Category Archives: Development

Brit paper exposes possibly illegal Trump tax dodge


The London Telegraph lobbed a bombshell at The Donald today, reporting that he took a $50 million investment from Iceland investors, then subsequently signed off on documents that misrepresented the funds as a loan — thus evading $20 million in New York real estate taxes.

When the newspaper showed the documents to tax experts, they alleged “the deal amounted to fraud.”

From the London Telegraph:

The allegations centre on Mr Trump’s business alliance with Bayrock Group, the property company that was building Trump SoHo, the mogul’s prized New York building  – as well as two other projects to which he had licensed his name.

In 2007 Bayrock struck a deal with FL Group, an Icelandic company that had agreed to invest $50 million in four of Bayrock’s subsidiary partnerships. However, the deal was later relabeled as a loan.

In New York, the sale of a stake in a partnership would make the existing partners liable to pay more than 40 per cent in tax on their ‘gain’, based on the highest tax rate.

However, if the investment is classified as a loan no tax would be payable.

Former employees of Bayrock have alleged in a case against the company that the deal was intended to fraudulently evade some $20 million in tax through a disguised sale of partnership interests.

Absent changes, California faces a parched future


Land-use and land-cover change for the historical period (1992–2012) and the projected period (2012–2062) in California's Central Valley and Oak Woodlands regions under a business-as-usual scenario.

Land-use and land-cover change for the historical period (1992–2012) and the projected period (2012–2062) in California’s Central Valley and Oak Woodlands regions under a business-as-usual scenario.

Absent major changes in the way California uses its land and water, the Golden State is headed for a long dry future.

And that’s without factoring in any significant increase in temperatures or shifts in global climate patterns.

From the U.S. Geological Survey:

If past patterns of California land-use change continue, projected water needs by the year 2062 will increase beyond current supply. If historical trends of land use changes to or from urban, agricultural or other uses continue, the result will be increased water-use demand beyond what existing supplies can provide. Large uncertainties associated with weather and climate variability have the potential to exacerbate the problem.

Scientists with the U.S. Geological Survey and the Nature Conservancy calculated historical trends of land-use change, urbanization, agriculture expansion and contraction from 1992 to 2012, and then used those trends to project future land-use patterns and water demand from 2012 to 2062 in California’s Central Valley and foothills, Central Coast and South Coast. These new projections are detailed in the paper, “Future land-use related water demand in California”  [open access] published this week in the journal Environmental Research Letters.

Assuming no new storage, efficiency or technology is created to improve California’s water supply, the study results indicate that the current 25 percent urban water-use restrictions called for in Governor Edmund G. Brown’s Executive Orders B-29-15 and B-37-16 would need to be maintained through 2062 for future water demand to remain at or below 2012 demand, unless restrictions were put in place on other water uses. Water use in 2012 was already proven unsustainable given the ongoing multi-year drought, which led to mandated statewide urban-use restrictions in 2015.

In the long term, drought, highly variable rainfall from year to year, and the real possibility of future warming and drying of climate combine to create potential water supply limitations. Coupled with population increases and shifting agricultural practices (from annual crops to orchards and vineyards) there can be enormous uncertainty in planning for future water supply and demand.

There’s lots more after the jump. . . Continue reading

Tape proves Rousseff ouster really was a coup


Anyone with the slightest doubt that the impeachment of Brazilian President Dilma Rousseff is anything other than a coup should be disabused of their credulity by events coming out of that Latin American nation today.

The scenario unfolding in Brasilia has elements of the Nixonian [tapes], touched with good old-fashioned corruption.

We open with the Independent:

Brazil’s interim leader Michel Temer is facing his first full-blown political crisis following the release of tape recordings seemingly showing that the suspension two weeks ago of President Dilma Rousseff was the result less of legitimate constitutional complaints and more of a plot.

After a day of frantic speculation in the capital, Brasilia, the country’s barely installed planning minister and top Temer ally, Romero Juca, announced he was temporarily stepping aside after admitting earlier in the day that his was one of two voices heard on the tape.

>snip<

Mr Temer became interim president of Latin America’s largest economy earlier this month after the upper chamber of the National Congress voted to suspend Ms Rousseff and begin an impeachment trial against her on charges she fiddled the nation’s books to paper over a dire budget deficit.  She and her allies contended however that she was in fact a victim of a “coup”.

The bomb was dropped on the Temer team early Monday when one of Brazil’s leading papers, the Folha de São Paulo, released chunks of a 75-minute conversation from early March between Mr Juca, who was then a Senator, and Sergio Machado, also a former senator and the head of a state oil company.  Who made the tape and why is not clear.

Al Jazeera English examines the timing and identifies the suspected Taper, whose motivations weren’t exactly Nixonian:

The scandal threatens Temer only 11 days after taking power from Rousseff, whom the Senate suspended as president on May 12 at the start of an impeachment trial on charges of breaking government accounting rules.

