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THE DOMINICAN REPUBLIC REPORT now on-line: . We have been flooded with inquiries about how to order the Dominican Republic Report since the demise of the company handling our orders for us. The nice people at Escape Artist have put the finishing touches in place and you can now order the report on-line for the downloadable PDF version (which allows you to read it on your own computer or print it out on your home printer) for less than 50% off the hard copy version. Of course, for those people that would still prefer the hard-copy, you can still send a US Dollar check or money order to the address mentioned on our web site: . http://www.ascotadvisory.com . To Order the Downloadable Version from The Escape Artist: . http://www.escapeartist.com/e_Books/Residency_Report.html . . IN THE NEWS: (AKA unbelievable, but true) . . FOX News Reports: US State Department Consulate Employees in Qatar Caught selling US travel visas for US$10,000 each: From the on-line story (and link below) - July 11, 2002 . . The timing of Ryan's departure links closely to the announcement that "Operation Eagle Strike", an investigation led by Diplomatic Security, has uncovered that at least 71 people were illegally issued visas from the U.S. embassy in Qatar. DS, together with the FBI and Immigration and Naturalization Service, has been investigating the visa fraud charges since Nov. 2001 after it learned that 38 Jordanians, 28 Pakistanis, three Bangladeshis, and one Syrian had all bought visas and were also linked to the terrorists responsible for the Sept. 11 attacks. In fact, one of the men with an illegal visa, Ramsi Al-Shannaq, roomed with two of the Sept. 11 hijackers. Shannaq, who showed up in court Wednesday for overstaying his visa, denied the charge that he paid $10,000 for the papers. His lawyer said that the fact that he roomed with two of the hijackers does not implicate him in any way. . http://www.foxnews.com/story/0,2933,57453,00.html . EDITORS NOTE: We reported on numerous occasions that corruption in US consulates is nothing new, and have often spoke about the practice of selling US visas at many American Consulates in Latin America, (the US Consulate in Guatemala especially as one example to highlight). Consulate employees are often rotated every two years, and I tend to think this is meant to prevent anyone from getting too comfortable. After all, when you are assigned to a new country, it takes time to get settled in, get to know the local people and make business contacts, etc. In short, I tend to think the US State Department is well aware that this goes on, and has gone on for some time. For those that claim many smaller nations in Latin America, and elsewhere, are corrupt (and that the US is not), I give you Mary Ryan as mentioned above. Even if she herself did not engage or benefit from the practice of selling visas, she was in charge. On another note, I have heard that some US State Department employees working in consulates hold the view that this is an opportunity to earn extra income and fund their retirement (considering the fact they feel they are underpaid). For me, this is just another example of government and public civil servants at work (to protect and manage your future and safeguard US tax payer funds, or not). I wonder what the folks at Social Security are up to? Perhaps many are manipulating the computer system so friends and relatives are put on the system to get monthly checks they are not entitled to? Sound like a far-fetched possibility - or is it really so far-fetched? If US Government civil servants working for the State Department are selling visas, one must wonder what else they are up to. . . IN THE GOD BLESS AMERICA CORNER: . NYC workers stole millions after Sept. 11, DA says - August 6, 2002 Posted: 3:33 AM EDT (0733 GMT) . NEW YORK (AP) -- In one of the largest fraud cases resulting from the terrorist attacks, thousands of people are accused of using ATMs to steal $15 million from a municipal employees' credit union whose computer security system was damaged on Sept. 11. Sixty-six people have been arrested and 35 more were being sought in the scheme, authorities said Monday. As many as 4,000 people manipulated the system to overdraw their bank accounts by at least $1,000. Of that group, more than 540 credit union members exceeded their balances by more than $5,000. According to authorities, a 54-year-old nurse made 54 cash withdrawals from September 18 to the end of October, leaving her with a negative balance of $18,111. The problem stems from September 11, when the attack on the World Trade Center damaged a nearby building housing the credit union's computer system. Credit union officials soon realized they could not properly monitor the computer network that handles automated teller transactions. But they decided to allow withdrawals without the normal banking safeguards so they would not offend members affected by the tragedy. . http://www.cnn.com/2002/LAW/08/06/attacks.atm.fraud.ap/index.html . . ALSO, IN THE WHERE IS THE MONEY COMING FROM CORNER? . The US Government promises US$50 Million Dollars to Indonesia. Indonesia gets US$50 Million while Social Security remains broke and politicians refuse a plan to include prescription drug expense coverage under Medicare (in part due to the cost or argument they have no money) - Very Interesting. Read the