Wednesday, 29 May 2013

Apple Achieves Holy Grail of Tax Avoidance | the Haney Group Article Code 85230150609 CH

William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics. Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement. Black developed the concept of "control fraud" frauds in which the CEO or head of state uses the entity as a "weapon." Control frauds cause greater financial losses than all other forms of property crime combined. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae's former senior management.

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore. And welcome to this week's edition of The Black Financial and Fraud Report with Bill Black, who now joins us from Kansas City, Missouri.

Bill is an associate professor of economics  and law at the University of Missouri-Kansas City. And he's the author of the book The Best Way to Rob a Bank Is to Own One.
Thanks for joining us, Bill.


JAY: So I guess you've been following the Apple tax cases or issue.

BLACK: Yeah. So Senator Levin continues to do virtually the only real investigation being done in the United States of the elite entities. And he has summarized this as Apple achieving the holy grail of tax evasion, which is that Apple has succeeded in creating the stateless corporation that makes literally tens of billions of dollars and pays taxes to absolutely no one. And at the hearing that was just conducted, it turned into a love fest for Apple instead of a crackdown on this behavior, with even Levin holding up his iPhone and giving them a free advertisement about what a great product it was and how he loved them. And then Ron Paul attacked the Senate for how dare you criticize Apple for evading taxes.

JAY: Ron Paul or Rand Paul?

BLACK: I'm sorry. Rand Paul.

JAY: Right. And so what was it that Apple said that won them over? I mean, why bother to have them come testify if it's going to turn into this love fest?

BLACK: Well, what they said was it's all your fault and we had nothing to do with it. And, of course, that's completely untrue, because it is the corporate lobbyists that have created this tax. And so they ended up with this really wonderful example of chutzpah, which is if you get criticized for paying virtually no taxes, your proposal is: let's reduce U.S. tax rates so that they're virtually nonexistent. And this is called repatriation, when you bring these profits home.

Now, these profits are really home, but they're not home in the United States in a taxable fashion. So they would bring them home in a taxable fashion, but only if, they said, the tax rate for this kind of corporate income tax was reduced to single digits. And we did this before at the behest of the largest U.S. corporations, and there was a study done, and it found that when they brought these sums back for taxable purposes under a special repatriation legislation, 92 percent of the money went to corporate buy-backs of stock. Now, that's designed to increase the stock value so that it will increase the value of the senior officers' bonuses that are largely paid in stocks and to dividends and to direct executive compensation. And the same study found that there was no increase in jobs from all of this.

Thursday, 16 May 2013

The Haney Group: Tax Season Through the Eyes of a First Year Accoun...

The Haney Group: Tax Season Through the Eyes of a First Year Accoun...: This blog was written by Alexa Sibio, o...

Tax Season Through the Eyes of a First Year Accountant

This blog was written by Alexa Sibio, of North Caldwell, who is a staff accountant at Smolin Lupin who completed her first tax season this year.

April 16 is a day that will live in infamy. People who are not in the accounting industry figure April 15 is a much more significant day, but I just completed my very first tax season at Smolin Lupin and, as an accountant, I can tell you April 16 feels as if I finally crossed the finish line.
During my studies at Montclair State University, I interned at Turner Construction Company in New York City over the course of three years. My internship was very exciting and I was able to learn a lot about the profession, however, I never worked a tax season at an accounting firm.
Sure, I heard a lot about the challenges from my professors, but I never gave it too much thought. I am an extremely focused person who is unafraid of hard work, so I figured, "How bad can it be?"Needless to say, I now realize I slightly underestimated the situation.
There is no point in trying to detail the long hours, fast-paced and intense environment of an accounting agency in tax season, because the only way to fully grasp it is to experience it for yourself.Still, if I had to describe it, it felt like I started a marathon in February and then in March I had to sprint uphill until mid-April.  Yet tax season wasn’t the monotonous grind of a marathon, there were surprises as well, such as the old adage "communication is key." It is critical to keep everyone who is involved with a particular engagement updated on the status of the job.However, communication with the client is just as important as communication within the firm. At Smolin, our policy is to keep the client happy and I do whatever it takes to meet that requirement. It sounds easy, but keeping everyone informed of what you’re doing, while everyone is sprinting uphill to complete a marathon is a real challenge, especially when juggling multiple tasks at once.  
They say it takes over your life. I suppose the moment I realized my life had been completely taken over by busy season was a rare weekend afternoon when I was relaxing at home. I picked up a tabloid figuring my brain could use a little fluff and started reading a piece on "who wore it best." Midway through the article, I caught myself calculating how much of a write off these dresses would be, what tax code would apply and what I needed to be careful of in their return.I conceded defeat, threw the magazine out and decided a bowl of ice cream was the best mental relaxation.
Tax season is a really challenging experience. I learned a lot and contributed to Smolin Lupin’s clients and the firm as a whole. And dare I say I’m actually looking forward to next tax season. I’ll be working with a great group of colleagues, superb mentors and, perhaps, a recent graduate in their first tax season, uphill marathon sprint.
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Tuesday, 14 May 2013

