This issue contains articles found in other magazines/sources. Please contact the source with a view to taking out a subscription (some of them are free) if you want to obtain more of the same. Also check out the other lists at topica.com; some are announcement lists and others are discussion lists – there will be at least one of them that will be to your liking! Feel free to contribute to, reply to, comment on or (Heaven forbid) correct any item in these newsletters. Send an e-mail to: newsletter@ceg.ai Your input will be discreetly disseminated.

This issue marks the return of the "Scam" section, after the clippings…

LATEST NEWS FROM ANGUILLA....

…. Has been dominated by the presentation of the long-overdue Budget for the year 2000. Anguilla is usually the model of rectitude as to having the Budget approved before the year starts (some island governments in the region have this awful tendency to debate their budget as late as the year following the budget year, for reasons which vary, but come down to incompetence). However, due to the boycott of the House of Assembly by the then Opposition last year, the resulting lack of a quorum followed by the change of Government in March, Anguilla was only able to debate the budget in April 2000. This was just days before the 30 April deadline which, under the Constitution and Standing Orders, would have meant that any of their cheques would effectively have bounced (regardless of how much money was in the kitty). By the same regulations the Government had been able to function for the first few weeks of 2000 without a budget, but it was restricted in what it could spend and where.

Unlike countries like the UK, where the focus is on which taxes change (usually increase), the Anguilla electorate tend to concentrate on where the money will be spent. The budget, presented on 19 April by the Minister of Finance, Victor Banks, showed an 18% increase of expenditure over 1999’s estimates to just over EC$75m., the largest ever. Major percentage increases are in Water (from EC$1.8m. to EC5.3m), Financial Services (including funding for marketing the "Offshore" sector, from EC$0.6m to EC$1.5m), Social Services (from EC$1.4m to EC$2.1m); and in value terms: Education (from EC$10.5m to EC$11.8m), Treasury (from EC$8.9m to EC$10.2m) and Primary/Secondary Health care (from EC$9.5m. to EC$10.7m). Capital expenditure is up by 67% from EC$3m to EC$5m.; more than half of this will be taken by The Ministry of Infrastructure (of which about EC$1.7m is earmarked for road building). The Minister believes that revenue has been realistically set at just over EC$75m. He is probably right on this: Estimated Revenue for 1998 was a whopping EC$88.3m., mostly due to the windfall from transhipment duty (indirect tax, including duty was EC$56.8m.) and helped along by direct taxes (EC$10.9m.), stamp duty & licences (EC$8.9m.) and earnings from Government Departments (EC$6.7m.). In 1999 when there was little in the way of transhipment revenue (arising from the political fall out) the corresponding revenue heads contributed EC$30.1m., EC$11.6m., EC$8.2m. and EC$7.0m., out of a total take of EC$61.8m. The 2000 budget then anticipates a budgetary surplus of recurrent revenue over current expenditure of almost EC$100,000. Interestingly, the Minister is convinced that the additional revenue can come about without any new taxes and, if the transhipment programme comes back on stream, life at the Treasury should be that much more enjoyable. Nevertheless, there will be a concerted effort to collect taxes and fees due. To this extent a task force has been established to improve and develop a system of tax collections, including property tax (presently levied on somewhat of a piecemeal basis – some receive assessments and pay them, others do not), medical/hospital fees and business licences. There will be minimal, but psychologically significant relief for some consumers and small businesses. As the Minister commented: "We have carefully considered … the likely impact of providing tax relief to the lower income groups and to small independent struggling business owners…". Some of the relief granted is the removal of the 5% duty on basic food items with effect from 1 May. The amount foregone will not be significant in itself (less than EC$80,000 if 1998 and 1999 figures are anything to go by) but merchants are being asked to pass on these savings to the customer. Part of the funding for the capital requirements is expected from the European Development Fund (so European readers are urged to put in for more overtime so they can pay more tax) and the Caribbean Development Bank.