on-line story from CNN here: . http://www.cnn.com/2002/WORLD/asiapcf/southeast/08/02/indonesia.powell/index.html . . If the US invades IRAQ, aside from the initial cost of a military operation, it has been estimated that it would cost US$ BILLIONS for US troops to remain in IRAQ and rebuild the country. Billions of dollars, that's a lot of money and the question is - Where will it come from, especially now during a so-called double dip recession? Read the on-line story here: . http://www.cnn.com/2002/ALLPOLITICS/08/01/iraq.senate.ap/index.html . . In the IT NEVER ENDS corner, Duke Energy (a NYSE listed company) is yet another American Company that now admits to a little creative cuisine with its books and records. Read the on-line story here. . http://www.foxnews.com/story/0,2933,57833,00.html . EDITORS NOTE: Many clients often ask me - How safe is it to invest in companies in the Dominican Republic (or elsewhere)? My question is - How safe is it to invest in US companies? . . ONLY IN AMERICA: Lawsuits abound for School Teachers that do not issue passing grades for students that fail in their studies. Read the on-line story here: . http://www.foxnews.com/story/0,2933,59330,00.html . EDITORS NOTE: It would seem that the US is the only place in the world where School Teachers can be sued for doing their job. The US Government has blasted many countries for their so-called poor educational systems, yet who in their right mind would want to be a School Teacher in the US? The problem of course is not the educational system, but rather the Judges and Legal System that allows such lawsuits to be given the time of day in the first place. . . Americans are now encouraged to spy on their neighbors - TOLL FREE. This new program, organized by the US Justice Department and under the auspices of the new CITIZENS CORPS allows everyone to become a junior G-Man. Read the on-line story: . http://www.foxnews.com/story/0,2933,57874,00.html . EDITORS NOTE: Some people may think this is a good idea, but knowing what I know about American Culture, I would say many people will take the opportunity to work out grievances with their neighbors. Take for example, the Sate of New Jersey and the state government run child protection program, known as DYFS (or some similar acronym). In any event, the point is, if you live in New Jersey and want to screw with your neighbor (assuming they have children), all you have to do is call up anonymously and report some kind of child abuse. The nice folks from the state will come unannounced and take the children away for 3 days, pending an investigation. Now of course, with this new Justice Department Program, you have the opportunity on a national level to report that your neighbor Mr. Smith, for example, was seen buying some strange wires and explosive materials from Home Depot. Considering that they now can lock you up indefinitely without charges under the auspices of the Patriot Act, I wonder what kind of nonsense might be in store? By the way, this is the kind of thing that goes on in countries, such as Cuba, under their current regime. So, if you want to know what it's like to live in Cuba, it sounds like to me, there is a very real possibility that you will (without ever traveling). . . READERS WRITE IN: . . In Reply to Our Last Bulletin: . Hello, John. . NYC has never been a brain trust of the US in the last century. In the late 70s, a survey was done in the five boroughs asking when Columbus supposedly discovered "America". Around 95% of the people surveyed had no idea. This was at a time when most people were still reasonably educated at public schools in most places in the US. However, this sort of ignorance is completely widespread now. . EDITORS REPLY: Well, if I remember correctly, the middle-aged lady interviewed claimed to be a tourist from Georgia, so I guess it is hard to say if this is only indicative of New York alone. However, I will say that widespread ignorance is a very dangerous thing. I will also say, without trying to sound elitist, that these are types of people in the majority that think everyone thing is fine and that the public should trust the government in all matters, (including the management of their money with respect to things like pension programs - ex. social security). Quite frankly, such people probably should give the government ALL of their money and be told what to do. What I do not like is the idea that such a concept should be imposed on the rest of us, who can still think for ourselves and prefer to continue doing so. . . Another Reader Writes: . Dear John: . I just returned home from checking the mail at Mailboxes, Inc. One of the items I received today was a box from Amazon.com - a book on Bear Market Investing. I noticed that the box was completely covered in clear tape and remarked to the clerk that there was so much tape on it, I would never be able to get it open. She looked at the box and said very casually, "Oh, it was probably opened for inspection by UPS." I was shocked and said, "Why would they open a box that was sent directly to me from Amazon?" She said, "They open everything now - looking for anthrax probably. UPS and FedEx routinely open packages and the USPS is now opening all Priority Mail items. If we (employees of Mailboxes, Etc.) think a customer is acting 'shady' then we put a Target Mail label on their mail and it will be opened and inspected." . I suppose