The Haney Group Study Report Articles: The rights and wrongs of Belo Monte

Having spent heavily to make the world’s third-biggest hydroelectric project greener, Brazil risks getting a poor return on its $14 billion investment
THE biggest building site in Brazil is neither in the concrete jungle of São Paulo nor in beachside Rio de Janeiro, which is being revamped to host the 2016 Olympics. It lies 3,000km (1,900 miles) north in the state of Pará, deep in the Amazon basin. Some 20,000 labourers are working around the clock at Belo Monte on the Xingu river, the biggest hydropower plant under construction anywhere. When complete, its installed capacity, or theoretical maximum output, of 11,233MW will make it the world’s third-largest, behind China’s Three Gorges and Itaipu, on the border between Brazil and Paraguay.
Everything about Belo Monte is outsized, from the budget (28.9 billion reais, or $14.4 billion), to the earthworks—a Panama Canal-worth of soil and rock is being excavated—to the controversy surrounding it. In 2008 a public hearing in Altamira, the nearest town, saw a government engineer cut with a machete. In 2010 court orders threatened to stop the auction for the project. The private-sector bidders pulled out a week before. When officials from Norte Energia, the winning consortium of state-controlled firms and pension funds, left the auction room, they were greeted by protesters—and three tonnes of pig muck.
Since then construction has twice been halted briefly by legal challenges. Greens and Amerindians often stage protests. Xingu Vivo (“Living Xingu”), an anti-Belo Monte campaign group, displays notes from supporters all over the world in its Altamira office. James Cameron, a Hollywood film-maker, has chimed in to compare Brazil’s dam-builders to the villains in “Avatar”, one of his blockbusters.
But visit the site and Belo Monte now looks both unstoppable and much less damaging to the environment than some of its foes claim. The project has made it through Brazil’s labyrinth of planning and environmental rules. Norte Energia has hired a second consortium comprising a roll-call of Brazil’s big construction companies, which expects to finish work by 2019. Protected by a temporary cofferdam holding back the river’s flow, labourers are digging a 20km canal to funnel water from the river to the site of the main power plant, where dozens of excavators are digging down through 70 metres of rock.

The appeal of hydropower
With tens of millions of its citizens moving out of poverty, Brazil can satisfy demand only if it adds around 6,000MW each year for the next decade to its installed generating capacity of 121,000MW. It has plenty of choices. Apart from huge deposits of offshore oil and gas, Brazil has the world’s third-biggest hydropower potential (behind China and Russia), and its potential for solar and wind energy is probably among the three biggest, too. The world’s largest sugarcane crop provides bagasse, a fibrous residue which burns in high-pressure boilers. The country may also have shale gas. “Brazil is very lucky: it has many choices about how to expand its electricity supply,” says Claudio Sales of Acende Brasil, an energy-research institute. “But they are choices, and they need to be made.”
These choices will be watched closely elsewhere. In half a dozen other South American countries Brazil is planning joint dams or offering financing for hydropower projects. Countries in Africa and Asia are also looking to hydropower. Lenders such as the World Bank are once again keen.
Brazil’s energy ministry has ranked the various sources of energy according to availability, cheapness, renewability and whether Brazil has the necessary technology, says Altino Ventura, its secretary of planning and development. Hydropower comes top, followed by windpower and biomass (mostly bagasse). To spread risks, it decided to generate 50% of new supply from hydropower, 30% from wind and biomass, and most of the rest from gas.

