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Spain’s economy minister sees ‘significant’ job creation in 2014 | Business | Reuters

Spain’s economy minister sees ‘significant’ job creation in 2014 | Business | Reuters.

Spain's Economy Minister Luis de Guindos arrives at the Parliament to attend the weekly government control session in Madrid October 30, 2013. REUTERS/Juan Medina
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MADRID (Reuters) – Spain’s Economy Minister said on Wednesday that job creation in 2014 would be “significant” as a tentative economic recovery kicks in, but a poll showed most Spaniards do not expect any clear improvement until 2015.

“2014 will see the net creation of jobs, higher even than we predicted in September in the budget, and the jobless rate will fall,” Luis de Guindos told Cadena Ser national radio, declining to put a number on expected jobs created.

Spain exited a recession in the third quarter of last year but the economy is still sickly and with unemployment officially predicted at 25.9 percent in 2014, roughly where it is now, there is little perception of a real recovery on the streets.

Separately on Wednesday, a poll of 1,000 people published in newspaper El Mundo showed that 71 percent of Spaniards believe the recovery and the end of the crisis will start in 2015 at the earliest.

The country is still reeling from a decade-long housing bubble which burst more than five years ago, forcing a 41-billion euro ($56 billion) bailout of the country’s banks, which were glutted with property debt.

The center-right government decreed a labor market reform in late December to encourage employers to take on more part-time workers and to simplify contracting in hopes of fuelling job creation.

“We believe the labor reform will make the market more dynamic … in 2014,” Guindos said in the interview recorded a few days ago.

However one think tank has said the changes fail to tackle Spain’s notoriously two-tiered labor market, with security for long-term fixed contracts and practically none for shorter-term ones.

Guindos added that the economic recovery would take root thanks to an expected tax reform which would look to reverse a personal income tax rise implemented when the government came to power in 2011, and cut

 

If Mexico is the next Brazil in oil production, brace for disappointment

If Mexico is the next Brazil in oil production, brace for disappointment.

by Kurt Cobb, originally published by Resource Insights  | DEC 22, 2013

Recent reforms that would open oil exploration and development in Mexico to major oil companies for the first time in decades has the media all atwitter about the prospects of a reversal in declining Mexican oil output and a possible doubling of production. The reforms have brought out comparisons with Brazil which has a similar arrangement in which the country’s state-owned oil company works with major international oil giants to develop Brazil’s petroleum resources. Adding to the frothy atmosphere, former Brazilian President Luiz Inacio Lula da Silvaproposed a partnership between Mexico and Brazil to develop oil resources in both countries.

Mexico regional map http://commons.wikimedia.org/wiki/File:Mexico_regional_map.pngIn a world with daily average oil prices hovering near record levels, such news might be welcome if only we could actually count on the accompanying optimistic production forecasts. But, it’s instructive to look at what actually happened in Brazil since the time its potential as a major new oil producer was touted several years ago.

Brazil had discovered large oil deposits in ultradeep (30,000 feet down) reservoirs far offshore. In 2009, Petroleo Brasileiro SA (Petrobras), Brazil’s state-owned oil company, announced that it would invest approxmately $175 billion in oil exploration over several years to boost Brazilian liquid fuel production from 2.4 million barrels per day (mbpd) in 2008 of oil, biofuels and other liquids to 4.6 mbpd in 2015, a move that would make the country a major oil exporter.

Let’s see what kind of progress Brazil has made so far. In 2012 the country produced 2.65 mbpd of liquid fuels, making hardly any progress toward the goal announced for 2015. (The figures for oil proper, that is crude oil plus lease condensate which is the definition of oil, were 1.81 mbpd in 2008 and 2.06 mbpd in 2012.) In fact, instead of contributing to the worldwide supply of exports, Brazil remains a net importer of oil according to the U.S. Energy Information Administration (EIA), and those imports grew from 36,470 barrels per day in 2011 to 155,040 barrels per day in 2012.

The large Brazilian oil company OGX Petróleo e Gas Participações SA filed for bankruptcy recently “after disappointing output from offshore OGX wells set off a crisis of investor confidence,” according to Reuters. It’s no surprise that state-owned Petrobras is also finding it far more difficult to exploit its deep sea oil resources than originally anticipated. Admittedly, there are other problems at Petrobras. It has become a tool of economic policy for keeping unemployment low, saddling it with investments that it might not otherwise have made as a private company. But that doesn’t change the fact that exploiting oil far offshore at extreme depths is difficult.

Mexico’s state-run oil monopoly, Petroleos Mexicanos (Pemex), has seen its production drop from 3.45 mbpd of crude oil proper in 2004 to just 2.59 mbpd in 2012 according the EIA. Reforms that will give international oil companies new access to Mexican oil fields are supposed to change that trend. It’s one thing to let private companies drill previously monopolized fields. It’s another to raise overall nationwide production significantly as a result. Just ask the Brazilians. The easy-to-get oil has already been harvested in Mexico and Brazil. The hard-to-get oil comes next, and well…it’s proving hard to get.

