MICHAEL HORNE FUGITIVE FROM THE SCORPION TECHNOLOGY CRIMINAL INDICTMENTS AS WELL AS OFFSHORE BOILER ROOM OPERATER JACK FLADER ESQ. ZETLAND IS ON THE NEW ZEALAND SECURITIES EXCHANGE COMISSION WEB SITE. THEY HAVE BEEN BUSY LITTLE BEAVERS PUSHING TBXR AND ASAP. MADISON AND WALL WORLD WIDE IS THE IR COMPANY FOR TBXR. PACIFIC CONTINENTAL SECURITIES CORP WHO'S BROKER DEALER LICENCE WAS PULLED WAS ALSO ACTIVE IN BOTH TBXR AND ASAP.
NASDAQ AND SEC CONTINUE TO LOOK OTHER WAY
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20 December 2001
HONG KONG AUTHORITIES SEEK NEW ZEALAND VICTIMS OF TELEPHONE "BROKERS
216.239.37.100
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offshore.com.hk
ZETLAND FINANCIAL GROUP Newsletter 13/F., Silver Fortune Plaza, 1 Wellington Street, Central, Hong Kong Tel : (852) 2525 7718 Fax :(852) 2140 6833 E-mail Address: intray@offshore.com.hk Web Site : www.offshore.com.hk Zetland Financial Services Limited Zetland Corporate Services Limited
MARCH 2002 Issue No: 03/2002
NEWS FROM ZETLAND
Hong Kong Holidays
March 29th is a holiday in Hong Kong and our office will be closed.
Travel schedule
Jim Sutherland will be in Australia from 21st March. Michael Horne will be in San Francisco from 11th March for a few days. Jack Flader will be in London, Monte Carlo (attending the International Tax Planning Association meeting) and Copenhagen returning to Hong Kong on 17th March. Jack Flader will also visit Shanghai from March 25th to 29th attending the Asia Pacific Offshore Institute meeting.
Zetland International Trust Company Limited
Gemini International Trust Company Limited our licensed Belize trust company has recently changed its name to Zetland International Trust Company Limited to conform to the new identity of our Group Company and two main subsidiary companies.
Trade Marks
We are pleased to announce that our trade marks "ZETLAND" and the blue "device" have been accepted for registration in Hong Kong.
E-Mails
Zetland is changing its Internet Service Provider over the weekend of 2/3 March. There may be some temporary delays in e-mails getting through to us but please keep trying!
SWITZERLAND - TOP TAX HAVEN
According to the EIU publication of Tax Havens and their Uses 2002, Switzerland remains the top tax haven for rich individuals. One third of the US$3 trillion amount of individual wealth estimated to have been held in tax havens in the year 2000 was looked after by Swiss-based wealth managers. The UK was the second most important centre for private offshore asset management, with 15% of the total, while Caribbean havens jointly accounted for 10%.
Tax havens have been under pressure over the last year or two, accused of money laundering and endangering world financial stability. The author of the publication says tax havens have responded by tightening banking and financial supervision and now have exemplary regulatory systems. It is being predicted that tax havens are likely to see renewed growth in their share of the global investment industry.
INVESTMENT OPPORTUNITY - YACHTS OF THE AMERICAS
Zetland Financial Services Limited will shortly begin to offer a private placement of shares in the Bermuda listed company Yachts of the Americas Limited. This company has been established to build a manufacturing plant in the Yucatan, Mexico for the production of luxury motor yachts and has recently acquired the assets, designs and trade marks of the well respected US boat manufacturer Tollycraft. Jim Sutherland has been working on the project for some time and currently serves as Chairman of Yachts of the Americas. Anyone interested in receiving an Executive Summary of the proposal should contact Jim on jcs@offshore.com.hk.
FATF - UPDATE
The Financial Action Task Force (FATF) held its Plenary meeting in Hong Kong early last month. The meeting was attended by 60 jurisdictions from FATF and 9 international organisations. Hong Kong is chairing the FATF this year. The Forum stressed the importance that all countries in the world adopt and implement the Eight Special Recommendations to counter the financing of terrorism agreed on 30 October 2001. In June 2002 the FATF will initiate a process to identify jurisdictions that lack appropriate measures to combat terrorist financing.
The FATF reviewed its list of non-cooperative countries and territories (NCCT) in the fight against money laundering. No changes were made to the list of 19 countries that were identified as NCCT's in September 2001. At its Plenary meeting in June 2002, the FATF will review again the situation of each NCCT and will deliberate to taking counter-measures against those jurisdictions that have not made adequate progress. Nauru is already subject to the counter-measures applied by the FATF members.
PANAMA - UPDATE
Panama recently unveiled an action plan to root out money laundering to clean up its banking sector. The two year programme sets out to better monitoring of suspected money transfers, sharing more information with the FBI, toughen prison sentences for money launderers and to improve regulation of Panama's financial sector. The action plan will also focus on curbing money laundering at Panama's casinos, gaming halls and in the country's free trade zone, which is home to 1890 international companies that generate some US$5 billion in re-exports annually. The programme, financed via an Inter-American Development Bank loan, is being initiated in response to the pressure exerted by the FATF.
