What can rugby tell us about the future of football?

A recurring question in discussions of the future of football in light of safety concerns is whether, and how, you can have a "safer" tackling sport. Thoughts generally turn towards rugby--dre did a workshop at FIU in February and this came up during that conversation. Having just watched the Tokyo Sevens rugby tournament, I wonder if the answer is in there somewhere. Without question it is a tough, brutal, physical sport and in all likelihood players are suffering some head trauma, as well as other physical injuries. But rugby seems to involve more tackling and less "big hits" or high-speed/high-impact collisions. Players (especially off the ball) do not get the same running start or head of steam, so they are not moving as fast when the hit one another.

So am I correct as to nature of the hitting and tackling in rugby compared with football? And if so, is there a way to change the rules of football and the way it is played to make the hitting more like rugby? And would it work to preserve football or would it so fundamentally alter the game?

MLB v. Biogenesis

In recently suing a Miami clinic, Major League Baseball signaled a new legal strategy for combating steroids: sue those who allegedly sell to players on grounds the sellers are intentionally interfering with players' employment contracts. I wrote an article titled "Squeeze Play" in the April 1, 2013 issue of Sports Illustrated that examines this strategy.

Hope you can check it out on page 20 of the magazine.

TEDxYouth@Austin - Guest Blog Post By Jackie Singer

My 15-year-old daughter, Jackie Singer, asked if she could write a guest blog post after her great experience attending the inaugural TEDxYouth@Austin event. Jackie is a high school sophomore.

TEDxYouth@Austin

By Jackie Singer

I had the opportunity to attend the first TEDxYouth@Austin. Because I have grown up in the speaking industry (my father is a professional speaker and I have attended the National Speakers Association's "Youth Leadership Program" for several years) I am often hypercritical of speakers. Too often speakers do not have both interesting information and the skills to inspire an audience. However, I truly enjoyed listening to what every speaker had to share atTEDxYouth.

The speakers and performers included Joseph Asfouri, Chris Kocek, Shree Bose, Ashley May, Premier and Final Cut, Garrett Weber-Gale, Joaquin Zihuatanejo, West Ridge Middle School Future City Team, Michael McDaniel, LimitLess Dance, Brandi Burton, Peter Stone, Ruby Jane, Jia Jiang, and Lizzie Velasquez. Each of them added something to make the event a success.

It was inspiring to hear the stories of those who had overcome big challenges and achieved their dreams. At the same time, I was disappointed in myself that I didn't start playing the violin at the age of two, had won two Olympic gold medals, or achieved something else on this level.

I believe that the team who created this event was fantastic in choosing a wide variety of speakers, of all ages and of very different backgrounds. The unique mix of speakers and entertainment was key in keeping hundreds of middle and high school kids entertained for over four hours. The hosts, Louis Lafair and Nancy Giordano, (and the entire planning committee) did a great job.

The break was also great, when we were given the opportunity to meet the speakers and ask them questions. The snacks were also a nice plus, but my favorite part of the break was the activity. Everyone had been given colored stickers with their name badge and right before break, the hosts explained that if we were to exchange our stickers with others, ending up with one of each color, we could get a keychain made by a 3D printer (that in itself was pretty awesome). The idea was for us to reach out and meet new people, talking to those who we would have otherwise ignored. Unfortunately, everyone was just asking for different colors and trading rapidly in an attempt to gain every color and then rush to get the keychain. We probably should have taken more time to talk with other attendees!

Although I was not able to stay for the reception, I walked away with a very memorable experience. I had a lot of fun and I can’t wait for next year’s TEDxYouth@Austin.

-jackie singer

State Bill Challenges NCAA Amateurism Rules

The battle over the future of college athletics continues to evolve as more and more people view the NCAA's failure to compensate student-athletes from the revenue created by their labor as hypocritical.  Most challeneges have come from either public commentary--Taylor Branch, Joe Nocera, Jay Bilas, etc.--or the court system, i.e. O'Bannon v NCAA.  However, the state of California continues to advocate on behalf of the college student-athletes, not surprising given that it's also home to the National College Players Association (NCPA)--a nonprofit student-athlete advocacy group.

The latest effort by the California legislature is Assembly Bill 475.  This Bill would require all public universities and colleges in California that offer full athletic scholarships and receive media and licensing revenues in excess of $20 million to provide each athlete $3,600 stipends and guarantee full-ride athletic scholarships for five years, instead of the year-to-year guarantee.  As of now, the only schools that meet these thresholds are USC and UCalifornia, Berkeley.

Of import is that this Bill directly conflicts with current NCAA rules regarding amateurism.  Any stipend will be defined as an "extra benefit" violating the NCAA's self-defined amateurism rules.  The $3,600 stipend, not coincidentally, is close to the average amount that the NCPA determined is the cost of attendance shortfall for student-athletes receiving a "full grant-in-aid" scholarship.  For more on this research, please see their study, conducted by Ramogi Huma and Dr. Ellen Staurowsky, entitled "The $6 Billion Heist: Robbing College Athletes Under the Guise of Amateurism."

Finally, from a strict legal standpoint, we may be heading for a showdown--does a state have the right to impose laws that supercede the NCAA's regulations?  I'd say yes.  Will the NCAA challenge this rule?  I'd say yes again.  The result, perhaps an expedited judicial hearing, and ruling on the merits, on the claim that the NCAA's rules impose an unreasonable restraint of trade under the antitrust laws.  Stay tuned.

Read more here: http://www.sacbee.com/2013/03/30/5303876/bill-would-guarantee-5-year-athletic.html#storylink=cpy#storylink=cpystr

Can't make it Malibu for Pepperdine Law Review Sports Law Symposium on Fri Apr. 5? Live and Free Webcast = Next best thing

From the Pepperdine Law Review: 

The Pepperdine Law Review is pleased to announce that we will be hosting a free, live webcast of our Sports Law Symposium next Friday, April 5th.  If you cannot join us in sunny Malibu, CA, please consider tuning in online!  You may add the webcast to your calendar here: http://t.co/3gkgDlUmMh.  Sports law experts Michael McCann, Gabe Feldman, Matt Mitten and ESPN's Roger Cossack are among our 22 speakers.  A full list of panelists is below.

The New Normal in College Sports: Realigned and Reckoning

Friday, April 5th – 8:30am to 5:15pm PST // 11:30am to 8:15pm EST

Live from Pepperdine University School of Law, Malibu, CA

Live Webcast:  http://t.co/3gkgDlUmMh

Complete Schedule of Events: http://bit.ly/UvxZRr 

Line-up of Speakers: http://bit.ly/UvxZRr

Web viewers may tweet questions for the panelists to @PeppLawReview

Note: if you wish to attend in person, registration closes tonight at 11:59pm PST.  You may register here: http://bit.ly/10gmGdV.

