Carta a Jeffrey Owens

Panama, September 3, 2009

Mr. Jeffrey Owens
Director – CTP
OECD
France

Dear Mr. Owens:

The OECD is not a true international organization as are, among others, the International Monetary Fund (IMF), the World Trade Organization (WTO) and the International Maritime Organization (IMO). The OECD is no more than a club or cartel of 30 rich countries, whose objective – according to its by-laws – is “to help its member countries to achieve sustainable economic growth and employment and to raise the standard of living in member countries.

One of the purposes of the OECD is to avoid the competition other financial centers, may pose for the OECD members, its partners, aided by technological advance. Thus, in the document entitled Improving access to bank information, the OECD states that the liberalization of the financial markets was promoted by them as “a response to the threat to financial markets posed by offshore financial centers. Such financial centers, in the 1960’s and 1970’s, attracted foreign financial institutions by offering a minimally regulated banking system and minimal taxation, at a time when technological advances made them more readily accessible”.

The members of the OECD are largely responsible for the world crisis by neglecting to realize that the relaxation of their regulations would lead to harmful speculation with financial instruments. Therefore, they have now tried to cover up their responsibility with an insidious campaign, filled with fallacies against the so-called Tax Havens, which they have tried to blame for the disaster.

In the year 2000, the OECD members spoke of a Level Playing Field, a goal they did not achieve because of its absurdity; today, they have re-labeled it as “Transparency and Exchange of Information.” I transcribe the words of the Secretary General of the OECD, Mr. Angel Gurría: “What has happened is nothing less than a revolution. For decades it has been possible for taxpayers to hide income and assets from the taxman by abusing bank secrecy and other impediments to information exchange. What these developments show is that this will no longer be possible.

OECD members themselves have shown us that the whole purpose of this campaign is to prevent competition from other financial centers. Let’s see: The United States, the principal member and largest contributor (25%) to the OECD budget, is undoubtedly the largest Tax Haven in the world. This country, which has the wealthiest economy, is the safest place for investment. IT DOES NOT TAX FOREIGN PASSIVE INVESTMENTS. But that is not all: IT DOES NOT PROVIDE INFORMATION TO THIRD COUNTRIES ABOUT THESE INVESTMENTS.  And for greater guarantee of anonymity to its foreign investors, it enters into an agreement with foreign financial intermediaries, which is known as QUALIFIED FINANCIAL INTERMEDIARY, guaranteeing that NOT EVEN THE IRS WILL KNOW THEIR CLIENTS.  This is clear evidence that the interest of the members of the OECD is to get rid of the competition, not any issues related to taxes.

Our question to Mr. Owens and Mr. Gurría is whether the OECD has asked the USA to change its laws to eliminate tax advantages for foreigners, or if it has asked them to get rid of the QI agreements that to this date add up to more than 7500 executed (with 5000 in force). See the Senate hearing transcription on the UBS case at https://hsgac.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=3b2c1960-1… -32k) so that Timothy Geithner, the US Treasury Secretary, could be in a position to provide information on deposits of Mexican taxpayers, requested by the Mexican Secretary of Finance, Agustin Carstens.

The foregoing confirms that the article The G20 and Tax Haven Hypocrisy  published by The Economist magazine in its March 26, 2009 issue was right on track. The Global Forum of Transparency and Exchange of Information is the summit of hypocrisy and another step in the conspiracy to eliminate financial competition.

The OECD cannot go on with this agenda. On the contrary, it should follow the example of the USA and promote healthy competition, such as this great country has done. In fact, we believe it would be much more productive for our countries to become allies in the fight for the right of all nations of the world to use their tax policy as a means to attract foreign capital.  This includes confidentiality vis-à-vis abusive governments, both for their tax rates and for their confiscatory policies.

Lastly, allow me to remind you that on July 9, 2008, the IMF, a true international organization and part of the UN system, integrated the OFFSHORE FINANCIAL CENTER ASSESSMENT PROGRAM with the FINANCIAL SECTOR ASSESSMENT PROGRAM (Public Information Notice (PIN) No. 08/82, July 9, 2008).

Since then, the IMF eliminated any discrimination between “Offshore” and “Onshore,” explaining its reasons as follows: “Typically, the assessments reviewed a jurisdiction’s compliance with supervisory standards in banking, and with the anti-money laundering and combating the financing of terrorism (AML/CFT), and where applicable also assessed compliance with supervisory and regulatory standards in the insurance and securities sectors. Adherence to all four international standards among OFCs was broadly comparable or better, on average, than other countries, reflecting the higher than average incomes of OFC jurisdictions”.

Had the OECD done its job, as the IMF surely did its own, the economic crisis would have been averted and millions of people would not be out of work.

Very truly tours,

Eduardo Morgan, Jr.

Former ambassador of Panama in the United States of America