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Two Articles Worth Reading

By: IdBing Thursday December 27, 2012 5:05 am

Two articles in the Guardian (UK, formerly the Manchester Guardian and a workingman’s paper, printed on thin white paper with long articles, copies of which made it as far as NY and which may have had some influence on my intellectual outlook) the last two days relevant to my pieces:

First, Costas Lapavistas on the European economic prognosis: “Germany’s austerity plans will beggar Europe, Berlin’s mantra about spending cuts in the eurozone is bringing unemployment and spreading hopelessness across Europe.”

And Miriam Elder’s interview with Yekaterina Samutsevitch of Pussy Riot


Stealthy Money, Secret Finances, Why Pay Taxes At All If You Don’t Have to?

By: IdBing Thursday December 27, 2012 4:51 am


I’ve just posted Invisible Money 5 here on FDL. It’s part of a series running on Ground Report. You can see all of my articles here:


(Plus an old photo of meself doing what I do best.) You are free to reprint any of the pieces, just get in touch, eh? (

It’s an interesting journey for a kid who grew up hating the government and never to support their reckless wars and security state. However, it should be noted, that I’m not rich, that I vote and pay my taxes when I qualify.

The old motto from Wendell Holmes on the facade of the IRS building in D.C. is “Taxes are the price we pay for a civilized society.” Not everyone agrees.

Ed Crane of the uber-conservative Cato Institute said, “Taxes are actually the price we pay for our failure to create a civil society.”

He is adopting an anarchist slogan – without being an anarchist. He’s an anarcho-capitalist on steroids and I find his vision of a libertarian society in which no one owes anything to anyone else terrifying. Somehow everything will just work out nicely if we all take care of ourselves and leave everyone else alone. That’s been the trend, as they say, and we can see how well-managed a society the U. S. is becoming – at a terrifying pace. Fortunately, Europeans have a little more sense and cynicism about the role of taxes and government – and they actually get something in return.

But all that merely scratches the surface of the debate. “War is the health of the State.” Randolph Bourne said that. And you?

Invisible Money 5 The Cloud Factory Revisited

By: IdBing Thursday December 27, 2012 4:18 am


Invisible Money 5 

The Cloud Factory Revisited

Up The Ladder, Marius Kohl To Luc Frieden

Iddhis Bing




With the equivalent of 67 trillion dollars floating in and around what is known as the off-shore “shadow banking system” – in tax havens and fiscal paradises from Delaware to Mauritius, the isle of Jersey to Hong Kong – we return, via Ed Perrin’s documentary, to Luxembourg to take a close look at how things work in one capital of guarded finance.1

Readers may recall that in 1998 the OECD – the thirty-four member, European-based Organization for Economic Development and Cooperation – agreed that “All members’ tax thorities must communicate about Advance Tax Agreements,” which effectively meant that if Starbucks wanted to camouflage its UK earnings by moving the money somewhere else, that somewhere else (if a member of the OECD) would have to notify Her Majesty’s Revenue Collection, and the HRMC could object. OECD rules are, however, enacted “by consensus.” Two member countries, Switzerland and Luxembourg, abstained, and thus, in the case of Starbucks, the money slipped away to Luxembourg, Starbucks cried poor, Her Majesty and subjects being none the wiser at least until hearings were held in November of this year. Luxembourg and Switzerland can therefore argue that they abide by OECD regulations, which are, as far as they’re concerned, toothless.2

(Switzerland, grandaddy of the fiscal havens, is a bit more complex: unlike Luxembourg, there is movement inside the country to change its status as tax pariah numero uno.)3

Marius Kohl spends his days in a brick and glass pile in Luxembourg’s capital. It’s one of those mysterious post-modern sandwiches which perfectly merge form and function: it’s impossible have even the slightest idea what goes on inside, which must be the point. 18, rue du Fort Wedell is where Kohl and his coworkers quietly wreek havoc withother countries’ incomes, churning out tax schemes for companies like Pearson and GlaxoSmithKline that are the only real reason any is aware that Luxembourg exists.

Kohl is the head of Sociétés 6. The other five Sociétés divide their labors as follows:

Sociétés 1: ArcelorMittal, RTL Group, SES, Postes &Telecommunications Enterprises Luxembourg, Guardian group, Cactus, Match, Auchan and Monopol stores.

Sociétés 2: religious associations, the Friob group, and global corporations located in unlikely towns and hamlets from Bertrange to Winseler. It is precisely in places like that the 1,000s of sociétés anonymes listed in Perrin’s documents have established their world headquarters, at least on paper. The pharmaceutical giant GlaxoSmithKline, under Kohl’s purview in Sociétés 6, makes its home in the suburban hamlet of Mamer, just off the roadway to Belgium.

Sociétés 3: partnerships, limited partnerships, real estate companies, economic interest groups and European economic interest groups.

Sociétés 4: Commercial, industrial and craft groups covered by public law, associations and other communities; limited liability companies.

Sociétés 5: Farming cooperatives, resident commercial groups, insurance companies, the ASSEP savings and pension group, the CEPAL group.

Publicly available information all of the above, and no warrant to indict anyone. But one’s curiosity is piqued reading a list such as that in Sociétés 1: what exactly is the present relationship between ArcelorMittal – a steel and mining transnational operating in over 60 countries worldwide, with revenue of USD 93.97 billion as of March 21, 2012 – and Luxembourg? We know that its owner, Lakshmi Mittal, exploits his resident status to pay no taxes in the UK where he lives. So we are entitled to a few suspicions.4


Lazy Sods


Perrin went to no. 18, with camera and crew, on an official visit, hoping to find Marius Kohl and importune him with a few questions. Perrin had ample evidence that Kohl’s office was the most important of the bureaus, approving tax agreements for thousands of companies.