The symposium will consist of four panel discussions and a keynote address with leading academics, university administrators, and practitioners in a variety of areas, including: a conversation with institutional leaders of major intercollegiate athletic programs; a consideration of the possibility of an antitrust exemption for the NCAA; the impact of conference realignment, digital media, broadcasting, and commercialization; and other emerging hot topics in college sports.

Schedule of events (all times PST):

8:30-8:45am                       Introductions and Welcome

8:45-10:45am                     Institutional Control: A View From the Top

11:00-12:30pm                   NCAA, Legal Exemptions, and Liability

12:30-1:30pm                     Lunch (Pause in Webcast)

1:30pm-2:00pm                 Address by Jeff Moorad, Founder, Moorad Sports Management

2:00pm-3:30pm                 NCAA: Enforcement, Sanctions, and Relationship with Universities

3:45-5:15pm                       The Money: Broadcasting, Digital Media & What Drives the Machine

Speakers include: 

Michael McCann, Professor of Law and Director of the Sports and Entertainment Law Institute, University of New Hampshire School of Law; Legal Analyst and Writer, Sports Illustrated

Gabe Feldman, Associate Professor, Tulane Law School; Director, Tulane Sports Law Program; and Associate Provost for NCAA Compliance 

Roger Cossack, ESPN Legal Analyst & Pepperdine University School of Law Distinguished Visiting Professor

Jeff Moorad, Founder, Moorad Sports Management; Former owner of the San Diego Padres

Judge Ken Starr, President, Baylor University

Katherine Sulentic, Assistant Director of Enforcement, NCAA

Britt Banowsky, Conference Commissioner, Conference USA

Steve Potts, Athletic Director, Pepperdine University

Dave Roberts, Vice President for Compliance, USC

Maureen Weston, Professor of Law, Pepperdine University School of Law

Daniel E. Lazaroff, Professor of Law and Director, Loyola Sports Law Institute at Loyola Law School

Jeffrey Standen, Professor, Willamette University 

Professor Ed Larson, Professor of Law, Pepperdine University School of Law

Matt Mitten, Professor of Law and Director, National Sports Law Institute, Marquette University Law School 

Rod Smith, Director of Sports Law & Professor of Law, Thomas Jefferson School of Law 

Brian Halloran, NCAA Perspective 

Andrew Brandt, NFL Business Analyst, ESPN; Columnist for ESPN.com; Director, Moorad Center for Sports Law at Villanova Law School; and Co-Founder, The National Football Post 

Brian Marler, Director, Houlihan Lokey 

Babette E. Boliek, Associate Professor of Law, Pepperdine University School of Law 

Mark Fainaru-Wada, Reporter, ESPN Investigations/Enterprise Unit 

Deanell Reece Tacha, Duane and Kelly Roberts Dean and Professor of Law, Pepperdine University School of Law 

Margot Parmenter, Editor-in-Chief, Pepperdine Law Review

Email Michael Wood at mcwood@pepperdine.edu or call Pepperdine Law at (310) 506-4653 if you have any questions.  For more information, please visit our website: law.pepperdine.edu/SportsLawSymposium

Pepperdine Law Review

A scholarly law journal published by second- and third year law students at the Pepperdine University School of Law, the Pepperdine Law Review was founded in 1972. In its 40 years of existence, the law review has been a resource for practitioners, law professors, and judges alike and has been cited several times by the U.S. Supreme Court. Written contributions to the symposium will be published in Volume 41. For more information about the Pepperdine Law Review, please visit our website: pepperdinelawreview.com

Thanks,

Michael Wood

Symposium Editor, Pepperdine Law Review

mcwood@pepperdine.edu

THE GREAT REVENUE ROBBERY - New Canadian book

Stop the tax scam and save Canada, say economists and analysts

New book,The Great Revenue Robbery, calls for fair tax system

Austerity is a bitter pill to swallow. But it is even more galling when we realize that it is the wrong medicine for the economy.  So-called experts say that the benefits of a radical free market agenda will trickle down to regular families. 

Meanwhile, the wealth and income in this country are increasingly concentrated in the hands of the top 1per cent, household debt is at an all-time high, poverty is at unacceptable levels, and the gap between rich and poor is an absolute canyon. Corporate executives are paying themselves multimillion-dollar salaries and bonuses while exploiting tax loopholes, and bankers are being bailed out with our tax dollars. But the tide is turning. Faced with growing inequality and cutback to government programs, public opinion polls show strong support for tax fairness, including raising taxes on the rich and on corporations.

The Great Revenue Robbery shows us how tax policy can help rebuild our social programs, reduce the gap between rich and poor, restore environmental respon sibility, and revitalize our democracy.

Contents:

-  Prologue by James Clancy

-  Introduction: Tax Fairness Key to Rebuilding Canada by Dennis Howlett

-  Passing On the Torch by Trish Hennessy

-  Pushing the Envelope: The Overton Window and the Left by Diana Gibson

-  The Power of Conventional Thinking: Canada’s Media Join the Anti-Tax Movement by Richard Swift

-  The Trouble with Tax Havens: Whose Shelter? Whose Storm? by Peter Gillespie

-  The Failure of Corporate Tax Cuts to Stimulate Business Investment Spending by Jim Stanford

-  Financial Transaction Taxes: The Battle for a Small but Important Tax by Toby Sanger

-  Taxes and Ecological Justice?  By Joe Gunn

-  Tax Justice and the Civil Economy by John Restakis

-  Conclusion: The Way Out of This Mess by Murray Dobbin

Praise for the Book

“For decades,the right has flooded the airwaves and taken over the political podiums with its anti-taxhysteria. But Canadians are waking up to the simple truth that taxes are the price we pay for civilization, and that scrimping on taxes means scrimping on civilization. This collection of compelling essays deconstructs the misinformation spewing out of right-wing think tanks and media outlets, and reminds us that a far bettersocial order is tantalizingly within reach.”

~ Linda McQuaig, author and journalist

“The Great Revenue Robbery is a rallying cry for a just society. Special-interest lobbying has hollowed out the tax system. Corporations and wealthy elites have shifted their wealth and income to tax havens, and the mainstream media have polluted democratic politics with a trenchantly anti-tax agenda. This book explores this attack on tax and identifies potential progressive counterattacks, for example through financial transaction taxes, environmental taxes, and tackling tax havens. As the climate and economic crises deepen, the case for progressive taxes becomes more compelling by the day. Aux armes citoyens!”