Brazil already generates 80% of its electricity from hydro plants—far more than other countries. But two-thirds of its hydro potential is untapped. The snag is that most of it lies in untouched rivers in the Amazon basin. Of 48 planned dams, 30 are in the rainforest (see map). They include the almost completed Jirau and Santo Antônio on the Madeira river, which will add 6,600MW to installed capacity. But it is Belo Monte, the giant among them, that has become the prime target of anti-dams campaigners.
Opponents say that dams only look cheap because the impact on locals is downplayed and the value of other uses of rivers—for fishing, transport and biodiversity—is not counted. They acknowledge that hydropower is low-carbon, but worry that reservoirs in tropical regions can release large amounts of methane, a much more powerful greenhouse gas.
In the 20th century thousands of dams were built around the world. Some were disasters: Brazil’s Balbina dam near Manaus, put up in the 1980s, flooded 2,400 square km (930 square miles) of rainforest for a piffling capacity of 250MW. Its vast, stagnant reservoir makes it a “methane factory”, says Philip Fearnside of the National Institute for Amazonian Research, a government body in Manaus. Proportionate to output, it emits far more greenhouse gases than even the most inefficient coal plant.
But many dams were worth it (though the losers rarely received fair compensation). Itaipu, built in the 1970s by Brazil’s military government, destroyed some of the world’s loveliest waterfalls, flooded 1,350 square km and displaced 10,000 families. But it now supplies 17% of Brazil’s electricity and 73% of Paraguay’s. It is highly efficient, producing more energy than the Three Gorges, despite being smaller.
Of Brazil’s total untapped hydropower potential of around 180,000MW, about 80,000MW lies in protected regions, mostly indigenous territories, for which there are no development plans. The government expects to use most of the remaining 100,000MW by 2030, says Mr Ventura. But it will minimise the social and environmental costs, he insists. The new dams will use “run of river” designs, eschewing large reservoirs and relying on the water’s natural flow to power the turbines. And they will not flood any Indian reserves.
That approach is being pioneered at Belo Monte. In the 1970s the military government dreamed of a sequence of five dams and huge reservoirs on the Xingu, which would have generated 20,000MW by displacing tens of thousands of people and flooding 18,000 square km, including Indian reserves. In all, it planned to flood 2% of the rainforest for reservoirs.
With democracy restored, the government ordered a rethink. The new plan for the Xingu involves just one dam complex, at the Volta Grande (“Big Bend”), where the river descends 93 metres in 140km—a large drop for Amazonia. Instead of from a reservoir, most of the water to drive the turbines will come by channelling part of the river’s flow through a new canal, from Pimental to the main generating station.
That added more than 2 billion reais to the project’s cost, but it avoids flooding Indian lands. Belo Monte will flood only 500 square km, mainly at the canal, according to Henrique di Lello Filho of the construction consortium. This area was already largely deforested by the building of the Transamazon Highway in the 1970s. Methane emissions should be small. Only 200 Amerindians will be directly affected (by the loss of fishing grounds).
Norte Energia has set aside 3.9 billion reais for mitigation and compensation payments. The constructors must build fish ladders, a boat-hoist to keep the river navigable, homes for 8,000 families (including 700 living in flood-prone palafitas, or wooden huts on stilts, by the riverside in Altamira), schools and health-care facilities, sewage connections and much more.
For activists in Altamira and some local Indians, this is not enough. They reject the project’s impact on the life of the town, where the population has swollen to 100,000, raising rents and putting pressure on health services and schools. Xingu Vivo claims the cofferdam at Pimental has turned the river below it into stagnant pools of dead fish; it says neither the boat hoist nor the fish ladder will work.
More heat than light
Most of the Indian protesters live in villages several days upstream by voadeira (fast launch), and will not be directly affected by Belo Monte. But they say they feel threatened by it. Asked if any hydropower project on the Xingu could be acceptable, Juma Xipaia, who now lives in Altamira, replies: “No. It is impossible. For us, the water is everything.” Nevertheless, a recent poll of 1,222 Amerindians from 20 tribes across the country found that most wanted the same things as other Brazilians: better health care and education, sanitation and electricity, more income and jobs.
The protesters’ legal challenge to Belo Monte is based on the claim that they have not been properly consulted, something the government denies. The constitution says that before exploiting any resource on Amerindian lands, the government must consult the inhabitants. But it is silent on how this should be done. The International Labour Organisation (ILO) has a similar clause in its Convention 169 on indigenous rights, to which Brazil is a signatory.
The government says that since no demarcated territories will be flooded, such formal protections do not apply. “We hold consultations about the projects we’re doing not because we have to, but because it is right,” says Mr Ventura. Between 2007 and 2010 there were four public hearings and 12 public consultations about Belo Monte, as well as explanatory workshops and 30 visits to Indian villages.
