Chasing the dots ... The Beauty of Dirty Laundry
By: Chris Smith
MANY, many years go “consultants” purporting to represent a bank where I kept money promised me ways to reduce my tax. Pushed, their proposals were ethically doubtful but probably just legal. I avoided them, my account dwindled, they eventually left me alone. But their methods stayed in my mind.
Later, when my tax bill was quite high another “consultant” approached me with promises and somehow had my previous year’s tax data and showed me what I could have saved. Superficially it all looked good, other recommended him and matters proceeded; the submission looked attractive, appeared to lower my liability considerably and seemed honest and legal!
My natural cynicism made me ask a CA friend (now diceased) to cast an eye over the numbers. He was an “old school” conservative and pointed out that while marginally legal, the “tax mafia” was indicating collusive actions between banks, tax officials and “advisors” that may put me into legal jeopardy! I paid the advisor his bill and submitted my tax return, as usual, in consultation with my usual taxman! It cost, but I could have fallen into the trap of having “dirty laundry” and possible risk of entrapment. Now debatable tax avoidance by the rich appears to be acceptable (?).
Thus with little surprise but great sadness the world financial crisis is beginning to expose realities which some time ago would have been regarded as ridiculous conspiracy theories as having a factual basis. This in a world where maybe up to 10 per cent of economic activity could relate to organised crime, maybe more, based on drugs, people trafficking, insider trading and similar evils with an increasing interdependency of corrupt governments (and officials), banking and other major global players who create entrapment and subservience.
While illegality and quick profits will always be with us the emergence of apparently undenied money laundering charges over many years by the world’s biggest bank, HSBC, appears to open the door to thinking there really are massive conspiracy activities in progress! Are the flood gates opening? Barclays involvement in debatable tax schemes and more recently in interest fixing (LIBOR), along with many other “reputable” banks seems to be another chink in the armour, especially when politicians, officials and central banks appear to be playing the game with the banks!
Once upon a time I remember from my limited understanding of money and economics that interest rates were about attracting savings and the margin for lending represented risk, and yes, banks, based upon central advice (sometimes) set interest rates and lent on sensible leverage levels. This seems to have gone out of the window and interest rates seem to be a proxy for how ridiculous the leverage can be so as to extend credit and make money! After all the consumer did not save and lived off increasingly available credit and financial crookery. Additionally, if money laundering was at conspiracy thinking levels, the acceptable 30 per cent margin (?) would finance bad risk and also would fund the invisible line between legal and organised crime business. Similar argument may also indicate stock market insanities!
But it was watching a documentary on the failings of Costa Concordia where victims were gaining my sympathy. So that cruise business makes US$11 billion profit and pays 1.1 per cent tax! And that poor family of survivors bleating their hearts out then admit this was their 60th cruise! My mind returns to those bank consultants and their advice how to avoid tax!
Unfortunately those (reluctantly, belatedly?) exposing all this dirty laundry are entrapped in this conspiracy – if there is one! Makes you think, dirt sticks.
csmith@mweb.com.na