The Folha newspaper released what it said were recordings of conversations in March between Juca and Sergio Machado, a former oil executive.

The recordings were allegedly made secretly by Machado who, like Juca, is the target of an investigation into massive embezzlement centred on state oil company Petrobras.

In the conversations, Juca is heard calling for a “national pact” that he appears to suggest would stop the investigation, known as Operation Car Wash, in which dozens of top-ranking politicians from a variety of parties, as well as business executives, have been charged or already convicted for involvement in the Petrobras scheme.

MercoPress covers embarrassment:

Juca’s decision to take a leave from his post to defend himself is a huge blow for Interim President Michel Temer, who counted on the experienced senator to secure legislative support for key economic measures and reforms.

The new scandal also raises fears of further political instability in Brazil less than two weeks after President Dilma Rousseff was suspended to stand trial in the Senate for allegedly breaking fiscal laws.

>snip<

In recorded comments made before Rousseff was suspended and published by newspaper Folha de S. Paulo on Monday, Juca told an ally he agreed on the need for a “national pact” to circumscribe the probe known as “Operation Car Wash.”

Asked for help by a friend and former senator under investigation in the probe, Jucá replied, “The government has to be changed in order to stop this bleeding.”

There’s a whole lot more after the jump. . . Continue reading

More environmental woes in Latin America


From Brazil, the first our three stories today, starting with an ongoing problem, reported by the Thomson Reuters Foundation:

Latin America’s largest country is still losing tropical forests the size of two football fields every minute, despite attempts to tackle illegal logging and improve local land rights, a former head of Brazil’s forestry service has said.

Deforestation rates in Brazil, home to the world’s biggest expanse of tropical forests, slowed significantly between 2004 and 2010, but have picked up again in recent years due to a lack of innovation and government planning, Tasso Azevedo told the Thomson Reuters Foundation.

Preserving forests is a key way to reduce emissions of planet-warming gases and combat climate change, as trees suck carbon out of the atmosphere. Forests are also home to hundreds of thousands of people who depend on them for their livelihood.

“In some cases, we are walking backwards,” warned Azevedo, citing poor cooperation between competing government departments and civil society in Brazil.

And from Brazil and the Thomson Reuters Foundation again, more devastation, this time human, as activists fighting to preserve lands and forests continue to die at the hands of developers:

Land rights campaigners and environmentalists are facing growing violence and intimidation in Brazil, with at least six activists killed so far this year, a human rights group said.

The killings, tracked between January and February 2016, happened in three largely rural Brazilian states with a history of land conflicts: Rondônia, Maranhão, and Alagoas, the Inter-American Commission on Human Rights (IACHR) reported this week.

South America’s largest country has some of the world’s widest inequality in land distribution, according to a U.S. government report, with one percent of the population owning nearly half of the country’s land.

A growing number of activists demanding land reform and rights for indigenous people are facing “an increase in acts of violence, repression and criminalization”, the IACHR, that monitors human rights across the Americas, said in a statement.

And for our third story, we move closer to home, via teleSUR English:

The southern Mexican state of Chiapas has been hard hit by the El Niño climate phenomenon causing such an intensive drought that 13 rivers have been completely dried up, Mexican newspaper Reforma said Friday.

State Director of Civil Protection Luis Manuel Garcia told Reforma that 40 Chiapan municipalities have been affected, of which four are experiencing extreme drought.

“All of the biggest rivers in the coastal area of Chiapas have been practically dried up,” Garcia said.

In light of the extreme circumstances, Garcia said they would send a petition to the federal government requesting that they issue a state of emergency decree for three of Chiapas’ municipalities in order to get financial resources from the National Disaster Fund.

Democratic Republic of Congo, a story of tragedy


For five centuries, Western nations and empires viewed the Congo as the source of vital raw materials: First slaves, then rubber, and now minerals, including those needed to keep the American war machine running.

Before the mass murders of European Jews, the 20th Century witnessed another genocide, the slaughter of slaves under Belgian King Leopold II, who held the country as his personal property and whose regime as estimated 10 million Congolese perished in a ruthless drive to produce rubber at the dawn of the automobile age — a story told with brilliant and compassionate precision in King Leopold’s Ghost by Adam Hochschild, a scholar now on the faculty at the Graduate School of Journalism here in Berkeley.

The West has maintained its oppressive grasp on the Congo, though now through puppets who make deals with the new empires of the age, multinational corporations back by American military might and the dark doings of its intelligence agencies.

The tragic plight of the Democratic Republic of Congo [DRC] is the subject of the latest episode of The Empire Files, the superb series on teleSUR English hosted by Abby Martin, a fine journalist who began her television journalism on Berkeley Community Cable.

