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TIANJIN PORT DISASTER-THE WORST EVER? NOT YET, NOT BY A LONG SHOT

21 Aug 2011

UNFORTUNATELY, HISTORY IS REPLETE WITH WORLD-CLASS PORT AND INLAND EXPLOSIVE INCIDENTS. So many in fact that, we are forced to limit our comparison to those that occurred in the past 70 years (or so). Perhaps not so strangely, many of them involve the explosive detonation of nitrates and/or munitions. Note: Nitrates are used worldwide for agricultural fertilizer products; hence are ubiquitous, inexpensive, and unfortunately, can be used as precursor for explosives of all sorts. Munitions involving small and large cartridges, artillery shells (small and huge fused devices) torpedoes, and non-nuclear bombs of all sizes and capabilities. To this we must add industrial explosives used in mining, tunnel boring, etc. (referred to as: Dynamite). Most such are made from derivatives of nitro-cellulose in different compounds. Then there are the High explosives such as Centex, TNT, Plastique, and other compounds normally strictly controlled by governmental offices and restricted to use by the military in most nations. Today, there exist many previously unheard- of “Precursor” compounds used in the Industrial production of chemicals ranging from textiles to amphetamines, and other mind altering “designer drugs”. Were any of these compounds present in the Tianjin explosion? Probably, but there are worse chemical compounds in term of their lingering effects such as Sodium Cyanide. It has been detected in huge quantities in the water used by the firemen to suppress the fires. Many dead fish have been found several kilometers from the port, attributed to chemical poisoning. Who cares the most about what chemicals they are exposed to? Firemen and First Responders of all kinds; that’s who! As the extent of the damage becomes known, the public has been well advised to leave the area for other cities. China’s capital city of Beijing is only about 150 Km. away as the crow flies. As of of 15 August 2015, the number of evacuees has grown to more than 6,000 The government has issued an evacuation order fearing further explosions; but not all residents complied. Perhaps it is a problem of: “were do we go to? and, who will feed us? Such problems really tax a government.

THE 2015 PORT OF TIANJIN, NORTH CHINA EXPLOSIONS started on Wednesday, 12 August 2015 about 23:30Hrs. The first explosion occurred and registered as a magnitude 2.3 earthquake. Initial reports estimate that the first explosion was equivalent to 3 tons of TNT. Shortly thereafter, a second more powerful explosion occurred, estimated to be equivalent to 21 tons of TNT, causing most of the damage and injuries. Its shock-waves were felt many kilometers away. The resulting fireballs reached hundreds of meters high, and were visible from space. On15 August, a further series of 8 explosions occurred in the port as fire from the original blasts continued to spread. It is believed the first explosion occurred at a shipping container storage area containing calcium carbide, sodium nitrate, and potassium nitrate two explosions occurred within 30 seconds of each other at the facility, which is located in the Binhai-New Area, North China. Over 100 people were killed, and hundreds of others were injured. The cause of the explosions was not immediately known, but initial reports pointed to an “Industrial accident” (so said the port authorities). Fires caused by the initial explosions continued to burn uncontrollably throughout the weekend; repeatedly causing secondary explosions. Eight (8) additional explosions occurred on Saturday, 15 August. The Central China government immediately began a Military-like PR Campaign to minimize the extent of the dangers still prevalent (supposedly to prevent panic), and even prevented news media photographers from entering the area (for their own safety-so they said)… But, how does the TIANJIN PORT disaster compare with other such disasters? It is way too early to assess the total extent of the damage (and will remain so for at least the foreseeable) future; however, in terms of lives lost it may never equal the the deadliest industrial accident in USA history: THE PORT OF TEXAS CITY DISASTER OF 1947. See below.