Will Mexico fare better than Brazil? Art Berman, a petroleum geologist and consultant who accurately forecast the bust for shale gas investors, offered this analysis in a recent email:

 I have worked in Mexico since the early 1990s inside Pemex. There is a reason that no significant discoveries have been made since the 1970s–no reservoirs.

 The Campeche Sound [in the Bay of Campeche] has reservoirs thanks to the biggest frack job ever, the Chicxulub meteor impact. The Golden Lane reef trend, discovered much earlier, has been fully explored with no new discoveries. Beyond that, almost nada.

 The Eagle Ford Shale play [in Texas] extends into Mexico and, so far, all tests have yielded [natural] gas. There is a potential oil play in theTampico area from the El Abra Shale that sourced the Golden Lane. The Chicontepec tight calcarenite play contains huge oil [resources] that no one has figured out how to exploit commercially as recently as in the last few years. The deep-water Gulf of Mexico has serious reservoir problems in Mexico.

 Add it all up and we are left with the same sense that there should be huge remaining undiscovered reserves in Mexico that an awful lot of smart foreign companies (Amoco, BP, Chevron, Exxon, Shell, etc.) have been unable to discover working closely [through service contracts] with Pemex since the 1980s.

 As far as the Citi [Citigroup Inc.] estimates go [projecting a doubling of Mexican production which is mentioned and linked above], mucho ruido, pocos nueces (much ado about nothing; literally, lots of noise, no nuts).

Jeffrey Brown, an independent petroleum geologist best known for his Export Land Model weighed in as well on Mexico’s oil future. Brown’s model, first released publicly in 2006, correctly forecast shrinking global net exports of oil in recent years. He believes that any effect of the Mexican reforms will be relatively small and delayed several years. He related his views in a recent email:

 Regarding their [Mexico’s] offshore potential, it’s going to take a long time to work out the agreements, drill some wells and put the wells on line. I wouldn’t expect to see any meaningful contributions from joint venture offshore projects until some time after 2020. Regarding onshore, [that] production could come on line sooner, but the agreements have to be made, and the per-well production rates are vastly lower than offshore. Also, I suspect that the production sharing agreements are going to be something more or less equivalent to a 50% royalty (or worse), versus much more favorable terms in Texas [which would make investment in Texas more attractive to major oil companies versus investment in Mexico].

Brown, who manages a joint venture exploration program based in Ft. Worth, also noted that “Mexico is on track to approach zero net oil exports in about six years (around 2019).” He continually reminds those making rosy predictions about oil exports for any exporting country that those countries tend to grow as oil revenues increase which means their thirst for oil also grows. That can leave less and less oil available over time for export. If the country’s production is in decline, as has been the case with Mexico, exports decrease much faster than production on a percentage basis if domestic consumption grows in the face of declining production–a sort of pincer movement on oil exports.

It’s possible that Mexico’s production may grow somewhat as a result of the country’s reforms. But, it is foolish to expect too much given what we’ve seen in Brazil to date. And, it is important to remember that production from currently producing Mexican wells is declining continuously making it necessary to drill a lot of wells just to maintain current production let alone increase it.

Anyone looking for oil exports or production from Mexico to reach their previous high marks would be wise to plan for a less than salutary result.

 

Pipeline Decisions Based on Short-Term Payoffs Are Dangerously Irrational | David R. Miller

Pipeline Decisions Based on Short-Term Payoffs Are Dangerously Irrational | David R. Miller.

Last week, Lorraine Mitchelmore, the top Canadian executive for Royal Dutch Shell, broke with industry narrative, stating that “the argument for environmentalism is not an emotional argument. It is just as rational as the argument for growing our energy industry.”

There is an important underlying realization in Mitchelmore’s statement that some conservative pundits, as well as our own government, seem to willfully miss. Sustainability — smart environmental decision-making — has everything to do with prosperity. It has everything to do with people’s jobs and their quality of life, with the opportunities they want for their kids. It is, in fact, the rational decision to carefully steward, protect, and invest in the natural capital on which our communities and future livelihoods depend.

What is dangerously irrational is making decisions based on short-term economic pay-offs that we know will undermine our future prosperity, perhaps catastrophically.

This is exactly what the proposed Northern Gateway pipeline threatens to do. Our government is apparently determined to move unprocessed diluted bitumen by tanker through the Great Bear Sea, which by Environment Canada’s own assessment, is one of the most treacherous sea passages in the world. No one can guarantee that there will not be an accident. Indeed, given the extremely dangerous waters of the Hecate Strait, it is rational to argue that an accident is simply a matter of time. And as two recent reports point out — one commissioned by the Province of B.C. and the other by the Federal government — Canada is woefully ill-prepared to deal with an oil spill in these waters.