Her interview subject is Kambale Musavuli, a native of the DRC who studied engineering at North Carolina A&T University and now serves as a human rights advocate and  Student Coordinator and National Spokesperson for the Friends of the Congo.

From teleSUR English:

The Empire Files: Empires Feed on Congo’s Treasure

Program notes:

Every drone flown by the U.S. military has inside a piece of the Democratic Republic of the Congo–a valuable mineral, of which the DRC has trillions of dollars worth buried underground.

For five centuries, the continent of Africa has been ravaged by the world’s Empires for its vast untapped treasure. Today, the U.S. Empire is increasing it’s military role through their massive command network, AFRICOM, carrying out several missions a day.

With the Congo being arguably the biggest prize for imperialist powers, Abby Martin is joined by Kambale Musavuli, spokesperson for Friends of the Congo, to look at Empire’s role in their history and current catastrophe.

Mossack Fonseca: A case of business as usual


We’re somewhat amused at the revelations coming out of the Mossack Fonseca leak, given that for the last four decades or so we’ve been following the world of offshore banks and secret tax havens.

Any journalist looking into real estate development quickly discovers that the source of money pouring into major projects often traces back to the opaque world of offshore funding.

Back when we entered the world of daily newspaper journalism, the city where we launched our career, Las Vegas, was the center of a major offshore banking operation, with the mafia running illegal cash skimmed off the casinos of the Strip and Glitter Gulch into the black world of Caribbean banks — a money machine created by Meyer Lanksy, the “little Man,” whose late partner, Benjamin “Bugsy” Siegel, had built the Flamingo, the first great star-studded Strip gambling palace.

As Chris Eshelman wrote back in 2012 in a review in the Journal of International Affairs:

For decades, criminals of all stripes—from gunrunners to money launderers—have stashed their accounting books in a murky, global, offshore library. For example, mob boss Meyer Lansky used banks in Switzerland, Cuba, and the Bahamas to hide mafia money. The Colombian Medellin cartel used the Cayman Islands’ confidentiality rules to protect its cocaine trade. Such offshore sandboxes are preferred by wealthy elites and even some too-big-to-fail banks for similar reasons: low taxes and strong secrecy rights.

Thanks the reporting of the late Jonathan Kwitny, we followed the mysterious doings of Nugan Hand, the bank used by arms merchants, the CIA, and a host of other players to enshroud their financial deeds/misdeeds.

And as veteran journalist Don Bauder wrote in San Diego Reader in that same year, offshore banking also benefitted a certain President of the United States:

According to reliable reports — not widely publicized — Nixon had a bundle of money in a now-defunct Swiss bank with smelly clients, particularly in San Diego.

The bank, which closed in 1974, was based in Zurich, but it had a branch in Nassau, the Bahamas, and its law firm and some operations were in New York City. It was named the Cosmos Bank. (Full disclosure: I began investigating Cosmos in 1970 and provided much information on it to Business Week magazine and Forbes magazine.)

Researchers have found that Cosmos was deeply involved with mobbed-up casino operations in the Bahamas and so was Nixon, often with his friend Bebe Rebozo. After Fidel Castro drove the Mafia out of Cuba, mob moneybags Meyer Lansky looked to the Bahamas for a casino haven.

Huntington Hartford, heir to a grocery fortune, set up a casino in the Bahamas and initially wanted it free of mob influence. But that was not to be, and Hartford eventually sold most of his holdings. Hartford told Dan E. Moldea, author of several organized-crime books, that Nixon made three deposits totaling $35,883,070 in the Cosmos Bank between October 21, 1971, and June 11, 1972.

What the Mossack Fonseca scandal has made apparent is the vast scale of the offshore banking and corporate tax evasion industries.

But let’s also not forget that the U.S. itself offers a wide range of virtual offshoring in the form of a growing number of states that, thanks often to Republican legislatures, have created their own laws to shroud actual corporate ownership and control.

Let us quote from an article that we wrote for the Berkeley Daily Planet, published 6 May 2005:

When is the sale of a building not a sale, at least for property tax reasons?

The question arose during last week’s heated discussion at the Zoning Adjustments Board over The Old Grove—the massive new housing-over-commercial project planned for University Avenue and Martin Luther King Jr. Way.

At one point during the discussion, Tom Hunt, a neighbor of the project, complained that the building would never be reassessed if sold in the future because it’s owned by a limited liability corporation (LLC).

If true, an LLC would be an effective tool for avoiding any future reassessments.

In an era when cash-starved local governments are laying off workers and cutting back services, cities and counties desperately need the increased revenues that come when property is reevaluated at the time of sale.

When a reporter posed the question of whether a LLC provides an escape from reassessment to a representative of the State Board of Equalization (BOE), the answer was: “Depends.”

