Patrick Radden Keefe writes:  Since 1713, when the Great Council of Geneva banned banks from revealing the private information of their customers, Switzerland had thrived on its reputation as a stronghold of financial secrecy. International élites could place their fortunes beyond the reach of tax authorities in their own countries. For Swiss wealth managers, who oversaw more than two trillion dollars in international deposits, the promise to maintain financial privacy was akin to a religious vow of silence. Switzerland is the home of the numbered account: customers often specify that they prefer not to receive statements, in order to avoid a paper trail. In light of these safeguards, the notion of a breach at HSBC was shocking in 2008.

The Swiss economy is charged by banking.  Were its secrecy policies to be ended, they would be left making cheese, cuckoo clocks and watches.  The Swiss vote in their cantons almost daily on every imagineable issue, so at some point they will weigh in on the future of their economy.

In the meanwhile, the US and its tax and justice departments want to know which of their citizens are avoiding taxation by stashing their money in private accounts in Swiss banks.

When Hervé Falciani, a computer technicians,  arrived in Geneva, he realized that HSBC. was engaged in a “gigantic swindle.” Clients were not only placing their fortunes in accounts that were “undeclared” to tax authorities; HSBC bankers were actively assisting clients in hiding their money, by setting up shell companies and sham trusts in the British Virgin Islands and Panama. In some instances, the bankers were handing customers hundred-thousand-dollar bricks of U.S. bills, allowing money to be smuggled back home. In a subsequent investigation by French prosecutors, an HSBC client said that the bank had instructed him to “make a company in Panama, which should open an account at HSBC. in Lugano, into which I should transfer all my holdings, in order to not be hit by this tax.”

Like many Swiss banks HSBC. offered “hold mail” accounts, refraining from sending any statements or other mail to clients. Nearly fifteen thousand clients chose this method—roughly half of the account holders at HSBC’s Swiss bank. Another client questioned in the subsequent investigation recalled that when he wanted to make a deposit he would meet his account manager in a public place. “I would give him an envelope holding my money, in cash,” he explained. “And a few days later he would tell me by phone that the funds had been credited to my account in Switzerland.” H.S.B.C. has numerous offices in Paris, but, according to the French investigation, when the Swiss bankers visited clients there they preferred to meet in cafés; in a similar spirit of concealment, account holders used pay phones when making calls to Switzerland. One client pointed out that the furtive face-to-face meetings offered “a bit of reassurance about the money I had in Switzerland, since I had no documents or anything that attested to my having an account.”

Although the conduct that Falciani witnessed may have been illegal, it was fairly standard practice for Swiss banks at the time. A 2014 U.S. Senate report describes a Credit Suisse banker travelling to America to meet a client for breakfast at a Mandarin Oriental hotel, and passing along an issue of Sports Illustrated in which account statements were concealed between the pages.

Swiss banks routinely dispatched emissaries to cultivate new clients at art shows and regattas, and the illegality of the service was implicit in the pitch: if you bank with us, your fortune will not be taxed. It is not illegal for a person or a corporation to hold a Swiss bank account, or to engage in tax “avoidance”—skirting tax requirements through gymnastic accounting and the exploitation of loopholes. But tax evasion, in which wealth is actively concealed from authorities, is illegal, and the behavior of Swiss bankers often suggested that they knew they were crossing the line. According to testimony in a 2014 criminal trial in Florida, representatives of the Swiss bank UBS. who travelled to such events as Art Basel to recruit clients carried encrypted laptops that were configured with an emergency password, so that they could erase the hard drive with a few keystrokes. An unnamed Swiss banker said, “We all have one foot in prison. Maybe that’s why we were all paid so much.”

Mohamed El-Erian writes:  Saudi Arabia has captured the world’s attention with the announcement of Vision 2030, aimed at overhauling the structure of its economy. The plan would reduce historical high dependence on oil by transforming how the Kingdom generates income, as well as how it spends and manages its vast resources. It is supported by detailed action plans, the initial implementation of which has already involved headline-grabbing institutional changes in a country long known for caution and gradualism.