What is at risk is very clear. Just talk to the people who live in this region, and they will tell you. It’s their jobs — the fishing and tourism industries — and their cultural identity. And it’s the spectacular ecosystem upon which all of that depends. A place that is as unique a global treasure as the Great Barrier Reef or the Amazon rainforest. It is no wonder that so many Canadians exercised their democratic rights by participating in the review process for this project. More than 9,500 people wrote to the Joint Review Panel, 96 per cent against the pipeline. The overwhelming majority of the 1,000+ people who provided oral testimony were also opposed. There is no question that the concerns raised by this project are the legitimate concerns of Canadians who value their livelihoods.

The real question is why we would take such a huge risk in such a special place.

If the answer is “to defend jobs”, it is misguided and misleading. More jobs will be destroyed by an oil spill than will be created by Enbridge’s proposed Northern Gateway pipeline. Coastal First Nations’ traditional territories and coastal communities depend economically on the Great Bear Sea. Marine-dependent activities in these territories represent significant economic value. B.C. seafood and tidal recreational fishing generate $2.5 billion per year – and support more than 30,000 jobs. Exporting raw, unprocessed bitumen creates far more jobs outside Canada than it does here.

It is also irrational to repeat mistakes that we now have the knowledge and ability to avoid.

A generation ago, the Exxon Valdez ran aground and foundered, off the coast of Alaska. The resulting oil spill was an ecological, economic and social disaster that crippled coastal communities and deprived a generation of its livelihoods. The loss of the herring fishery alone cost the economy $400 million. Many communities have not yet fully recovered. In fact, some never will.

It’s a fate that we have the power to prevent in the Great Bear region, by pragmatically acknowledging that the risks of this proposed oil pipeline outweigh the benefits.

Yes, the argument for environmentalism is a rational one. For the people whose lives would be destroyed by an oil spill, it is also an emotional one. And for Canada, particularly at this moment, it is the one that will determine our future as global leader or laggard.

This article originally appeared in the Financial Post on Dec. 17, 2013

 

The Pain In Spain Is Mainly… Everywhere | Zero Hedge

The Pain In Spain Is Mainly… Everywhere | Zero Hedge.

Despite the ratings agencies (Moody’s Dec 5th and S&P Nov 22nd) seemingly premature raising of the outlook for the nation’s sovereign credit rating (from negative to stable), economic hardship in Spain looks likely to continue as loan defaults surge and the unemployment rate remains the second highest in the EU.

 

25% of Working Population to Stay Unemployed

The IMF predicts Spain’s unemployment rate will remain at 25 percent or higher until 2018 even after the nation exited its recession in the third quarter. Spanish households’ average income fell to 23,123 euros per year in 2012, compared with 25,556 euros in 2008, the National Statistics Institute said on Nov. 20. That leaves 22.2 percent of the population at risk of poverty, according to Eurostat.

Bad Debts at Record High

Record bad loans may restrain the economic recovery. Spanish banks’ bad debt as a proportion of total lending rose to a record 12.68 percent in September, according to Bank of Spain data that began in 1962. Missed payments on mortgages are rising and defaults as a proportion of total mortgages jumped to 5.2 percent in the second quarter from 3.2 percent a year earlier.

House Prices May Fall Further

Banks are likely to remain under pressure as real estate values fall. House prices are down 28.2 percent from their peak. Fewer than 15,000 mortgages were granted in September, compared with about 129,000 at the September 2005 peak, according to the National Statistics Institute, pointing to more price declines. House prices may drop a further 13 percent by the end of 2014, S&P forecasts.

Corruption Levels Rise Most in Europe

Spain’s levels of perceived corruption rose the most in Europe last year, Transparency International’s annual rankings show. Spain fell six points to 59, ranking it 40th in the world. Only Syria fell by more. The so-called gray economy represents 18.6 percent of GDP according to analysis by Friedrich Schneider for the Institute of Economic Affairs. That is equivalent to about 183 billion euros.

But apart from that… it’s all good in Spain…

 

Source: Bloomberg Briefs

 

Making Better Choices in the Future | Peak Prosperity

Making Better Choices in the Future | Peak Prosperity.

BLOG

(Un)Paving Our Way To Nirvana

Making better choices in the future
by James H. Kunstler
Monday, November 25, 2013, 7:10 PM
You can’t overstate the baleful effects for Americans of living in the tortured landscapes and townscapes we created for ourselves in the past century. This fiasco of cartoon suburbia, overgrown metroplexes, trashed small cities and abandoned small towns, and the gruesome connective tissue of roadways, commercial smarm, and free parking is the toxic medium of everyday life in this country. Its corrosive omnipresence induces a general failure of conscious awareness that it works implacably at every moment to diminish our lives. It is both the expression of our collapsed values and a self-reinforcing malady collapsing our values further. The worse it gets, the worse we become.

The citizens who do recognize their own discomfort in this geography of nowhere generally articulate it as a response to “ugliness.” This is only part of the story. The effects actually run much deeper. The aggressive and immersive ugliness of the built landscape is entropy made visible. It is composed of elements that move us in the direction of death, and the apprehension of this dynamic is what really makes people uncomfortable. It spreads a vacuum of lost meaning and purpose wherever it reaches. It is worse than nothing, worse than if it had never existed. As such, it qualifies under St. Augustine’s conception of “evil” in the sense that it represents antagonism to the forces of life.

