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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Sunday, December 11, 2011

The Power of Goldman Sachs Is Everywhere

David Hartnett, Permanent Secretary of Tax, is retiring. He signed off on a deal that allowed Goldman Sachs to avoid paying £10 million tax bill.

MPs repeatedly accused him of lying over a settlement with U.S. bank Goldman Sachs, which cost the taxpayer as much as £8 million." (Mail Online)

A whistleblower, Osita Mba disclosed the information regarding Goldman Sachs's not paying the tax:

Goldman Sachs whistleblower threatened with sack
Osita Mba, who disclosed that managers had let off Goldman Sachs with tax penalties, is facing disciplinary procedures.
By Rajeev Syal -

A solicitor at HM Revenue & Customs who turned whistleblower to disclose that senior managers had quietly let off Goldman Sachs from paying millions of pounds in tax penalties is facing disciplinary procedures and possible prosecution for speaking out.

Osita Mba has worked within the Revenue for at least four years and claimed to have personal knowledge of the deal that allowed the bank to write off a £10m bill.

He told the National Audit Office and two parliamentary committees the bank's settlement had been agreed with a handshake by Dave Hartnett, the permanent secretary for tax at HMRC.

Mba believed the deal might be illegal and told them he was making the disclosure under whistleblowing legislation. His evidence led to Hartnett being accused of lying to parliament over his role in the Goldman Sachs deal, which he denied. But he admitted his organisation had made a mistake by approving the deal.

Now Revenue & Customs managers have launched an inquiry into Mba's conduct that could lead to his being sacked or face prosecution for disclosing sensitive information.

He has been told not to enter the Revenue's building in Westminster without a personal escort from his line manager and has been summoned to a meeting, according to documents sent to the Commons public accounts committee.

Mba's treatment has angered MPs who say that his disclosures have been of enormous service to Parliament and the public. Margaret Hodge, Labour chair of the committee – which uncovered the deal using Mba's evidence – said: "Whistleblowers play such an important role that the previous government brought in legislation to protect them.

"Mr Mba's evidence has been crucial in uncovering not just specific but systemic problems in HMRC's secretive relationship with big corporations.

"This is harassment and is completely unacceptable."

Stephen Barclay, a Conservative MP on the committee, said it would ask further questions about HMRC's approach to whistleblowers. "We have already seen how whistleblowers from the health world have been stopped from disclosing information by their managers. It appears that a similar obstructive approach may now be being followed by Her Majesty's Revenue & Customs.

"The committee will be making further inquiries to establish the facts to ensure that the will of parliament is being followed," he said.

Hartnett reached an agreement with Goldman a year ago whereby it did not have to pay back about £10m interest on tax it had avoided.

The bank was found to have employed London-based workers in the British Virgin Islands where they did not have to pay tax on bonuses.

Mba, who trained as a barrister in Nigeria and completed his master's degree at Oxford, worked in the personal tax litigation team from February 2007 until November last year.

Read the full story here

Apparently, the taxes that Goldman Sachs avoided paying are much higher than reported. See story here.


Turn off MSM said...

Jeffrey Sachs: 'That's not a free market, that's a game'

The controversial economist talks about the collapse of the global financial system and how to end the crisis.

How can the global financial crisis be solved? What went wrong, and what are the stakes? One of the most controversial economists of our time talks to Al Jazeera's Sami Zeidan about the debt crisis, what caused it and how to fix it.
"The banks have said, leave us deregulated, we know how to run things, don't put government in to meddle. Then with that freedom of maneuver they took huge gambles, and even made illegal actions, and then broke the world system. As soon as that happened then they rushed out to say 'bail us out, bail us out, if you don't bail us out, we're too big to fail, you have to save us'. As soon as that happened, they said 'oh, don't regulate us, we know what to do'. And they almost went back to their old story, and the public is standing there, amazed, because we just bailed you out how can you be paying yourself billions of dollars of bonuses again? And the bankers say, 'well we deserve it, what's your problem'? And the problem that the Occupy Wall Street and other protesters have is: you don't deserve it, you nearly broke the system, you gamed the economy, you're paying mega fines, yet you're still in the White House you're going to the state dinners, you're paying yourself huge bonuses, what kind of system is this?

When I talk about this in the United States, I'm often attacked, 'oh, you don't believe in the free market economy', I say, how much free market can there be? You say deregulate, the moment the banks get in trouble, you say bail them out, the moment you bail them out, you say go back to deregulation. That's not a free market, that's a game, and we have to get out of the game. We have to get back to grown-up behaviour."

Jeffrey Sachs, Columbia University

Run over by gs said...

