Cayman Islands used by companies to bypass US disclosure requirements

WASHINGTON, USA: Taiwan News, October 30, 2009 – In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.

Goldman’s sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled one of the nation’s premier investment banks to pass most of its potential losses to others before a flood of mortgage loan defaults staggered the U.S. and global economies.

Now, pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses, and a five-month McClatchy Newspapers investigation has found that Goldman’s failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws.

McClatchy’s inquiry found that Goldman Sachs used offshore tax havens to shuffle its mortgage-backed securities to institutions worldwide, including European and Asian banks, often in secret deals run through the Cayman Islands, a British territory in the Caribbean used by companies to bypass U.S. disclosure requirements.


‘Dirty dozen’ subsidiaries in the Cayman Islands

WASHINGTON, USA: Huffington Post, October 30, 2009 – When the Obama administration quietly shelved its proposal to raise $210 billion over 10 years by cracking down on U.S. companies that use overseas subsidiaries to avoid paying U.S. taxes, commenters hailed it as a victory for the business lobby.

Indeed. But the tax-loving folks at the U.S. Public Interest Research Group would like to emphasize that members of a group that led the fight against the administration’s proposal, the Promote America’s Competitive Edge Coalition, boast hundreds of subsidiaries in tax havens, spend millions contributing to campaigns and lobbying, and hold government contracts worth tens of billions of dollars.

Twelve of the companies who’ve signed on to the group’s recent letters to Congress landed on a 2008 Government Accountability Office report detailing the hundreds of subsidiaries held in tax havens by the 100 largest U.S. corporations. That “dirty dozen,” as PIRG calls them, have a combined 443 subsidiaries in tax haven countries like the Cayman Islands, and they spent $37 million lobbying last year and $33 million so far this year. Not to mention $6 million in campaign contributions to members of Congress.