Vision 2030 focuses on three major areas, together with efforts to protect the most vulnerable segments of the population.

First, the plan seeks to enhance the generation of non-oil revenues, by raising fees and tariffs on public services, gradually expanding the tax base (including through the introduction of a value added tax), and raising more income from a growing number of visitors to the Kingdom.

Second, the authorities want to reduce spending by lowering subsidies, rationalizing the country’s massive public investment program, and diverting spending on arms away from foreign purchases.

Third, the Kingdom seeks to diversify its national wealth and, in the process, increase current investment income. For example, the plan would raise funds via the IPO of a small part (up to 5%) of Saudi-Aramco, the giant oil conglomerate, and invest the proceeds in a broader range of assets around the world.

This bold economic vision is not without risks. Economic transitions are inherently tricky, especially one of this scale and scope. Early successes are often needed to solidify the overwhelming buy-in of key constituencies, particularly those that naturally may be resistant to change at first (especially change that eliminates some of the traditional financial entitlements in moving from a familiar, albeit less secure, present toward what is now an unfamiliar future).

The action plans underpinning the implementation of Vision 2030 inevitably involve progressing on multiple fronts simultaneously and in a carefully coordinated and monitored fashion. Requiring invigorated administrative and operational resources, it comes at a time when the Kingdom is not only dealing with lower oil earnings and drawing down its large reserves, but also is increasingly asserting its regional role, including in Syria and Yemen.

How the Saudis proceed on this important economic restructuring is being closely watched by the other five members of the Gulf Cooperation Council – and by many other countries as well. If Saudi Arabia succeeds in transforming its economy, including reforming institutions and restructuring economic incentives, other countries that face similar challenges, in the region and beyond, will be inspired to follow suit.

It appears that in the wake of the Panama Paper Leaks, the Bill and Hillary Clinton family fortune may have been acquired through partners with numerous offshore entities.

The organization that makes up Mrs.Clinton’s enormous collaborative team of investors has been operating with funds that have been fused with offshore accounts from around the world. Giving Hillary a direct link to one of the biggest offshore accounting scandals.

Two of the leading partners in the Clinton financial family, Canadian business executive known for his mining and filmmaking endeavors Frank Giustra and the Chagoury family in Nigeria, have been using the law firm Mossack Fonseca, the center of the Panama Paper investigation, to move and exchange their assets. Giustra, one the largest financiers to Hillarys financial foundation, gave more than $25 million. Whereas, the Chagoury family has committed to giving $1 billion.

Giustra used Mossack Fonseca back in 2005 to created UrAsia Energy, a company that acquired uranium concessions in Kazakhstan with the aid of Bill Clinton. UrAsia Energy was one of the companies responsible for sending a section of the 20 percent of American uranium production into the hands of the Russian Government. In 2010, UrAsia Energy sold the uranium assets they had acquired in the United States to the Russian State Nuclear Academy.  Hillary Clinton as Secretary of State had to sign off an approval before the control of large amounts of uranium were turned over to the Russian government.

This is not the first time that the Clinton’s financial contributors have been linked to offshore accounts. Two years ago it was discovered, by a Swiss whistleblower, that up to $81 million has been given to the Clinton Foundation by means of Swiss accounts.

Contributors who financed the Clintons through their Swiss accounts were Richard Caring, a British businessman, who donated $1 million in 2005.Frank Gisutra also had a Swiss account and donated up to $10 millionbetween 2006 and 2007. Eli Broad an American entrepreneur donated over $1 million to the Clintons from his Swiss account.

With Mrs. Clinton’s donors and contributors not able to hide away their assets anymore, who will be funding her campaign?

Original
Dieter Huthmacher
www.w-t-w.org/en/dieter-huthmacher

Hall of Fame Gender Ratio by Fast Company

Fast Company currently operates a number of franchises such as “Most Innovative Companies”, and “Most Creative People”. For their Most Innovative Companies feature, Fast Company assesses thousands of businesses to create a list of 50 companies it considers the most creative.^[1The Most Creative People in Business is a list of 100 people from different industries.