We find ourselves now in a strange slough of history. Circumstances gathering in the home economics of mankind ought to inform us that we can’t keep living this way and need to make plans for living differently. But our sunk costs in this infrastructure for daily life with no future prevent us from making better choices. At least for the moment. In large part this is because the “development” of all this ghastly crap — the vinyl-and-strandboard housing subdivisions, the highway strips, malls, and “lifestyle centers,” the “Darth Vader” office parks, the infinity of asphalt pavements — became, for a while, our replacement for an economy of ecological sanity. The housing bubble was all about building more stuff with no future, and that is why the attempt to re-start it is evil.

Sooner rather than later we’ll have to make better choices. We’ll have to redesign the human habitat in America because our current environs will become uninhabitable. The means and modes for doing this are already understood. They do not require heroic “innovation” or great leaps of “new technology.” Mostly they require a decent respect for easily referenced history and a readjustment of our values in the general direction of promoting life over death. This means for accomplishing this will be the subject of Part II of this essay, but it is necessary to review a pathology report of the damage done.

Launching Nirvana

I have a new theory of history: things happen in human affairs because they seem like a good idea at the time. This helps explain events that otherwise defy understanding, for example the causes of the First World War. England, France, Russia, Germany, and Italy joined that war because it seemed like a good idea at the time, namely August of 1914. There hadn’t been a real good dust-up on the continent since Waterloo in 1814. Old grievances were stewing. Empires were both rising and falling, contracting and reaching out. The “players” seemed to go into the war thinking it would be a short,  redemptive, and rather glorious adventure, complete with cavalry charges and evenings in ballrooms. The “deciders” failed to take into account the effects of newly mechanized warfare. The result was the staggering industrial slaughter of the trenches. Poison gas attacks did not inspire picturesque heroism. And what started the whole thing? Ostensibly the assassination of an unpopular Hapsburg prince in Serbia. Was Franz Ferdinand an important figure? Not really. Was Austria a threat to France and England? It was in steep decline, a sclerotic empire held together with whipped cream and waltz music. Did Russia really care about little Serbia? Was Germany insane to attack on two fronts? Starting the fight seemed like a good idea at the time — and then, of course, the unintended consequences bit back like a mad dog from hell.

Likewise America’s war against its own landscape, which got underway in earnest just as the First World War ended (1918). The preceding years had seen Henry Ford perfect, first, the Model T (1908), and then the assembly line method of production (1915), and when WW I was out of the way, America embarked on its romance with democratic motoring. First, the cities were retrofitted for cars. This seemed like a good idea at the time, but the streets were soon overwhelmed by them. By the mid-1920s the temptation to motorize the countryside beyond the cities was irresistible, as were the potential profits to be reaped. What’s more, automobilizing the cities made them more unpleasant places to live, and reinforced the established American animus against city life in general, while supporting and enabling the fantasy that everyone ought to live in some approximation to a country squire, preferably in some kind of frontier.

The urban hinterlands presented just such a simulacrum of a frontier. It wasn’t a true frontier anymore in the sense of civilization meeting wilderness, but it was a real estate frontier and that was good enough for the moment. Developing it with houses seemed like a good idea. Indeed, it proved to be an excellent way to make money. The first iteration of 1920s car suburbs bloomed in the rural ring around every city in the land. An expanding middle class could “move to the country” but still have easy access to the city, with all its business and cultural amenities. What a wonderful thing! And so suburban real estate development became embedded in the national economic psychology as a pillar of “progress” and “growth.”

This activity contributed hugely to the fabled boom of the 1920s.  Alas, the financial shenanigans arising out of all this new wealth, along with other disorders of capital, such as the saturation of markets, blew up the banking system and the Great Depression was on. The construction industry was hardest it. Very little private real estate development happened in the 1930s. And as that decade segued right into the Second World War, the dearth continued.

When the soldiers came home, the economic climate had shifted. America was the only industrial economy left standing, with all the advantages implied by that, plus military control over the loser lands. We already possessed the world’s biggest oil industry. But after two decades of depression, war, and neglect, American cities were less appealing than ever. The dominant image of city life in 1952 was Ralph Kramden’s apartment inThe Honeymooners TV show. Yccchhh. America was a large nation, with a lot of agricultural land just beyond the city limits. Hence, the mushrooming middle class, including now well-paid factory workers, could easily be sold on “country living.” The suburban project, languishing since 1930, resumed with a vengeance. The interstate highway program accelerated it.

The Broken Promises of Suburbia

It seemed like a good idea at the time. Country life for everybody in the world’s savior democracy! Fresh air! Light! Play space for the little ones! Nothing in world history had been easier to sell. Interestingly, in a nation newly-addicted to television viewing, the suburban expansion of the 1950s took on a cartoon flavor. It was soon apparent that the emergent “product” was not “country living” but rather a cartoon of a country house in a cartoon of the country. Yet it still sold. Americans were quite satisfied to live in a cartoon environment. It was uncomplicated. It could be purchased on installment loans. We had plenty of cheap energy to run it.