The debate took place the following week. Leading off, the Leader of the Opposition, Hubert Hughes, spoke for the entire day. As can be expected, this was a wide-ranging address. The following day the other 6 members made their contributions. The Chief Minister, picking up on the observations of his Minister of Finance about the establishment of a task force, told the House that he had made it clear, at a recent meeting of the Anguilla Hotel & Tourism Association , that he is disappointed that a number of property owners on the island are withholding the Guest Accommodation tax, collected from visitors, to the Government. (The Minister of Finance had specifically singled out the villa operators for this breach). He estimated that some US$1.52 m. (which would equal 5% of the expected revenue for 2000) is being "stolen" per year as a result of this, and admitted that it was unknown how far back this went. Other motions (to allow the Government to take increase its overdraft from EC$4m to EC$6m., to fund the capital Programme, and pass Supplementary Appropriations for the previous periods), like the Budget itself, received the support of the entire House. The Chief Minister and Minister of Finance thanked the Opposition for its support and agreed with them that prudence would be exercised at all times.

Other news: the unfortunate death mentioned in the previous issue: the forensic pathologist’s preliminary report said that the victim had drowned; certain samples have been taken to Barbados for a more detailed examination.

Happier news: Indian High Commissioner for the region (based in Trinidad) Professor Parimal Kumar Das visited Anguilla and made an offer to the Government whereby nationals can undergo specific training programmes in India. Training courses would be for 3 months or a year in area such as computer hardware and software, where India has competitive and robust industries.

CLIPPINGS FROM MAGAZINES AND NEWSPAPERS

As is always the case, the following contains material which is courtesy of various publications (who also hold the Copyright) – please contact them for subscriptions:

First: A couple of items from The Financial Times, which should bring tears to the eyes of those who ignored our comments on dot.com prices a few weeks ago, and are still holding in there (hopefully you are still ahead, on paper). The first is a Cassandra-like message from America’s wealthiest investor:

The internet will create no more wealth than a chain letter and will damage the profits of most US businesses, Warren Buffett said this weekend. Addressing 15,000 shareholders at the annual meeting of Berkshire Hathaway, America's wealthiest investor, said: "For society the internet's a wonderful thing, but for capitalists it's probably a net negative.''

Mr Buffett's aversion to investing in technology stocks contributed to the investment and insurance group's worst ever absolute and relative returns in 1999. He was unrepentant on Saturday, saying: "When we look back, we will see this as a period of enormous amounts of wealth transfer [rather than wealth creation].''

The internet was much more likely to reduce the value of American business than improve it, he said, because the ability to easily compare prices online would drive down margins and increase competition. Internet investments worked on the same principle as a chain letter, he argued: "If you are very early in a chain letter, you can make money, but there's no money created."

Mr Buffett, who has chaired the Omaha-based group for 35 years, likened current equity market conditions to the

"mania" in farmland prices in Nebraska 20 years ago, noting: "It killed a lot of people who bought at those [inflated] prices.'' He added: "Any time there have been real bursts of speculation in the market, it does get corrected eventually.''

Asked about the decisions of two other prominent investors - George Soros and Julian Robertson - to scale back or close their hedge funds, Mr Buffett said he was not in the same business. However, he gave strong indications that Berkshire may reduce its equity holdings. It would prefer to expand its list of wholly-owned operating companies through large acquisitions, rather than put more money into stock market investments, he said.

"I'd love it if we could move all the money we have in securities into businesses we like," he added: "But that's not going to happen in all probability, because it's too tough to find businesses that we like."

The legendary loyalty of Berkshire Hathaway's investors, some of whom had travelled from Australia and Japan, appeared unshaken by the group's poor performance last year, which is still 25 per cent below its peak despite a recent rally. Only two of the shareholders who addressed the six-hour meeting referred to the stock. One, Steve Yates from Chicago, thanked the people who sold Berkshire stock last year "for giving us an opportunity to buy more of the world's greatest stock." Another jokingly chided Mr Buffett and his vice chairman, Charlie Munger, saying he would like to give them "10 lashes with a wet noodle because you have spoiled your shareholders into expecting 25 per cent [annual growth in Berkshire's book value]". Last year, Berkshire's book value advanced just 0.5 per cent, while the S&P 500 recorded a 21 per cent gain.

Comment: We could observe "Well, [Buffett] would say that wouldn’t he?". But this thoughtful offering, same source, quoting some interesting examples, should make you sit up and think of Hans Christian Anderson’s "Emperor’s New Clothes"….:Calculating accurate values for companies in the new economy takes more than a grasp of mathematics, says John Kay. Published: April 23 2000 20

Do the math. The slogan favoured by Jim Clark, creator of Silicon Graphics, Netscape and Healtheon, has become the mantra of a generation of consultants and investment bankers. The new economy, they claim, requires new principles of valuation.

