The lists of tax havens published by the Organisation for Economic Co-operation and Development () (OECD), – especially the so called “grey list” – became the cause of hard battle for business between international financial centres. This competition will probably intensify during this month.
OECD grey list, which includes jurisdictions not fully compliant with international standards on tax transparency, has a sub-division into tax havens and other financial centres. This list is regularly revised, but the only jurisdiction which was moved from the “grey” to the “white list” at this moment is Bermuda. The BVI, the Cayman Islands and Bahrain are, in their turn, very close to meeting the OECD requirement of 12 tax information exchange agreements signed. However, this might be not enough: for example, Cayman will also need to undergo peer review before it can move to the white list.
The Channel Islands, the Isle of Man, Cyprus, the Seychelles are already on the white list, and some of these financial centres are making heavy promotion of their services based on the fact they are identified as top quality and regulatory compliant jurisdictions. For example, the Channel Islands have been lobbying for companies based in grey list centres, like Cayman and BVI, to move to their corporate registry.
The OECD list was requested by the G20 group of large states; all jurisdictions included on both lists will be reviewed at the November meeting of the organisation. The countries which do not comply with the strict requirements by that time will face stringent fiscal sanctions that could harm the economies of some of them.
China Networks International Holdings Ltd. (formerly known as Alyst Acquisition Corp.) received a letter from the NYSE Amex indicating its intent to proceed with delisting of company’s common stock, units and warrants. The intent is based on the Exchange’s Company Guide, which cited the failure of the BVI company to meet certain initial listing requirements following the consummation of Alyst Acquisition Corporation’s merger with China Networks Media, Ltd. on June 30, 2009.
China Networks International Holdings Ltd. was formed as a result of this merger and redomestication of Alyst to the British Virgin Islands, but after that it failed to follow the requirements of the Exchange’s Company Guide. According to them, it is required for a company to have a minimum public distribution of 500,000 shares of common stock and a minimum of 800 public shareholders, or a minimum of 1 million shares of common stock together with a minimum of 400 public shareholders. Also, the Exchange cited company’s failure to provide certain additional documentation and information requested by the Exchange in a timely manner.
If China Networks fails to retain its listing on the NYSE Amex, its securities will be eligible for trading in the OTC Bulletin Board, until it can once again meet the listing requirements of the exchange.
The Australian internet tycoon Daniel Tzvetkoff has been filed a $52 million legal action by an online gambling firm Kolyma Corporation AVV. The action was lodged in the Supreme Court of Brisbane on May 25, 2009.
Mr. Tzvetkoff and his partner Sam Sciacca have built a business empire, based on very effective online billing, payments and fraud-detection system, and estimated at US$120 million. Now his and his partner’s firm Intabill Inc, registered in the British Virgin Islands, is being sued for payments which, as the plaintiff claims, were not passed on.
The Aruba-based Kolyma corporation, which operates one of the most popular and lucrative online gambling sites, was one of the major clients of the BVI-domiciled company, headquartered in Milton. Kolyma is seeking Intabill to pay an alleged debt of $US43 million plus interest, which as it claims has been increasing at $US13,532 a day since the day of filing the lawsuit. Beside the BVI-registered Intabill, the corporation named as defendant the Australian-registered holding company BT Projects. The lawsuit also targets Mr Tzvetkoff and Mr Sciacca individually, saying they gave a guarantee to pay Kolyma money that were claimed to be owned. By words of Mr Tzvetkoff, the partners would defend the lawsuit.
Intabill had more than 5000 customers in 70 countries; about half of its revenue came from business linked to online gambling operations, with fees from just one operator reaching more than $150,000 per day. In April, because of bad market conditions and increased loan funding costs, the BVI company laid off 96 employees. Also, in May Intabill withdrew a multimillion-dollar sponsorship of the Team IntaRacing V8 Supercar team, announced some months earlier.
The African Development Bank launched legal support organisation to protect the poor African states negotiating commercial transactions or facing litigation by the so-called vulture funds. These funds have already provoked international criticism by launching lawsuits - many of them being in the US and Britain - to force repayment of poor country debt they have bought at discounted prices on world markets.
One of the most prominent cases in the last years connected with complex commercial transactions that faced litigation by vulture funds was Donegal International, a fund based in the British Virgin Islands, which sued Zambian government for more than $55 million, as repayment for Zambian government debt that was bought for less than $4 million in 1999. As a result of the lawsuite, the BVI fund was awarded $15.5 million in 2007 by the High Court in London.
Now, the Africa Legal Support facility will provide funding and advice so that governments of African countries will have the top level legal representation when facing the debt claims similar to that of the BVI fund against Zambia. It was estimated by the World Bank that in 2007 38 creditors had won $1bn from lawsuits against countries in its debt relief programme, many of them being African nations. For example, the claims of 10 creditors against Liberia - the country devastated by almost 15 years of civil war - amounted to $130 million, the sum which makes almost fifth part of annual gross domestic product.
Steven Michael Rubinstein, the accountant of wealthy Coral Springs company, became the first U.S. citizen charged in a wide-ranging tax probe of Swiss major bank UBS, based in Zurich. The reason for the criminal charges were the UBS records obtained by the federal government as part of a deferred prosecution agreement with the bank.
Rubinstein admitted to the felony charge in federal court in Miami. He is alleged of creating a shell corporation in the British Virgin Islands in 2001, named Hybridge International Ltd., to hide money in the UBS account under the name of this BVI corporation. Also, he is accused of having not paid income taxes on these amounts.
The BVI company was used by the accountant to finance construction of a multimillion-dollar Florida home, deposit about $2 million in gold coins, and make different kinds of investments. All in all, Rubinstein is said to have hidden some $6 million with the UBS bank.
It was claimed by the IRS that Rubinstein failed to report UBS income on his returns from 2001 to 2007. Rubinstein agreed to pay a 50 per cent penalty for the year 2004 , which was the year with the highest balance in the account as of June 30.
The UBS representative declined to comment on the case against Rubinstein, who was one of about 300 UBS customers whose account details were turned over to the U.S. authorities as part of the agreement, in a deal that required the Swiss bank to pay $780 million in fines and restitution.