Treasure Islands - Nicholas Shaxson [152]
26.Author’s interview with Scriven, March 2009.
27.Michael Foot, “Final Report of the Independent Review of British Offshore Financial Centres,” HM Treasury, October 2009, http://www.hm-treasury.gov.uk/d/foot_review_main.pdf.
28.“Jersey Banking: The International Finance Centre,” Jersey Finance Ltd., Fact Sheet, August 2009, http://www.jerseyfinance.je/_bluebox/download.cfm?attachment=18FCF7CA.
29.Some illustrative comparative data is provided at Ann Hollingshead, “Bamboozled!,” Task Force on Financial Integrity blog, October 16, 2009.
30.When Lee Kwan Yew approached the Bank of England for support in setting up an offshore market, it was less encouraging, saying that it supported Hong Kong as a financial center instead. See Lee Kwan Yew, From Third World to First: The Singapore Story, 1965–2000 (Singapore: Singapore Press Holdings, 2000), p. 90.
31.This was widely reported. E.g., Netty Ismail, “Morgan Stanley Fallout from Andy Xie Costs More Jobs,” Bloomberg, October 12, 2006; and Netty Ismail, “Morgan Stanley Fallout From Andy Xie Costs More Jobs (Update1),” Bloomberg, October 12, 2006.
CHAPTER 6 THE FALL OF AMERICA
1.From author’s interview with Hudson, New York, 2008.
2.These days, it is intangibles like patents or brands that are most often abused: Transfer mispricing on oil is much harder because the market price of oil is widely known.
3.As told to author by Hudson in New York in 2008; the memo is reproduced on p. 33 of the 2004 paperback edition of Tom Naylor’s Hot Money and the Politics of Debt, 3rd ed. (McGill-Queen’s University Press).
4.Raymond Baker, Capitalism’s Achilles Heel: Dirty Money and How to Renew the Free Market System (Hoboken, NJ: John Wiley & Sons, 2005). Baker is a world authority on illicit cross-border financial flows. The chapter 4 table entitled “Specified Unlawful Activities under U.S. Anti-Money Laundering Laws” lists 65 crimes—aircraft piracy, human trafficking, alien smuggling, bank fraud, bribery, ocean dumping, and so on—that can be used as a basis for money-laundering charges under U.S. law. The table then cross-checks each crime against two columns: first, if the crime underlying the money flow is committed in the United States; and second, if the crime is committed overseas. The table shows all 65 crimes triggering U.S. money-laundering laws if the crime is committed in United States. But if the crime is committed overseas, three-quarters of them—including alien smuggling, racketeering, peonage, and slavery, and nearly all forms of tax evasion—are excluded from the “prohibited” list.
5.See, for example, “US Bankers Attack IRS Deposit Interest Reporting Requirement,” Tax News, December 3, 2002.
6.“Miami: The Capital of Latin America,” Time, December 2, 1993.
7.See Naylor, Hot Money and the Politics of Debt, p. 292.
8.Author’s interviews with Blum.
9.Blum, by correspondence, and Naylor, Hot Money and the Politics of Debt, p. 293.
10.This was the Interest Equalization Tax. The Kennedy speech on this subject is available at the American Presidency Project, http://www.presidency.ucsb.edu/ws/index.php?pid=9349.
11.The tax did not cover loans, so many corporations simply switched from bond financing to lending. To check bank loans to foreign countries, the U.S. Congress enacted the Voluntary Foreign Credit Restraint Program (VFCRP) in February 1965, broadening it in 1966. U.S. corporations were asked to voluntarily limit their direct foreign investment. The program was made mandatory in 1968. Capital controls were relaxed in 1969 and phased out in 1974, after the United States left the Bretton-Woods system of fixed-exchange rates. See, for example, “Introduction to Capital Controls,” St. Louis Fed. Review, November/December 1999, p. 24.
12.This “deferral,” as it is known, was not uniformly available. The Kennedy administration had enacted Subpart F of the Code in 1962, which defended against tax havens by curbing deferral of U.S. corporate taxes in certain situations, deeming the income of foreign subsidiaries and affiliates of U.S.