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rman Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-06-06 01:58 PM
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19. some more on Clearstream and related activities
WFMU "For The Record" #531
Dave Emory
Interview with Lucy Komisar about Offshore
October 30, 2005
(real audio, summary)

Featuring the brilliant investigative journalist Lucy Komisar, this program highlights the use of Offshore entities to evade taxes, maximize corporate profits and finance a variety of criminal enterprises. Much of the first side of the program consists of analysis and discussion of insurance giant AIG and its prolific use of offshore scams. In addition to presenting AIGs pioneering devlopment of captive reinsurance companies to launder profits and evade taxes, the program highlights AIGs use of Coral Reinsurance for a variety of illegal gambits. It should be noted that AIGs illegal operations have been aided by a number of powerful and influential people. Much of the second side of the program consists of review of the pivotally important Clearstream network, and its use by intelligence agencies, corporations, criminal syndicates and terrorist organizations.

Program Highlights Include: A working definition of Offshore; the links of AIG to the intelligence community; assistance given to AIGs scams by luminaries such as Henry Kissinger and former Secretary of the Treasury Richard Rubin; Clearstreams use of unregistered accounts; the role of the Clearstream network in the Banco Ambrosiano, October Surprise and BCCI scandals; the role of the Clearstream network in the financing of Al Qaeda and 9/11; the role of the Clearstream network in the machinations of the Russian criminal networks of Mikhail Khordokovsky; discussion of the Bermuda Inversion gambit; discussion of Transfer Pricing; discussion of an organization formed by Lucy Komisar that is working to eliminate corporate tax evasion through the use of offshore.


In a 'corporate inversion, a U.S. company creates a new parent corporation based in a tax haven like Bermuda. The company and any foreign subsidiaries become subsidiaries of the new parentand the entire corporation then benefits from tax reporting and regulations that are often significantly less demanding and expensive than those in the United States. In the past few years, about two dozen publicly traded companies have reincorporated in Bermuda or announced they would do so. Among them are Tyco International, McDermott International, Ingersoll-Rand, Nabors Industries, a huge, Houston-based operator of oil-drilling rigs. Since they are now foreign corporations, they evade billions of dollars of US taxes. Shareholders - including pension funds - lose too. In Bermuda, corporate laws shift the balance of control from stockholders to a company's directors and severely limit investors' right to sue. There is no treaty with Bermuda guaranteeing the reciprocity of judgmentsmeaning stockholders may have a hard time ensuring American court orders are enforced. In addition, stockholders' ability to obtain information about Bermudan court decisions is limited: the island does not even maintain an official court reporter. Legislation to block the tax advantages of conversions was decimated by the Republicans, which applied only to future conversions.


Offshore financial centers are, mostly, confidential and parallel financial systems segregated from the traditional banking structure of the jurisdiction and restricted to non-residents. There are more than 4000 offshore banks thought to exist in about 70 offshore jurisdictions. They lack the regulation and supervision of banks found in developed onshore jurisdictions. In many OFCs, a bank can be formed, registered and its ownership placed in the hands of nominee directors via the Internet. There are few, if any, disclosure requirements, bank transactions are free of exchange and interest rate restrictions, there are minimal or no capital reserve requirements, and transactions are mostly tax-free. Some OFCs permit the licensing and registration of shell banks that exist only on paper and do not have a physical presence. They generally have legal frameworks designed to obscure the identity of the beneficial owner. Some OFCs offer the ability to form and manage secretly a variety of international business companies (IBCs), trusts, investment funds and insurance companies, many with nominee - that is front -directors, nominee officeholders and nominee shareholders.


9. Next, the program reviews Transfer Pricing. (For more about Transfer Pricing, see: DAVE: How about Transfer Pricing? LUCY Is a way of evading taxes by allocating profits for tax and other purposes among parts of a multinational corporate group or to secretly owned companies. These front companies are always offshore in tax havens. Offshore trading offices or companies handle imports and exports, buying a U.S. export from a company at a sharply reduced paper cost and selling it abroad for the real-world market value, so the exporting company makes no profit. That stays with the tax haven trading company.
In the reverse, a company buys goods at a real price and sells to the U.S. firm at a grossly inflated one, so the U.S. firm has a huge cost to deduct when it uses the item in manufacture or resells it at a loss.
Two US professors used customs data to examine the impact of over-invoiced imports and under-invoiced exports on U.S. federal income tax revenues for 2001. The findings were staggering. Would you buy plastic buckets from the Czech Republic for $973 each, tissues from China at $1,870 a pound, a cotton dishtowel from Pakistan for $154? U.S. companies, at least on paper, were getting very little for their exported products. If you were in business, would you sell bus and truck tires to Britain for $11.74 each, color video monitors to Pakistan for $21.90, and prefabricated buildings to Trinidad for $1.20 a unit? After all the deductions, the U.S. company has minimal profits. The offshore centers levy no taxes on profits claimed there. Comparing all the stated export and import prices to real-world prices, the professors figured the 2001 U.S. tax loss at $53.1 billion. (Idem.)


LUCY: Following the September 11 attacks on the World Trade Center and the Pentagon, the U.S. started focusing its investigation on the financial trail of Osama bin Laden and the al-Qaeda network. Like any other large, global operation, international terrorists need to move large sums of money across borders clandestinely. In November, U.S. authorities named some banks that had bin Laden accounts, and it put them on a blacklist. One was Al Taqwa-Fear of God-registered in the Bahamas with offices in Lugano, Switzerland. Al Taqwa had access to the Clearstream system through its correspondent account with the Banca del Gottardo in Lugano, which has a published Clearstream account No. 74381. But Bin Laden may have other access to the unpublished system. In what he calls a spectacular discovery, A series of 16 unpublished accounts had been opened under the name of the Saudi Investment Company, or SICO, the Geneva holding company of the bin laden family's Saudi Binladen Group it is run by Bin Laden's brother, Yeslam Binladen. SICO is associated with Dar AI-Maal-AI-lslami (DMI), an Islamic financial institution also based in Geneva and presided over by Saudi Prince Muhammed Al Faisal Al Saoud, and which directs millions a year to fundamentalist movements. DMI holds a share of the Al Shamal Islamic Bank of Sudan, which was set up in 1991 and partly financed by $50 million from Osama bin Laden. (For more specific documentation, see:;

<much, much more, and then some>


related links:

tax justice network

The Fall of a Titan by Lucy Komisar; AlterNet; 3/17/2005;

Take the Money and Run Offshore by Lucy Komisar; AlterNet.)

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