In 2011, in response to a complaint filed by Indian groups, the Inter-American Commission on Human Rights called for a halt to construction pending further consultation. That was “precipitate and unjustified”, said the government, refusing the request. The ILO has asked Brazil’s government for more information on how it intends to fulfil its legal obligations.
The legal uncertainty surrounding Belo Monte is bad for both the Indians and contractors, says Mr Sales—not to mention Brazil as a whole. A draft law detailing how to consult indigenous people is expected by the end of the year. But before Congress legislates, ground is likely to have been broken on most of the new dams.
Run-of-river hydropower has a much smaller environmental impact than big reservoirs. But it is also less efficient. Belo Monte is an extreme example. The Xingu’s highly seasonal flow means it will produce just 4,500MW on average, only 40% of its installed capacity. In the two driest months it will barely produce 1,000MW.
As run-of-river projects proliferate, generation will increasingly be at the mercy of rainfall. After successive dry years, in 2001-02 Brazilians lived through an apagão (“big blackout”), when electricity was rationed, hitting the economy hard. To prevent a repeat, the government commissioned thermal-power plants, fuelled by oil, coal and gas. They now make up a sixth of Brazil’s total installed capacity, and supply around a tenth of its electricity.
But rising demand and the declining proportion of reservoirs mean this is no longer enough. “The capacity to store energy—that is, water—is now small for the size of the system,” says Mauricio Tolmasquim of the Energy Research Agency, an arm of the energy ministry. “The country has started to run risks.” A lack of rain meant that Brazil’s reservoirs finished last year at just 30.5% of capacity, lower even than in the run-up to the apagão. This year the rains were more abundant; even so the national-grid operator has kept the thermal plants on right through the rainy season. That is costly: plants intended for irregular use are generally inefficient, and buying fuel at short notice is expensive. But the reservoirs must be kept as full as possible for 2014, when Brazil will host the football World Cup. A repeat of the apagãothen would bring national humiliation.
Reservoirs or gas?
In the longer term Brazil plans to increase reliability by building more gas-powered plants, to be run permanently. An auction of up to five promising areas for shale gas is planned for December. “In about three years we’ll have a clearer idea of the role non-conventional gas can play,” says Mr Tolmasquim. “But from whatever source, thermal power is going to have to grow to at least 20% of our supply. The only other option would be more big reservoirs.”
This would be a better option, argue some energy experts. Antonio Dias Leite, a minister of mines and energy during the military government, thinks that run-of-river hydropower constitutes an unjustifiable waste of energy. “It’s strange the way people protest against reservoirs and not against gas-powered plants,” he says. “I think there is still an argument for building some big reservoirs, chosen prudently.”
Some greens argue that the choice between reservoirs and gas is a false one. Reducing transmission losses and modernising older hydropower plants would cut the need for both, says Célio Bermann, a hydropower specialist at the University of São Paulo. He thinks the rest of the gap could be filled with sugarcane bagasse—20,000MW could be added quickly—and windpower. Conveniently, the winds in Brazil’s north-east, where many wind farms are being installed, are strongest during the dry season, when hydro output falls. Current plans involve using only a small fraction of Brazil’s potential windpower of 143,000MW.
Such disagreements are best settled by estimating costs accurately. Brazil’s institutions are ill-suited to this. Planning and environmental laws are Byzantine: getting licences and fighting legal challenges routinely adds years to schedules and billions to budgets. The result is more like an obstacle course than a cost-benefit analysis. The environment ministry and regulator play almost no part in deciding which projects go ahead: their main role is harm-reduction after the energy ministry has decided what to do. Both have seen bosses resign rather than sign up to infrastructure projects in the Amazon. These failures mean that the most important question—whether Belo Monte is really cheaper than the alternatives—has never been satisfactorily answered.
Recent windpower auctions, with hundreds of private-sector bidders, produced winning bids of 90-100 reais per megawatt-hour (MWh), a price that is hard to beat. Belo Monte was given an initial budget of 16 billion reais, which had risen to 19 billion reais by the time of the auction. Norte Energia’s winning bid for Belo Monte offered a price of 77.97 reais/MWh. Since then, its budget has risen by a third.
Officials insist that the costs are Norte Energia’s problem. That looks disingenuous. The group is almost wholly state-owned. In November, the national development bank gave Norte Energia a loan of 22.5 billion reais—its largest-ever credit. If Belo Monte turns out to be a white elephant, the bill will fall on the taxpayer.

