In How multinational, aide by Ernst & Young, tried to launder porfits & cheat on taxes through offshore Bermuda shell, by Lucy Komisar, at The Komisar Scoop (Jan. 20, 2010), provides a nice addition to the information on how the big, multinational financial and accounting firms have aided and abetted tax evasion. It's a story provided by Rudolf Elmer, the Julius Baer Swiss banker who was fired in 2002 when he refused to continue the scams, and made off, apparently, with various incriminating documents about the bank and its assistance to various nations' citizens in their zeal to avoid paying their fair share of the tax burden.
Elmer later worked for Noble Investments SA, Zurich, a hedge fund consultant, from June 2003 to Oct 2005. He is providing information about this company, too--including the use of a shell company in Bermuda to cheat on Swiss taxes, according to documents that Komisar says she has exclusive access to. For example, here's an excerpt from the posting from text of a document written by the tax director of the Noble group (based in Hong Kong) about its efforts to avoid Swiss tax.
In the disclosure to the Swiss tax authorities we have not advised that personnel working in Switzerland conclude NIL’s contracts for fees for products structure and portfolio performance; and NIL’s intermediary agreements. .. There is concern that if the Swiss tax authorities learn that Swiss personnel are concluding NIL contracts, that NIL will be deemed to have a permanent establishment in Switzerland or that NIL will even be treated as a Swiss resident company... NIL would be exposed to a Swiss tax on a portion or all of its profits.
The post says that the Noble people had the initial idea for the scam, and then went to a Swiss lawyer to structure the companies and used Ernst &Young as its auditor, which "was also aware of the plan from the start." Komisar details the kinds of facts that would likely lead the Swiss tax authorities to think the Bermuda company was a fake--no physical presence, no staff, not listed in the directory, Swiss-based board, Swiss-based sales work, representation as an active investment company even though Elmer claims it was not.
Hmmm. As more of these activities come to light, perhaps these banks and auditors will finally get their comeupence? Not unless things change in enforcement and in Congress, where financial institutions have held much too much sway for the last twenty years.
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