OFFSHORE COMPANIES: THE NEEDLE IN A HAYSTACK

Published by El Nuevo Herald on April 17, 2016

Any person, natural or legal,  is entitled to conduct business in the country of their choice. That is the essence of our system.The problem is that politically exposed persons (PEP) and their families, apparently, also have that right.

The Panamanian firm Mossack Fonseca is only one of the creators of more than 214,000 offshore companies handling around $ 40.000 million. Recently, the analysis of a research consortium says that the firm in question has as clients 58 relatives and associates of prime ministers and kings.

When an offshore company is created, usually several objectives are pursued, namely:

▪ Hide identity

▪ Investing abroad

▪ Having foreign partners

▪ Paying less taxes on profits

▪ raise funds from the public

▪ Establish legal succession

Of course, artists, athletes and other celebrities have business offshore. And rightly argues: "I do not want people to know that I am the corner business owner ." Thus they have fewer escorts, are less exposed to vandalism or demands, and can even visit incognito their own business.

The situation is complicated when dubious resources come in. Where no previous research is done, occurs what it happened with the firm Mossack Fonseca, when they incorporated more than 14,000 companies on an island in the Indian Ocean, of which only 204 were known by its true identity of the principal.

It had already been a previous history with this firm when they were fined $ 37.500 in the British Virgin Islands for incorporating a company of the son of former Egyptian President Hosni Mubarak, while both were accused of corruption in his country.

In the 80's began to decline the numbered accounts in Swiss banks, which was the main destination of the ill-gotten money. Subsequently and following a US agreement with many European banks, the US standard was established to report  all investments of more than $ 50,000 made by US citizens.

All of this simply urged more offshore corporations to be created, especially by the fact that they are much more profitable than a bank deposit.

The greatest danger is that billionaires terrorist groups like ISIS  may have legitimate business; however, so far the most serious crimes committed  in the US have been done using onshore companies, as in the slaughter of the Twin Towers or the $ 40.000 million scam perpetrated by Bernie Madoff in 2008.

Many offshore companies continue to exist, just only now, investors will prefer smaller, discrete firms. They will continue hiding the identity, except legal provisions such as recently occurred in Miami and New York, when the federal government banned the sale of real estate to ghosts corporations that do not reveal the real identity of the buyer.

Many just say you should do business  with "God and the Devil". However, we must defend our democratic system, precisely to not giving input to totalitarian solutions.

So simply, we must not sell the rope with which to hang many, including ourselves.

Benjamin F. DeYurre

Economist and journalist.

 Follow on Twitter: @DeYURRE

TRUMP, CHINA AND CUBA

                                  Published by El Nuevo Herald on March 23, 2016

We know the political aberrations of Donald Trump when seeking to legally carry arms to all 50 states of the Union with a single permit for all of them, when he states that must deny citizenship to children of illegal immigrants born in the US or when he says that it is necessary to deport all undocumented immigrants and build a wall along the border with Mexico.

Although these barbarities have their followers, Trump also holds other positions, such as tax free inheritance, sell military services to other countries, multilateral treaties combat unleashing a trade war with China and advance relations with Cuba.

Trump says that you should not punish those who achieved the American Dream, taxing their heirs. Does not clarify whether the heirs have to be strictly family.

It proposes to sell the US military services for intervening in conflicts in other regions. This can be interpreted as mercenaries services, which, of course, never include the loss of human lives.

It is against treaty as the Trans-Pacific Agreement, involving 40% of world production in 12 countries. Apparently not foresee that this agreement is precisely that guarantees the hegemony of the dollar against the Chinese harassment. Currently in 70 countries, more than 900 financial institutions make operations exclusively in yuans (renbimbi), instead of using the dollar, which is customary.

It ensures that the inclusion of China in the World Trade Organization (WTO) has led to the closure of 50.000 factories in the US, leaving millions unemployed. Trump guarantees that the Chinese currency is artificially undervalued in order to stimulate their exports. However, since 2006, the yuan has gained 19% against the dollar.

About three years ago many began to sell the currency to buy other currencies, it brought down the yuan. The Chinese government reacted, massively selling the dollar to buy yuan and so strengthen it. Of course, lowering the Chinese dollar reserves, and since most transactions are in that currency (fortunately), the yuan can fall back sharply. Hence the vital importance of the Trans-Pacific Agreement, to which China does not belong and where the twelve signatory countries will trade in dollars.

Among the Trump's proposals is to advance relations with Cuba and that differed with other candidates in the Republican party.

Condemns the Cuban Adjustment Act of 1966 and yet does not speak about the necessary full freedom of the Cuban people to lift this law in the US.

Refers that US should take care of any agreement with Cuba since this could introduce a demand for $ 30 billion in American courts by the trade embargo on the island. However, does not touch the sensitive issue of the restitution of goods confiscated in Cuba, from both, Americans and Cubans.

As we see, despite all their positions, Trump has his followers.

Until where its position on Cuba favors him nationally?

Surveys in favor of relations with Cuba exceed 54%, without implying recognition or support for the dictatorship in Cuba.

Perhaps, even a particular interest in Cuba might have Trump. He may want to be the first to invade the island with its casinos, after doing so in the US if elected president, something extremely unlikely given that US presidential elections are usually defined by a narrow margin of two to three million votes. If only 57% of the 16 million Hispanics who are against Trump actually vote, he already lost to Hillary.

Benjamin F. DeYurre

Economist and journalist.

Follow on Twitter: @DeYURRE