• President Barack Obama has appointed Former Federal Reserve Chairman Paul Volcker to close tax loopholes and streamline tax laws. The top-to-bottom overhaul of the 96-year-old tax code will reduce tax evasion and “corporate welfare,” budget Director Peter Orszag told Bloomberg.

• Kenneth Lewis, Bank of America Corp.’s (BAC) chief executive, told The Los Angeles Times he wants to begin repaying the $45 billion his company owes the U.S. government next month. He also said that a variety of financial indicators “leads me to think we’re starting to see the bottom” of the recession.

• In a message to its Volvo employees, Ford Motor Co. (F) said it is moving closer to selling the Swedish brand, which has been losing money. “We’ve had contact with a number of parties who’ve expressed interest concerning the future of Volvo. Ford’s been pleased with the number and quality of those parties,” John Gardiner, Ford’s European director of strategic communications, told Reuters.

• Romania became the sixth eastern European country to receive a bailout from the International Monetary Fund. Despite being the European Union’s fastest-growing economy last year, the country received a $27 billion (20 billion-euro) loan from the IMF, Bloomberg reported.

• International Business Machines Corp. (IBM), the world’s biggest computer-services provider, plans to inform a large number of U.S. employees in its global-business services unit that their jobs are being transferred to IBM employees in India, reported the Wall Street Journal, citing people familiar with the situation. IBM had already cut at least 4,000 positions since January, joining technology bellwethers Microsoft Corp. (MSFT) and Intel Corp. (INTC) in trimming payrolls to cope with the recession.  The global division accounts for about one-fifth of sales.

• Orders for U.S. durable goods unexpectedly rose by 3.4% in February, the biggest gain in more than a year, the Commerce Department said yesterday (Wednesday). Increasing demand for machinery, computers and defense equipment, highlighed the figures and indicate the economy is stabilizing after shrinking last quarter at the fastest pace in a quarter century, Bloomberg reported.  Stepped-up efforts by the Obama administration and Federal Reserve to ease the credit crunch may help revive growth later this year.

• Brazil’s stock index climbed to a six-week high on speculation government efforts to bolster the housing industry and reductions in interest rates will boost economic growth, Bloomberg reported. The Bovespa index increased 2.4%, erasing yesterday’s 2.3% decline. The gauge has gained 13% this year on speculation government measures, falling interest rates and a recovery in commodity prices will boost growth.

• Chief Executive Officer Kenneth Lewis said Bank of America Corp (BAC) wants to start repaying $45 billion of federal bailout money next month, after completing a government stress test, the Los Angeles Times reported on Wednesday. Lewis had previously said he hoped to pay back all of the money the largest U.S. bank took from the $700 billion Troubled Asset Relief Program as soon as later this year.

Source: Global Investment News Briefs Thursday March 26, 2009

Is most offshore activity illegal?  Hardly.

According to the World Bank, more than half of the world’s personal wealth – over $50 trillion – is stashed in about 60 or so asset and tax havens worldwide.

More than a third of it is in Switzerland.  The rest is stashed away in Hong Kong, the Cayman Islands, Panama, Bermuda, the Isle of Man and other protected havens.

What do all these rich people know that you don’t?

Plenty. But their secrets are finally revealed in a fascinating new book by Erika Nolen and Shannon Crouch of The Sovereign Society. It’s called “Offshore Investments That Safeguard Your Cash: Learn How Savvy Investors Grow and Protect Their Wealth.”

Reasons for Offshore Investing

What legitimate reasons could you have for going offshore with your investments?  Let me count the ways:

1. Are you worried about potential claims against your assets?
2. Are you having troubles with difficult business associates, angry ex-spouses or greedy children?
3. Does the lack of privacy in your personal financial affairs bother you?
4. Are you interested in gaining access to the tens of thousands of publicly-traded securities that are unavailable in the U.S.?
5. Are you interested in creating an ironclad estate plan for your loved ones?
6. Do you want greater asset protection than an American safety-deposit box offers?
7. Are you worried you may not have enough money for retirement?

If you answered yes to any one of these questions – and especially if you answered yes more than once – you should read this book, if only to understand your options.