FastCompany.com operates as a network of sites. It comprises three sites: Co.Design, Co.Exist, and Co.Create. Co.Design covers innovation and design. Co.Exist covers environmental and social issues. Co.Create covers creativity, marketing, and culture.

The board of governors of the European Bank for Reconstruction and Development (EBRD) approved China’s application for membership. China is, of course, already a shareholder in several global and regional development institutions, but the EBRD is different in its focus on private sector development and explicit promotion of democracy and a market economy. Membership is part of much more ambitions engagement of China in global finance.

The European Union will likely struggle to find a balance in relations with China this year, after initiatives such as participating in the Beijing-sponsored Asian Infrastructure Investment Bank contributed to a warming of ties last year with the world’s second-largest economy. On Feb. 15, the head office of the EU in Brussels was surrounded by about 5,000 demonstrators wearing hard hats and carrying banners and signs, who accused China of dumping steel and demanded the protection of jobs in Europe.

the US Dollar is close to printing 2016 lows. We have a scenario on our hands that is uniquely different to 2015 at the same time of year. Last year, the US Dollar was a run-away train into the Ides of March, and then the Fed came out to tell markets that the Fed would not harm the world with a Strong Dollar on their own accord.

The future-bearing potential of the rapprochement of Europe and the BRICS as a spearhead of global governance reform in a multipolar world. However, given the current global political setup the Euro-BRICS connection does not live up to its full potential.

Britain’s membership of the European Union reinforces the country’s economic “dynamism” but leaves it more exposed to financial shocks, Bank of England governor Mark Carney said.  Carney expressed the view in a letter to the head of the Treasury Select Committee before facing questions from the cross-party panel of lawmakers on Britain’s relationship with the EU ahead of June’s referendum on whether the country should remain part of the EU.

Brexit  Wolfgang Schäuble was on a mini-roadshow in London, appearing at a couple of events to push the anti-Brexit case with characteristic toughness but uncharacteristic emotion.

First, the German finance minister appeared alongside George Osborne at a panel. Asked about his reaction should Britain decide to leave, he said: “We would cry … and I hope that we will not.”

Then, at a conference organized by the German British Forum, he urged Britain to go for “splendid integration” rather than “splendid isolation.”

“If the U.K. were to leave the EU, it would be very dangerous for the European Union, it would weaken the European Union … I can’t see that it’s in Britain’s interest for the EU to be weakened,” Schäuble said. “So please don’t.”

“Britain’s future lies in Europe,” he pleaded to an audience of British and German grandees before ending with a very British exhortation: “Go on, lead Europe!”

The prime minister’s biggest headache on Brexit is not Boris Johnson but “Red Jez”, as some papers call the left-wing leader of the Labour Party, according to professor Matthew Goodwin writing for POLITICO. His thesis is that, in order to win the referendum, Cameron needs to win over voters that are not natural Conservative supporters.

Changing Securitization in Europe  Four trade associations have issued a paper pushing for a swift reform of the moribund securitization market.

The four, the Association for Financial Markets in Europe (AFME), the European Fund and Asset Management Association (EFAMA), the International Capital Market Association (ICMA) and Insurance Europe, are broadly supportive of the European Commission’s efforts to revive the market but want more clarity and details on issues such as asset-backed commercial paper, disclosure and third-country deals.

Remember: The US subprime mortgage crisis began with the securitization of mortgages.

UK Life Insurers   The Financial Conduct Authority is concerned about the treatment of long-term customers who wanted to make changes to their policies. Here’s Sky News: “Prudential, Old Mutual, Abbey Life, Scottish Widows, Countrywide and Police Mutual are to be investigated by the Financial Conduct Authority.

“The FCA has been monitoring whether insurers have treated customers who are locked into pensions and other savings plans fairly, compared with new customers. Tracey McDermott, the FCA’s acting chief executive, said: ‘The practices at some firms appear to have been poor.’