 

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THE DEADLIEST INDUSTRIAL ACCIDENT IN USA HISTORY

 THE “PORT OF TEXAS CITY” DISASTER OCCURRED APRIL 16, 1947, in the Port of Texas city. It was the deadliest industrial accident in USA history, and one of the world’s largest non-nuclear explosions to date. The incident began with a mid-morning fire on board the vessel SS Grandcamp (docked in the Port Texas City). Her cargo was about 2,300 tons of Ammonium Nitrate which caught fire and detonated, creating a chain-reaction of further fires and explosions in several other ships in the port, railroad cars, vehicles, and nearby oil and Chemical storage facilities, killing at least 581 people (plus many still missing); including all but one of the 29 members of the Texas City Fire Department.

THE “SS GRANDCAMP” (French Registry), WAS A RECENTLY DE-MOTHBALLED 437-FOOT-LONG, SURPLUS, WWII LIBERTY SHIP built in1942, and given to a French Line to assist in the rebuilding of Europe (we believe the SS designation implied “Surplus Ship”) Along with ammonium nitrate (a very common cargo on the high seas), it was also carrying small arms ammunition, machinery, and bales of sisal twine. Docked nearby SS Grandcamp on the port, were the SS High Flyer (blew-up 15 Hrs after the SS Grandcamp, and also the SS Wilson B. Keene, the High Flyer contained an additional 872 metric tons of ammonium nitrate, and 1,600 tons of Sulfur (a perfect formula for explosives). The ammonium nitrate in the two (2) ships and in the adjacent warehouse was on its way to farmers in Europe. Several other moored ships (also loaded with nitrates) caught fire and exploded. Let us remember that ammonium nitrate is not only an excellent agricultural fertilizer, but also a component of high explosives even today. On that fateful day, longshoremen reported the ammonium bags were warm to the touch prior to loading.

ON APRIL 16, 1947, AROUND 8:00 A.M., SMOKE WAS SPOTTED in the cargo hold of the Grandcamp while she was still moored. Over the next hour, maritime attempts to extinguish the fire or bring it under control, failed as a red glow returned after each effort to douse the fire with water. Shortly before 9:00 a.m., the captain ordered his men to “steam the holds”. Thoughts linger that such action only exacerbated the ignition; Meanwhile, the fire had attracted a crowd of spectators along the shoreline, who believed they were a safe distance away; Eventually, the ship’s hatches were blown open and yellow-orange smoke billowed out. The unusual color of the smoke attracted even more spectators. Spectators also noted that the water around the docked ship was already boiling from the heat, and the splashing water touching the hull of the ship was vaporized into steam. The cargo hold and deck began to bulge as the pressure of the steam increased inside. HMMM!- Time to scoot!!!

AT 9:12 A.M THE SS GRANDCAMP EXPLODED with a tremendous blast sending a 15 foot wave that was detectable nearly 100 miles off the Texas shoreline, and leveled nearly 1,000 buildings on land. The SS Grandcamp explosion destroyed the Monsanto Chemical Plant and resulted in ignition of refineries and chemical tanks on the waterfront. Falling bales of burning sisal twine from the ship’s cargo added to the damage and with the fires raging throughout Texas City, first responders from other areas were initially unable to reach the site of the disaster for several days. It is remindful of the PORT OF TEXAS CITY which also began reconstruction immediately after the disaster.

IN THE AFTERMATH OF THE DISASTER Victims’ bodies quickly filled the local morgue. Several bodies were laid out in the local high school’s gymnasium for identification by loved ones. More than 5,000 people were injured, with 1,784 admitted to 21 area hospitals. More than 500 homes were destroyed and hundreds damaged leaving 2,000 homeless. The seaport was destroyed and many nearby businesses were flattened or burned. Over 1,100 vehicles were damaged, and 362 railroad freight cars were obliterated. Burning wreckage ignited everything within miles, including dozens of oil storage tanks and chemical tanks. Even the nearby city of Galveston Texas, was covered with an oily fog which left deposits over every exposed outdoor surface. The property damage was estimated at $1.06 billion in today’s terms. One of the propellers on the High Flyer was blown off, and found almost a mile inland; it is now part of a memorial park, and sits near the the SS Grandcamp 1.8 ton anchor which was also hurled 1.62 miles across the city. Fires resulting from the cataclysmic events were still burning a week after the disaster, and the process of body recovery took nearly a month. Of the dead, 405 were identified, and 63 have never been identified. An additional 113 people were classified as: missing; these include 27 firefighters who were aboard SS Grandcamp when she exploded. It is really difficult to visualize the full magnitude of the disaster (perhaps like pictures of Hiroshima in WWII).