~ John Christensen,

director, Tax Justice Network

“Over the past thirty years the prevailing neo-liberal ideology has framed taxes as fundamentally illegitimate. In exposing this big lie,The Great Revenue Robberycompellingly demonstrates the crucial and varied role oftaxes in a flourishing democracy. If you want to understand what went wrong in Canadian public policy andhow it can be fixed, you should read this book.”

~Neil Brooks,

professor of tax law and co-author ofThe Trouble with Billionaires

“This is a welcome critique of conventional economic wisdom. If you thought tax cuts would solve all of your problems, read The Great Revenue Robbery and think again.”

~Thomas Walkom, political columnist, Toronto Star

Consumers and NCAA-licensed products: new findings

New empirical findings by Anastasios Kaburakis and his research team on how consumers perceive NCAA licensed products in relation to athletes featured in them. Key finding: consumers associate video game representations with actual NCAA players & a good number of consumers mistakenly believe that players endorse (and are perhaps paid to be in) these games. These findings clearly connect to O'Bannon v. NCAA and more broadly to evolving conceptions of amateurism in college sports.

Cool Things My Friends Do - Dee Copeland Patience and Lipstick Unplugged

Each Friday on this blog I enjoy highlighting some of the cool things my friends do in their work and personal lives. 

My friend Dee Copeland Patience is the curator of a great web community and the host a series of fantastic video podcasts. 

 Lipstick Unplugged™ is focused exclusively on helping strong women entrepreneurs build a bold online brands and platforms for their businesses.

Dee shares that she wasted over $18,000 in her first 9 months online. She listened to all the gurus, bought every training out there and got way off base. She spent money on equipment, tools, courses and resources that wasted time and money. She does not want others to make these same mistakes.

She believes that you don’t need a "high-gloss" and scripted act that tells you how to embrace your inner flower so you can buy a $25,000 mastermind program from a hard selling online guru. She also knows that you also won’t make money overnight with a blog, podcast, web show or Kindle book.

You need to know what works, why it works and how to implement it fast. NO GLOSS.

Dee has set out to get the stories and opinions of people who have achieved success in a variety of areas, and she does this with amazing interviewing skills that gets people to open up and share the details from their personal journeys.

Check out all her interviews at Lipstick Unplugged.  She posts a new video every other week.  She also lists a variety of resources that can assist entrepreneurs find success.  While the site is for women, men will find value there too!

I had the honor of being interviewed by Dee ... you can see the video below.

Have A Great Day.

thom singer

Links Mar 28

Post-2015 agenda must be founded on coherent global framework, says panel The Guardian

Understanding International Tax Havens NPR
Panel for the radio broadcast includes TJN's James S. Henry, lead researcher of the report, "The Price of Offshore Revisited."

Laundry ... TJN Latin America and Caribbean (In Spanish)
A focus on Swiss banking

CBC's The National gives top billing to story on tax havens Canadians for Tax Fairness

See also:
Getting a handle on Canada’s ‘tax gap’ National Post

India: Tax officials told to crack down harder on black money The Times of India

India: Nokia slapped with Rs 2000 cr notice for tax evasion The Economic Times

Cyprus – the next chapter of dysfunctional EU debt crisis management Eurodad

Where will money launderers turn after Cyprus? Marketplace

Mobile Millionaires and the Search for the Holy Grail Tax Jurisdiction Citizens for Tax Justice

Taxing the Wealthy Is Not So Easy The New York Times

Wealthy Say Higher Taxes Haven’t Hurt Spending, Investing CNBC

Why is the Bank of England ignoring the negligence of the auditors who’re signing off accounts that understate losses by £50 billion? Tax Research UK

Why the British Banking Industry has become identical with an Organised Criminal Enterprise. Part 3 Rowans-blog

Oligarchy Exists Inside Our Democracy naked capitalism

IMF will assist Latin America to control the flow of foreign capital El País (In Spanish)
Hat tip: Jorge Gaggero

Reasons to resist the attacks on the corporation tax

The Guardian two years ago carried a piece entitled "Ten reasons to tax corporations," responding to all the devious corporate lobbyists who seek to argue that it's better to let corporations take the benefits provided by society without paying for it.

Now, from Tax Research UK and Economia magazine, a new list that overlaps with the Guardian original but provides of fresh analysis too, with a UK focus.

• Corporation tax is a core part of our tax system. On average it raises 10% of UK tax revenues.
  
• Corporation tax is a backstop to income tax: without it anyone who could incorporate would pay tax at will. We cannot afford that.
  
• Tax-free companies would allow those with wealth to accumulate more in a tax-free environment, exacerbating wealth inequality.
  
• A tax-free business sector would distort competition, providing much opportunity to large business, but little or none to small enterprise.
  
• Corporation tax is source-based. It taxes profits made in or attributable to the UK. If it was abolished and instead company distributions to their recipients were taxed, the ownership of shareholdings would flee the UK and the tax base would collapse.
  
• In many cases we don’t know who the owners of companies are – so have no other way of taxing them.
  
• Source-based corporation taxes are the contribution paid for the right to trade in and make profit from UK markets. We grant that right by offering limited liability. As a result society shares the risks of capital communally, as the banking crash of 2008 showed.
  
• Corporation tax is a distribution to society for the right to have limited liability; as compensation for the costs it imposes, and for the costs of market failure. Unless business pays that, ordinary people will.

There are many other reasons to resist the anti-tax lobbyists. One particularly important argument, particularly in the current economic climate, is provided via the London School of Economics blog, here.

Points to understand and rehearse, and to wheel out wherever necessary.

India and tax havens: new Christian Aid report

Hot on the heels of our "No More Shifty Business" co-signed report responding to the OECD's major new "BEPS" international tax initiatives, Christian Aid have published a new report entitled Multinational Corporations and the Profit-Shifting Lure of Tax Havens, which provides useful new evidence on how tax havens affect developing countries.

Using the Orbis database, they analysed the accounts of over 1,500 MNCs (Multinational Corporations) operating in India, home to 25% of world’s undernourished people, and found out that those MNCs with links to tax havens paid nearly a third less in taxes per unit of profit than those with no tax haven links. More specifically:

"On the basis of our sample of MNCs operating in India, we find that MNCs with tax haven connections:
•    report 1.5 per cent less profits
•    pay 17.4 per cent less in taxes per unit of asset
•    pay 30.3 per cent less in taxes per unit of profit
•    have 11.4 per cent higher debt ratios than MNCs with no connection to tax havens."