Can things get worse in Russia?  Last year, as other money managers were steering clear of Russia’s broken economy, the Moscow-born Barinov pulled off something of a coup: He persuaded his bosses to take the plunge and buy Russian government bonds. It was a narrow bet, but he ended up winning because the central bank—after implementing the biggest interest rate hike since the Russian financial crisis in 1998 to prop up the collapsing ruble—changed course and aggressively backtracked. In the first 10 months of 2015, ruble-denominated government bonds handed investors such as Barinov a 25 percent return in dollar terms, the biggest gain for local bonds anywhere.

This year not even Barinov can spot an escape from the rubble of an economy mired in its longest recession in two decades, Bloomberg Markets magazine reports in its forthcoming issue. Sanctions imposed by the U.S. and the European Union to punish President Vladimir Putin for meddling in Ukraine remain a drag on growth. And oil’s decline to a 13-year low has been catastrophic for Russia, where almost 50 percent of government revenue comes from crude and natural gas. “With oil, you rely on a very volatile factor,” says Barinov, who oversees about $2.6 billion in assets. So as far as he’s concerned, “all bets are off.”

A persistent glut in crude supply could push prices to as low as $16 a barrel this year, according to former Russian Finance Minister Alexei Kudrin. Kudrin won plaudits overseas for his stewardship of Russia’s finances during Putin’s first decade in power. As the current crisis deepened, Bloomberg News reported in December, he was in discussions about a possible return to government. (He declined to comment on that.) A Putin ally, Kudrin remains negative about Russia’s prospects. “Over the next year to 18 months,” he says, “Russia will suffer major economic difficulties.”

In mid-January, as snow blanketed Moscow, the mood was grim at the Gaidar Forum, a kind of Russia-focused mini-Davos. The yearly economic conference is named after the free-market Russian economist Yegor Gaidar, who pioneered the shock therapy that introduced capitalism to Russia in the early 1990s. Finance Minister Anton Siluanov set the tone for the event, warning that without deep budget cuts to keep the deficit at 3 percent, the country risks a financial crash like that of the late ’90s, when Russia defaulted on its debts, the ruble crashed, and inflation spun out of control.

 

 

 

Boeing Co. has developed a new attempt to tackle a basic fear for flying germophobes: airliner lavatories that turn into virtual petri dishes during long-range trips.

The U.S. planemaker says its engineers and designers have created self-cleaning toilets that use ultraviolet light to kill 99.99 percent of germs, disinfecting all surfaces after every use in just three seconds.

“We’re trying to alleviate the anxiety we all face when using a restroom that gets a workout during a flight,” Jeanne Yu, director of environmental performance for Boeing’s commercial airplanes division, said in a statement.

The concept offers a new twist on the old aviator saying, “If it ain’t Boeing, I ain’t going,” aviation consultant Robert Mann said by e-mail. “Boeing should ground-test these in big-city public facilities to develop some street cred,” he said.

The lavatory prototype uses a type of ultraviolet light, different from the rays in tanning beds, that doesn’t harm humans. Activated only when the airliner toilet isn’t in use, the lights flood touch surfaces such as the toilet seat, sink and counter top.

Boeing has filed a patent for the concept, which it says can minimize the growth and potential transmission of micro-organisms. The sanitizing even helps rid a lavatory of odors.

Better yet, it would be touchless. The cleaning system would lift and close the toilet seat by itself so that all surfaces are exposed during the cleaning cycle, according to Boeing. Other perks for those worried about germs: hands-free faucet, soap dispense, trash flap, lid and hand dryer. The planemaker is also studying a hands-free door latch and vacuum vent system for floor spillage.

The concept is a finalist for a Crystal Cabin Award that will be announced at the Aircraft Interiors Expo in Hamburg, Germany on April 5.

The potential benefits aren’t just in the bathroom. The self-cleaning concept could also help airlines save money on costly repairs, Mann said.

Toilets “are notoriously difficult to keep maintained to high standards, which shows up as odors that cannot be controlled and eventually, corrosion to structures adjoining the lav module,” such as floor beams and fuselage, Mann said. “It really would be a maintenance cost savings, too.”