Tag: International Finance

Busy Day

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Eight. Eight Counts. pic.twitter.com/sowxIlGXu8

— Chris Geidner (@chrisgeidner) August 21, 2018

And the award for best tweet goes to………


And then there is this Doonesbury classic

Trumpsters have not had a good today.

First, Paul Manafort was convicted on 8 counts of fraud, with the jury deadlocking on the remaining 10 counts.  It still means that he is facing decades behind bars:

Paul Manafort, President Trump’s former campaign chairman, was convicted on Tuesday in his financial fraud trial, bringing a dramatic end to a politically charged case that riveted the capital.

 The verdict was a victory for the special counsel, Robert S. Mueller III, whose prosecutors introduced extensive evidence that Mr. Manafort hid millions of dollars in foreign accounts to evade taxes and lied to banks repeatedly to obtain millions of dollars in loans.

 Mr. Manafort was convicted of five counts of tax fraud, two counts of bank fraud and one count of failure to disclose a foreign bank account. The jury was unable to reach a verdict on the remaining 10 counts, and the judge declared a mistrial on those charges.

………

Mr. Manafort faces a second criminal trial next month in Washington on seven other charges brought by the special counsel, including obstruction of justice, failure to register as a foreign agent and conspiracy to launder money.

Bummer of a birth mark, Paul.

Meanwhile, former Trump lawyer, and fixer, Michael Cohen has pled guilty to campaign finance violations at the request as a yet unnamed candidate:

Michael D. Cohen, President Trump’s former lawyer, made the extraordinary admission in court on Tuesday that Mr. Trump had directed him to arrange payments to two women during the 2016 campaign to keep them from speaking publicly about affairs they said they had with Mr. Trump.

 Mr. Cohen acknowledged the illegal payments while pleading guilty to breaking campaign finance laws and other charges, a litany of crimes that revealed both his shadowy involvement in Mr. Trump’s circle and his own corrupt business dealings.

 He told a judge in United States District Court in Manhattan that the payments to the women were made “in coordination with and at the direction of a candidate for federal office.”

 “I participated in this conduct, which on my part took place in Manhattan, for the principal purpose of influencing the election” for president in 2016, Mr. Cohen said.

 The plea represented a pivotal moment in the investigation into the president, and the scene in the Manhattan courtroom was striking. Mr. Cohen, a longtime lawyer for Mr. Trump — and loyal confidant — described in plain-spoken language how Mr. Trump worked with him to cover up a potential sex scandal that Mr. Trump feared would endanger his rising candidacy.

The New York Times editorial board released an OP/ED titled, “All the President’s Crooks.”

I think that we shortly have a race to prosecutor by people trying to avoid jail time.

I really hope that Cohen flips.

This is almost too much schadenfreude.

Bummer of a Birthmark, Paul

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We’ve had a 2nd day of testimony by Rick Gates, Paul Manafort’s former partner and protege, and it ain’t pretty.

He testified that he conspired to break the law with Paul Manafort, AND he embezzled from Paul Manafort.

Sharper than a serpent’s tooth, neh?

Rick Gates, the star witness in Paul Manafort’s fraud trial, admitted that he stole money from his former boss to pay for an extramarital affair, lied to Special Counsel Robert Mueller, and may have submitted false expenses to President Donald Trump’s inaugural committee.

But even under two hours of withering cross-examination, Gates stuck to his basic account, insisting that he’s telling the truth now about how he helped Manafort hide millions of dollars from U.S. tax authorities and lie to banks to obtain loans.

Gates, who pleaded guilty and is cooperating with Mueller’s prosecutors, has testified over two days, detailing his criminal conduct in helping Manafort hide the money he made as a political consultant in Ukraine. He said he lied to Manafort’s accountants and bookkeepers, used offshore accounts in Cyprus to move millions of dollars for him, and fabricated several documents to deceive banks when his boss was drowning in debt.

Manafort’s lawyer Kevin Downing mocked and belittled Gates, browbeat and embarrassed him, and branded him repeatedly as a liar unworthy of the jury’s trust and respect. Gates wobbled in the first hour and appeared uncertain, but he regained his footing in the last hour of questioning.

