You have to wonder if Warren Buffett isn't in on the same racket, given his interest in 'reinsurance'. At any rate, AIG is getting over a hundred billion dollars in US funny money, so some of us are supposed to give a shit, right?
---------- http://businessmirror.com.ph/index.php?option=com_content&view=article&id=3931:aigs-offshore-strategies-hide-a-scam&catid=28:opinion&Itemid=64 NEW YORK?The company getting the biggest US bailout operated a scam to help clients cheat on US taxes, regulators say. It is AIG, American International Group, the world's largest insurance conglomerate. AIG was run by Maurice "Hank" Greenberg. He was ousted as CEO in 2005 by the board of directors after the New York Attorney General charged him with fraudulent business practices, securities fraud and other violations. These charges did not mention a captive insurance scam that Greenberg, famous as a hands-on manager, would have been involved in approving. AIG took inflated fees from customers, set up reinsurance companies for them in Bermuda, and bought reinsurance from them, effectively giving their clients tax-free cash in that offshore island. Would Greenberg have known that his company was writing such a tax-evading policy for the likes of Victor Posner, a notorious crook who was banned from public companies by the Securities and Exchange Commission (SEC) in 1988? Very likely. The scam was discovered by Terry Mills, who worked for a large insurance company in Delaware and was tasked to investigate the insurance of Posner's NVF Corp. in 1993. Mills found that the premiums were double the going rate. He said, "We were able to find them coverage in the standard market." However, the Delaware Insurance Department did not make the scam public or take any action against AIG, which was so powerful that it intimidated government regulators. (The Delaware regulator who talked to Inter Press Service [IPS] said AIG sent a private investigator to harass him.) Provided the details of what AIG did, company spokesman Andrew Silver replied, "We don't have any comment on that." That is because the captive insurance scam was systemic. "This was not an isolated case...AIG did that a lot," a former insurance regulator said, speaking under condition of anonymity. "AIG helped companies set up offshore captive reinsurance companies. AIG would then overcharge on insurance and pay reinsurance premiums to the captives, giving the captive owners tax-free offshore income." AIG declares on its web site, "We pioneered the formation of captives almost 60 years ago," and it offers management facilities to run the captives in offshore Barbados, Bermuda, the Cayman Islands, Gibraltar, Guernsey, the Isle of Man and Luxembourg?where corporate and accounting records are secret and taxes minimal or nonexistent. It was all in the family. Jeffrey Greenberg, the AIG CEO Greenberg's son, ran the Marsh Captive Management Group to help corporate customers set up reinsurance companies in offshore Barbados. Jeffrey was fired after his company was discovered rigging bids. Doug McLeod, editor of the trade publication Business Insurance, said there were captives that hardly ever paid any claims. McLeod explained that he saw from the reinsurance records of one of the AIG companies that it had a captive. It reported a pretty large amount of premiums sent to that captive, but very little in claims payments coming back. David Schiff, editor of Schiff's Insurance Observer, told IPS: "There are more captive insurance companies in Bermuda than any place else. The whole purpose is that it's not regulated by the US." He said, "How do they tell us Microsoft is paying too much for workers' comp [compensation]? There's no way for a regulator to know that." He said, "Fraud is hard to find unless you get tipped off." McLeod pointed out that several oil companies were joint shareholders of Oil Insurance Ltd., an oil company group captive. There are more than 1,800 captive insurance companies based in Bermuda, with over 60 percent owned by American interests. McLeod said, "A majority of Fortune 500 companies have captives." He pulled out a copy of the Tillinghas Captive Directory and ticked off US companies with Bermuda captives: Levi Strauss: Majestic Insurance International, Caterpillar Tractor: Caterpillar Insurance Co. Ltd., FMC Corp (tractors): Financial Reassurance Co. and Transcon Insurance, Carnival Corp.: Trident Insurance, all managed by Marsh. Other big firms with captives were Schlumberger (oil-field services): Harrington Sound Insurance and Castle Harbour Insurance, managed by JLT, and United Van Lines: Vanliner Reinsurance managed by Codan Management. The insurance broker, who did not want his identity disclosed, said, "Reinsurance has always been a traditional way of moving money. You can do a "rent-a-captive" where you don't even have to set up your own captive, you just run the funds through a bookkeeping system: it's even cheaper. The question is whether the IRS [US Internal Revenue Service] lets you get away with it." In 2002, the IRS and the Treasury required transactions with captives to trigger disclosure, list-maintenance and registration requirements "based on information that many of these arrangements were being used to shift income improperly to PORCs [producer-owned reinsurance companies] for purposes of avoiding income tax." However, in September 2004, the Bush administration abolished that rule. The IRS commissioner said, "Based on disclosures by taxpayers and examination of tax returns, we have determined problems associated with these transactions are not as prevalent as initially believed." The multibillion-dollar bailout of AIG by the US could trigger extensive examinations by accountants to make detailed analyses of the company's offshore strategies. What they learn could stop illicit practices by AIG and lead to laws to prevent other insurance companies from doing the same. _______________________________________________ Marxism-Thaxis mailing list [email protected] To change your options or unsubscribe go to: http://lists.econ.utah.edu/mailman/listinfo/marxism-thaxis