These conclusions provide useful empirical confirmation of what many people already know: tax havens help multinational corporations dodge taxes in developing countries, undermining development. Christian Aid continue:

"Our findings strongly suggest that MNCs with connections to tax havens engage in profit shifting more intensively than those MNCs with no tax haven links. This confirms the notion that when corporations have tax haven links they face higher incentives (because of the low tax rates in tax havens) and opportunities (because of the secrecy provisions tax havens offer) to shift income than corporations that do not have any tax haven links.

Profit shifting by MNCs can significantly reduce the tax revenues raised by governments. In countries where taxes raised as a percentage of GDP are very low, the revenue foregone can seriously undermine efforts to tackle poverty and invest in human development."

And their solution? Among other things, unitary taxation with profit apportionment.

Why Networking Does Work

Inc. Magazine has an online article on their website by Erick V. Hotlzclaw titled "Why Networking Doesn't Work".  The article is right and wrong at the same time.  It misses the point, as it focuses the definition of the word "networking" as if it only means "working a room". 

He makes the same mistake others do by trying to categorize small pieces of what it is to network as the whole.  The problem with the article is in the semantics and definition of "Networking". 

The definition I teach is:

"Networking is the creation and cultivation of long-term and mutually beneficial relationships between two or more people; where all involved succeed more because of the relationships than they would without the relationships".  

Now that works every time.  A long-term and mutually-beneficial relationship is always a good thing!!!

Holtzclaw sites "networkers" who run around collecting cards as the problem with networking.  I don't see that very often.  Yes, there are those who make idiots of themselves and have poor skills when it comes to engagement in the community, but that is not the average person at business events.

I also take exception with the word "networkers" in the way he uses it...  as I am not sure what "networker" really is by his definition.  Nobody holds that job title of "networker" (whom I have ever met).  Instead there are professionals in all industries who cherish learning about people, and cultivate meaningful connections that can (and will) lead to more opportunity for all involved.  But they are not "networkers"... they are a Realtors, lawyers, doctors, sales professionals and all other vocations.  The use of the word in this manner seems to undermine their real career efforts of these people.

If it is anything, a "networker" is someone who does a great job of creating relationships and serving others, not someone who fails at the task.

Networking should not be seen as a verb - "Oh, I need to Go Network".  Instead it is a lifestyle and a commitment to the people you encounter in your community.

As I read Holtzclaw's advice on how to do a better job,..... it was spot on right!!!  However his tips for how to properly network and get them most out of your time and efforts was listed as if it was somehow separate from "networking". 

Parts are not the whole of networking.  Yes, we can (and should) help others learn how to create the types of relationships that will lead to a better future and more opportunity.  But he is not really telling people that message with the title of "Why Networking Doesn't Work".  The reality of his article is educating people "Why Networking Does Work"....when done the right way.

A rose by any other name.....

Have A Great Day.

thom singer

Links Mar 27

Cyprus disaster shines light on global tax haven industry MSNBC

The effects of Cyprus on other tax havens The Economist

Cyprus's banks have been tamed – are Malta and Luxembourg next? The Guardian

Germany warns Russia tax "raids" on NGOs may harm ties

Five not-so-convincing ways that tax havens justify their existence Quartz

Egypt's top construction firm to pay $1 billion in tax evasion dispute albawaba

Ireland: Not one person prosecuted for Ansbacher scam
Greatest tax evasion scheme in recent history has returned €113m in penalties – but still no criminal convictions

Big companies' tax avoidance blatant and shameless The Sydney Morning Herald

U.S.: IRS Releases 'Dirty Dozen' Tax Scams TaxProf

How to Unlock That Stashed Foreign Cash The New York Times

Post analysis of Dow 30 firms shows declining tax burden as a share of profits Washington Post

Citigroup's Money Laundering Controls Must Be Improved: Fed Huffington Post

Is JPMorgan a farmer? Salon
How the U.S.'s biggest banks use the little-covered House Agriculture Committee to gut regulations

Wikileaks Was Just a Preview: We're Headed for an Even Bigger Showdown Over Secrets Taibblog / Rolling Stone

BRICS reach deal on development bank to rival IMF The Telegraph

Ecclestone, the French race circuit and the real story behind that $44m 'bribe’ The Telegraph

Corruption in Malaysia, Singapore exposed as investigation catches Sarawak’s ruling elite on camera

We are a few days late for a full blog on this Global Witness video (though we linked to it earlier). It has attracted quite a stir in Malaysia, garnering over a million views and, among other things, a mention in today's FT.) As Global Witness say:

"For over thirty years, Sarawak has been governed by Chief Minister Abdul Taib Mahmud, who controls all land classification, forestry and plantation licenses in the state. Under his tenure, Sarawak has experienced some of the most intense rates of logging seen anywhere in the world. The state now has less than five per cent of its forests left in a pristine condition, unaffected by logging or plantations and continues to export more tropical logs than South America and Africa combined.

The film reveals for the first time the instruments used by the ruling Taib family and its lawyers to skirt Malaysia’s laws and taxes. It shows how they cream off huge profits at the expense of indigenous people, and hide their dirty money in Singapore."

One company, for example, was offered for sale through an illegal transaction in Singapore designed to evade Malaysian tax. The lawyer told Global Witness that Singapore has a “Chinese wall,” that it’s impossible for the Malaysian authorities to get any information out of Singapore, and that Singapore is for "people like us."

It's a really good, important investigation. See the original here, and the Global Witness press release here. For a long-time investigator of these and many other matters, see the Sarawak Report.

No More Shifty Business: a response to the OECD's BEPS report on global tax

Last month we blogged a major new initiative by the OECD, a group of rich countries, to tackle tax avoidance by multinational corporations. We have been highly critical of the OECD in the past, but we broadly welcomed the new initiative, called BEPS (Base Erosion and Profit Shifting) initiative, because it appeared to show a real potential change of direction and a new willingness to start thinking of fundamental reform to international tax for the first time.

Now a large number of civil society organisations have jointly produced a document entitled No more shifty business: A response to the OECD’s Base Erosion and Profit Shifting Report on Tax.

It notes, among other things, that the international tax rules first drawn up 80 years ago have not kept pace with the changing business environment; the current rules are not fit for purpose. TJN has been saying this for a long time, and the OECD at last appears to be recognising this truth.