“I’m here to tell the truth,’’ Gates said. “I’m taking responsibility for my actions. Mr. Manafort had the same path. I’m here. I’ve accepted the responsibility, and I’m trying to change.’’

Downing began undermining Gates’s credibility in federal court in Alexandria, Virginia, even as he faces the arduous task of overcoming a raft of emails and other documents that suggest Manafort’s guilt.

Downing suggested that Gates stole $3 million through 40 wire transfers from Manafort’s accounts in Cyprus. Gates admitted to stealing hundreds of thousands of dollars. He said Manafort authorized some of the transactions, although he couldn’t identify which ones. The question of just how much Gates stole from the brilliant political strategist who initially hired him as an intern out of college was left unresolved.

Even with a nut job as a judge,  U.S. District Judge T.S. Ellis III has a long history of eccentric behavior, it seems to me that Manafort is, “Attached to another object by an inclined plane, wrapped helically around an axis.” (Screwed)

England Doesn’t Need the City of London Either

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The EU’s chief negotiator has stated that the EU does not need the City of London, and has no plans to create a special relationship with the UK financial sector. (FYI, the City of London is a 1 square mile area which is the heart of the British financial industry, the City of Londonis to London as Wal Street is to New York City)
No one needs the City of London except for a a small number of overpaid prats in Savile Row suits.

Finance is has become increasingly parasitic as it has grown to subsume larger portions of the UK (and US) economy, and the City of London is even worse than Wall Street, because while they both spend much of their effort on speculative activities of little or no benefit, the City of London’s special products are money laundering and tax evasion, which benefits no one:

The EU does not need the City of London, and Theresa May’s “pleading” for a special deal for the UK’s financial services sector will not be rewarded, the EU’s chief negotiator, Michel Barnier, has said.

In his toughest rebuff yet to the demands made by the British prime ministerin her landmark Mansion House speech, Barnier suggested the City would be granted nothing more generous than that enjoyed by Wall Street.

“Some argue that the EU desperately needs the City of London, and that access to financing for EU27 business would be hampered – and economic growth undermined – without giving UK operators the same market access as today,” Barnier said at a meeting of finance ministers in Sofia, Bulgaria. “This is not what we hear from market participants, and it is not the analysis that we have made ourselves.”

I am not surprised at Barnier’s comments.

The EU has plenty of expertise in tax evasion, it constitutes almost the entire economy of Luxembourg, and money laundering ain’t rocket science.

The Brexit could be an opportunity for the British to turn their economy toward more productive and more honest endeavors, with the added benefit of reducing inequality, but the Tories hate that idea, and they are in charge, for a while, at least.

Tory Government in a Nut Shell

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The UK Government refused to cooperate with a French money laundering investigation because the company being investigated was a major donor to the Conservative Party:

The British government refused to assist a French investigation into suspected money laundering and tax fraud by the UK telecoms giant Lycamobile – citing the fact that the company is the “biggest corporate donor to the Conservative party” and gives money to a trust founded by Prince Charles.

French prosecutors launched a major probe into the firm and arrested 19 people accused of using its accounts to launder money from organised criminal networks two years ago, after BuzzFeed News revealed its suspicious financial activities in the UK. But the Conservatives continued taking Lycamobile’s money – and it can now be revealed that the British authorities stonewalled a formal request from French prosecutors to carry out raids in London as part of the ongoing investigation.

Confidential correspondence between British government officials and their French counterparts, shown to BuzzFeed News by a source in the UK, reveals that the French wanted British authorities to raid Lycamobile’s London headquarters last year and seize evidence as part of their investigation into money laundering and tax fraud by the company.

In an official response dated 30 March 2017, a government official noted that Lycamobile is “a large multinational company” with “vast assets at their disposal” and would be “extremely unlikely to agree to having their premises searched”.