THE CAUSE OF THE INITIAL FIRE/EXPLOSION ON BOARD THE GRANDCAMP WAS NEVER DETERMINED. The Texas City Disaster is still generally considered the worst industrial accident in American history. There is some well-based speculation that there may have been hundreds more killed but uncounted, including visiting seamen, non-census laborers and their families and, an untold number of travelers. Strangely however; there were some survivors as close as 70 feet (21 m) from the dock.

RECONSTRUCTION OF THE PORT BEGAN SOON AFTERWARDS. A positive result of the Port Of Texas City disaster was widespread disaster response planning to help organize plant, local, and regional responses to emergencies. Within days after the disaster, major companies that had lost facilities in the explosions announced plans to rebuild in Port Of Texas City, and even expand their operations. Some Companies implemented hiring policies of retaining all of the hourly workers who had previously worked at destroyed facilities, with plans to utilize them in the rebuilding. The expenditures for industrial reconstruction were estimated to have been approximately $1.06 B (2015 Dollars). Payouts for fire insurance claims reached nearly $41.8Million. Difficulties in the settlement of liabilities caused the Federal Government enactment of Tort laws which exist today.

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WHO IS ULTIMATELY TO BLAME IN SUCH DISASTERS?

Industrial accidents will happen; that is the reason most industrialized countries have found it necessary to create governmental Agencies etc. to assist industry in preventing them, and to improve the safety of the general public.

The Occupational Safety and Health (Act) Administration(OSHA) is an Agency of the United States Department of Labor, its mission is to “assure safe and healthful working conditions for working men and women by setting and enforcing standards and by providing training, outreach, education and assistance”. If only they would!!!- Conservatives say: “that costs jobs”- The facts do not bear out their contentions, but they appeal to their base very successfully.

Federal Emergency Management Agency (FEMA). In the USA they would be responsible for the temporary wellbeing of displaced persons in any disaster area. They have faltered but come through in the past, if only to wastefully give away money to their friends who are not in need. We remember Hurricane Katrina in New Orleans brought about the FEMA purchase of several thousand trailer homes which were never occupied, and eventually sold for cents on the Dollar.

United States Environmental Protection Agency (EPA or sometimes called USEPA) is an Agency of the US Federal Government, United States Department of Labor, which was created for the purpose of protecting human health and the environments. We wish it would be allowed by conservatives (and some liberals) to perform its duties. Unfortunately we have a “do nothing Congress” which has as its function to block the actions of our president. I mean when these folks do something good for the people, it is probably for the wrong reason(s).

The World Health Organization (WHO) is a specialized agency of the UN that is concerned with international public health. Did you ever hear of anything good they did?

THAT BEING SAID, WHO IS REALLY TO BLAME FOR THESE CALAMITIES? We believe mostly wealthy Corporations, and a few Multi-billionaires, who because of their unbridled greed, and abundant funding, act like a Black-hole (in space) into which gravitate all susceptible public officials (those not so inclined are quickly dismissed, or sidelined), never to be heard from again. It is called: Corruption and defined as accepting favors or emoluments for taking action for or against, rules/laws not favorable to their financial/other interests. Now then, I hope china has counterparts to the organizations we have in the USA, and sincerely hope they take hold, and work to help to protect and compensate the working class for their losses in lives and property.

UPDATE 1. On 26 Aug 2015, CCTV News announced  that Officials from the City’s Transport, Work safety, and  Customs department, as well as the Tianjin Port group Company, are under investigation on charges of “dereliction of duty”, and “abuse of power”; Separately, China’s “Ministry of Public Security” announced the arrest of twelve(12) persons (including high ranking corporate Officers) from the “Tianjin International Ruihai Logistics”. It was their Containers that first expoded causing the entire incident.  We truly hope China will show the world a good example of dealing with corruption and conivance.