Perhaps the most important section of the report is this part:

"In order for MNCs to be taxed according to their real nature, two measures should be introduced:

• MNCs should be required to submit a worldwide combined report, including consolidated accounts, to the tax authorities of each country in which they operate.
• MNCs should be required to provide a country-by- country breakdown of their employees, physical assets, sales, profits and taxes actually due and paid.

These two measures could be the basis of a tax system that would consider the total profits made by a MNC, rather than the profits made by any of its parts. It would then allocate these profits to the different countries in which the MNC conducts its real business, according to transparent criteria. Each country would be free to decide what tax rates to apply to their corresponding tax base.

These measures should be complemented by others in order to foster financial transparency, such as the public disclosure of the beneficial owner of companies, foundations and trusts, and the adoption of automatic information exchange as the new global standard."

We should add that combined reporting, broken down on a country-by-country basis, is at heart a transparency issue. In and of itself it does not force countries into any particular tax policies, and It merely provides them with the information that they need to help tax multinationals. Combined reporting is a central component of the more far-reaching unitary taxation, which our new report also explores in depth, and which was the subject of a recent paper on the topic by Professor Sol Picciotto, who has done much work on this.

John Christensen, director of the Tax Justice Network, said:

"This is a truly historic moment. Issues that have been off the agenda for nearly a century are now finally on the agenda. The OECD can either make history and push forward with thoroughgoing reforms, or it can pander to corporate lobbying and come up with a damp squib. The next 12 months will be crucial for establishing whether or not the OECD is up to the job of establishing a new and more just global economic order, where multinational corporations can no longer free-ride on the backs of the rest of us, channeling wealth upwards into the hands of a privileged few."

Access the full report here or on Christian Aid's website here. This is an important document, which we will add to our home page.  For further reading on combined reporting, see The Use of Combined Reporting by Nation States, by Prof. Michael McIntyre, and a presentation by McIntyre looking at how combined reporting functions in the hands of U.S. states. Read more on this blog entitled Render Unto Caesar, from the Center for Global Development. As it notes:

No less a radical firebrand than the Financial Times notes that corporate tax has become ‘a largely voluntary gesture’, which it thinks ‘scandalous’. The problem is particularly acute for developing countries.

Our new No Shifty Business report contains further reading material.

The organisations that have supported the No Shifty Business document are:
 
Action for Economic Reforms (Philippines)
African Forum and Network on Debt and Development
(AFRODAD) (Africa)
Alliance Sud – the Swiss Alliance of Development
Organisations (Switzerland)
Attac Norway
Australian Education Union (Australia)
Berne Declaration (Switzerland)
Canadian Council for International Co-operation (CCIC)
(Canada)
Canadians for Tax Fairness (Canada)
Catholic Bishops’ Organisation for Development
Cooperation – Misereor (Germany)
CCFD – Terre Solidaire (France)
Centre for Budget and Governance Accountability (India)
Centre for Social Concern (CFSC) (Malawi)
Centre National de Coopération au Développement,
CNCD –11.11.11 (Belgium)
Centro Internacional para Investigaciones en Derechos
Humanos (CIIDH) (Guatemala)
Ciase (Colombia)
Christian Aid (UK)
Decidamos (Paraguay)
Economic Justice Network (South Africa)
European Network on Debt and Development (Eurodad)
(Europe)
Finnwatch (Finland)
Forum Solidaridad – Peru
Global Policy Forum Europe (Germany)
Halifax Initiative (Canada)
IBIS (Denmark)
Inter Pares (Canada)
International Alliance of Catholic Development
Organisations (CIDSE) (International)
Jubilee – Australia
Kairos (Europe)
Lantidadd (America Latina)
Malawi Economic Justice Network (MEJN) (Malawi)
Methodist Tax Justice Network
National Taxpayers Association (NTA) (Kenya)
Netzwerk Steuergerechtigkeit (Germany)
New Rules (USA)
Norwegian Church Aid (Norway)
Perkumpulan Prakarsa (Indonesia)
Plateforme Paradis Fiscaux et Judiciaire (France)
Red Jubileo – Peru
Red Nicaragüense de Comercio Comunitario (RENICC)
(Nicaragua)
Sherpa (France)
SJ Around the Bay (Australia)
Social Justice (Ivory Coast)
Southern and Eastern African Trade Information and
Negotiations Institute (SEATINI) (Africa)
Secours Catholique – Caritas (France)
Spire (Norway)
Tax Justice Network
Tax Justice Network – Africa
Tax Justice Network – Australia
Tax Justice Network – Europe
Tax Justice Network – Germany
Tax Justice Network – Israel
Tax Justice Network – Netherlands
Tax Justice Network – Norway
Tax Justice Network – USA
Taxpayers Against Poverty (UK)
Union Aid Abroad – APHEDA (Australia)
Uniting Church in Australia, Synod of Victoria and
Tasmania (Australia)
Weltwirtschaft, Ökologie & Entwicklung (WEED)

Equality

This graphic has taken over Facebook (and other internet sites) as people who differ on many other issues stand together in support of marriage equality in the United States.  

Have A Great Day.

thom singer

Links Mar 26

Tax and the post 2015 Agenda Christian Aid

Render unto Caesar Centre for Global Development

U.S. Seeks Answers in Liechtenstein on Tax Cheats Bloomberg
“Seeking documents from the Liechtenstein fiduciaries is an important investigative step,” which will shed light on “the roles of banks, of bankers outside of Liechtenstein”

Puerto Rico Creates Tax Shelters in Appeal to the Rich Dealb%k

Cyprus’ absurdly large, dodgy banking system, in three simple charts Quartz

Why did Apple have losses in Spain?  El País (In Spanish)

Why the British Banking Industry has become identical with an Organised Criminal Enterprise Rowan's-blog

HSBC By The Numbers Task Force Blog

World Derivatives Market Estimated As Big As $1.2 Quadrillion Notional, as Banks Fight Efforts to Rein It In naked capitalism

Nick Leeson, the man who bankrupted Barings Bank: "My story is being repeated, but should be avoided" Cronista / Apertura (In Spanish)
Hat tip: Jorge Gaggero

Spring Training Is A Tax Haven For Baseball Players Forbes

Tax-free culture and art haven to open in Beijing in 2014 Shanghaiist

Most foreign investment in BRICs isn’t foreign at all—it’s tycoons using tax havens

From Naomi Rovnick at Quartz:

"Each of the BRICs have big problems with tax dodging, which saps billions from national treasuries and—in the case of Russia, India, and China—suggests the newly rich are failing to share the wealth with the poor.
. . .
The clearest sign that BRICs are leaking tax revenues is that each country’s biggest source of outside investment is a tax haven. China counts the tiny Caribbean bolthole of the British Virgin Islands as its biggest source of foreign investment (not including the Chinese territory of Hong Kong). India has Mauritius, Russia has Cyprus, and Brazil has the Netherlands."