The letter, from the team at HMRC (Her Majesty’s Revenue and Customs) that handles law enforcement requests from foreign governments, continued: “It is of note that they are the biggest corporate donor to the Conservative party led by Prime Minister Theresa May and donated 1.25m Euros to the Prince Charles Trust in 2012.” The email referred to Lycamobile’s donations to the British Asian Trust, which was founded by the Prince of Wales to tackle poverty in South Asia, not to his youth foundation The Prince’s Trust which has never received any money from Lycamobile.

………

When BuzzFeed News first approached HMRC to ask about its response to the French request, the agency’s senior press officer strongly denied that Lycamobile’s donations would ever be cited as a reason not to conduct criminal raids. “No HMRC official would ever write such a letter,” he said. “This is the United Kingdom for God’s sake, not some third world banana republic where the organs of state are in hock to some sort of kleptocracy.”

However, after verifying the contents of the email seen by BuzzFeed News, another HMRC spokesman said that it was “regrettable”.

Translation, we regret that we have been caught.

Lord (Ken) Macdonald, England’s former director of public prosecutions, said the government’s response to the French request for assistance represented “a descent into banana republic law enforcement” – and called on the UK authorities to cooperate fully with the investigation. “It would be beyond worrying if HMRC were to regard the payment of political donations as a shield against criminal investigation,” he said. “Obviously the fact that a company may have the resources to challenge HMRC’s actions in court is not a reason for authorities to back off. Otherwise, wealthy organisations would be beyond the reach of the law.”

Gee, you think?

This is not a surprise.  The Tories and the Blairite New Labour have made financial corruption and money laundering the center (or centre) of their economic plans, and this is the inevitable result.

A Good Point on the Qualcomm/Broadcom Mess

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It’s has the kibosh put on this because CFIUS determined that it was a threat to US security.

This was not because the Singaporean firm Broadcom was a security risk by its actions or its location, but because it is aggressively leveraged to grow through acquisitions, while Qualcomm invests heavily in technology.

They explicitly said that the Private Equity/Hedge Fund type operations constitute a threat to American technological accomplishments, because it results in disinvestments.

The only conclusion that one can reach then is that the whole Private Equity/Hedge Fund business model is a threat to America:

By the normal standards of U.S. national security, the government’s ruling on Tuesday to delay and potentially derail the acquisition of high-tech company Qualcomm by the Singaporean company Broadcom was startlingly smart and gobsmackingly wonderful.

 It was smart because it extended its definition of U.S. security interests to maintaining our advantage in the development of the most advanced forms of technology, in this case, the 5G communications systems that will be critical to both driverless cars and network security in coming decades. The government’s Committee on Foreign Investment in the United States (CFIUS for short) wrote that it feared that if Qualcomm, the nation’s leading developer of 5G technology, were purchased by Broadcom, its research would suffer and a Chinese high-tech company, Huawei, would likely surge past it to become the global leader in security technology.

 In the past, CFIUS has blocked several Huawei attempts to purchase U.S. tech companies because they would have involved the transfer of security-related technology to a company that CFIUS has demonstrated has ties to the Chinese military. CFIUS—an interagency committee headed by the Treasury Department, but also consisting of more than a dozen departments and agencies, ranging from Defense to Commerce—is in the business of ruling on potential foreign purchases of U.S. companies that have national security implications. Tuesday’s ruling was groundbreaking in that the issue wasn’t whether Singapore’s Broadcom itself posed a security risk by favoring the Chinese—nothing in the CFIUS letter even hinted at that—but rather, that the purchase might simply reduce Qualcomm’s capacity to conduct high-end research, thereby enabling Huawei and the Chinese to develop advanced technology before we do, which could give them a military advantage.

 But why would Qualcomm’s purchase by Broadcom diminish Qualcomm’s commitment to research? This is the gobsmacking part of the CFIUS letter.

 Because, in the words of the letter, “Broadcom’s statements indicate that it is looking to take a ‘private-equity’-style direction if it acquires Qualcomm, which means reducing long-term investment, such as R&D, and focusing on short-term profitability.”