It took decades of accreting suburbia for its more insidious deficiencies to become apparent. Most noticeable was the disappearance of the rural edge as the subdivisions quickly fanned outward, dissolving the adjacent pastures, cornfields, and forests that served as reminder of the original promise of “country living.” Next was the parallel problem of accreting car traffic. Soon, that negated the promise of spacious country living in other ways. The hated urban “congestion” of living among too many people became an even more obnoxious congestion of cars. That problem was aggravated by the idiocies of single-use zoning, which mandated the strictest possible separation of activities and forced every denizen of the suburbs into driving for every little task. Under those codes (no mixed use!), the corner store was outlawed, as well as the café, the bistro, indeed any sort of gathering place within a short walk that is normal in one form or another in virtually every other culture.

This lack of public amenity drove the movement to make every household a self-contained, hermetically-sealed social unit. Instead of mixing with other people outside the family on a regular basis, Americans had TV and developed more meaningful relations with the characters on it than with the real people around them. Television was also the perfect medium for selling redundant “consumer” products: every house had to have its own lawnmower, washing machine, and pretty soon a separate TV for each family member.  The result of all that was the corrosion of civic life (a.k.a “community”) until just about every civic association except for school oversight (the fabled PTA) dwindled and faded. And the net effect of all that was the stupendous loneliness, monotony, atomization, superficiality, and boredom of suburbia’s social vacuum. It was especially hard on the supposed greatest beneficiaries, children, who, having outgrown the play space of the yard by age eight, could not easily navigate the matrix of freeways and highways outside the subdivision without the aid of the “family chauffeur,” (i.e. Mom).

Cutting Our Losses & Moving On

A couple of  points about the current situation in suburbia ought to be self-evident. One is that our predicament vis-à-vis oil, along with cratering middle class incomes, suggests that we won’t be able to run this arrangement of things on the landscape a whole lot longer. The circulatory system of suburbia depends on cars which run on liquid hydrocarbon fuels. Despite the current propaganda (“drill, baby drill”), we have poor prospects of continuing an affordable supply of those things, and poorer prospects of running the US motor vehicle fleet by other means, despite the share price of Tesla, Inc. The second point is how poorly all suburbia’s components are aging — the vinyl-clad houses, the tilt-up strip malls, the countless chicken shacks, burger stands, and muffler shops, all the generic accessories and furnishings that litter the terrain from sea to shining sea. There are a lot of reasons these things now look bad (and lose value) but the chief one is that most of them are things nobody really cares about.

In Part II: A Better Human Habitat for the Next Economy, we explore the necessary behaviors we’ll need to adopt if we hope to have any prosperity in the years ahead. What seemed like a good idea at the time — through the 20th century and a little beyond — is looking more like an experiment that failed. Our sunk costs in it promote a tendency to agonize over it. I propose that we just give up the hand-wringing and prepare to cut our losses and move on. The reality of the situation is that the response to all this will arise emergently as circumstances compel us to change our behavior and make different (and we should hope) better choices. That is to say, don’t expect programmatic political action to change this, especially from remote authorities like federal or state governments. We will reorganize life on the ground because we will have to.

Click here to read Part II of this report (free executive summary; enrollment required for full access).

 

Special Report: How Germany’s taxman used stolen data to squeeze Switzerland | Reuters

Special Report: How Germany’s taxman used stolen data to squeeze Switzerland | Reuters.

Special Report: How Germany’s taxman used stolen data to squeeze Switzerland

BY EDWARD TAYLOR, MATTHIAS INVERARDI AND MARK HOSENBALL

DUESSELDORF, Germany Thu Nov 21, 2013 5:06am A man poses holding a USB datastick in his hand in front of the Swiss flag in this photo illustration taken in the central Bosnian town of Zenica, August 29, 2013. REUTERS-Dado Ruvic

Compact discs with images of the Swiss flag are seen in this photo illustration taken in the central Bosnian town of Zenica, May 3, 2013. REUTERS-Dado Ruvic
A man walks in front of the entrance of the Banane Fitness Centre in the town of Winterthur some 30km (18 miles) north of Zurich, August 30, 2013. REUTERS-Arnd Wiegmann

1 OF 5. A man poses holding a USB datastick in his hand in front of the Swiss flag in this photo illustration taken in the central Bosnian town of Zenica, August 29, 2013.

CREDIT: REUTERS/DADO RUVIC

 (Reuters) – In the digital age, pen and paper are useful tools for intrigue. In 2007, SinaLapour, an assistant to a private banker at Credit Suisse, hand-copied the names of potential tax evaders listed on two of the firm’s internal computer systems. By not downloading information, Lapour avoided leaving electronic fingerprints. His employer did not detect his actions.

He put the notes in his briefcase and took them home, where he created an Excel spreadsheet which he called “Mappe1-test1.xls.” The spreadsheet held names, addresses, and amounts held by clients.

