switzerland that was shut down last November after Washington blacklisted it as a centerpiece of bin Laden’s financial network. The United States has not, however, blacklisted al-Shamal.
Derivatives trades are generally accounted for by the big broker dealers (now getting taxpayer money) as “off balance sheet” transactions. They are hidden from regulators and investors, via special purpose entities (SPEs), which can be offshore and presumably are for the profit of elite special partners or clients of these same firms.  -LK

Ben Leet says:

Between 2001 – 2007 the U.S. national debt load — consumer, government and corporate — grew from $27 trillion to $49 trillion, a $22 trillion or 81% increase. Of the $22 trillion, $18 was debt of financial corporations. This increase followed the passage of the Future and Commodities Trading part of the 2000 federal budget, thanks to Senator Phil Gram and his wife, who went on to sit on the board of Enron, and then signed by Clinton.
I learned that from Terry Gross’s Fresh Air interview of 3.25.09 with Frank Partnoy. The Flow of Funds data comes from Jack Rasmus article at Z magazine, “Epic Recession Revisited”, also at Kyklos He draws the data from Flow of Funds report of the Federal Reserve.
The point, most of the $18 trillion are credit default swaps, I think. If AIG has $2 trillion, there is still more “junk” out there for taxpayers to bailout. I heard that even the Cato Institute believes these are non-contractual obligations, that is bets, gambling, and bankruptcy laws do not compel anyone to pay them out, least of all the U.S. taxpayer.
The best solution is to nationalize, cut up the bankrupt firms and re-regulate the whole business. I think that the inequality generated since Reaganomics generated out-sized profits for the top 1% who had to play and gamble with their money because they have no purpose in life but to accumulate, something like the pack rats that have to amass more and more stuff compulsively. The fact that about 16 million people are going to lose employment and more postpone retirement means very little to them. Hence the blast of outrage that will come.
The clearinghouse ICE Trust U.S. forms a central part of these plans.
What is ICE Trust U.S., and who owns it? ICE US Holding Co., which was established in 2008 as the parent of ICE Trust U.S., is located in the Cayman Islands. Yet none of the owners of ICE US Holding Co. are based in the Caymans. International Exchange, Inc., which owns 50 percent of ICE US Holding, is headquartered in Atlanta, Georgia. Among the other owners of the Cayman’s company are Citigroup, Goldman Sachs, J.P. Morgan, Merrill Lynch and Morgan Stanley, which are headquartered in New York. Bank of America, which now owns Merrill Lynch, is based in Charlotte, North Carolina. Deutsche Bank (Frankfurt), and UBS and Credit Suisse (Zurich) are also part owners.
Derivatives lie close to the heart of the debate over financial reform, yet no one appears to have examined the ICE exchange, whose ownership means it will be the world’s main credit default swap clearinghouse; nor has anyone asked how its ownership structure might enrich the banks who own ICE US Holding Co. at the expense of U.S. taxpayers.
ICE Trust U.S. was created in anticipation of tougher U.S. laws that will force the trading of derivatives into clearinghouses, in which prices are made public and the losses of one member are shared with others….
The only reason a Cayman entity was formed was to have a foreign entity in the chain of ownership. The problem that some of the clearing participants had with this and with our clearing offering was the application of that section of the Internal Revenue code to payments that would be made from their CDS foreign clearing operations through the clearinghouse for marketing purposes and the potential taxation of those payments under Section 956. They were concerned that, because they would have a profit-sharing interest in this U.S. clearinghouse, that it could fall within 956. So the decision was made, ‘Let’s interpose a foreign entity in the structure.’ That way it will fall clearly outside 956. There will be no risk that it could ever apply, and everyone was happy with the structuring.  -source close to ICE
David Howard, a lawyer and certified public accountant with the Silicon Valley law firm Hoge Fenton, explained further that ICE US Holding Company L.P., Cayman Islands, which owns ICE Trust U.S., is “a blocking company” used to prevent the foreign subsidiary from being deemed to loan margin to a “U.S. person” (namely, ICE Trust U.S.). “They are loaning the money to a Cayman Islands person”, he said. This means that banks can keep their profits abroad and untaxed, but still use them to trade on a U.S. exchange, making investments in U.S. credit default swaps while not paying tax on the collateral placed on the exchange. It’s precisely what Section 956 was designed to prevent.
Tax experts say ICE Trust U.S. and its owners benefit from the fact that the IRS and other regulators have very different ways of looking at the map. The Cayman’s offshore structure is legal: Both the New York Federal Reserve Bank and the New York Banking Department approved it. New York Fed spokesman David Girardin declined to comment.
New York Banking Department spokeswoman Glorimar Perez-Gonzalez told me, “We satisfied ourselves that the holding company structure is not being used to evade U.S. taxes. We have no further comment on the matter.” The IRS declined comment as well.

6-14-13 When Bernard Madoff built his $65 billion house of cards; when food distributors passed off horsemeat as beef lasagna in Europe; and when Apple, Google and other American companies set up structures to channel their profits through Ireland — they all used tax havens.
They bought secrecy, minimal or zero taxes and legal insulation, the distinctive products that tax havens market and that allow companies to operate in a fiscal and regulatory vacuum. Using the offshore economy is akin to acquiring your own island where the rules that most citizens follow don’t apply.
The International Consortium of Investigative Journalists publishes today a database that, for the first time in history, will help begin to strip away this secrecy across 10 offshore jurisdictions.
The Offshore Leaks Database allows users to search through more than 100,000 secret companies, trusts and funds created in offshore locales such as the British Virgin Islands, Cayman Islands, Cook Islands and Singapore. The Offshore Leaks web app, developed by La Nación newspaper in Costa Rica for ICIJ, displays graphic visualizations of offshore entities and the networks around them, including, when possible, the company’s true owners.
4-3-13 Dozens of journalists sifted through millions of leaked records and thousands of names to produce ICIJ’s investigation into offshore secrecy ­
A cache of 2.5 million files has cracked open the secrets of more than 120,000 offshore companies and trusts, exposing hidden dealings of politicians, con men and the mega-rich the world over.
The secret records obtained by the International Consortium of Investigative Journalists lay bare the names behind covert companies and private trusts in the British Virgin Islands, the Cook Islands and other offshore hideaways.
They include American doctors and dentists and middle-class Greek villagers as well as families and associates of long-time despots, Wall Street swindlers, Eastern European and Indonesian billionaires, Russian corporate executives, international arms dealers and a sham-director-fronted company that the European Union has labeled as a cog in Iran’s nuclear-development program.
The leaked files provide facts and figures — cash transfers, incorporation dates, links between companies and individuals — that illustrate how offshore financial secrecy has spread aggressively around the globe, allowing the wealthy and the well-connected to dodge taxes and fueling corruption and economic woes in rich and poor nations alike.
The records detail the offshore holdings of people and companies in more than 170 countries and territories.
The hoard of documents represents the biggest stockpile of inside information about the offshore system ever obtained by a media organization. The total size of the files, measured in gigabytes, is more than 160 times larger than the leak of U.S. State Department documents by Wikileaks in 2010.


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