Monday, July 23, 2012
A neat and clean nefarious scheme
(No mask required)
We've seen bits and pieces how this little scheme works from the likes of 60 Minutes. But that was only a brief glimpse by outsiders much like seeing an envelope being passed under the table at an upscale restaurant. I speak of the supposedly legal method of hiding loot from the tax man. We saw the building that housed over 2000 companies discretely tucked in the Cayman islands. But no one has explained the process where by a company can get away with such unethical practices. It was explained to me once years ago but I thought little of it until now when the BBC did a bit of investigating in the matter. They of course didn't reveal the exact process but gave a little insight into the extent of the damage. Damage that is to the world economies.
Simply put it works something like this. A large corporation and many smaller ones as well establish a subsidiary company in the Caymans. This is a nation that refuses to reveal anything about the cash flowing in from around the world. To do so is considered a crime by their thinking. Now we know where the offspring of the Pirates of the Caribbean landed up. The corporation sends documents through these "shell" companies (after all there's no employees actually there and nothing produced). And it doesn't matter if it's a profit or a loss because anything can be seen as a benefit to the corporate bottom line. If the company on American soil is showing a large profit then the sister operation in the Caymans shows an offsetting loss and the corporation lands up paying no taxes for the year. And if that weren't bad enough the corporation relies on other companies set up to do it's dirty work. They are the ones who account for all the transactions and shuffle the cash around. Plausible deniability I believe is the term.
The other part of this scam is for corporations to place their profits into an off shore account. They inform the IRS that they have paid all their taxes to that foreign government. When asked by the foreign government for its' cut of taxes the corporation informs them that they have paid their taxes to the U.S. government. The real trick here is how they document such bogus information. And I'd all but bet that some palms were greased in the process. What's ten or twenty grand to a company that's making billions and hiding trillions?
Corporations Trillions Hidden via BBC news report
You think this shell game will stop any time soon? Think again. It was a campaign promise by Obama to clean up this mess and yet not one piece of legislation has made to the floor of the house or senate. Why? Because those in the house and senate are part of the game. And Mitt the biggest player is running for office. Even he admitted that a blind trust is a scam.
The extent of the problem is far greater than anyone first though. You may be thinking in the billions or hundreds of billions but this problem is in the double digit trillions. Equal to the entire economies of two nations combined was the last guesstimate. And that was only for the cash. We all know what happens in a monopoly game when only one or two players land up with all the cash and properties. It's game over.