that our benevolent government was so worried that Amazon was going to send anthrax through the mail to me (an unsuspecting, model citizen) that they just had to open it and check!!!! . John, I am a middle-class, middle-aged American mother and grandmother who never hurt a fly. Why is my privacy being violated by an inept government that can't even balance their own budget and administer a sane foreign policy so their citizens are safe from attack? America is fast becoming a police state and it's citizens are fast becoming paranoid (I certainly am)! Perhaps it is time to leave and seek a better life elsewhere. . EDITORS REPLY: Welcome to the NEW United States of America. My guess is that Thomas Jefferson has turned over so many times in his grave already, that he has dug himself halfway to China. While I certainly do understand the need for certain kinds of security in an uncertain world, I do not think that the perceived sense of increased security measures at the expense of civil liberties is the answer. In fact, I think time would be better spent watching the State Department employees at US Consulates who are selling visas than opening everyone's mail, but that is just my opinion. . . Another Reader Writes: . John, . While reading one of your articles in the last newsletter which I enjoy receiving very much I thought that I heard reference to the mention that Puerto Ricans did not pay US Income tax, is that true? . EDITORS REPLY: Puerto Rico has the distinction of being classified as a commonwealth, although interesting enough, so is Massachusetts and Pennsylvania. However, because Puerto Rico is NOT a state and by the way does not have publicly elected representatives to Congress, the relationship is technically and I suppose you can say legally different than that of any other US State. In short, the bottom line is, that while Puerto Ricans of course pay income taxes to their local government, Puerto Ricans living and working in Puerto Rico do NOT pay US Federal Government income tax. In fact, this has always been one argument in the debate to make Puerto Rico a state, as many claim they certainly take more than their fair share in US Federal Government money (without paying in via US Federal Income Taxes). On another side of the coin, Puerto Rico actually collects rent from the US Federal Government, specifically in the case of US military bases on the island, which of course is something they claim they now all of a sudden do not want (US military presence). Go figure. . . Another Reader Writes: . Dear Mr. Schroder, . Just this week, the UK government announced a white paper outlining plans to end the right of trial by jury for a large number of cases. One reason given was that in some trials there could be the chance of jury intimidation. It occurs to me that all the prosecution has to do is to shout out about the accused being a member of some top ranked group of villains and hey presto, the accused gets to sit in front of a magistrate who: has access to the accused previous criminal (and who knows what other) records and may well have his own interpretations of laws that will go unchallenged by a defense council in front of hopefully unprejudiced members of the public. Magistrates may also hear other cases instead of juries because of their 'complexity'. I am just a stupid man, but who is going to appoint themselves the arbiter, of what is to be considered complex? . There is also going to be the possibility of retrials when 'compelling new evidence' comes to light. While there is no doubt numerous counts of discoveries of evidence coming to light after a trial, I feel that this is another move toward a totalitarian state. . I wish to compliment you on your web site. I am a newcomer to the ideas of tax havens and have learned much from your site already. I, like many others, tend to go where I feel safest and believe me that even though I am a child of the cynical seventies and have been an expatriate us citizen for thirty years, it does scare me when I think of going offshore. Not because I feel that the US or UK institutions are safer, better regulated than elsewhere, but simply because I grew up on the south side of Chicago and always knew that local knowledge and a heads up attitude were the best ways not to get your wallet pinched. I am hoping to continue the process of self-education regarding the offshore move and to be in contact with you at some point for your professional services. If I could ask one question, where can you find info re the credit worthiness of offshore banks, like the Weiss Foundation in the US, and is that info of any practical use? Once again, thank you Mr. Schroder for your web site. I hope the info given above is of some practical use for your column. . EDITORS REPLY: Thank you for the information regarding the UK, as I was not aware of it. However, it is certainly very interesting to note that it would seem the one country on earth that originally developed the concept of trial or judgment by one's peers should now go in another direction. In reply to your banking question, you are correct in that it is difficult to find rating services that you might find in the US or elsewhere with respect to banks and other financial institutions (located outside of the US or Europe). However, there are quite a number of very good business magazines that offer analysis and rankings. In fact, there