 Let that sink in for a moment. The staffers of CFIUS—probably the most business- and security-savvy civil servants in the government, headed by those at Treasury—are saying that the private-equity control of companies, which is a dominant feature of current American capitalism, reduces investment and results in profit extraction. CFIUS does not go on to say that the purchase of U.S. companies not only by foreign companies but by U.S. private equity firms, too, also leads to reduced investments and the kind of profit extraction that has enriched the 1 percent at the expense of other Americans; that’s not CFIUS’s mission. But having baldly stated that private equity leads to profit extraction, that’s the inescapable conclusion that any reader of CFIUS’s letter must reach.

The CFIUS letter goes on to specify the way in which Broadcom follows the private equity model of purchasing companies by taking on debt, and paying off that debt by reducing expenditures and funneling revenue into profits. “Broadcom has lined up $106 billion of debt financing to support the Qualcomm acquisition,” CFIUS writes, “which would be the largest corporate acquisition loan on record. This debt load could increase pressure for short-term profitability, potentially to the detriment of longer-term investments. The volume of recent acquisitions by Broadcom has increased the company’s profits and market capitalization, but these acquisitions have been followed by reductions in R&D investment.”

This is not something I would expect from the Trump administration.

I can only conclude that the higher ups only read the recommendations, and not the explanation.

The way I would, and have, put this, is that, “There is nothing that cannot be ruined by an application of modern American Financial techniques.”

Things that Make you go HMMM………

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Here’s another thought though:

The Treasury Department is part of the IC. Yet it never has to come testify to talk about the World Wide Threats that things like tax havens create. Why is that?

— emptywheel (@emptywheel) February 12, 2018

(IC=Intelligence Community)

“The fight against global terror is sacrosanct, but the ability of the rich to dodge taxes in offshore accounts is more sacrosanct,” he said paraphrasing Animal Farm.

A Correction

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Today I opened up my email, and I had a demand letter from GIP Development SARL, a firm that IP licensing and regulation management.

I will not be reposting this email, as it was listed as confidential, but they had a complaint about a post of mine regarding vulture funds targeting Argentine bonds.

I made an error, and have corrected my post.

In researching the vulture funds, I conflated two different, but similarly named financial firms that turned up in my google search.

Dr. Dirk Markus has no connection to Aurelius Capital Management LP, the vulture fund in question. 

He is  the CEO of Aurelius Equity Opportunities, which is a completely unrelated financial firm, and is not involved with the attempted looting of Argentina in any way.

My apologies for calling for his arrest and extradition to Buenos Aires.

As an aside, this is the first time that I have gotten anything this close to a cease and desist letter from a lawyer, and on some deep and perverse level it makes me feel important.

Gawd, I am so unbelievably lame.

But the House of Saud Must Be Protected

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A sensitive report on terrorist funding is likely to be suppressed because it calls out the House of Saud’s role crucial in fomenting terrorism:

An investigation into the foreign funding and support of jihadi groups that was authorised by David Cameron may never be published, the Home Office has admitted.

The inquiry into revenue streams for extremist groups operating in the UK was commissioned by the former prime minister and is thought to focus on Saudi Arabia, which has repeatedly been highlighted by European leaders as a funding source for Islamist jihadis.

The investigation was launched as part of a deal with the Liberal Democrats in exchange for the party supporting the extension of British airstrikes against Islamic State into Syria in December 2015.

Tom Brake, the Lib Dem foreign affairs spokesman, has written to the prime minister asking her to confirm that the investigation will not be shelved.

………

The Lib Dem leader, Tim Farron, said he felt the government had not held up its side of the bargain made ahead of the vote on airstrikes. The report must be published when it was completed, he insisted, despite the Home Office caution that information in the document would be sensitive.

“That short-sighted approach needs to change. It is critical that these extreme, hardline views are confronted head on, and that those who fund them are called out publicly,” he said.

“If the Conservatives are serious about stopping terrorism on our shores, they must stop stalling and reopen investigation into foreign funding of violent extremism in the UK.”

We fight terrorism, and we cleave to the Persian Gulf potentiates who fund terrorism.