UPDATE 2. As of 12 Sep 2015 (a month after the incident), the official casualty report was 173 deaths, 8 missing, and 797 non-fatal injuries. The Central Government has offered to compensate the first responders (we do not yet know how), and a semblance of normalcy has returned to the Port. We feel certain a lot of rebuilding still remains to be accomplished, but no one doubts Chinese diligence.

Edward Oliver Gonzalez (gonzedo)

RELATED ARTICLE: GENERAL ACCOUNTING OFFICE (GAO) LAMBASTES NITRATES INDUSTRY Post 11-2014

P.S. We have once again opened the comment column. Please use it wisely, and not simply to promote your business.

 


August 21, 2015 at 11:37 PM Comments (0)

“FATCATS” FAVORITE TAX BOONDOGGLE – CORPORATE “INVERSION”

14 Aug 2014

In the USA, policymakers say they are attempting to halt a recent rise in the corporate practice known as “INVERSION”. A glaring example is a 207% spike in health care industry inversions during 2013. Why are such corporations renouncing the USA? TAX AVOIDANCE, that’s why! Profits made in the United States are subject to USA Corporate taxes of of almost 40 % ; On the other hand, profits earned in foreign markets often have a much lower lower tax rate; so, Corporations then claim that country as its primary home to achieve a lower tax rate. It is recognized that some some inversions in the USA occur naturally from traditional business mergers. Naturally, USA taxpayers are loudly expressing a rejection of such practices In response to online petitions, Walgreens decided last week that it would not seek an inversion as part of its purchase of the Swiss-based company Alliance Boots. Strangely, in Spanish “inversion” translates simply: “an investment”. The “fatcats” are never satisfied. We say again they seem to have no sense of ethics/morality, but are driven by greed. They seem to forget the lesson of the early Industrialists of America who ultimately gave much of their profit back to the people. It seems that near the end of their life, they realized you can’t take it with you, and wanted to leave a good legacy. Even so, none of them ever gave up their USA citizenship to evade taxes.

WHAT IS A “FOR PROFIT CORPORATION”? By definition, they are Anonymous Societies referred to as: Inc., and  as “SA” in most of the world. The important thing to know is that corporations enjoy sundry governmental protections and privileges granted them by the government in which they incorporate. In the USA for instance, such protections/privileges vary broadly by the State of incorporation (their corporate home). Pres Obama recently said of corporations: “a fortunate few (who) play by their own rules” That is a truism, and perhaps the main reason why corporations exist. There are also Non-Profit Organizations (NPOs); These corporations pay no taxes at all, and in the USA are governed by Internal Revenue Code 501(c) (3). Naturally, there are millions of NPOs in the USA; These include Churches, beneficent, and other Civil Societies (as NPOs are known in other parts of the world). No wonder our Treasury Department is in its current quandary.

 WHAT POLITICIANS ARE SAYING ABOUT CORPORATE INVERSION

President Barack Obama, In a recent video addressed, criticized corporate tax inversions calling them a: “renunciation of citizenship…Rather than double down on the top-down economics that let a fortunate few play by their own rules, let’s embrace an economic patriotism that says we rise or fall together, as one nation and as one people”.

Ron Wyden (D-OR), and Senate Finance Committee Chairman, called the increase in inversions a symptom of a broken tax system. He added: “The USA tax code is infected with the chronic diseases of loopholes and inefficiency. These infections are hobbling America’s drive to create more good-wage, red-white-and-blue jobs here at home. They are a significant drag on our economy and are harming USA competitiveness”

Sen. Orrin Hatch (R-UT) Says that members of the Finance Committee are frustrated, but that the issue needs to be dealt with as a matter of USA competitiveness. Senator Hatch said: I am greatly concerned about these corporate inversions…I believe the best way to solve this problem is to reform our corporate and national tax law in a manner that will make our multinationals competitive against their foreign counterparts…That would mean, among other things, a significant reduction in the corporate tax rate and major changes to make our tax system more competitive” – Easy to see he wants to favor For Profit Corporations in the USA ever more.