Let’s say, for example, that you are a physician, businessman or comfortable retiree (or that you will be one day).  In our litigious society, someone can trip over their own feet on your property and have an ambulance chaser on the line before they even get up off the floor.

Even if the “plaintiff” has no case whatsoever, you can spend tens of thousands of dollars defending yourself and your assets.  Or be forced into a settlement.

But as Nolen and Crouch write, “many U.S. lawyers hesitate or refuse to take cases involving defendants who have their cash and assets secured offshore.  They recognize the difficulties – indeed, the impossibility – of gaining access to those offshore assets.”

Some people, out of a misplaced sense of patriotism, refuse to even consider moving assets offshore.  Yet there is nothing illegal or immoral about moving assets offshore.  And there are many, many benefits.

Offshore bank and brokerage accounts offer you a wider selection of investments (especially in stronger currencies than our perpetually weak dollar).  Estate planning is often smarter and more efficient than what your local lawyer can set up.  Business regulations are less cumbersome.  You may even want to consider the advantages of dual citizenship and a second passport.

Sound too good to be true?  It isn’t.

“There are no -we repeat, no – outright and explicit prohibitions against American, British or Canadian nationals engaging in a slew of offshore financial activity.  It is legal and legitimate to invest offshore,” write Nolan and Crouch.  “This book tells you how to obey U.S. tax law and file all the required reports, but ensure that a substantial portion of your assets and investments are located in the place where the best profits are – offshore.”

In the end, only you know whether offshore investing is right for you.  But you can’t be sure until you have all the facts.

Nolan and Crouch’s new book is a great place to start.

Source: Offshore Investing: Smart Ways to Keep Your Money Safe

As you read what follows, keep in mind the following dictionary definition:

demagogue – noun, verb, -gogued, -goguing. 1) a person, esp. an orator or political leader, who gains power and popularity by arousing the emotions, passions, and prejudices of the people. 2) to treat or manipulate (a political issue) in the manner of a demagogue; obscure or distort with emotionalism, prejudice, etc.

It seems taxes have always been a sexy issue, at least for the last millennium since Lady Godiva, that notoriously anti-tax Anglo-Saxon noblewoman who – according to legend – rode naked through the streets of Coventry in England in order to gain a remission of the oppressive taxation imposed by her husband on his tenants.

Naked Demagoguery

From all historic accounts, at least Lady Godiva was sincere about her tax protest.

On February 17, 2007 when the junior senator from Illinois introduced his bill, the Stop Tax Haven Abuse Act, he issued a ringing statement in which he decried what he claimed was an annual loss of $100 billion due to alleged offshore tax evasion by Americans.

“This is a basic issue of fairness and integrity,” intoned then Senator Barack Obama. “We need to crack down on individuals and businesses that abuse our tax laws so that those who work hard and play by the rules aren’t disadvantaged.” In his 2008 Presidential campaign, candidate Obama often repeated this theme to applause, promising to crack down on tax cheats.

Do As I say, Not As I Do

Fast forward to 2009. President Obama’s choice to be Secretary of the Treasury is the supposedly indispensable Tim Geithner (who?) – thus making a tax cheat/incompetent who owed about $120,000 in back taxes head of the Internal Revenue Service.

Asked about the propriety of nominating a Treasury secretary who was a major tax scofflaw, Obama characterized the eight-year tax evasion as “an innocent mistake.”

Than came ex-Health and Human Services nominee, ex-Senator Tom Daschle, who was forced to pay back almost $200,000 in taxes with interest (but no penalties) on the free car and driver he had been receiving from a Wall Street friend for the past three years. And there was Nancy Killefer, who withdrew her nomination for Obama’s chief performance officer, because she too owed back taxes.

Not to mention my former House colleague, Rep. Charlie Rangel (D-NY), who is embroiled in a controversy over non-payment of years of back taxes on unreported income from a beach front villa in the Dominican Republic. Don’t worry folks, Charlie only heads the House Ways and Means Committee that writes all the tax laws.

Dutch Treat

But this tax hypocrisy by politicians is not confined to this side of the Atlantic Ocean.

Leftist members of the Dutch Parliament are in full cry against Princess Maria Christina of the Netherlands, the youngest of four daughters of the late Queen Juliana of the Netherlands and her Prince consort Bernhard.