was a very recent article that ranked the size and strength of almost all the banks in Latin America (including the Dominican Republic). The downside of course is that it is a Spanish language publication, but such information is out there (although not in the same format, from a rating service, as might be available in the US). . . Another Reader Asks: . If you have an offshore company, yet do not perform activities in that country, therefore are not subject to taxes in that country, and do work around the world, do you have to pay taxes and if so where? . EDITORS REPLY: This is a very interesting question. One must understand a few things first. One thing is that you must separate issues such as local taxation (where you may have your company domiciled or conduct your banking or other business) and taxation matters that may or may not apply to your home country of citizenship or residency (as perhaps a director or shareowner of the company). For example, there are many countries that do not impose local corporate income tax on company earnings derived from outside the country (Panama is just one example, Bermuda yet another). In fact, this was behind the idea of Stanley Works (Stanley Brand hammers, tools, etc.) to domicile the company in Bermuda. Why? Because, while Stanley knew they still would be liable for US income tax on earnings derived from sales inside the US, BUT they would get a break in Bermuda (pay no corporate income tax) for sales or profits earned outside of Bermuda (and outside of the US). Of course, the US Government currently taxes American companies on ALL profits or earnings regardless, so one might say that Bermuda has a fairer system of taxation than does the US and thus the advantage to move the company to Bermuda. . In any event, the short answer is that YES - it is very possible to take advantage of the tax regulations that exist in a number of countries and this is the whole point (and what larger American companies have been doing for years). Of course, now it is the case that small businessman and individuals are becoming aware and this is what has the US Government scared out of their wits, which is another topic altogether. Getting back to the discussion, we have already said that many countries will not tax you if your company profits or earnings are derived from somewhere else. In addition, having a bank account for the company (or merchant account) is not considered a commercial activity in many countries as well. So it is also true one may be incorporated in Country A, do their banking in Country B, and not have a tax liability in either country. Taking this idea one step further, it may also be true that if you are marketing a product via mail order or completely consulting work or some other kind of service in yet another country (Country D) then you may not have a tax liability there either. For example, let us say you do have a Panama Company that prints company brochures, and a company in Italy hires you to print brochures for them. You are not an Italian Company, and do not have any physical or other kinds of presence in Italy and therefore do not have any tax connection to the Italian Government. It is just a simple case of a company (or person) in one country contracting for services with a company in another country. As a result, your company is incorporated in Country A, you bank in Country B and are selling a product or service to a client in Country D. All the way around, you do not have a tax liability in either of the three. The nations that are very hungry for tax revenues would like to change all of that, but it is a steep uphill battle. In addition, how do you force one country to stop doing something that is beneficial for their economy, (such as offering tax-free banking for foreigners as just one example)? So, in short, I do not see this going away, plus the Pandora's box of E-Commerce and on-line banking has already been opened up, so good luck trying to now close it. . . Another Reader Asks: . My Question Is If I can Benefit from The free zone Benefits if I am Not In a Free Zone Park? Example: If I have my own Building outside the free zone park? . EDITORS REPLY: The Dominican Government has and will offer a Free Zone status to companies that for whatever reason cannot have their business located inside one of the existing Free Zone compounds. For example, let us say you have a business that requires a large amount of space, or have a business that physically needs to be located near other facilities. A concrete example might be a flower farm. Let us say you want to set up an agricultural business growing exotic flowers strictly for export purposes (to compete with the export flower market in Columbia, Mexico, etc. - By the way, about 80% of the flowers sold at florist shops inside the US are imported from countries such as Columbia, which is to say that flowers are a big business). In any event, you might need 20 acres of land suitable for agricultural for such a business, and such a business might create a large number of local jobs in the process. So, while I certainly cannot guarantee what the Dominican Government would approve or not approve, I can say that the chance is very high they would offer and approve a special Free Zone license status for the example I just mentioned. . . Another Reader Writes: . John, . I am back home at the swamp. I truly enjoyed my visit to