Now read on. It's a great article.

NB: The IMF searchable database that the report cites is excellent. This particular TJN blogger hadn't seen it before.

Taxodus - new online tax dodging game

Now TJN members can work and play video games, simultaneously. We haven't played it yet, but on a cursory inspection it looks quite sophisticated.

Taxodus: mapping assets offshore. Original site here.

(We originally embedded the video, but it was launching and playing strong music any time anyone clicked on our side, so we leave you merely with the web link.)

Transfer pricing in Helsinki: videos now available

Last year TJN hosted a major transfer pricing seminar in Helsinki, which brought speakers from around the world and was a great success. We already hosted the presentations on our transfer pricing website.

Selected videos are now available here, and more will be uploaded in due course.

This will be stored permanently on our transfer pricing webpage.

Stern magazine calls Big Four bosses "Legal Enemies of the State"

Germany's Stern magazine has an article, not currently online, whose thrust is summarised in this remarkable picture.

The article names the global heads of the Big Four accountancy firms, and the big headline translates as "Legal Enemies of the State."

Wow. That is a hefty charge. And the basis of the charge? Well, the article opens like this:

"Because of these men, corporations like Amazon, Google etc. pay almost no tax. With their 700 000 staff they skilfully create tax tricks. It is high time to drag them out of their loopholes."

How apt. Absolutely right. The Big Four accountancy firms help multinational corporations (and other wealthy players) escape huge tax bills, shifting the burden of tax onto the shoulders of others: smaller more local businesses, individuals, the victims of public sector cutbacks, and so on. The ability of multinationals to harvest these tax subsidies helps them out-compete their smaller, more locally-based rivals, killing them in markets and driving them out of business. The result is greater market concentration, greater oligopolistic pricing power for the multinationals, greater influence for the tax havens that facilitate all this (thus providing cover for all manner of nefarious activity,) greater economic inequality around the world, and more. All this goes by the name (in the Anglo-Saxon world) of 'tax efficiency' - when these outcomes are all profoundly inefficient. 

The Stern article extensively quotes accountancy expert Prem Sikka, a Senior Adviser to TJN, who for a long time has been calling the Big 4 the "Pin Stripe Mafia" (take a look at this exploration of the problem). Sikka says:

"A lack of transparency and strict secrecy are part of the business model of the Big 4. As with the banks, nobody dares to break the wall of silence."

It is fantastic to see Stern taking this approach. Spot on. Among other things, the authors read and understood our research about the propensity of big 4 firms to locate in jurisdictions which provide a more secretive legal environment. In tiny Cyprus, for instance, PWC alone employs over 1000 staff.

One quote is interesting, from an apparently highly motivated official in the German Ministry of Finance, head of the tax department. Stern says:

"Michael Sell profoundly knows the big tax firms. He can assess the danger arising from the Big Four like few others. "With 32 I was employee of a big-four firm. There, I asked myself: do I want to help foreign firms save taxes in Germany all my life? I then changed to the federal tax administration."  He begun to model and expand the central tax office on the example of the federal criminal investigations office - though he does not accept this comparison."

A US senate report reveals what happens in sales pitches for new tax avoidance schemes: the clients do not receive computer files. Nothing is noted on paper. The sellers write everything on boards, which they wipe off afterwards."

Stern investigates classic tax structures such as the "Double Irish", and lesser-known ones such as Cobra, Soap Picante, and Pita.

Thanks to the Blog Steuergerechtigkeit 

The Tax Free Tour - excellent new tax haven video

The Tax Free Tour, a Dutch television programme, is now available online. A most useful primer on how these things work.


Featuring various TJN officials.

Links Mar 25

ActionAid calls for post-15 development panel to address domestic taxation
Press release on a new ActionAid briefing paper, Bringing taxation info the post-2015 development framework

See also:
Tax emerges as crucial issue in post-2015 development talks The Guardian

Tax Fairness on the agenda but .... Canadians for Tax Fairness
Analysis of The Canadian Federal Budget, tabled on Thursday, March 21. Much more needs to be done, especially on tax havens.

Alvin Mosioma: "For every $1 dollar that flows into Africa, $10 flows back out ' Vice Versa (In Dutch)

Sarkozy under formal investigation Economist Blog
Former French president's involvement in the Bettencourt case, a saga that mixes alleged tax evasion, a tropical island, domestic servants, fabulous wealth and political party-financing.

U.S." Web Money Gets Laundering Rule The Wall Street Journal

Dealing with tax avoidance "down under" economia
Proposing that the UK should look to the Australian model for tackling tax avoidance.

Austrian Lawmakers Back Tax Deals With Liechtenstein Tax-News

Amazon tax petition hits 100,000 signatures The Guardian

Alcoa and Norðurál Pay Little Or No Income Tax In Iceland The Reykjavik Grapevine
Involving complicated chains of ownership, using Delaware and Luxembourg.

Yachts Lured To Croatia By EU Accession VAT Perk Tax-News

The super-rich who have made Cyprus their home The Guardian

Creativity in Business

Creativity should not be a mystery, but to many business professionals it seems allusive.  Most of us can remember times as kids when we played, colored, created art, made up songs and games, etc...  But the social norms and pressures we face while growing up have caused many to put their creativity on hold once they reach their career.

While some may have creative hobbies, too few allow this part of their life to mingle into how they conduct business.

We seem to leave creating to those with job descriptions that call for artistic qualities -  but creativity does not need to equal "art". We all face issues daily that call for solutions that are unique and fresh, but too often we take the proven route (with mixed results).

Re-tapping the kegs of creativity and letting our minds discover new paths is needed in most business situations   We all have it inside of us to do this, but too many do not trust their ability to color outsides the lines in our daily routines.

In our fast paced and highly competitive world we need more people to attempt solutions to daily problems that block our success.  Some fear they will be laughed at if they step beyond what is expected from them.  Others worry about their job security as creative solutions are subject to failure.

I have had bosses who clearly were not in favor of experiments.  One told me that there was no room for any failure in marketing (by its very nature, marketing should be creative), as the company had a limited budget and waste was unacceptable   This message was received loud an clear, but it limited the way the company promoted itself.  Employees were scared to try anything that would not be seen as having a pre-set as a victory.   While little money was lost, there was also limited gain from successful marketing campaigns or other promotional activities.