Despite trying to cover his tracks, Lapour was eventually convicted of economic espionage, among other crimes. According to a statement he made in a plea bargain, the data he stole gave details of as many as 2,500 clients with combined assets up to 2 billion Swiss francs ($2.2 billion). He sold it to a middleman, who then sold it to German tax inspectors. The information led to police raids in 2010 on Credit Suisse’s main offices in Germany.

Lapour’s spreadsheet was one of a half-dozen sets of stolen data for which Germany has paid millions of euros over the past five years. Those purchases pushed the boundaries of German law; Reuters’ inquiries have found Germany’s 16 federal states all cooperated in making them.

German parliament and court records, Swiss legal documents and interviews with bankers and politicians show the states and the central government in Berlin gradually constructed a system, partly funded by Germany’s federal finance ministry, to buy information on tax evaders. It’s a campaign which involves hundreds of Germany’s roughly 2,500 tax inspectors, includes a formula to calculate each state’s share of a purchase, and continues to this day, German tax officials say.

Some German politicians say buying stolen data added to pressure on Switzerland to share more information about tax evaders. Last month, Switzerland, which for decades has nurtured bank secrecy as a cornerstone of its offshore wealth industry, signed a convention to exchange some tax information with other countries. If approved by the Swiss parliament, it could be the end of a long and passionate battle.

Swiss officials accuse the Germans of breaking Swiss laws on banking secrecy and of committing economic espionage. According to arrest warrants seen by Reuters, the Swiss prosecutor is seeking the arrest of three German tax inspectors on these charges. Swiss finance minister Eveline Widmer-Schlumpf declined to comment, but a spokesman for her ministry said Germany’s handling of stolen goods “is highly questionable with respect to the rule of law.”

In June this year, Germany’s parliament received a draft law with a clause to exempt from prosecution civil servants who handle stolen data. As Berlin parties haggle over a new government, it has yet to be passed.

Nonetheless Norbert-Walter Borjans, finance minister for North Rhine-Westphalia, the state which bought the Lapour data, says he would support the purchase of such information “so long as there is data containing valuable tips to be bought.” His predecessor, who signed off on the Lapour deal, could not be reached. Switzerland has filed no charges against the politicians involved.

Buying stolen data is an “emergency remedy”, a spokesman for Germany’s federal finance ministry told Reuters: It was justified because Germany and Switzerland did not have a deal through which Germany could enforce its tax claims. None of the tax inspectors could be reached, and the state declined to comment on their behalf.

THE DECEASED WITNESS

The Swiss prosecutors suspect the German tax inspectors of more than handling stolen goods. They allege the taxmen even solicited the theft of specific information, according to an international request for legal assistance that Switzerland sent to Germany on the case.

In that confidential document, seen by Reuters, Lapour is quoted as saying a middleman showed him a text message in which tax inspectors allegedly requested specific information.

Tax inspectors in North Rhine-Westphalia say they don’t solicit data stealing. Ingrid Herden, a spokeswoman for the state’s finance ministry, said German tax authorities had not actively encouraged theft of client data from Swiss banks. “There is no evidence that tax inspectors from NRW did such a thing,” she added in a written statement to Reuters.

However, Herden added that she could not rule out that a middleman may have incited Lapour to steal information.

That go-between, named in the Swiss request as an Austrian graphic designer called Wolfgang Umfogl, committed suicide in prison in Switzerland in 2010, weeks after his arrest on suspicion of money-laundering, according to police in Berne, Switzerland.

Lapour, who was given a two-year jail sentence but spent less than six months in custody, could not be reached for comment. His lawyer declined to be interviewed. North Rhine-Westphalia declined to comment on the details of the case.

THE FITNESS CENTER

Lapour was born in 1983 in Tehran, Iran. By the mid-2000s he was working at Credit Suisse in Zurich and would meet up with Umfogl at the Banane Fitness Centre in Winterthur, according to the Swiss request for assistance, which is also based on Umfogl’s testimony and other material gathered by Swiss police. How the two got talking about stealing data is not revealed.

Lapour created a data file on March 2, 2008, containing names, addresses, net worth and contact details for clients, the request for assistance says; Umfogl flew to Duesseldorf to meet German tax inspectors at the end of that month to see what this information was worth. His opening price: 6.75 million euros ($9.13 million).

By that time, North Rhine-Westphalia already had experience of handling stolen information from other sources. In 2008, it emerged that the state’s tax inspectors had obtained data stolen from LGT Group, a Liechtenstein bank, from a thief who originally sold it to Germany’s federal intelligence service, the BND.

That year, North Rhine-Westphalia officials commissioned a legal opinion from the regional prosecutors to determine if they were within their rights to buy stolen data from Lapour. The prosecutors found in their report that for civil servants, dealing with LGT data did not amount to handling stolen goods – the theft happened in Liechtenstein, to a foreign company. They also said “emergency measures” are justified if tax claims cannot be enforced by other legal means: Authorities in Liechtenstein had not cooperated with requests for legal assistance.