It seems that Princess Christina, who lives in London and also holds British citizenship, has been exposed as being the beneficiary of private foundations that act on behalf of members of the Dutch royal family, both registered in the Channel Island’s tax haven of Guernsey, where they enjoy legal tax exemption!

“Eh gad,” say the Dutch parliamentarians, “this must be investigated!” (Forget the fact that the Netherlands is possibly the world’s leading tax haven for offshore registration of corporations that bring in millions of tax dollars).

It is not enough that the Princess was forced by Dutch law to renounce her and her children’s rights to the throne before converting to Catholicism when she married a Catholic in 1975 without the permission of Parliament.

Although the Guernsey trusts are fully legal, MPs say Christina should act as a role model. “She should not be looking for financial loopholes to avoid paying the full amount of tax,’ Labour MP Diederik Samsom said. (Someone should investigate him!)

British Blather

And not be outdone in hypocrisy, in London the British Left is demanding the political scalp of one Glen Moreno, the chairman of the Pearson corporation, which owns the Financial Times, who was appointed as acting chairman of the government’s UK Financial Investments (UKFI) company last month. UKFI was set up to manage the billions of pounds of public money that is helping to keep troubled British banks afloat.

Moreno’s sin? Until last April he was a trustee of Liechtenstein Global Trust, where allegedly some British citizens had accounts that may have been used for tax evasion.

Give ‘Em a Hand

So I will again quote the late, distinguished Judge Learned Hand of the U.S. Court of Appeals in New York, who in a memorable tax case dissent, offered these timeless remarks, “There is nothing sinister in arranging one’s affairs so as to keep taxes as low as possible…nobody owes any public duty to pay more than the law demands. Taxes are enforced exactions, not voluntary contributions.” [IRS Com. v. Newman, 159 F2d 848, 851 (2nd Cir 1947)]

Source: A Taxing Situation

He’ll be joined by Vice Chairman Lee Hak Soo and Presient Kim In Joo, who will quit by the end of June.

“The resignation by Chairman Lee Kun Hee is unprecedented,” Tom Coyner, who helps advise foreign investors in Korea as president of Soft Landing Consulting Ltd. in Seoul, told Bloomberg. Coyner said it signals “an end to the era of the Masters of the Universe.”

After more than two decades on top of Samsung, Lee was shrouded in controversy. Last week, he was charged with evading $133 million (112.8 billion won) in taxes and breaching his chairman duties by enabling his son to reign control of several of the group’s units.

These charges stem from a four-month investigation that began when Lee’s house was raided in January after a former company lawyer alleged the company created several “slush funds” valued at $200 million.

Lee tactfully apologized in a televised briefing – not so much for the base of the charges, but for the trouble they are causing.

“I’m truly sorry for causing so much concern with the investigation,” Lee said. “I will assume full legal and moral responsibility.”

Interestingly, the current charges pale in comparison to previous charges brought against Lee. In 1996, he was convicted of bribing South Korean presidents Chun Doo Hwan and Roh Tae Woo, which earned him a two-year prison term that was soon pardoned by sitting president Kim Young Sam.

And in 2005, Lee was investigated for – and later cleared of – using corporate funds to pay presidential candidates.

No change expected, somehow

For Samsung, the resignation trifecta creates a serious hole atop the conglomerate. In the meantime, the group will dismantle its strategic planning office.

Some analysts are skeptical of the move’s ambiguity, especially when timed after top brass resignations.

“I don’t see anything more than a change of people in charge. There’s no change at all in the fact that (the Lee family) will remain the owner,” Citibank economist Oh Suk-tae told Reuters.

It would take a team of lawyers to dissect the degree and specifics of the Lee family’s ownership of Samsung, but put simply, they own a large majority of the parent company and its units’ shares.

And it isn’t likely that the scandal – as colossal as it would be if it occurred in the United States – will affect the company’s operations.

Samsung’s businesses include high-tech offerings, semiconductors, telecommunication, life insurance, fiber optics, supertankers, compressors and more – all of which account for about one-fifth of South Korea’s exports, Reuters reported.

Samsung Electronics Co. Ltd. alone is Asia’s largest maker of cell phones and televisions.