D.R. I was extremely impressed with banking system, both the physical plants and the officers I met. Of course, I fell in love with the country itself and with the people I met. Virtually all were so very friendly and helpful. I thought you might enjoy this bit of humor regarding the WorldCom situation: . For those who can't understand the WorldCom case, this is put in the simplest form so that every one can understand. . An old country farmer with serious financial problems bought a mule from another old farmer for $100, who agreed to deliver the mule the next day. However, the next day he drove up and said, "Sorry, but I have some bad news: The mule died." "Well, then, just give me my money back." Can't do that. I went and spent it already." "OK, then. Just unload the mule." "What ya gonna do with a dead mule?" "I'm going to raffle him off." "You can't raffle off a dead mule!" "Sure I can. I just won't tell anybody he's dead." A month later the two met up and the farmer who sold the mule asked, "Whatever happened with that dead mule?" "I raffled him off just like I said I would. I sold 500 tickets at $2 a piece and made a net profit of $898." "Didn't anyone complain?" "Just the guy who won, So I gave him his two dollars back." . EDITORS REPLY: Thank you for your comments and of course the amusing story. . . Another Reader Writes: . I came across the following in the most recent issue of "Vault" (formerly Offshore Finance Canada). Sorry no link. Can you provide more information on this program, particularly the information exchange? Programs focused on money laundering inevitably come to include a focus on aggressive tax planning it seems. . Cracking Down: . In an effort to stamp out money laundering, Panama recently launched an ambitious US$1.2-billion, two-year program. Panama's Banking Superintendency says the program includes more effective monitoring and reporting of suspicious transactions, more information exchange, tougher prison sentences and the establishment of a regional committee to improve regulation of the banking sector. Panama's free trade zone, casinos and gaming halls will also come under increased scrutiny. . EDITORS REPLY: Well, I have answered some questions and have given my opinion about Panama in the recent past (based upon what I know and the people I know), so some of my previous comments can be found on-line from our other Weekly Update bulletins. However, I will generally say, YES - you are correct this is all about tax collection for those governments going broke, and I will also say watch what countries actually do and not what they say to appease the US. Many smaller nations are in a difficult situation politically regarding the US, however they are not so foolish to completely do something to put their own economy into the crapper. Publicly, many politicians and business leaders have said certain things, but privately they have a different perspective, as they do understand what is going on. . . Another Reader Writes: . Dear John, . I was just curious to know what your feelings are regarding the effect of Dr. Balaguer's death on the Dominican economy and government, this past Sunday morning. My understanding is that he was influential in the election process and that Dominican political leaders would turn to him for advice on a consistent basis. From the reaction seen on the news, its clear the people loved him very much. What do you think? . EDITORS REPLY: Dr. Balaguer was of course an important part of Dominican history, and as a person of political power for such a length of time, he did have an important influence. However, one must remember that one man does not make a country, especially in a democratic country with a number of political parties and other political leaders. He was well respected and loved by some, and disliked by others, just as any political leader. I would say, to answer your question directly, NO his death will not have any particular effect on current politics or the economy. This is true just as the US did not dry up and blow away when President John F. Kennedy was killed, another extremely popular and vibrant public figure from US history. In addition, even though many other political leaders did often seek his consultation and advice (speaking of Dr. Balaguer), he was a very elderly man that was out of active public office for a number of years. I guess a better analogy would be found with Ronald Regan and any effect his death has on the US economy or politics. . . Another Reader Writes: . John, . http://www.washingtonpost.com/wp-dyn/articles/A47913-2002Aug5.html . I have never been much of a believer in conspiracy theories beyond the word theory. The US has certainly had some good potential conspiracies over the years. The beginning of WWII is a good example of a big pile of circumstantial evidence, but it is just that, circumstantial. That kind of evidence is not enough for a conviction in a (fair) court of law. So for me, it is not enough to become a believer in such things either. The long going conspiracy of Oil is another good one. But one that is getting an awful lot of new evidence. Afghanistan was sold as the revenge of 911. Even though the Talaban were not the same thing as Al Queda, they got blasted as an easy target. Not cooperative enough with the US, so boom. In the link above I quote the following from one of Americas better think tanks as reported in