Tax authorities at three German states would go ahead with deals, buying at least five sets of data since 2008 according to media announcements they made; the data was stolen frombanks including UBS, Julius Baer and HSBC. The banks declined further comment or said they had resolved the issues.

THE UPDATED FILE

In Switzerland, Lapour was busy. The Swiss prosecutor says his data file was updated on July 21, 2008, four months after Umfogl allegedly first met the German tax inspectors, to add the dates each account was opened.

This, the Swiss prosecutor asserts, suggests he was stealing to order: German tax authorities needed the dates to see how long a client had evaded taxes. In the request for legal assistance, Lapour is cited as saying Umfogl asked him to get that extra data: Umfogl had shown him a text message from June 24, 2008 in which the tax inspectors purportedly demanded more information. The alleged message’s exact contents are not described.

In May 2009, Umfogl and the German tax inspectors met again, at the Kronen Hotel in Stuttgart, the Swiss document says. There, prosecutors say, tax inspectors asked for a sample of the data and for information beyond names and dates.

According to the Swiss prosecutor, Lapour confessed he stole and sold a PowerPoint presentation that Credit Suisse made for staff on how to handle German clients who were “non compliant” – evading German tax. The presentation told staff how to avoid implicating themselves or the bank in aiding tax evasion. The Swiss say the Germans wanted to use it as evidence Swiss banks had a strategy to look after foreign tax-evading clients.

Credit Suisse would eventually pay 150 million euros to the state of North Rhine-Westphalia to end an investigation into allegations it helped German citizens evade taxes. Neither the bank nor North Rhine-Westphalia would comment further.

Back in 2009, after another meeting in the German lakeside city of Konstanz, Umfogl handed tax inspectors a USB stick containing a sample of 10 percent of the data, according to the Swiss request for assistance. In mid-July, he purportedly handed over the PowerPoint presentation. It’s not clear from the document when or how the rest of the information was handed over or paid for.

In all, Umfogl allegedly paid Lapour at least 65,000 euros for his information; Lapour later told Swiss prosecutors that he used most of the money to support his Czech girlfriend. He showered her with gifts including a car, paid for vacations to Italy, Spain and Egypt, and helped her to pay off a mortgage in the Czech Republic. She was not accused of wrongdoing and could not be reached for comment.

Germany’s legal machinery continued to gather opinions on how far tax inspectors could go. In 2010, the North Rhine-Westphalia inspectors got some legal reassurance.

A CHANGE OF VIEW

“With the LGT CD, many said it’s a one-off, but then came 2010,” said Borjans, the finance minister of North Rhine-Westphalia.

On February 23, representatives from the Federal Central Tax Office, an authority under the jurisdiction of the German Ministry of Finance, contacted officials from what is now Borjans’ ministry and decided to coordinate bank data purchases so different states would not all buy the same set, parliamentary questions show.

Days later, Borjans’ predecessor, a member of Chancellor Angela Merkel’s CDU party, announced he had struck a deal to buy a “client data CD” – the Lapour data – for 2.5 million euros.

In November, a legal opinion from Germany’s Federal Constitutional Court added weight to that plan. The court found that if data had been “received” rather than actively solicited, then those who used it were not guilty of abetting the theft. Whether it was legal to buy stolen data was a question it referred to other courts.

“It’s not like I commission a purchase, or people come directly to me,” Borjans told Reuters this year. Tax inspectors, not politicians, are in the driving seat, he said. They act on tips and then ask him for resources.

THE KEY OF KOENIGSTEIN

By 2010, all Germany’s tax collectors had reached agreement on how to split the cost if the federal ministry decided to join the states in funding a purchase, parliamentary questions show.

Acquisitions of taxpayer names are funded using a formula known as the “Koenigsteiner Schluessel,” which translates as “the key of Koenigstein.” The formula, named after a wealthy Frankfurt suburb, was devised after World War Two to work out how to spread the cost of funding scientific research in Germany.

“Should the Federal Ministry of Finance decide to make a purchase, it will contribute 50 percent of the acquisition costs,” a spokesman for the ministry told Reuters. All 16 states told Reuters they have helped pay for data: Berlin and Hamburg say these purchases led to the recovery of more than 100 million euros each.

But not all are convinced the system is legal. After initially joining in, one state – Brandenburg – said it was opting out because of such doubts. Last June, when the draft law on handling stolen data went to parliament, Brandenburg’s finance minister issued a news release saying it would “provide long overdue legal certainty for our finance officials.” The state which bought the material paid the shortfall, a spokesman for Brandenburg said.

Volker Kauder, head of the parliamentary group for the CDU, is still “highly critical” about buying such data, a spokesman told Reuters. “In doing so the state is in danger of slipping into the role of a dealer in stolen goods,” he said.

THE TELEVISION CABLE

In March 2010, Umfogl opened a bank account in Austria. According to the Swiss request for legal assistance, he was trying to divide the 2.5 million euros he had received between banks in Germany, Austria and the Czech Republic. Staff at a savings bank in Dornbirn, Austria, got suspicious about a deposit of 893,000 euros, and raised the alarm with police on March 25, 2010, believing Umfogl could be a money-launderer.