TAX RATE REDUCTION IN THE USA is the main target of the Republican congressional Reps; Democrats on the other hand, are looking for ways to augment tax revenue. Given the adversarial/ intractable divide between the USA political parties, no change can be anticipated in the near future. Folks, we are talking about huge “Lobbying contributions” that will continue to stagnate/prevent change. It is unfortunately true that “we have the best government that money can buy” The USA Treasury Department holds little hope of congressional action; accordingly, it is looking into how to slow inversions by the diligent application of using existing tax laws. They want to seem optimistic/diligent, but we know better that to expect them to succeed, they have few successes to brag about. It’s hard to estimate how much a rule change could affect the government’s tax revenue bottom line. Estimates vary broadly over the course of a decade. Some think the USA stands to gain $20 billion in revenue if most new inversions are prevented. We think it would be much higher. Sigh!-wish it were so! In Texas we have an old-timer’s advice: Dance with the one that brung you! You fatcats know exactly what that means!

Thanks to America-Aljazeera for their quotes.

Sincerely,

Edward Oliver Gonzalez (gonzedo)

e-mail>gonzedo@yahoo.com

RELATED ARTICLE: “FATCATS” RENOUNCING THEIR USA CITIZENSHIP TO EVADE PAYING TAXES ( #16-2014)

 


August 14, 2014 at 1:30 AM Comments (2)

“FATCATS” RENOUNCING THEIR USA CITIZENSHIP TO EVADE PAYING TAXES

 7 Aug 2014

In the USA, the Foreign Account Tax Compliance Act (FATCA), prompted the number of Americans renouncing USA citizenship to a near all-time high in the first half of 2014; just before the new rules that make it harder to hide assets from tax authorities came into force. Some 1,577 people gave up their nationality at USA embassies in the six months through Jun 2014, according to the Federal Register data published 6 Aug 2014. It is only the second time there’s been more than 500 “renouncers”(Tax evaders) based on records starting in 1998. The FATCA asset-disclosure rules became effective on 1 Jan 2014, and prompted 576 of the estimated 6 million Americans living overseas to give up their passports in the second quarter of 2014. The appeal of USA citizenship for such renouncers faded, as more than 100 Swiss banks turn over data on USA clients to avoid prosecution for helping tax evaders.

IN 2010 THE USA ESTABLISHED THE FATCA LAW. Congress and Pres. Obama in effect threatened to cut off banks and other companies from easy access to the USA market if they didn’t pass along such information. It was projected to generate $8.7 billion over 10 years, according to the USA congressional Joint Committee on Taxation; However, The start of FATCA was delayed by 18 months to give foreign banks time to comply with the law, after financial institutions including ; CanadaToronto-Dominion Bank and Allianz SE of Germany, complained that it was too complex. Even so, June 30, 2014 was the deadline for turning over information on Americans considered in breach of USA tax rules, while July 31,2014 marked the end of the second wave of deliveries and includes documents that show which American clients were compliant.

Matthew Ledvina, a USA tax lawyer at Anaford (Antigua and Barbuda-AG) in Zurich said: “FATCA and the Swiss bank disclosure program has intensified the search for USA nationals beyond all measure…It’s shocking the levels of due diligence they are going through to ensure they have cleaned house…Swiss banks are trawling through records going back to the 1990s to find clients with USA addresses and telephone numbers, and those who received schooling in the country…Those identified as USA persons are either being asked to leave or be placed in special USA-only sections of the institution” Ledvina added that as many as 106 Swiss banks entered a USA Justice Department program to volunteer information on how they helped clients hide money from the Internal Revenue Service – Yeah! we remember, and they got away by paying cents on the Dollar.