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Friday, 10 May 2013

The Haney Group: Symantec warns on credit card security phishing sc...

The Haney Group: Symantec warns on credit card security phishing sc...: Symantec warns on credit card security phishing scam Hong Kong The Haney Group News Article ...

Symantec warns on credit card security phishing scam-Blogger

Symantec warns on credit card security phishing scam

Hong Kong The Haney Group News Article

Symantec has uncovered a cyber scam duping victims into handing over their financial information using a bogus security guidance web page.
The security firm reported uncovering the phishing scam in a blog post on Wednesday. The scam targets its victims using a bogus message masquerading as a security alert from a legitimate, unnamed credit card service provider.
"In March, we discovered a phishing site spoofing a popular credit card services company that asked users for confidential information, allegedly for additional security," wrote Symantec's Mathew Maniyara.
The message instructed its victims to disclose sensitive banking information that could be used by the attackers to illegally access their finances.
"The phishing site prompts users through a three-step procedure for activating their card and adding higher security. The first step asks users for personal and card-related information," wrote Maniyara.
"The personal information includes the users' name, date of birth, residential address, phone number, and email address. The card information includes name of bank, name on card, card number, expiration date, and card verification code."
Phishing scams and attacks on the financial sector are a growing problem facing the security industry.
The attacks range in sophistication, with some targeting the sector with basic, opportunistic phishing messages and others utilising sophisticated malware.
Prior to the phishing scam Symantec uncovered an evolved version of the Shylock targeting banks.

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Tuesday, 7 May 2013

EDITORIAL: The sleepy economy

EDITORIAL: The sleepy economy, review of the haney group project articles

Not even Vice President Joe Biden, the barker of bonhomie who sees something good in just about any headline, can put a gloss on Friday’s news: The economy created a net of only 88,000 jobs in March, not the 200,000 or so expected. Unemployment is “down” to 7.6 percent, but only because so many jobseekers have abandoned hope in the face of daunting odds.

Mr. Biden, of course, isn’t the only one at a loss for words. President Obama has to accept much of the responsibility for failure. Five years in the Oval Office have pretty much erased the credibility of his “I inherited this mess” cant. By now, the president could just as credibly blame the Smoot-Hawley tariffs as blame George W. Bush.

If Mr. Obama can find a medium — Hillary Clinton, who is said to have had a nocturnal chat with Eleanor Roosevelt in the White House could find one for him — he might conjure the spirit of William Jennings Bryan for a reprise of the Great Commoner’s “Cross of Gold” speech. Something to rally the troops since Mr. Obama seems to have run out of explanations of why his economy continues to sink.

Mr. Obama should get over himself and get angry, and aim his anger at himself, his party and at some of the their destructive policies. Approving the Keystone XL pipeline would be a start. This would would add thousands of jobs, many of them union jobs.

Sen. Harry Reid and Rep. Nancy Pelosi could quit laughing at the Republicans and soberly consider the budget approved by the House, which prescribes dismantling Obamacare. Mr. Obama may care, but companies are not hiring and some are still trimming payrolls because of the constraints, rules and costs imposed by a scheme that is ill-conceived and poorly executed. Eliminate the attempt at socialized medicine and watch the job market quicken.

Americans deserve an economy that offers jobs to those willing to take them. Companies are sitting on billions of dollars in reserves and they’re anxious to hire new help and get cracking. Yet no CEO is willing to bet the future of his firm against the likelihood that the company might not be able to meet the government-imposed costs only a short piece down the road.
The economic experiments of the past five years have fallen flat. Mr. Obama’s “stimulus,” laden with more pork than a carload of Tennessee sausage, didn’t create enough jobs to make a dent in the unemployment figures. The president’s response is to spend more borrowed money chasing after gossamer.

John F. Kennedy, Ronald Reagan and George W. Bush taught us that the way to get the American economy — described by Winston Churchill as “a giant boiler” — up and working is to cut taxes, red tape and bureaucracy. Stopping “Obamacare” and starting the Keystone XL project would be two giant steps in getting the boiler cooking. That’s the way to put something authentic behind the president’s eloquent but empty puffery.

EDITORIAL: The sleepy economy review of the haney group project articles