'STOP TAX HAVEN ABUSE': COOKS TOLD

Nearly a decade ago now, Dr Terepai Maoate was a hero to the offshore industry-not public enemy number one.
First, legislative act of his new government in 2000 was a repeal of an amendment to the Electoral Act requiring political parties to disclose funding sources.
Such an amendment, if left on the books, would have put the Cook Islands way ahead of its major trading partner, New Zealand.
However, the amendment was repealed, the industry heaved sighs of relief, and rumours grew fresh energy with tales of offshore bankers donating tens of thousands of dollars to local political parties.
Surprising twist is that, in November 2008, Maoate told ISLANDS BUSINESS he was in fact in favour of the amendment his own government repealed.
"I am still very much in support of it," he said.
"It can be very dangerous if we don't have that legislation in place because we would not want to allow anyone from outside to be able to influence elections here.
"That's the reason [founding leader] Albert Henry lost his seat. I am hoping the committee that is working on the electoral act will include it in the act."
An official claims Maoate came under "huge pressure" from government MPs to get rid of the new amendment, introduced by an outgoing prime minister, Sir Geoffrey Henry, in 1999.
Ten years later, the offshore industry continues to occupy a controversial role as global pressure builds to "stop corruption" estimated at costing world trade US$1 trillion every year.
Or, in full, US$1,000,000,000.
"The hard truth is that the Cook Islands has developed a bad reputation in the US courts as being a debtor haven," reads one asset protection advisory site, Adkisson and Riser's.
Outlining the case for the 2007 Stop Tax Haven Abuse Act, US Senator Carl Levin described it this way: "In effect, tax havens sell secrecy to attract clients to their shores.
"They peddle secrecy the way other countries advertise high quality services. That secrecy is used to cloak tax evasion and other misconduct, and it is that offshore secrecy that is targeted in our bill."
Now President Obama became a co-sponsor of the bill after learning from a 2006 study that an estimated US$100 billion is lost to tax havens each year.
Embarrassing stuff, especially since a Pacific Economic Survey funded by AusAID in 2008 places the Cook Islands at the top of a regional chart for governance effectiveness and control of corruption.
Based on a 2007 World Bank governance review of 208 different countries, that survey contrasts with the Obama Act which lists four of 35 countries under the bill as coming from the Pacific-Cook Islands, Nauru, Samoa and Vanuatu.
In the year ending 30 June 2007, revenue from licenses just topped NZ$1,085,724, about US$500,000. Not a huge amount for an industry that one trust claims "is now recognised as the world leader in the protection of trust assets".
Attacking the media for reports on alleged corruption within the industry, former government official turned offshore banker Brian Mason accused daily the Cook Islands News of "irresponsible journalism."
"If the offshore banks in the Cook Islands are involved in providing funds for terrorism, then all of these agencies are either complicit in it or not doing their jobs."
Mason denied this was the case. "Rather we have an ill-informed, gratuitous and baseless opinion from the editor of a newspaper."
And of the government of the Cook Islands, whose deputy prime minister claims evidence of "money laundering" by an offshore bank in an attempt to legislate it out of existence, see main offshore story."
The bill marks more than a quarter century of what one offshore banker described as "extraordinary" cooperation between the industry and government.
Extraordinary it has been.
Members of Parliament from both sides of the house bent over backwards to enable offshore laws, holding numerous in-camera, off-the-record, closed door sessions to "brief" members on the bills, including frequent amendments.
Offshore banking proved to be one area of unanimous law-making, aside from increases in pay and perks, with opposition figures declaring support throughout the industry's history in the Cook Islands.
Those laws include one that bans "disclosure" of information relating to offshore banks, while another bans discussion altogether. Penalties for breaking those bans go up to US$50,000 and a two-year stint in prison.
Local media rarely break the bans and so far there has been no cases brought against them for doing so-perhaps because such a move might spark an uncomfortable debate over the constitutionality of offshore laws that interfere with the right under section 64 (e) to "freedom of speech and expression."
Much of the country's offshore laws are rumoured to have been written by offshore trusts. At least three of the country's solicitor-generals operated a revolving door between Crown Law and doing work for the offshore industry.
One former solicitor general even attempted to move dodgy "letters of guarantee" on international markets.
Crown Law was not the only state agency with former offshore workers.
Even the country's well regarded audit office lists a former general manager from Cook Islands Trust Corporation, one of five offshore banks based on the capital island, Rarotonga.
Perhaps the most high profile example of poacher-turned-gamekeeper is the chairman of the Financial Supervisory Commission itself.
Trevor Clarke is best known as one of the authors of the Winebox Affair, as well as taking a leading role in the Letters of Guarantee scandal.
Action in the Cook Islands against offshore banks comes as Swiss bank USB was recently forced to pay US$780 million to the US Government for operating secret tax accounts.
UK Prime Minister, Gordon Brown, last month called for global action against offshore banks after yet another huge fraud was exposed involving a knight of the realm, with the Telegraph reporting "clouds gather over tax havens."