Working for myself  is changing my outlook on personal creativity in business.  I have no trepidation about what bosses or co-workers will say if I attempt to release more creativity, but it is still a work in progress to get more playful in how I conduct myself professionally.   I have been conditioned to see business in a certain way, and now I am re-inventing my point of view.

Trying new ways to interact with clients and prospects is having results.  I enacted a common marketing practice from another industry, and invested in a campaign that lead to new business.  Additionally my speeches and training presentations are becoming more interactive because I am "playing" more with the audiences.

Pushing yourself, and others, to explore creativity is necessary in our current business climate.  Instead of thinking that failure is unacceptable, bosses need to encourage risk, as that is what brings reward.  This is true in every industry (I see it in the meetings industry...where those who are willing to attempt stuff are seeing better results than those who are holding onto the old ways to plan events).

Group brainstorming, when all participants are fully committed to uncovering ideas, can have outstanding results.  We cannot get to the good stuff if we do not feel free to toss out all thoughts to see what resonates.  Each person tries to validate each concept and then build upon the previous idea.  Not everything works, but this process can lead to major breakthroughs.

As I work with more companies (in a training and consulting role) I am getting better at helping facilitate environments where people can have fun with their creative spirits.  While not everyone is comfortable sharing and being open to exploring creativity, those who do are inspired to keep seeking ways to let more creativity into their business world.

Creative executives will always be in demand, and often have more fun.  When we are open to creating.... it brings out the best in all we do.  I admire entrepreneurs who understand that they are really "artists" at heart, not just business professionals.

What are you seeing in your company?  Is creativity cherished or pushed away?

Have A Great Day.

thom singer

March Taxcast

In March 2013's Taxcast: the crisis in Cyprus and the risk tax havens pose to the global economy, a surprise earthquake for UK-affiliated tax havens and a frustrated corporate tax inspector speaks out on the corrupting of the tax system. Now also available on iTunes: bit.ly/Y8UOfQ Produced by @Naomi_Fowler

 

Or download it here.

Cyprus: what the world's media has missed

April 3: slightly updated, with fresh quotes and modified commentary
Many people have been asking us about Cyprus. Its tax haven status is central to the drama that has seen big depositors there stand to suffer large losses, while small depositors holding amounts below 100,000 Euros, who had previously been threatened with a 6.75 percent levy on the capital value of their deposits, will be spared.

The question is: is this the right deal, from our perspective?

In broad terms, yes. It absolutely is.  And much of the world's media has not taken into account all the factors that are at play here. (Though we do particularly like this recent interpretation of events by Paul Krugman of the New York Times, of course.)

Most notably, Cyprus has been running a pernicious, unpleasant, grubby and often violent tax haven racket for years. As a result, it long since left the community of decent, respectable nations. (We should note here that the ordinary population of a tax haven is different from the financial services industry of a tax haven; but more on this below.)

This deal will, we fervently hope, kill off Cyprus' entire offshore model which goes far beyond banking deposits, and includes offshore companies and other structures. We know, via specific cases, that Cyprus has been harbouring and protecting vast subterranean funds from activities of the Russian Mafia, criminal organisations, common thieves, wholesale tax evaders, insider traders, and much more. We know, for instance, that Cyprus has been harbouring illicit gains obtained (partly) through murder (see this, for instance). Krugman notes that:

"Whatever gloss you put on it, it’s basically about money-laundering."

Quite so.

Cyprus, of course, loudly denies being a tax haven: they all do. It's part of the theatre of probity that is de rigeur among corrupt tax havens that is required to reassure the world's hot money that their money is safe.

The reality is entirely different. This has been, in effect, a substantially criminalised state, and it is now being brought to book. So this is a highly positive development, all things considered, and there are grounds for hope that the offshore model will be effectively killed: as this article notes in the Cyprus Mail:

"The troika has potentially vaporised the Cypriot-based financial services sector and undermined its status as a tax haven, a deliberate act which aimed to police the wilder shores of capital flow in and out of Europe. . . .The financial services sector may now prove dead in the water and the tax haven status of Cyprus has been swiftly and comprehensively compromised. If you have money to hide, you are not going to park it in Cyprus any more.

Or, in the words of a Russian cited in the FT (in an article that deserves a blog all to itself),

“The Cypriots killed their country in one day.”

The Cyprus Mail article is fascinating, for although the authors clearly it describes something that we at TJN have long described and will explore in far greater depth, in a forthcoming long paper: the capture of, and capitulation by, an entire nation state, to the offshore financial services industry. And this is the big point that the world's media has largely missed, and which is perhaps the most fundamental of all. As the same article notes:

"The interest of the Cypriot political elite has, in large part, been tied to the financial services sector since the early 1990s with lawyers, accountants and others massively over represented in public life and wielding inordinate power . . . the broader interests of the Cypriot economy have become, to a significant degree, dependent upon this economic regime."

Take this interesting article about Cyprus, for instance, which noted that the EU had held back on taking action against Cyprus banks because of imminent elections, which EU officials hoped would oust the current President, the Communist Dimitris Christofias, who was "considered too close to the Russian investors." The opposition leader, Nikos Anastasiades, is duly elected, and the article notes that "Anastasiades is a successful investment lawyer, who has several Russian billionaires in his portfolio" and the finance minister Michalis Serris "was also a member of the board of the second bank of Cyprus, the Popular Bank (Laika Bank in Greek.)" And those are just the most obvious examples. 

David Officer, one of the coauthors (along with Yiouli Taki) of the Cyprus Mail article, is an academic who has been conducting a "democratic audit" of Cyprus. Officer told TJN in emails:

"Cyprus is a remarkably un-reflexive society so this issue appeared to have been ignored by every single journalist, academic and political actor on the island. A consensus emerged here that if the goods were being delivered there was nothing to be gained by reflecting on how those resources were secured."

Or, as that same Russian businessman cited in the FT put it:

"They are saying we laundered all the money, but they lived on that money for 10 years and forgot about it.”

Back to Officer and Taki:

The crisis has caught up with us and I have grown inured to international media attention since stories are spreading across the media but with no connection to the context described above. Gave a 45 min interview to [a U.S. newspaper] a couple of days ago which was reduced to two lines on their front page on Saturday. The outsider cannot grasp the context and the Cypriot insider is not in a position to join the dots because they have never been given the conceptual framework or the motivation to do so."