It was a weekday but, surprisingly, Marius Kohl wasn’t around. He had taken a day off, or so the pesky crew was told.

“In fact he was there. Later that afternoon, after we had left the building, I saw him quickly peer out his office window, but we didn’t have time to get a picture before he hurried back to his desk.”

“Luxembourg is not a big country,” Perrin continued. “There are only two men above Kohl, Pascale Toussing, Assistant Director, and Guy Heintz, Director of the International section at Contributions Directes; after that, one meets the Finance Minister, Luc Frieden. That’s the beauty of the place. Luxembourg is too small to ever produce an anomaly in its tax regime, and if you are seeking a safe haven for your money, it’s fast and easy.”

But not so fast and easy for some. The team from Cash Investigations, accompanied by Richard Brooks of Private Eye, slipped in the door to see if they could find Kohl, only to confront the haughty regard of the Luxembourgeois, who looked at them like losers.

“I learned how condescending the Luxembourgeois could be towards the bloody French,” Perrin told me. “We were the lazy sods, the 35-hour a week gang, a bunch of inefficient Latin peasants. In a way, it’s not so very different from the way the Flemish regard the Wallons in Belgium, who lost their dominance to the new rich on the block, those who wisely chose a new and more productive way. Luxembourg lost its industry and settled on finance. They feel proud of it, and they should.”

From Luxembourg’s point of view, France’s loss is their gain. If the French had made other arrangements, companies like Arcelor and stars like Gerard Depardieu, who handed in his passport and fled to Belgium, would never have slipped across the border. Such is the attitude in all tax paradises towards troublesome outsiders: here they are, the peasants, with mud on their shoes, looking for dirt.

If the Cash Investigations group had no luck cornering Kohl, they fared better with Luc Frieden, who serves as public point man for Luxembourg’s ingenious interpretation of European law and thus consented to letting himself be interviewed later on screen. Frieden is the heir apparent in Luxembourg and he takes his role seriously. Perhaps he saw the interview as one more skirmish in the war of the tax havens, to lift a phrase from Nicholas Shaxson. Frieden did not, in any case, count on Elise Lucet, who conducted the interview.


“If the description you made is accurate, I find it unacceptable”

             Luc Frieden is a member of the Christian Social People’s Party, and currently serves as Finance Minister. He, and not Vice-Premier and Foreign Minister Jean Asselborn, takes the lead in the tricky business of fending off attacks on Luxembourg’s status quo. He is on record as saying, “Our financial approach is totally European and applies all laws in the struggle against financial criminality.” He is very careful in his choice of words.5

It’s very rare for a senior official in a tax haven to speak publicly and on the record. Readers of Shaxson’s invaluable Treasure Islands know the many tactics, from coöptation to contempt to outright threats, that are employed to avoid doing exactly that. So it’s worthwhile to watch Frieden closely while he dances around the issues. It exposes the logic tax havens use to keep a respectable face on what they do.

For the sake of brevity, the interview is excerpted here.6

Cash Investigations: We’ve seen a lot of those docs. They cover Liechtenstein, the Caymen Islands and… Luxembourg. If we’re talking about tax havens, we find you, Luxembourg, in the middle of those schemes.

The International Criminal Court & Greece

By: IdBing Thursday December 20, 2012 5:34 am

This piece has already seen a bit of notice on FDL thanks to GreyDog. I’ve substantially revised it, so here’s a teaser and the link (below). There will be a new Invisible Money early next week. I hope to finish the series before the end of the year.

Now we know a bit more about the cat who is swallowing Greece. Let’s take a step back and look at the people presumably paying the tab for this bailout: not the Greeks, but the Germans (and other Northern Europeans) who are funding it all – at least according to widely held belief. And because they are seeing their finances make the trip from their pockets to Greece and then to the banks in Greece, France and Germany, they are watching their living standards and infrastructure decline.           

         A reader from Berlin got in touch. This is her take on German realities here and now, and as such are only one person’s opinion. But they are valuable not only because they contradict the dominant message abroad these days, which is, in part, Prosperous, hardworking Germans have a system that is the envy of all Europe.

merci beaucoup

iddhis bing


Points of Contact

By: IdBing Thursday December 20, 2012 5:21 am

I write about politics, finance and the intersection of the two on various sites – here, and on GroundReport. The Invisible Money series has gotten a lot of notice, as has the interview I did with Tony Phillips; there’s talk with various publishers of a book on the subject, a kind of bootstrap followup to Nic Shaxson’s magisterial Treasure Islands, which one and all should duly read. As my columns are getting a bit of notice, and I am happy to dialogue with readers, I created idreport19 at gmail so people can write directly. Two commentaries were invaluable in the last column, which I am about to reprint here. The book I have in mind is a country by country report on just how tax evasion and debt issues have affected the populace. Hope to hear from you.

Interview with Ekaterina Samoutsevitch of Pussy Riot

By: IdBing Friday November 2, 2012 1:15 am

My translation of the radio interview Ekaterina Samoutsevitch gave to Echoes of Moscow appears here:

My not-so-big thinks about the case are here:

The original interview was in Russian. I translated from Olga Kokorina’s careful French version. Not ideal I realize but after a day’s search,

I only found many, many commentaries about the case and precious few words from the participants themselves. So, now you know.