The USA is the only “Organization for Economic Cooperation and Development” nation that taxes citizens wherever they reside, stepped up the search for tax evaders after UBS.AG paid a $780 million penalty in 2009 and handed over data on about 4,700 accounts. Shunned by Swiss and German banks and with FATCA looming, almost 9,000 Americans living overseas gave up their passports over the past five (5) years.

FATCA LAW requires USA financial institutions to impose a 30% withholding tax on payments made to foreign banks that don’t agree to identify and provide information on USA account holders. It allows the USA to seek/obtain data from more than 77,000 institutions and 80 governments about USA citizens’ overseas financial activities.

SWISS BANK ACCOUNTS NOT SO SECRET ANYMORE. Julius Baer Group Ltd. HSBC Holdings Plc’s Swiss unit, are excluded from the program as they are already under investigation in the USA, the second-biggest Swiss bank that was part of the probe, was fined $2.6 billion in May 2014 after it pleaded guilty to aiding tax evasion. Americans with a net worth exceeding $2 million, and an average income tax of at least $157,000 over the previous five years, must pay an exit tax on unrealized capital gains when they renounce USA citizenship. USA citizens aren’t the only ones giving up their ties to America. The Treasury Department is also trying to limit the benefits from corporations adopting foreign addresses to avoid taxes, a process known as “an inversion”.

Thanks to Bloomberg for Their 7 Aug 2014 Story.

OUR TAKE AND COMMENT

FATCA – a “BIG DEAL”, Hardly! At first, we were surprised, and pleased about the application of the FATCA Law (we make the “FATCAT” analogy because in the USA, a “fatcat” is an extremely wealthy person). The fact that such law is in effect (since Jan 2014), provides some hope that at least some of the International tax-loopholes may begin to be closed; However, let us do the numbers: FATCA is projected to generate $8.7 billion in owed taxes over 10 years…but, that, is less than a billion per year. Folks that is a minuscule amount given that Switzerland alone (there are many other “tax heavens”) holds $2,300 billion in assets. One might say FATCA represents a Band-aid on a bleeding tax artery. And then, there is an even bigger tax-dodge: The Treasury Department is also trying to limit the benefits from corporations adopting foreign addresses to avoid taxes, a process known as “an inversion”. Yeah! Things are “inverted” all right! The wealthy pay little or no taxes, then complain about how “liberal”, and wasteful” those of us who do pay taxes are. In my book, a person who renounces their citizenship is a non-descript scoundrel who has no flag, allegiance, or shame! There have been over 9,000 such greedy “renouncers” in the past five (5) years. They probably vacation in our country under their new citizenship- No shame!

THEN THERE ARE THOSE WHO PROFIT FROM FATCA. Mathew Ledvina, a USA tax lawyer at Anaford (Antigua and Barbuda-AG) in Zurich (talk about an elusive group), speaks very optimistically about FATCA (par 3). In our opinion, he only wishes to make the new law sound very threatening to tax evaders, but not to worry, because he is there to show them how to avoid tax liabilities – at a low price. In our opinion he is just advertising his services. He could care less about the ethics of tax dodging, and specializes in how to do it legally. Notice he too lives, and practices outside the USA. His USA Law license and citizenship should be revoked ASAP as a “Persona non-grata”.

Edward Oliver Gonzalez (gonzedo)

e-mail; gonzedo@yahoo.com

Related articles: INDIA TAX EVADERS IN THE CROSSHAIRS OF P.M. MODI VS THE SWISS CONNECTION; http://energymaters.com/?p=1574


August 8, 2014 at 9:30 PM Comment (1)

INDIA TAX EVADERS IN THE CROSSHAIRS OF P.M. MODI VS THE SWISS CONNECTION

13 JUN 2014

On 27 May 2014, India’s ’s new Prime Minister (P.M.) Narendra Modi on one of his first acts (on his first day in office), was to make it a priority to recover billions of dollars (in Ruppies) stashed overseas to avoid taxes. P.M. Modi immediately created an investigative team of former judges and current regulators to find the concealed financial assets, known in India as black money”, to return them home. At stake is what’s estimated to be as much as $2 trillion, more than India’s annual gross domestic product. P.M. Modi enthusiastically said: “It will send out a loud and clear signal to all tax evaders” But will it?