How Goldman Sachs and Other Companies Exploit Port Truck Drivers — Occupy Protesters Plan to Shut Down West Coast Ports in Protest

Occupy organizer Kari Koch in Portland says that their action is aimed at disrupting business as usual for "Wall Street on the waterfront." In particular, they are targeting EGT (Export Grain Terminal) and Goldman Sachs. EGT is part of a multinational conglomerate, and the company is engaged a labor struggle with the International Warehouse and Longshore Union in Longview, Wash., and Goldman Sachs, much maligned for its shady business dealings, which were part of the economic collapse, owns half of SSA Marine, which operates four terminals at the Port of Long Beach and also owns the trucking company Shippers Transport Express (more on them below).

Vote with your feet said...

US Markets A Great Place to Divest (The Infomercial)

Its time for a "true" commercial on the US (and Global) Financial
Markets. Our new slogan "US Markets are a Great Place to Divest" and
"Global Markets are Also A Great Place to Divest." At last no false
advertising here, or on CNBC or Bloomberg, or on Fox, or on CNBC.....

Vortex said...

The Fed, MFG and Reg. T

I think there is sufficient evidence today to conclude that
Re-Hypothecation is at the root of the customer losses at MFG. This
Reuters story started the discussion on re-hypothecation. There have
been several additional articles on this at Zero Hedge,  (link, link)
and FTAlphaville (link, link).  Let me add one additional bit of info.

The Canadian customers of MFG got their money back within 10 days of
the MFG bankruptcy. The accounts that have lost money are either USA
or UK based. In Canada, re-hypothecation is not permitted. I got these
comments from a Canadian MFG account holder:

   The trustee where segregated MF Global Canada customers' funds
were held was RBC Dominion Securities. I don't think any of these
funds ever left the trustee in Canada. Likelihood is if they left, the
Canadian government would have made the parent Royal Bank of Canada
eat up the losses and make full restitution.

We shall see in the coming weeks if, in fact, re-hypothecation is the
cause of the problems. I’m convinced it is.

The rules on broker's ability to A) Hypothecate and B) Re-hypothecate
in the USA are spelled out in Reg T. This set of rules has been
established by our good friends at the Federal Reserve Bank. Let me
provide some telling words on this re Reg. T rule 15c3-3: (emphasis

• Except as otherwise agreed in writing by the OTC derivatives dealer
and the counterparty, the dealer may repledge or otherwise use the
collateral in its business;

• In the event of the OTC derivatives dealer's failure, the
counterparty will likely be considered an unsecured creditor of the
dealer as to that collateral;

• The Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et
seq.) does not protect the counterparty.

Well there you have it. Reg. T does permit the broker to “repledge”
(AKA re-hypothecate).

Players in place said...

Wealthy Patriots Wage Class War

Audience Calls for Integrity

Michael Moskow, current vice-chairman and senior fellow on the global economy at CCGA and former head of the Chicago Federal Reserve, stood at the podium as Robert Shiller took questions from an upset audience. One attendee noted in an email to me that questioners were professionals, "not the Occupy Wall Street crowd who were accused of inciting 'class warfare' at the podium."

During the brief Q&A two men, one a former long-term Wall Street professional, asked questions about how we move forward when there is so little confidence. They cited the lack of integrity in the global financial markets.

After that, I asked how one creates a futures index (as Shiller proposed) in which one can have confidence without acknowledging the existence of fraud and vigorously prosecuting fraud. There was fraud by loan originators, fraudulent securitizations, and even fraud in the residential mortgage backed securities (RMBS) that backed a different hedging instrument, the ABX index.

The first time the word "fraud" was uttered that evening was when I posed my question.

Shiller himself never used "fraud." The most he would say in his so-called response was "some people aren't very nice." Really? It sounded rehearsed, and it struck most people in the audience as a shameful cop-out. If this is what economists are teaching students at universities, students should demand a refund of their tuition. Kindergarten children are given better warnings about strangers with candy.

Robert Shiller and Michael Moscow, the retired head of the Chicago Fed, appeared smug to me about this anonymous struggling working man's plight.

They seemed to be promulgating what Elizabeth Warren calls the "myth of the immoral debtor." Yet being in debt or even going bankrupt is not a crime in the United States. Loan originators' submission of fraudulent documents is a crime. Securities fraud is a crime. Foreclosure fraud is a crime.

Class Warfare

Alumni of the Federal Reserve, corrupt politicians, and willfully blind academics would be correct to say that evening was a case of "class warfare." Well-heeled U.S. patriots declared war on the lack of class demonstrated by their financial peers.

Shake out of it said...

"Perhaps Americans can revel in their unique freedom of action when
they step to the voting booths next fall, and vote for one of the two
choices offered to them by their corporate oligarchs, while their
elected representatives continue to ignore massive bank frauds and the
gaming of the system by the monied interests, now colloquially called
the 'one percent.'

And don't step out of line or speak up because you may be pepper sprayed at will."

Gangs all here said...

This video explains causal links between OTC derivatives, the financial
crisis of 2008, Alan Greenspan, Robert Rubin, Larry Summers, Jon Corzine
and MF Global.

JEHR said...

Once again, thank you, faithful commentators.  We always enjoy reading your links.

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