Austrian authorities froze Umfogl’s funds that September, said the prosecutor’s office in Feldkirch, Austria. Swiss Federal Police were notified because Umfogl lived in Switzerland. They arrested him at his work. A day later, Lapour was tracked down and arrested in the Czech Republic where he was visiting his girlfriend.

Lapour was convicted in Switzerland’s Federal Criminal Court of economic espionage, violating bank secrecy and violating trade secrecy, by passing client data outside the bank. Besides his 24-month sentence, he was fined 3,500 Swiss francs.

At a house in a suburb on the outskirts of Winterthur, given in the request for assistance as Lapour’s parents’ address, a man told a reporter he did “not know where Sina is.”

At about 6.30 a.m. on September 29 2010, just days after Umfogl was arrested, he was found dead in his police cell in Berne. He had left a note before hanging himself with a television cable, according to a joint statement issued by the coroner and police. Both declined to reveal the note’s contents.

That month, Switzerland’s government said it had agreed to resolve the problem of untaxed money stashed away by Germans in Swiss accounts.

North Rhine-Westphalia’s Borjans believes the purchase of stolen names was crucial to that. “You could tell this was not only a question of decency,” he told Reuters. “It was also about hardcore commercial interests. And that’s why Switzerland was suddenly willing to negotiate.”

The Swiss finance ministry said it had been Swiss financial market policy since 2009 to seek international tax agreements.

By August 2011, Switzerland and Germany had reached an outline deal on sharing tax information. But the pact failed to win political support within Germany and the upper house threw it out in November last year.

Borjans was one of the pact’s opponents. He said he felt Berlin had sold itself short. “It left the door open to bank secrecy and tax evasion,” he said.

Last month, Switzerland finally signed onto the international tax convention, giving Germany some of what it wanted. The Swiss request to Germany to arrest three tax inspectors has gone unanswered: Germany’s finance ministry said it is still evaluating it.

(Hosenball reported from Berne, Switzerland; Additional reporting by Andreas Rinke and Michelle Martin in Berlin and Jan Lopatka in Prague; Edited by Sara Ledwith)

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Brazil Amazon destruction rises 28 per cent – Americas – Al Jazeera English

Brazil Amazon destruction rises 28 per cent – Americas – Al Jazeera English.

 

Deforestation in Brazil’s Amazon region has risen 28 percent over the past year, the country’s environment minister says.

Making the announcement in the capital Brasilia on Thursday, Izabella Teixeira said she was calling an emergency meeting to try to remedy the situation.

“We confirm a 28 percent increase in the rate of deforestation, reaching 5,843sq km,” she said quoting provisional statistics for August 2012 through July this year.

Extensive farming and soya-bean production in the northern state of Para and the central-western state of Mato Grosso were key factors behind the rise, Teixeira said, citing increases for the two states of 37 and 52 percent respectively.

Teixeira said she would meet Amazon regional environment secretaries of state next week to demand explanations and measures to deal with the situation on her return from a UN climate change summit in Warsaw.

Authorities scolded

Teixeira also criticised the apparent ineffectiveness of monitoring by federal state authorities.

“The Brazilian government does not tolerate and does not accept any rise in illegal deforestation,” she said, insisting that the country was firmly committed to drastically reducing deforestation.

Although large in percentage terms, the rise in absolute terms is the second smallest in recent years as 2012 saw 4,571sq km of deforestation, following an even more disturbing 6,418sq km in 2011.

 

The worst year on record was 2004, when 27,000sq km of forest was lost.

Environmentalists blame the increase on a loosening of Brazil’s environmental laws. They also say that the government’s push for big infrastructure projects like dams, roads and railways is pushing deforestation.

Paulo Adario, coordinator of Greenpeace’s Amazon campaign, said it was scandalous that there was such an increase in the destruction.

“The government can’t be surprised by this increase in deforestation, given that their own action is what’s pushing it,” he said.

“The change in the Forest Code and the resulting amnesty for those who illegally felled the forest sent the message that such crimes have no consequences.”

Brazil, a major global agricultural producer, is caught between environmental pressures and the interests of large-scale farmers.

The country’s forestry code requires landowners in the Amazon to devote 80 percent to native forests. But enforcement has been lax.

 

Puerto Rico heads towards debt default – Americas – Al Jazeera English

Puerto Rico heads towards debt default – Americas – Al Jazeera English. (source/link)Puerto Rico’s economy is shrinking at an alarming rate. Officially the unemployment rate in the US territory is 13 percent, but some economists say it is three times higher.

The island is $70bn in debt, it has lost nearly 200,000 skilled workers in the past two years and could be heading towards default.

The US government says it is monitoring the situation. But without financial aid or a bail-out, the three and half million people that still live in Puerto Rico could be facing an even bleaker future.

Al Jazeera’s Andy Gallacher reports from San Juan.

 

Cambodia tensions threaten to boil over – Features – Al Jazeera English

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