ARUN KUMAR, AUTHOR OF THE BOOK “THE BLACK ECONOMY IN INDIA” and an economics professor at Jawaharlal Nehru University in New Delhi, calculated the $2 trillion figure said: “There was always a lack of political willpower, and I hope it will be different this time. India is joining countries including the U.S. and Britain in cracking down on rich people who haven’t reported offshore funds”. India ranked third in the world (for money illegally moved overseas in 2011), behind China and Russia. According to Kumar, India (Asia’s third-largest economy) loses an estimated 60 trillion rupees ($1 trillion) each year from its formal sector, such as banks, and almost 6 trillion rupees of that is moved out of the country, Kumar analyzed independent studies and World Bank and International Monetary Fund data on trade flows. His $2 trillion estimate is the total amount Indians currently have stashed abroad illegally, without paying taxes or disclosing the funds to authorities. Kumar added: Tax revenue on those assets could exceed $600 billion, based on a 30 % rate plus penalties, that’s six (6) times the amount India’s federal government estimates it will need to borrow this year to meet expenses. India’s (GDP) yearly fiscal deficit will widen this year to the highest among BRIC countries (Brazil, Russia, India and China) — in part, because taxes, as a proportion of GDP are low.  A May 29 International Monetary fund (IMF) estimate showed. “The black money within the country is easier to get at than that stashed abroad…Probing money moved abroad is a rather convenient way of diverting public attention from addressing the larger issue of unaccounted money within the country”- Well…maybe.

SEPARATELY, IN A 2013 REPORT BY “GLOBAL FINANCIAL INTEGRITY”, a Washington-based group researching cross-border money transfers, said that high-net-worth individuals, and private companies are the “primary drivers of illicit (money) flows”. Indians had moved $644 billion to tax havens as of 2011, according to their estimates. (note the wide variance with Arun Kumar’s estimates). One has to wonder if this organization is on the payroll of the tax evaders, and only trying to minimize the extent of the problem.

INDIA’S PRESIDENT Pranab Mukherjee TOLD LAWMAKERS ON 13 JUN 2014, that India will proactively engage with overseas governments to hunt black money, while outlining goals of the two-week-old government, which is also seeking to stimulate economic growth, curb inflation, simplify investment rules and abolish obsolete laws. The government defines black money as assets that haven’t been reported to authorities at the time of their generation or disclosed at any point during their possession. A large portion is converted into gold and held in households domestically. It’s legal for Indian residents to hold money in foreign bank accounts as long as they disclose it and pay taxes.

P.M. MODI’S SPECIAL INVESTIGATIVE TEAM, Will Focus On The Black Money held In Offshore Accounts, and was set up to comply with a Supreme Court directive. The new investigative panel headed by M.B. Shah, a former judge in India’s top court, who has yet to figure out its scope and methods. The panel held its first meeting on 2 Jun 2014, and decided on a “road map” for implementing the court order, according to a government statement.

ENTER: THE SWISS CONNECTION Paulson-Ellis, who used to run the Bank of India business’, said: “This is a particularly good time to collaborate with international agencies chasing unaccounted cash…Private banking systems are being exposed and forced to share client details with U.K., U.S., EU and Swiss authorities. If India can be a part of that dialog, it will get better access to information than was possible historically…P.M. Modi, needs to back words with action”. But …Ellis is now co-head of “Global Emerging Business” at Banco Espirito Santo SA (Inc) in London, so how sincere can he be? Question is: Is he a part of the problem? or, a part of the solution?

SWISS SAY “HSBC does not condone,” the bank said (in an e-mailed response) last week.  Mario Tuor, a spokesman for Switzerland’s State Secretariat for International Financial Matters in Bern, said: “Individuals are responsible for their own tax affairs”. Adding that his government can only cooperate within the framework of Swiss law, and it doesn’t allow cooperation based on stolen data, referring to data stolen in 2011 by a former Bank employee. See there!- our hands are tied – Sure, we know!

