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Strategies & Market Trends : Scamthony Cataldo -- Ignore unavailable to you. Want to Upgrade?

To: scion who wrote (26)	1/14/2004 4:40:54 PM
From: scion	Read Replies (1) \| Respond to of 137

38 International Affairs Review evading up to $40 million in Russian export taxes annually. 48 Importers and exporters need not rely solely on undervaluing contracts, as document falsification is also a viable option. Such bogus trade deals, according to Alexander Livshits, are a large portion of the estimated one billion dollars the Central Bank says is lost due to loopholes in Russian legislation.49 In one case, a deal worth $11 million dollars was entirely devoid of material goods, existing only on paper. The transaction involved a Russian local government, a Russian private bank, a Spanish bank and a joint venture company who negotiated contracts for the purchase of 100,000 tons of Spanish citrus fruits. The negotiators never intended to ship goods to Russia, but rather, to send funds outside of Russia. The Russian local government supposedly paid for the alleged transaction in which no product was shipped.50 Russian government funds paid for the fruit, the Russian private bank authorized payment for the goods based on the joint venture’s submission of documents, the Spanish bank accepted payment and the money was transferred out of Russia. Contrary to what the forged documents indicated, there was no fruit.51 Tax evasion may also be accomplished through a scheme in which Russian businessmen claim to contract for services from foreign consultants.52 In such a scheme the Russian “pays” a foreign company for consulting services, then sends the money to a phony company abroad, which in turn transfers it to the Russian’s foreign bank account.53 It is very difficult to prove that no services were rendered. There are dozens of firms that will perform this job for Russian businessmen for a fee of five to seven percent of the transaction.54 The phony deals - faked non-receipt of payment for exports, tolling, and bogus trade deals, compose the majority of laundered funds from Russia.55 They are not necessarily linked to organized crime, or the traditional revenue source for money laundering: drugs.56 Russian businesses working in an underdeveloped tax enforcement system facing high profit taxes from honest transactions use these methods as a way to compete, and to funnel funds abroad into personal accounts.57 Combined with privatization schemes that place the wealth in the hands of a rich few, it allows the elite to maintain funds outside of Russia in more stable currencies.58 Ties That Bind:CorruptioninBusinessandGovernment Corrupt business practices and officials exacerbate the problem. For example, Russian insurance schemes have become a widespread corrupt business practice. Russian insurance companies earn commissions of 8 - 12 percent from enterprises seeking to avoid payroll tax payments, by channeling money to their employees through bogus policies.59 Employees are often keen on the idea, as they avoid paying payroll taxes. However, in some cases enterprises take out these insurance policies and do not use them to protect employees.