Panama was blacklisted by the FATF in 2000 and was removed from the list in June last year after passing a new law against money laundering. The country, which is host to 85 international banks has for long marketed itself as an offshore centre for multinational companies to finance their international operations. Bank Deposits are not taxed and profits are exempt from local income tax.
BAHAMAS - ON THE DECLINE
Until two years ago The Bahamas stood out as one of the world's premier asset and tax haven nations. That is no longer true. Since June 2000 the island's offshore legal framework has been diluted that was designed to protect financial privacy and wealth in the islands. Last month the final coup de grace came in the signing of a tax exchange agreement between Nassau and Washington, DC, a demand that Bahamas officials had rejected for over 20 years. Under the new accord US IRS requests for information about criminal and civil tax investigations routinely will be handed over by the Nassau government. The Deputy Chief of Mission at the American Embassy in Nassau had informed last year that the sharing of this kind of information was not unusual. Bahamian banks, at their own request, are already providing information to the IRS pursuant to the Qualifying Intermediary (QI) agreements.
Early this year the Government had increased the annual license fee payable by the IBC's from US$250 to US$350. This increase has added to the negative impact of the jurisdiction and has placed other offshore jurisdictions like BVI and Belize in a more favourable position to its comparison. Recently Citibank had cut back its consumer operations there by selling its Visa card business to the islands' Scotiabank.
NIUE - UPDATE
The tiny offshore jurisdiction of Niue has buckled under pressure from the OECD and has announced that it will be dismantling its offshore banking legislation. The pacific island nation has been on the OECD's blacklist of non-cooperative tax havens for two years. Niue's Premier has informed that offshore banking licenses will not be renewed on the island and the Offshore Banking License Act will be put to Parliament on 7 March 2002 to be repealed.
ASIA - TOP IN FOREIGN CURRENCY RESERVES
The Hong Kong Monetary Authority (HKMA) recently announced the foreign currency reserves of Hong Kong, which stood at US$111.3 billion at the end of January 2002. The reserves represent over seven times the currency in circulation or about 43% of Hong Kong Dollar M3, one of the highest ratios in the world.
In terms of ranking, Hong Kong is the fourth largest holder of foreign currency reserves after Japan (US$400.9 billion), Mainland China (US$212.2 billion) and Taiwan (US$123.6 billion). South Korea (US$104.3 billion) and Singapore (US$75.8 billion) were ranked fifth and seventh respectively. United States (US$68 billion) was ranked eighth with Switzerland (US$53.9 billion) taking the tenth position
CHINA - FINANCIAL OUTLOOK
Following are the comments from Mr. K C Kwok, Chief Economist of the Standard Chartered Bank in Hong Kong on the speech given by Mr Dai Xianglung, Governor of the People's Bank of China about China's financial outlook, during a recent gathering in Hong Kong:
(a) Mr Dai said at least 3 times that China's financial system is in a "safe operating situation". He also said at least 2 times that one of his main duties is to make sure that China's financial system is safe. While the outside world, and the media in particular, keep on emphasizing the need to reform the Chinese banking system, I get a feeling that looking at the issues from a Central Banker's perspective, Mr Dai would certainly put stability and safety on top of everything else. In any case, this is also in line with the broader Party line in China that "stability overrides everything". This also explains why supervision is given such a heavy emphasis in China's banking reform.
(b) Mr Dai quoted various numbers to show that the RMB had appreciated against the USD or in trade-weighted terms since 1994 (when a unified exchange rate was introduced). He said that some studies show said that in purchasing power parity terms, the RMB may be worth around 2 - 3 to the USD. However, in reality, he said that the RMB's exchange rate should be determined by traded goods and the current exchange rate is probably the right one. He does not see any need to appreciate nor to depreciate. He did not mention anything about the Yen. He also said that the trading band should be widened in due course under the managed floating exchange rate regime. All in all, I think the bottom line is that the RMB will remain stable.
(c) In talking about RMB convertibility, Mr Dai highlighted the difference between liberalization of capital account transactions and RMB convertibility. He said that China's rising FX reserves, the increase in direct investment by Chinese companies overseas, and the increase in FX assets of Chinese banks, highlight the transition of China from the old model of attracting capital inflow to the new situation of having more and more balanced capital inflow and outflow. WTO accession will mean that this trend will continue. The authorities will therefore have to accelerate the process of liberalization of capital account transactions. But full convertibility of the RMB is a different issue -- there is no timetable. One should understand that capital account convertibility means that transfer money in/out of China for portfolio investment or for other purposes would be allowed. But this does not mean that such transactions could take place freely in the way things happen say in Hong Kong -- application and approval for each deal are still required. Look at developments in Taiwan over the past 15 years or so and one would have a better understanding of what capital account convertibility means in China.
(d) Mr Dai mentioned that money supply growth should grow by 5% - 6% points higher than nominal GDP, and that this was what was required to support economic growth. He hinted at the potential longer-term inflationary problems of such a policy. But he also said that the shorter term concern is not inflation, but sustained economic growth. He elaborated no further. But my view is that the rapid rate of money supply growth in the past has resulted in a lot of money in the banking system looking for potential homes -- and the danger in the coming years will be financial market bubbles and instability.