Seriously:  It’s time to fish or cut bait.

Headline of the Day

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What Is ‘Global Britain’? A Financier and Arms Merchant to Brutal Dictators

—Nick Dearden in an OP/ED in the Guardian

This is a pretty good description of what the UK’s global footprint these days.

For a very long time, the UK has aggressively moving away from productive work and toward a financialized economy which is little more than a vehicle for parasitism.

It is what is happening to the US as well, but it’s not moving quite as quickly, if just because our government is less centralized, and because our economy is so much bigger.

He’s Gonna Fold Like Overcooked Broccoli

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Greek PM Alex Tsipras is insisting that he will go no further with austerity.

While I agree with his sentiments, Angela Merkel and her Evil Minions™ have turned Greece into the world’s largest debtor’s prison, Tsipras has been saying this for years now, and when push comes to shove, he folds:

Greek Prime Minister Alexis Tsipras dug in against creditor demands for more pension cuts and tax increases before a meeting of euro-area finance ministers to unblock the country’s bailout review.

“There is no way we are going to legislate even one euro more than what was agreed in the bailout,” Tsipras said in an interview with Efimerida ton Syntakton, to mark the two-year anniversary since he was elected on an anti-austerity platform. “The demand to legislate more measures, and contingent ones, no less, is alien not just to the Greek Constitution but to democratic norms.”

Euro-area finance ministers will discuss Greece when they meet in Brussels on Thursday, with Greece and officials representing the European Commission, the European Central Bank, the European Stability Mechanism and the International Monetary Fund locked in a stand-off over how to complete the country’s second bailout review, now a year behind schedule. The IMF, in particular, views the projections shared by Greece and the European creditors that the country can reach a primary budget surplus of 3.5 percent of gross domestic product by 2018 as too optimistic.

The IMF will make noises about the unsustainability of the program, but will then break its own rules and go along.

The Greeks will protest, and then capitulate.

Angela Merkel will use her “toughness” as a cudgel in the next round of elections.

The Greek people will continue to suffer.

Bet on it.

Our Foreign Policy is Going Swimmingly

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Despite US sanctions, Russia is now top wheat exporter, proving sanctions won’t work – MarketWatch:

Wheat, the world-feeding crop whose shortage was Pharaoh’s nightmare, is now at such a global surplus that last month its price was less than two-thirds its level in 2008.

………

Wheat prices have plummeted not for a circumstantial reason, like weather-driven bumper crops, nor for a cyclical reason like a major buyer’s recession. Though some such factors have been at play in this market, they were marginal compared with the structural fact that Russia, once an agricultural laggard, has joined the industry’s leaders — big time.

The first meaning of this far-reaching development is not about Russia’s place in the world, but about the commodity markets’ beauty.

………

Blessed with endless expanses of exceptionally fertile land known as “black earth,” Russia is doing to the grain markets what shale did to oil.

Russia’s annual wheat output, which 20 years ago was just under 35 million metric tons, is expected to cross the 70 million metric ton barrier this year. Nearly half that volume will be exported, making Russian media celebrate Russia’s emergence as the world’s largest wheat exporter.

This is the same Russia that, back when it was under Soviet management, depended on Western grain imports because it failed to use its rich soil to feed its people, a glaring embarrassment that mocked Moscow’s imperial ambitions and inspired its younger leaders’ economic heresy.

………

Now, the markets attest that Russia’s agrarian reform has been a smashing success, so much so that U.S. government charts show that Russia has just surpassed Uncle Sam in wheat production.

………

Russia’s new agricultural prowess has just made its farm exports surpass its arms sales for the first time ever. Earning $20 billion abroad last year, 15% more than the previous year, agriculture’s evolving centrality in the Russian economy is evidently part of a governmental design.

Modern Agriculture, like pretty much everything else, runs on credit, and theoretically, the international credit markets have been inaccessible to Russia, but they are now the largest exporter of wheat in the world.

Our sanctions were supposed to prevent this, but they don’t because we’ve worn out the proverbial batteries.