the Washington Post. . Murawiec said in his briefing that the United States should demand that Riyadh (the Saudis) stop funding fundamentalist Islamic outlets around the world, stop all anti-U.S. and anti-Israeli statements in the country. . The Saudis should stop all anti US statements in that country? So much for advocating the principle of free speech and religion around the world. We are back to free speech as long as the bully approves of it. As for being a bully: . If the Saudis refused to comply, the briefing continued, Saudi oil fields and overseas financial assets should be "targeted," although exactly how was not specified." . As for the oil part of it, The report concludes by linking regime change in Iraq to altering Saudi behavior - once a U.S. invasion has removed Hussein from power, a friendly successor regime would become a major exporter of oil to the West. That oil would diminish U.S. dependence on Saudi energy exports, and so -- in this view -- permit the U.S. government finally to confront the House of Saud for supporting terrorism. . Now the funny part is . "Once you have a democratic regime in Iraq, like the ones we helped establish in Germany and Japan after World War II, there are a lot of possibilities." . Gee, Hitler won his first election by a popular vote no? What would stop another Hitler from being elected and bullying the world? Bush is still in office and he was elected in a country that thinks it is a democracy (it is actually a republic and not a democracy, but they forgot that part). Sadly nothing in the report gets to any of the fundamental problems. One such being the US dependence on foreign oil and of course the profits from consuming so much of the worlds oil. It does not take much of a think tank expert to figure out that if the US was not dependant on oil, then the pipe line through Afghanistan or Columbia would no longer make those places so hot. What any oil-producing nation does would not be a significant issue if the US did not desperately need the oil. Those oil- producing countries would also not have the money to fund major war machines as alleged either. A little bit like the war on drugs I would say. No success has been achieved in reducing the demand, keeping it illegal raises the cost and hence the profits. This is even to the point that nice businesses in the US supply all the chemicals and special equipment to process illegal drugs. I can not say that the War on drugs or the new War on terrorism is a conspiracy of any kind, but it all has a lot of greedy hands in the till, a lot of people in a lot of countries are dying violent deaths over it and no one is talking about real solutions. . The main-stream press is finally beginning to report the series of events and the true thinking behind it. The alternative press has reported on the US intervention in world politics (Assassinations, interventions, bombings, puppet regimes) for a long time. Almost all of the world's hot spots have been funded in the past with US money and weapons. Buy the oil, sell them guns. Blow them up, buy more oil, sell the new regimes more guns. Create a new tension some place, they blow each other up, buy more oil, sell more guns. This would actually be a great business if it did not leave people dead. . EDITORS REPLY: Well, as always, thank you for your information and comments. I think the short comment is, things are not always as they appear. Stated another way, one might say that things are not always exactly the truth as portrayed by both politicians, and the media that report on the politicians. In any event, an interesting question is, why is it that the US does not seek alternative fuels as was a hot topic numerous times before when oil prices spiked up due to political turmoil in that region? How many people remember the so-called Energy Crisis in the US during the Nixon administration 30 years ago? How about the problems with oil prices and political turmoil under the Carter administration? All these problems and issues are nothing new. The Saudis have made some public statements, almost to the point of bragging, that they tend to pay off US politicians very well while both while in office (contributions to political campaigns) and hiring ex-politicians (paying very handsome salaries) as consultants later on. So another question is, Are US politicians so corrupt to sell out their own country and people to a foreign government? Ironically, we of course always hear about the terrible corruption and payoffs in other countries. . I would say it would be an interesting study to follow the flow of Saudi money over the past 30 years and how it connects to US politicians. Which is to say, why is it that the US can develop major technological advances in medicine and science during a 20 to 30 year period, but the issue of reduced dependence on foreign sources of oil has not even been scratched? Especially foreign sources which are prone to political problems and have proven to cause economic issues for the US long ago? . .. This information has been compiled and presented by John Schroder of Ascot Advisory Services, for the benefit of clients and readers. Ascot Advisory Services provides assistance with such matters as offshore company formation, Panama Foundations, offshore banking, and special services in the Dominican Republic regarding residency, free zone applications, etc. For more information: .. |