TAX HEAVENS Switzerland, Liechtenstein and the British Virgin Islands were among tax havens where illegal funds were stashed, A.P. Singh, then director of India’s Central Bureau of Investigation, said in 2012.that Indians were reported to be the largest depositors in Swiss banks, without providing details.

Siamak Rouhani, an official at the Swiss embassy in New Delhi, said on Jun 2014 (in an e-mail):“Switzerland understands and shares India’s wish to fight tax evasion and is committed to complying with the relating international standards”- Yes, we know!- carefully worded language that only seeks to obscure the facts.

SOME INDIANS ARE SKEPTICAL ABOUT RECOUPING THE BLACK MONEY. According to Ashutosh Kumar Mishra, New Delhi-based Executive director of “Transparency International India” (a group that monitors corporate and political corruption) said India needs to raise the issue in international forums and put pressure on foreign banks to disclose information about those who are evading taxes through their branches, he said. “The problem of black money cannot be solved in a day…Lack of proper implementation is what has derailed all well-intentioned announcements like this”  Others said…

Bizay Sonkar Shastri, a spokesman for the BJP (Party) said: “The few steps the previous Congress government had initiated was all eyewash…It’s a priority for us, and we will pursue it with all sincerity and seriousness…Unaccounted money reduces the tax base and the ability of the government to tackle the fiscal deficit.

Ashima Goyal, a member of a panel that advises the Bank of India on monetary policy said:“This probe team is very timely. It can also draw upon international treaties drawn up for this”.

MONEY TRANSFERS THRU “HOOK OR CROOK”- hawala. Some undisclosed money is moved out of the country through the global transfer system known as hawala The system is based on trust or family connections and can involve mispricing of goods, financial loopholes and hidden accounting procedures to deliver cash in one country and pick it up in another. Using hawala is illegal in India. Shell companies (in paper only) are set up Tax Heavens to route some of the cash back to India by investments in stock markets, through participatory notes, foreign direct investments, and other instruments. We suppose that is also a method of “spreading the wealth”.

Thanks to Bloomberg for their 13 Jun 2014 story

OUR TAKE AND COMMENT

We said it before. Switzerland Banks are the key to world-wide corruption, and fraud. Our previous article on this subject dealt with USA banking firms doing business with their Swiss counterparts to evade paying taxes for earnings in the USA. Unfortunately, either by USA Internal Revenue System (IRS) collusion, or their legal inability to prosecute such slick trans-national banks, the tax evaders got away by paying a few cents on each dollar, and then only against those tax evaders who surfaced then.

In May 2014 India’s new prime Minister Modi started his tenure by declaring war on those who stashed profits overseas to avoid taxes by appointing a new Investigative Panel headed by Mr. M.B. Shah, a former judge in India’s top court; Unfortunately, he too seems to be scratching his head, wondering how to successfully recoup monies owed to the Indian government by these super-slick tax evaders who are making it very difficult to defray India’s governmental expenses. It seems quite clear Mr. Shah, and other judges/businessmen, in India agree that the Swiss connection is deeply involved. Problem is: How to “pin the tail on the donkey”. Many fear that P.M. Modi’s initiative may be not really “A loud and clear signal” to tax evaders, but rather “political-posturing” so that he may later say: Well…we tried from day one. The proof to his strength of purpose will be the resolve he shows in the days to come. We wish him the best!An anecdote: A man said to another: “I never turn on the light in the kitchen at night, because the roaches all come out”.  HMM! No wonder it is “lights out” in India too.

Edward Oliver Gonzalez (gonzedo)

e-mail > gonzedo@yahoo.com

RELATED ARTICLES: THE SWISS CONNECTION – KEY TO WORLD-WIDE CORRUPTION AND FRAUD    Feb 2014 http://energymaters.com/?p=1429


June 13, 2014 at 7:46 PM Comments (3)