The New York Times reports: A Tennessee woman slipped into a coma and died after an ambulance company took so long to assemble a crew that one worker had time for a cigarette break.
Paramedics in New York had to covertly swipe medical supplies from a hospital to restock their depleted ambulances after emergency runs.
A man in the suburban South watched a chimney fire burn his house to the ground as he waited for the fire department, which billed him anyway and then sued him for $15,000 when he did not pay.
In each of these cases, someone dialed 911 and Wall Street answered.
The business of driving ambulances and operating fire brigades represents just one facet of a profound shift on Wall Street and Main Street alike, a New York Times investigation has found. Since the 2008 financial crisis, private equity firms, the “corporate raiders” of an earlier era, have increasingly taken over a wide array of civic and financial services that are central to American life. [Continue reading…]
Reuters reports: The $2.08 trillion wiped off global equity markets on Friday after Britain voted to leave the European Union was the biggest daily loss ever, trumping the Lehman Brothers bankruptcy during the 2008 financial crisis and the Black Monday stock market crash of 1987, according to Standard & Poor’s Dow Jones Indices.
Global markets skidded following the unexpected result from the June 23 referendum, in which Britons voted to withdraw from the EU by a 52 percent to 48 percent margin.
Markets in mainland Europe were hit the worst, with Milan .FTMIB and Madrid .IBEX each down more than 12 percent for their biggest losses ever. Britain’s benchmark FTSE 100 .FTSE was down nearly 9 percent at one point on Friday, but rallied to close down 3.15 percent.
The route started in Asia, with the Nikkei .N225 down 7.9 percent, and carried over into Wall Street as the S&P 500 fell 3.6 percent.
Mohit Bajaj, director of ETF trading solutions at WallachBeth Capital LLC in New York, said the severity of the sell-off was partly due to investors misreading the outcome and betting the wrong way. [Continue reading…]
Before Thursday’s vote, George Soros wrote: avid Cameron, along with the Treasury, the Bank of England, the International Monetary Fund and others have been attacked by the leave campaign for exaggerating the economic risks of Brexit. This criticism has been widely accepted by the British media and many financial analysts. As a result, British voters are now grossly underestimating the true costs of leaving.
Too many believe that a vote to leave the EU will have no effect on their personal financial position. This is wishful thinking. It would have at least one very clear and immediate effect that will touch every household: the value of the pound would decline precipitously. It would also have an immediate and dramatic impact on financial markets, investment, prices and jobs.
As opinion polls on the referendum result fluctuate, I want to offer a clear set of facts, based on my six decades of experience in financial markets, to help voters understand the very real consequences of a vote to leave the EU.
The Bank of England, the Institute for Fiscal Studies and the IMF have assessed the long-term economic consequences of Brexit. They suggest an income loss of £3,000 to £5,000 annually per household – once the British economy settles down to its new steady-state five years or so after Brexit. But there are some more immediate financial consequences that have hardly been mentioned in the referendum debate. [Continue reading…]
The New York Times reports: Over the years, William R. Ponsoldt had earned tens of millions of dollars building a string of successful companies. He had renovated apartment buildings in the New York City area. Bred Arabian horses. Run a yacht club in the Bahamas, a rock quarry in Michigan, an auto-parts company in Canada, even a multibillion-dollar hedge fund.
Now, as he neared retirement, Mr. Ponsoldt, of Jensen Beach, Fla., had a special request for Mossack Fonseca, a Panama-based law firm well placed in the world of offshore finance: How could he confidentially shift his money into overseas bank accounts and use them to buy real estate and move funds to his children?
“He is the manager of one of the richest hedge funds in the world,” a lawyer at Mossack Fonseca wrote when the firm was introduced to Mr. Ponsoldt in 2004. “Primary objective is to maintain the utmost confidentiality and ideally to open bank accounts without disclosing his name as a private person.”
In summary, the firm explained: “He needs asset protection schemes, which we are trying to sell him.”
Thus began a relationship that would last at least through 2015 as Mossack Fonseca managed eight shell companies and a foundation on the family’s behalf, moving at least $134 million through seven banks in six countries — little of which could be traced directly to Mr. Ponsoldt or his children.
These transactions and others like them for a stable of wealthy clients from the United States are outlined in extraordinary detail in the trove of internal Mossack Fonseca documents known as the Panama Papers. The materials were obtained by the German newspaper Süddeutsche Zeitung and the International Consortium of Investigative Journalists, and have now been shared with The New York Times. [Continue reading…]
CNET reports: One of the biggest databases of leaked documents has just hit the internet, and what lies within is a massive and complicated web of corporate ownership that spans the globe.
The Panama Papers contain more than 2.5 million files, analysed by the International Consortium of Investigative Journalists and 112 reporters across 58 countries. Today’s data dump is just part of the picture, detailing the relationships between individuals, companies and offshore entities.
Think of it like a searchable corporate registry. But in this case, it’s a network made up of hundreds of thousands of individuals and companies, with seemingly endless links criss-crossing from Australia to Zimbabwe. The question now is which of these links can be used to prove the companies involved were attempting to hide massive wealth overseas.