C.com is one of the most exciting prospects in business-to-business commerce. It is the world leader in a growing market - annual sales by 2010 are likely to be $500,000bn. If C.com can maintain a 5 per cent share and earn only 1 per cent net margin its prospective annual earnings will be $250bn. If we assume that market growth after 2010 is 5 per cent and discount future revenues at 10 per cent, the prospective value of C.com is $5,000bn - about 10 times the recent market capitalisation of Microsoft, Cisco or General Electric.

You don't have to wait for the IPO. You can buy shares in C.com right now for less than 5 per cent of that value. C.com is called Citigroup and in addition to its foreign exchange trading, which is the business I have described, you get its other wholesale, retail and investment banking activities and a leading insurance company thrown in.

Of course, nobody would be so stupid as to value Citigroup in this way. Yet I have followed more or less exactly the methodology recommended in the latest McKinsey quarterly for the valuation of new era companies. They use precisely analogous calculations to arrive at a valuation of $37bn for Amazon.com.

Paul Gibbs, head of merger and acquisition research at J.P. Morgan, recently used similar principles to confirm that assessment of Amazon. He then performed the same calculation for internet service provider Freeserve. Assume that UK retail sales grow at 5 per cent a year, that 25 per cent of sales take place on the net, that portals capture 50 per cent of these, that Freeserve gets 30 per cent of the portal share and maintains an 8 per cent commission on sales. Multiply these together and you establish that in 2017 Freeserve will make profits of £2bn ($3.2bn). This, he argues, justifies a value today of £6.50 per share.

But I prefer T.com to Freeserve. T.com has a customer base four times larger than Freeserve. Its franchise is stronger. Its customers are concentrated in the affluent south-east of England, where it faces virtually no competition. Market research shows that more than 95 per cent of its customers use its essential services every

day, many of them several times a day. T.com also has ambitious plans for expansion. At present, its geographical coverage is less than one-quarter of the market in England and Wales. T.com has an interest in south-east Asia. The population of China is 100 times the number of people who today can access T.com services. Even after the recent market correction, T.com, better known as Thames Water, still has a market valuation below that of Freeserve. At the widest point between the old and new economies, Freeserve was worth four times as much.

The reason the Citibank calculation is nonsense is simple, but fundamental. The margins Citibank makes on its forex business vary widely. If you buy small quantities of notes from a bank, the spread is much wider than 1 per cent. If you are a large corporation trading major currencies, the margin is wafer thin. Entry and competition force prices down to the related costs.

In Mr Gibbs's model, Freeserve earns profits of £2bn, about equal to the current profits of Tesco, J. Sainsbury and Marks and Spencer together. And it earns these on revenues of only £2.5bn, so that profits are 80 per cent of the value of its sales. No established business earns margins of that size.

Thames Water is one of a tiny number of companies whose market position is so strong, whose output is so necessary to life, that if it charged five times the current price we would have little choice but to pay. We

do have one option - to insist the government intervenes. It confines Thames Water to a return on its capital employed of about 6 per cent.

The idea that profit is a return on capital invested still has some role in new economy valuation, at the level of the overall market. There is a key formula in the new math. The required yield on a security is equal to the difference between the rate of return demanded from that class of securities and its expected rate of growth. So, if you expect a return of 5.5 per cent from a share whose dividends will grow at 5 per cent, calculations show that the dividend yield should be 0.5 per cent. This is the calculation done by James Glassman and Kevin Hassett in their book Dow 36,000*. Claiming that sustainable dividends average half of earnings, this yield equates to a price/earnings ratio of 100 - implying a target of 36,000 for the US index.

The trouble with this theory is that it takes too long to produce what the investor is looking for. Investors will receive only two-fifths of the cash sustaining the valuation this century. One-third of the total depends on dividend cheques that will arrive after 2200. Two hundred years ago, well before the Dow Jones average, prudent, diversified investors would have owned slave traders and sugar plantations, or perhaps a bold speculation in that symbol of the then new economy - a canal. The next 200 years may be more stable than the last and Microsoft and Cisco may prove more enduring than plantations. But we can hardly be sure.