Read the rest for a look at a relatively new form of American tax dodge, one controlling ever larger blocs of property and businesses in California and other states.

All of which is by way of a preface to this 26-minute Al Jazeera English report on the unfolding scandal, including a look at the U.S.’s own laws:

Counting the Cost – Panama Papers: Inside the shady world of tax havens

Program notes:

The Panama Papers shocked the world this week when a massive leak of 11.5 million tax documents exposed the secret dealings of hundreds of thousands of people, including world leaders and celebrities, and how they use shady financial mechanisms to avoid paying taxes and hide their wealth.Linking at least 12 current and former heads of state and 143 politicians to illicit financial transactions, the documents revealed how Mossack Fonseca, a Panama-based law firm, allegedly used banks, law firms and offshore shell companies, from 1977 to the end of 2015, to help hide its clients assets.

While the disclosures have since led to the resignation of one world leader, Sigmundur Davio Gunnlaugsson, the Icelandic prime minister; the problem goes beyond mere individuals.

The Panama Papers have exposed that most of the work Mossack Fonseca and the rest of the wealth-management industry do is perfectly legal.On this special edition of Counting the Cost, we take a closer look at tax havens and the legality behind them.

Alex Cobham, a director of research at the Tax Justice Network, joins the programme to discuss the loopholes that allow tax-dodging.

Stewart Patton, a US tax attorney based in Belize City, discusses the possible fallout for tax havens following the release of the Panama Papers.

We also speak to James S Henry, a senior fellow at Columbia University’s Center for Sustainable Investment, about the absence of American billionaires and companies on the leaked list and how the US, the world’s biggest economy, is surprisingly a top tax haven.

And now for a touch of the absurd from Wall Street On Parade, prompted bny a joint letter from Senators Elizabeth Warren and Sherrod Brown asking for the country’s Secretary of the Treasury to look into the scandal:

Senators Warren and Brown appear to have short memories. Otherwise, U.S. Treasury Secretary Jack Lew would be the last person that comes to mind to conduct an investigation to protect “the integrity of the U.S. financial system.” How Lew was confirmed by the U.S. Senate for U.S. Treasury Secretary remains an open mystery at Wall Street On Parade.

Lew had previously worked as an executive for the very division of Citigroup that blew up the bank during the 2008 financial crisis and cost taxpayers the largest bank bailout in U.S. history.

When Lew left his executive position at Citigroup at the end of 2008 and joined Hillary Clinton’s State Department as Deputy Secretary of State, he retained an investment in Citigroup Venture Capital International (CVCI), a $7 billion private equity fund which was housed in the Cayman Islands at the infamous Ugland House. According to a previous Government Accountability Office (GAO) report, Ugland House is home to 18,857 corporations. In 2009, President Obama called it either “the largest building in the world or the largest tax scam in the world.”

According to Lew’s January 11, 2009 financial disclosure report, his CVCI account at that point had a value of between $100,000 and $250,000. During Lew’s confirmation hearing for U.S. Treasury Secretary, he said he had sold the position at a loss.

But Ugland House was not Lew’s only Citigroup problem during his confirmation hearing. Senators challenged Lew on the fact that he had accepted a $940,000 bonus from Citigroup in early 2009, even though the insolvent bank was subsisting solely on taxpayer bailout funds at that time.

Maybe they’re operating on the “takes one to know principle”?

Donald Trump opens war on the environment


We open with a clip from The Late Show with Stephen Colbert:

Department Of Environmental, You’re Fired

Program notes:

If he becomes president, Donald Trump will definitely get rid of the Department of Environmental, which is a thing that does not exist. Good job, President Trump!

Colbert’s funny and spot on, but there’s a darker meaning to the story.

Yes, Trump is willfully ignorant and a preening bully boy, but his hatred of the “Department of Environmental” is obviously focused on the Environmental Protection Agency, which is not a cabinet level department but rather an independent agency [though its director is traditionally accorded cabinet level ranking].

And the irony, of course, is that the EPA was created in 1970 by a Republican, one Richard Milhous Nixon of all people — the same guy who one proposed a minimum guaranteed income for all Americans.

We suspect Trump’s hatred of the EPA comes in its role as a frequent obstacle to the ambitions of developers like Trump, whose megalomaniacal schemes are occasionally derailed because their developments would damage sensitive environments or threaten imperiled species.

Ignorance, combined with wealth and narcissistic ambition [solid gold bathroom fixtures, anyone?] are a dangerous combination.

But if a President Donald Trump is allowed to demolish the EPA, then we’re all in danger.

Let us repeat: All developers hate regulations — as we’ve seen firsthand as a journalist covering land use and development for five decades — seeing them as obstacles to the unrestrained indulgence of their own ambitions, and Trump is a developer on a grand scale.

If he’s elected, fear for your children, their children, and all generations yet to come.