While there’s no evidence that any of the entities have acted illegally, the “John Doe” behind the leak argues the data dump exposes the names behind growing income inequality, saying “it doesn’t take much to connect the dots.” [Continue reading…]
David Cay Johnston writes: For the first time we have a reliable estimate of how much money thieving dictators and others have looted from 150 mostly poor nations and hidden offshore: $12.1 trillion.
That huge figure equals a nickel on each dollar of global wealth and yet it excludes the wealthiest regions of the planet: America, Canada, Europe, Japan, Australia, and New Zealand.
That so much money is missing from these poorer nations explains why vast numbers of people live in abject poverty even in countries where economic activity per capita is above the world average. In Equatorial Guinea, for example, the national economy’s output per person comes to 60 cents for each dollar Americans enjoy, measured using what economists call purchasing power equivalents, yet living standards remain abysmal.
The $12.1 trillion estimate — which amounts to two-thirds of America’s annual GDP being taken out of the economies of much poorer nations — is for flight wealth built up since 1970.
Add to that flight wealth from the world’s rich regions, much of it due to tax evasion and criminal activities like drug dealing, and the global figure for hidden offshore wealth totals as much as $36 trillion.
In 2014 the net worth of planet Earth was about $240 trillion, which means about 15 percent of global wealth is in hiding, significantly reducing the capital available to spur world economic growth. [Continue reading…]
The Guardian reports: On 10 November, 2003, Gerry Florent, and Ralph Abercia, plus his son, Ralph Jr, left the Bellagio Hotel in Las Vegas, and drove to the Stirling Club, a high-end private venue just off the Strip. They were to attend separate meetings with Sir Richard Benson, but had met each other that morning, when they were collectively coached on the etiquette expected of them: speak only when spoken to, stand when he comes in. They were happy to comply. This was a man who had bailed out the Queen, after all.
Both Florent and the Abercias wanted the same thing from Sir Richard: money, of which he had plenty. Sir Richard, who was portly, balding and elderly, explained to them that he owned a company named Sherwin & Noble, which was worth billions and was prepared to finance their business projects. At their meetings, the prospective investors received a glossy spiral-bound summary of S&N’s balance sheet, which showed it to be a financial firm of significant size.
Florent wanted $55m to buy land on which to build a hotel in Florida; the Abercias needed $105m for an “aquarium/entertainment complex” in Houston. In return for the money, all Sir Richard asked was that they pay advance fees (two payments of $412,250 each from Florent, and two payments of $787,500 each from the Abercias) to signal their commitment to the projects. If S&N decided not to go ahead with the loans, the fees would be repaid.
The investors left Las Vegas, instructed their lawyers to wire the first tranche of the fees over, and settled down to wait for their money. They waited. And they waited. When they rang or faxed the S&N office in London, they were reassured that there was nothing to be concerned about. But, over the next few months, Florent and his business associates became suspicious. They held off wiring the second half of the fee, and brought in a private investigator, who discovered that S&N, far from being worth billions, was an empty shell company. The glossy booklet detailing its assets had been copied from the banking company HBOS, with the names changed.
Thus, the fraud fell apart. The Abercias, who had wired the whole fee asked of them, were devastated. “That was a lot of money,” Ralph Sr told a local journalist. “We’re still paying the damgum thing back.”
The whole saga had been scripted by a conman named Lal Bhatia. Sir Richard Benson was an actor. He had never rescued Buckingham Palace from foreclosure. The billions and the knighthood were fictitious. S&N had no assets, beyond a registered presence at a house in London – 29 Harley Street. [Continue reading…]
Reuters reports: Panama’s attorney general late on Tuesday raided the offices of the Mossack Fonseca law firm to search for any evidence of illegal activities, authorities said in a statement.
The Panama-based law firm is at the center of the “Panama Papers” leaks scandal that has embarrassed several world leaders and shone a spotlight on the shadowy world of offshore companies.
The national police, in an earlier statement, said they were searching for documentation that “would establish the possible use of the firm for illicit activities.” The firm has been accused of tax evasion and fraud. [Continue reading…]
James Denselow writes: Against the backdrop of recent territorial gains, the cessation of hostilities and a peace process in Geneva that is rumbling along, President Bashar al-Assad seems more secure than ever after five years of conflict in Syria.
When people ask how he managed to stay in power despite the country having its economy collapse in half, hundreds of thousands killed, one in two Syrians being forced from their homes and the conflict dragging in four of the five UN P5 members of the Security Council, you wouldn’t necessarily think about the Seychelles.
Yet as the Panama Papers, the biggest leak in global history, has shown, the idyllic archipelago of 115 islands in the Indian Ocean off East Africa has played its part in keeping Assad in the Presidential Palace in Damascus.
What this demonstrates is that what appears from a distance to be an insular, authoritarian regime far more proficient in the tools of medieval warfare than modern capitalism, has actually used the levers of globalisation well to protect its interests.
What the 11.5 million leaked documents reveal is that three Syrian companies close to the government – Maxima Middle East Trading, Morgan Additives Manufacturing and Pangates International – used the already infamous Panama-based law firm Mossack Fonseca to create shadow or shell companies in the Seychelles to avoid the increasing pressure of global sanctions.
