"The era of banking secrecy is over" - Gordon

[AtW]

So we agree that you were wrong in using "flowed" in the above post. Great.
Have a nice weekend.

Indeed I spelled that word wrongly.

[ThomasSoerensen]

When a company derives a lot of profits from unpublished tax avoidance this results in misrepresentation of profitable base, essentially investors are mislead as to what makes money and all their predictions are based on flawed assumptions about cash flows.

So we agree that you were wrong in using "flowed" in the above post. Great.
Have a nice weekend.

[AtW]

...

When a company derives a lot of profits from unpublished tax avoidance this results in misrepresentation of profitable base, essentially investors are mislead as to what makes money and all their predictions are based on flawed assumptions about cash flows.

[ThomasSoerensen]

It was big problem actually - when Govt took over and actually read contracts it turned out NR was contractually obliged to do a lot of business with Granite or else big sanctions - so much for due diligence

NR was publicly traded company - the market in my view should have known about such odd arrangement and potential risks it may contain.

You can say it was not Granite that killed NR, but the unnatural structure of business designed to get profits from manipulation of money flows rather than having proper customers is that made their business fundamentally flowed - essentially ability of big companies to save on tax creates false impression on where their profits come from.

...

[AtW]

You're talking about Granite - yes that's true. I think having it offshore was the least of NR's problems though.

It was big problem actually - when Govt took over and actually read contracts it turned out NR was contractually obliged to do a lot of business with Granite or else big sanctions - so much for due diligence

NR was publicly traded company - the market in my view should have known about such odd arrangement and potential risks it may contain.

You can say it was not Granite that killed NR, but the unnatural structure of business designed to get profits from manipulation of money flows rather than having proper customers is that made their business fundamentally flowed - essentially ability of big companies to save on tax creates false impression on where their profits come from.

[bobhope]

Northern Rocks vehicle was in tax heaven - that's why they were able to hide it so well.

You're talking about Granite - yes that's true. I think having it offshore was the least of NR's problems though.

[AtW]

No, you are talking about operations, which is something else entirely. The tax haven issue relates to accounts.

Northern Rocks vehicle was in tax heaven - that's why they were able to hide it so well.

[Not So Wise]

Of course, banking secrecy caused this crisis?

Easy targets that allows them to avoid one of the real causes ie the creative accounting that goes on these days, be it banks hiding liabilities in shell companies or major companies paying little to no tax in their main counties of operations due to them shifting reported profit to low tax (not tax havens) countries

Gov's just don't want to admit the major accountants and tax lawyers have been kicking their ass's and running rings around them for years now

[suityou01]

Its all a sham. Worked for a wealth management firm once. One of their "products" involved tucking the money in a bank acount of a company they created, paying themselves a huge divvy from the interest and giving the client a modest return.

[Doggy Styles]

In a substantial part yes, for example who knew that Northern Rock used murky offshore company that Northern Rock made obligation to buy or sell huge sums of morgages to/from them, otherwise it will be huge ruinous penalties? Any such material agreement should be public - better even banks should not be allow to use any vehicles to keep things off balance, maximum is having a subsidiary in a foreign country (one such company per country), and certainly nothing in countries where they don't do their primary business, ie offshores.

No, you are talking about operations, which is something else entirely. The tax haven issue relates to accounts.

[AtW]

Of course, banking secrecy caused this crisis?

In a substantial part yes, for example who knew that Northern Rock used murky offshore company that Northern Rock made obligation to buy or sell huge sums of morgages to/from them, otherwise it will be huge ruinous penalties? Any such material agreement should be public - better even banks should not be allow to use any vehicles to keep things off balance, maximum is having a subsidiary in a foreign country (one such company per country), and certainly nothing in countries where they don't do their primary business, ie offshores.

[DimPrawn]

Yes it's all the tax havens fault. Terrorists the lot of 'em.

[Doggy Styles]

"We need your money. As much as we can get. We've got bills."

[bobhope]

http://www.telegraph.co.uk/finance/f...ng-crisis.html

Gordon Brown and his fellow world leaders have pledged the biggest crackdown on tax havens, hedge funds and banks in modern history as the price to be paid for the multi-trillion dollar bail-out of the world economy.

"The era of banking secrecy is over", the Prime Minister declared, as the Group of 20 leading nations agreed to impose a new range of regulations on banks and non-bank financial institutions as a punishment for contributing to the crisis.

Of course, banking secrecy caused this crisis?

Allowing governments/tax agencies to go on fishing expeditions is such a good idea.