(e) I sensed a very positive tone from Mr Dai regarding the ways through which Hong Kong could work closer with the Mainland in banking. There are various examples dotted here and there in his speech and in his answers to questions: the Chinese banks will manage more of their FX assets in Hong Kong (but there was no mention of the management of the central government's FX reserves), there could be closer cooperation between the banks in HK and those in China in specific business segments, HK professionals and managers could be employed to work in Chinese banks in China, etc.
QUICK TAKES
Expensive oranges!!!
We recently read with interest about Japan creating the world's most expensive orange grove using taxpayers' funds. At US$307,000 per acre, we wonder if this is the beginning of the end for Japan's reformist government?
Pearl River Delta
The Pearl River Delta - basically the best economic parts of Guangdong Province in southern China - is home to approximately 86 million people, boasts gross domestic product of approximately US$88 billion, accounts for approximately 31% of total China exports and attracts more than 27% of foreign direct investment in China. If you throw in Hong Kong's gross domestic product of US$163 billion, then the "greater" Pearl River Delta economy dwarfs that of Thailand, the Philippines, Malaysia, Singapore and Indonesia and gets pretty close to Taiwan. It makes us wonder why foreign business people stray much further north? Something to think about as China joins the World Trade Organization.
The Document Shredding Industry
According to the National Association for Information Destruction (yes, it exists), we understand that the document shredding industry in the USA generates in excess of US$1.5 billion per annum with more than 600 companies throughout the nation providing this expertise. Legitimate reasons such as consumer privacy and protection of corporate secrets (yes, competitors apparently search the garbage cans!) fuel most of this revenue. We wonder why Enron was apparently handling this task in-house?
Fishy quotation
We recently noticed the quotation on Nasdaq Japan of a hi-tech sushi restaurant chain in Japan - Kura Corp. (2695). The restaurants use the conveyor belt system known to sushi-lovers in Japan, but they now include a touch-screen system that allows the hungry customer to order what he/she wants by touching an individual fish swimming on the screen. What will they ever think of next!?
Thai rumour
The minister responsible for "cleaning up" Thailand's "famous" nightlife is apparently facing a change in portfolio. We gather this is a victory for the "wine, women and song" element of Thai society and no doubt will be well-received by many foreign nationals who visit Thailand quite frequently. Politics…
Billing arrogance
A telephone company in New Zealand apparently charged a customer a "penalty for being an arrogant bastard". We know (and actually appreciate) the Kiwis' reputation for straight-talking, but we imagine most people might find putting such a statement on a customer's bill is, well, a little "arrogant"...after all, we think the advent of the Internet has possibly proven that telephone companies have been eating up on consumers for decades simply by charging us for what we now pretty much get for free!
Ad: Innovative Western farmers needed!
Many people in China would agree that China joining the WTO is a good thing. Most people - farmers - are not so sure. This reflects a recent claim by a research centre in China that indicated the average farmer will lose approximately 5% of their annual income this year...the poorer farmers will lose even more. The sheer size of China's population means that approximately 25 million farmers will earn quite a bit less this year than last...and at a current average annual income of US$285, this is not the sort of benefit one might expect when joining the WTO. We have taken it upon ourselves to call for innovative Western farmers that not only bring technology and lower prices but a solution to the tens of millions of people (especially their children) who will suddenly find themselves unemployed and/or desperately seeking food. After all, history (particularly in China) has taught us that hungry masses do not lead to anything positive!
USA style shareholders' lawsuits for China?
We read recently that a court in Harbin (Northeast China) allowed three investors to file a lawsuit against a quoted company in relation to alleged fraud. The company was fined recently for, among other things, overstating profits. We shake at the thought of shareholder derivative and class action lawsuits coming to the world's largest country. With a fast-growing economy, even faster-growing capital market and more than 80 million people with brokerage accounts, well, we think you get the picture…more lawyers and accountants!!! Perhaps the companies will learn how to "amend" or "restate" their accounts…sound familiar?
The information contained in this Newsletter regarding organizations, companies and transaction dates and prices is for reference purposes only, and is provided by the Zetland Financial Group as a complimentary service. Many sources were used in compiling this information including specific companies' marketing materials, the South China Morning Post, Far Eastern Economic Review, Finance Asia, The Economist, International MoneyMarketing, Financial Times, BusinessWeek, Asian Business and the Asian Wall Street Journal. Due diligence must be exercised and additional research should be conducted before acting on any opinions or purchasing any securities in the companies mentioned herein. The Zetland Financial Group, its directors, officers, shareholders, employees, affiliates, agents, or the like, do not warrant the accuracy or reliability of any information made available herein. In accordance with the Personal Data (Privacy) Ordinance, Chapter 486, of the Hong Kong Special Administrative Region of the People's Republic of China, the Zetland Financial Group hereby informs the recipient of newsletter that he or she has the right to demand that the Zetland Financial Group discontinue sending such material to him or her. In the event the recipient makes such a demand, the Zetland Financial Group will be obligated to discontinue and shall discontinue distributing newsletter to the recipient without charge. |
