The U.S. Justice Department on Thursday asked a federal court to force HSBC Holdings PLC (HBC, HSBA.LN, 0005.HK) to reveal the names of U.S. customers suspected of having secret bank accounts in India.
The move opens up a new front in the U.S. crackdown on tax evasion and comes days before the April deadline for taxpayers to file individual returns. Previous cases focused on Americans with Swiss bank accounts.
In court documents, the Justice Department said HSBC bankers told prospective clients that, as a foreign bank, HSBC's India operations wouldn't disclose their accounts to the Internal Revenue Service. Armed with that knowledge, U.S. customers 'have been able to maintain these foreign accounts with reasonable confidence that the IRS would not discover them,' government lawyers alleged.
Thousands of U.S. taxpayers of Indian origin have opened up accounts with HSBC in India since 2002, when the bank allegedly began soliciting their business, according to the U.S. government. It asked a San Francisco court to allow the IRS to serve a so-called 'John Doe' summons against the U.K.-based bank's U.S. unit, HSBC USA, to get the names of its U.S. clients with Indian accounts.
U.S. law requires U.S. taxpayers to declare their global income and any foreign bank accounts with more than $10,000 during that tax year.
According to court documents, HSBC informed the IRS last September that at least 9,000 U.S. 'premier' clients-high-net-worth customers-had deposits with HSBC's Indian bank. The government said 2009 bank figures showed that U.S. resident premier clients had Indian deposits of nearly $400 million.
U.S. officials said that as of 2009, U.S. taxpayers had only disclosed 1,921 accounts in India. The IRS is seeking client information on premier accounts as well as standard accounts maintained for less-wealthy customers.
The government's long-running probe against secret bank accounts led Swiss banking giant UBS AG (UBS, UBSN.VX) to admit in February 2009 to conspiring to defraud the U.S. government of billions in taxes by helping wealthy Americans hide assets. The bank paid $780 million in a deal to avoid prosecution and eventually released the names of more than 4,000 U.S. clients.
In February, the IRS announced a new leniency program that offers reduced penalties to tax scofflaws that voluntarily report their offshore accounts. The agency offered a similar one in 2009 in the wake of the U.S. case against UBS that brought in more than 15,000 disclosures.
Sunday, April 10, 2011
Wednesday, April 6, 2011
China Skims Milk Producers
China is ordering half of its dairy producers to close shop in effort to tidy up the country's tainted milk industry and to usher in a new era of consumer safety. After a recent nationwide inspection of matters milk-related, China's top quality control body รข ' the General Administration of Quality Supervision, Inspection and Quarantine -- is pulling operating licenses from 426 dairy producers and suspending operations for 107 more, state-run China Daily reports.
The closures and suspensions account for nearly half of China's 1,176 domestic dairy producers, the China Daily said, though the newspaper did not cite specific reasons for license termination.
Nearly 80% of the country's 145 producers of infant formula, large quantities of which were found to contain the industrial chemical melamine in 2008, passed inspection.
Tighter supervision of dairy production comes as China's safety regulators attempt shore up an industry that has suffered crippling safety problems.
The 2008 melamine scandal killed at least six children and caused illnesses in nearly 300,000 others. Chinese consumers responded by avoiding locally-produced milk products. Dairy imports jumped from 120,000 tons in 2008 to 600,000 in 2009, according to state media. Nearly three years after the incident, consumers continue to flock to import dairy products on the assumption that they are safer.
The fears go beyond dairy. A recent survey conducted by Insight China, a magazine, and Tsinghua University's Media Survey Lab found that 70% of consumers fear food safety in China. Many are suspicious of meat quality and even materials used in food packaging. Around 50% of consumers feel the government should increase its oversight, the survey said.
The central government is making a broad push to respond to those fears. In February it announced a campaign to improve oversight of food processing, circulation, service, and additives.
But many believe China has a long way to go in its effort to protect consumers. Despite frequently threatening food safety violators with the death penalty and having executed two milk producers in the melamine scandal, problems persist.
In late-March a supplier of the country's largest meat processor found that pigs it had purchased had been fed clenbuterol, an illegal additive that helps pigs develop lean muscle but causes nausea and headaches in humans. Meanwhile, despite all the crackdowns and criminal penalties, melamine continues to pop up in the country's dairy supply.
The closures and suspensions account for nearly half of China's 1,176 domestic dairy producers, the China Daily said, though the newspaper did not cite specific reasons for license termination.
Nearly 80% of the country's 145 producers of infant formula, large quantities of which were found to contain the industrial chemical melamine in 2008, passed inspection.
Tighter supervision of dairy production comes as China's safety regulators attempt shore up an industry that has suffered crippling safety problems.
The 2008 melamine scandal killed at least six children and caused illnesses in nearly 300,000 others. Chinese consumers responded by avoiding locally-produced milk products. Dairy imports jumped from 120,000 tons in 2008 to 600,000 in 2009, according to state media. Nearly three years after the incident, consumers continue to flock to import dairy products on the assumption that they are safer.
The fears go beyond dairy. A recent survey conducted by Insight China, a magazine, and Tsinghua University's Media Survey Lab found that 70% of consumers fear food safety in China. Many are suspicious of meat quality and even materials used in food packaging. Around 50% of consumers feel the government should increase its oversight, the survey said.
The central government is making a broad push to respond to those fears. In February it announced a campaign to improve oversight of food processing, circulation, service, and additives.
But many believe China has a long way to go in its effort to protect consumers. Despite frequently threatening food safety violators with the death penalty and having executed two milk producers in the melamine scandal, problems persist.
In late-March a supplier of the country's largest meat processor found that pigs it had purchased had been fed clenbuterol, an illegal additive that helps pigs develop lean muscle but causes nausea and headaches in humans. Meanwhile, despite all the crackdowns and criminal penalties, melamine continues to pop up in the country's dairy supply.
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