Considering how near the regime was to collapse before the Russian intervention, this evasion of sanctions is fairly significant. The Panama Papers suggest it paid for fuel that kept Syria’s Air Force helicopters and airplanes in the air. [Continue reading…]
Max Ehrenfreund writes: The documents known as the “Panama Papers” have created a global scandal around the ways the world’s rich conceal their wealth from the authorities. The prime minister of Iceland offered his resignation after the papers reportedly revealed that he and his wife had a fortune
on paperhidden away in the British Virgin Islands. British Prime Minister David Cameron is taking criticism as well, and he acknowledged that he profited from a secret family trust.
The Washington Post has not reviewed the Panama Papers or verified their authenticity, but what seems certain is that wealthy people all over the world — and in the United States — pay much less in taxes by moving their income and assets to foreign countries.
In the United States, the Treasury would collect about $124 billion a year in additional taxes — $36 billion from individual taxpayers and $88 billion from multinational corporations — if it weren’t for such schemes, according to estimates by Gabriel Zucman, an economist at the University of California at Berkeley.
That’s a lot of money — and we’re all paying for it, Zucman said.
When the wealthy pay less in taxes, the rest of the population bears the burden. Either the government spends less money, providing fewer public services, or ordinary citizens pay more to make up the cost. [Continue reading…]
Uri Friedman writes: I did nothing wrong. That’s the gist of how many individuals connected with the “Panama Papers” — the millions of leaked documents exposing how a Panamanian law firm, Mossack Fonseca, helped the rich and powerful park their wealth in tax havens and offshore bank accounts or shell companies — are responding to the revelations this week. And in many cases, they may be telling the truth. As The New York Times points out, “Holding money in an offshore company is generally not illegal, although such financial arrangements can be used in illegal ways — for example, to facilitate tax evasion or money laundering.”
Wear a ski mask around town on a warm day, perhaps for a perfectly good reason (you’re a celebrity trying to avoid paparazzi, you ran out of sunscreen), and you’ll probably invite suspicion. Because it looks like you might rob a bank.
The release of the Panama Papers is a bit like the end of The Truman Show, the 1998 film about a man, Truman Burbank, who gradually realizes he’s spent 30 years on the set of a reality TV show in which he’s the star. In the last scene, Truman is sailing a boat when its bow pierces the artificial sky — hinting at a world beyond the show’s set. The leaks, from just one law firm in one country, have similarly pierced the screen that normally conceals a vast network of financial secrecy. But on the other side, there’s a much bigger world that, for most people, remains unexplored.
And this elite world has an impact on the world your Average Truman inhabits. [Continue reading…]
The Guardian reports: In June 2013, two Swiss lawyers held a private telephone chat. They were annoyed. In London, David Cameron had just given a speech. The prime minister had promised to sweep away decades of offshore “tax secrecy” by introducing a central register. Anybody who owned an offshore company would have to declare it to the authorities.
The G8 summit, to be hosted by Cameron on the shores of Lough Erne, in Northern Ireland, was looming. Top of the agenda: how to stop aggressive tax avoidance.
For much of the 20th century hiding your money was simple. You got a lawyer, filled in a form and set up a Swiss bank account or offshore “shell company”.
Nobody asked questions. For a couple of thousand dollars a year, it was possible to hide away profits where governments could never find them.
But in the UK crown dependencies and overseas territories where financial services were the main source of jobs and income times were changing. In tropical tax havens such as the British Virgin Islands a chill wind – or at least the threat of one – was blowing.
One of the Swiss lawyers was Sandro Hangartner, the Zurich boss of the Panamanian law firm Mossack Fonseca.
The other man, his disgruntled caller, was Sascha Züger. Züger’s company looked after the assets of some very wealthy South Americans.
In an email to his head office in Panama, Hangartner wrote: “Sascha is not very pleased about the development in BVI [British Virgin Islands].”
He was now looking for “alternatives”, Hangartner added – in other words other secret jurisdictions where a client might park their money.
For the network of international lawyers and accountants who serviced the offshore industry, these were troubled times.
Cameron’s speech was merely the latest piece of unwelcome attention. Since 2008, and the global financial crisis, cash-strapped exchequers had been trying to get their hands on billions in potential tax revenue hidden offshore.
How serious these attempts were was a matter for debate.
What wasn’t in doubt were the vast sums involved. According to the US economist Gabriel Zucman, 8% of the world’s wealth – a vast $7.6tn (£5.3tn) – was stashed in tax havens.
Zucman estimates the loss in global tax revenues at $200bn per year. That includes $35bn in the US and $78bn in Europe.
Previous attempts to bring about transparency had flopped. But now the world’s leading economies – the G20, G8 and Organisation for Economic Cooperation and Development – were apparently pursuing the theme with zeal.
If Cameron got his way, British overseas territories such as the BVI and Gibraltar would soon have to draw up a register of beneficial owners – the real owners of a company, even though their name may not appear on the shareholder register. The crown dependencies Jersey, Guernsey and the Isle of Man would fall into line, too. [Continue reading…]