TJN has been told by Cypriot journalists that they had (until the recent crisis) quite literally been afraid to report deeply on the offshore sector, for fear of reprisals. Anyone who has read The Life Offshore chapter in Treasure Islands will instinctively understand what is happening here. Officer and Taki continue:

"Why we can talk about 'state capture' by the financial services industry is how a nominally left-wing party such as AKEL has never once raised any substantive issues about how the economy had become absolutely dependent upon the tax haven model and Cyprus a conduit for the flow of foreign finance capital between jurisdictions. Political consensus emerged around this model because it appeared to deliver the goods and common resistance was forged to any attempt by international organisations - World Bank, IMF, FAFT, EU....the list goes on - to impose an effective regulatory regime which would undermine this particular cash cow."

Officer and Taki clearly have great sympathy with the ordinary citizens of Cyprus, as do we: the EU's response, they say, is

"a cruel and unusual punishment visited upon ordinary Cypriot citizens who have never been informed of the perpetual risks which have accompanied the tax haven strategy of economic development vigorously promoted by the political elite since the 1980s."

Now Cyprus - and ordinary Cypriots - have a huge, existential problem. When an island gets captured by an offshore financial services industry - and we've seen this again and again - it tends to kill off substantial parts of alternative sectors. Among other things, it can create "Dutch Disease" effects where local price levels rise in response to the inflows of money, either via the exchange rate or via inflation, and the resulting higher-cost environment then makes it harder for various other sectors to compete in international markets. They consequently wither. More importantly, though, the salaries in this sector are far higher than in any other, and this leaches the best and most highly skilled people out of other sectors (private and public) and thus further worsens their prospects. In the face of all these adverse trends, policy makers then lose interest in 'difficult' problems such as creating a viable agriculture or manufacturing or tourist industry and instead let the easy money roll in in pursuit of secrecy and lax criminal enforcement, no questions asked. Dissenters are bought out or threatened.This makes the problem worse still. It also tends to criminalise originally law-abiding people who come into contact with this sector, who find that they are required to turn a blind eye to foreign tax evasion and other criminality if they want to prosper.

And here we get to what exactly it is that Cyprus has been selling. Its secrecy score on the Financial Secrecy Index is not especially egregious in comparison to some other havens, but that's not quite the point in this particular case. From our knowledge of what has been going on, Cyprus's top offering has been to peddle non-compliance with its own laws (for an example, see here, at about 10.00-11.00 minutes in.) Officer on our Financial Secrecy Index itself:

"The index indicators through which measurement occurs are incomplete because they concentrate on the formal legal framework rather then the actual practice of lawyers, accountants and others which deviate from the legal norm established.
. . .
The usual vested interests from the President to the financial services industry have been repeating the mantra that 'there is no dirty money in Cyprus' and deflecting attention from implementation issues to the comprehensive legal framework in place - this is the same issue. Small island jurisdictions obscure from view the informal practices which circumvent the law.
. . .
This is the competitive advantage they then use to attract foreign capital to Cyprus."

(We don't disagree with this criticism of our index, other than to say we consider that deviation from the rules that we measure, is exceedingly hard to measure. We would argue that our index is made up of two components: a secrecy score, and a weighting for size, and deliberate non-compliance ends up being captured, indirectly and very roughly, in the scale weighting, which reflects the size of flows that are attracted by the non-compliance.)

In summary, though, when dirty money comes in, Cyprus' regulators and forces of law and order have deliberately turned their face away.  That is what happens when you allow criminal financial interests to 'capture' your state. And international initiatives have not helped much, it seems: like so much that happens in offshore, it's easy to get good marks. Look beneath the hood, though, and a very different reality appears.

A new report in the EU Observer, focusing on the EU money laundering body Moneyval, is worth quoting at some length:

"Moneyval in 2005 noted that Cyprus also hosts 14,000 offshore firms, 12,000 of which have no physical presence on the island. . . . It [Moneyval] operates by sending a questionnaire to the Cypriot government, which evaluates itself on compliance with international anti-money laundering standards.

It then sends six or so experts who spend three to eight days talking to people in Cypriot government institutions, such as the central bank, Cysec (its main financial regulator) and Mokas (the Cypriot attorney general's anti-money laundering division).

Its last report, in 2011, was described by an independent expert, Tommy Helsby, from the US-based audit firm Kroll, as full of "glowing words."

That sounds good. But what did they actually find?

"Despite the size of Cyprus' financial sector, it said that since 2005 authorities convicted just two people and issued nine orders to freeze accounts in cases focused on money laundering. It noted that "sanctions imposed in practice have been mainly in the form of warning letters." It also said Cyprus lacks the IT and human resources to implement laws."

This EU Observer article is worth reading in full: it's a shocker. Just for instance, in light of the  Magnitsky case:

The plot involved the theft of three Russian firms, which were owned by two Cypriot companies, which in turn belonged to a UK-based investment firm called Hermitage Capital.

The directors of the Cypriot firms in June 2008 sent a complaint and two affidavits, seen by EUobserver, to the Cypriot authorities asking for help. The authorities never replied.

When EUobserver phoned the Cypriot attorney general in January to ask why, he said he is too busy to explain. . . . the Cypriot attorney general did not open a money laundering case until six months after he got the information and now appears keen for it go away." 

Officer and Taki continue:

"Small, close knit societies like Cyprus thrive on a lack of transparency and inadequate regulatory regimes in dealing with their own population. This is the competitive advantage they then use to attract foreign capital."

Quite so. And there's another hard piece of evidence of state capture, which will probably surprise few Cypriots. From Greece's Ekathimerini: 

"According to the revelations, Bank of Cyprus, Cyprus Popular Bank (Laiki) and Hellenic Bank -- which were earlier this week acquired by Greece's Piraeus Bank -- has forgiven companies, MPs and local authority officials millions of euros in loans over the past five years."

That would constitute outright bribery, as a direct route to state capture.

This is exactly, exactly, the sort of thing that Treasure Islands, and our forthcoming paper, describe. The trouble that Cyprus now faces is that there is no plan B now. Other sectors have withered, skills have been lost, none of the polliticians know what to do, the rest of economy has been hollowed out, and even the banking sector is unable to function, since it was only ever a business in pursuit of those easy, secrecy-suffused rents, cosying up to Russians, Ukraininans and others.  Cyprus turned itself into into a dodgy wealth management economy, and many of those skills aren’t transferable to other sectors.

As alternatives wither, political capture deepens, in a self-reinforcing dynamic.

And now, the consequences.

One final note. The countries pointing the finger at Cyprus are vast, unprincipled hypocrites. The UK, Germany, the United States, and many others are all tax havens in their own right. This is true, and raising this issue is our bread and butter. But this does not in any way change the arguments about Cyprus.