While 5 per cent may be a reasonable assumption for the growth rate of dividends in the US economy as a whole,

it is likely that well before 2200 most of these will come from companies not yet founded. Suppose we accept Glassman and Hassett's protests that their dividend growth expectations are conservative. If you raise them only from 5 per cent to 5.25 per cent, the anticipated value of the Dow Jones average is 72,000. At 5.5 per cent the formula breaks down because the shares of US companies are infinitely valuable. Not even the most credulous dotcom investor believes that.

The math also works in reverse. If expectations of return are 6 per cent rather than 5.5 per cent, the market p/e ratio falls to 50 and the value of the Dow Jones from 36,000 to 18,000. And if equity investors require a return of 8 per cent, you would have to conclude that shares are worth only half their current level.

An 8 per cent expected total return is not ambitious for an equity investor. A day trader might think you were talking about a weekly profit rather than annual. Glassman and Hassett use a figure as low as 5.5 per cent - the return on Treasury bonds - because they argue that equities have so consistently outperformed bonds that there is now no risk associated with equity investment. In other words, because equities are sure to offer higher returns than bonds, the expected yield on equities should be the same as on bonds.

You do not have to be Wittgenstein to spot the flaw. The rules of logic hold even in cyberspace, and so do the principles of economics. Profits are hard to earn in competitive businesses, and markets that are not competitive are usually regulated. The value of companies ultimately depends on their capacity to generate cash for shareholders. Distant returns are uncertain. Share prices are volatile, and investors need to be compensated for the risks. These truths are as valid in the new economy as the old.

By all means do the math. Isaac Newton, who could do the math better than most, gave up an annuity of £650 per year to invest in the South Sea Bubble. In addition to the math, you need the econ., the pol., and perhaps the psychology.

* Dow 36,000: The New Strategy for Profiting from the Coming Rise in the Stock Market, James K. Glassman &

Kevin A. Hassett, Random House, 1999.

The author is a director of London Economics.

The following snips are courtesy of the wonderful magazine, "Offshore Finance Canada"….

MONEY-LAUNDERING BILL QUESTIONED

Date: Apr. 9, 2000 Source: Globe & Mail

Ordinary (Canadian) citizens may be caught in a "web of suspicion" if more precise guidelines aren't included in a government bill aimed at fighting money-laundering, say opposition MPs.

The new bill, which proposes heavy fines and stiff prison sentences for anyone who processes illicit funds, would also establish a centre to monitor all large, suspicious financial transactions.

However, the legislation does not contain any definition of what constitutes a suspicious transaction. Government officials have said they would use a series of 12 guidelines which have been indicative of suspicious activities in the past, such as a large cash deposit by a company that usually doesn't make them.

Some MPs worry the new centre might share information with other Canadian authorities too freely, or exchange information with jurisdictions such as the US which have different privacy laws in place.

GERMAN FINANCIER SOUGHT IN ALLEGED FRAUD

Date: Apr. 11, 2000 Source: Reuters Business Report

Canada may seek an international arrest warrant for German financier Wolfgang Stolzenberg, alleging he derauded investors in the C$1.5 billion bankruptcy of Castor Holdings Ltd. in 1992, police say.

RCMP officials say the force has been in contact with German authorities about arresting Stolzenberg and possibly bringing him before a German court.

Police say they believe Stolzenberg, who created and ran Castor, is living in a Frankfurt suburb. Germany does not allow the extradition of its citizens.

In the meantime, after charging Stolzenberg, 60, with 41 counts of fraud and conspiracy in connection with the Castor failure, the Mounties could try to arrest him if he ventures beyond Germany's borders.

The RCMP says the investigation of Castor, a Montreal-based property investment and private banking firm, was their second-largest fraud investigation ever, after failed mining company Bre-X Minerals Ltd.

Some of the top money losers in the alleged fraud included Chrysler Canada, out $200 million, and the Commercial Bank of Italy, out $10 million.

Funds were used to finance real estate projects, mainly in the US and Canada, some of which subsequently failed, say police.

In 1993, some of the investors filed a civil suit against Castor's auditors, Coopers & Lybrand Canada, seeking the recovery of $300 million. That case is still being heard in Quebec Superior Court.

Leonard Flanz, a lawyer for the investors, says more than $1 billion seemed to disappear from Castor in its final days. Castor had offices and affiliates in Canada, the US, Europe, the Cayman Islands, the British Virgin Islands and Panama.

After its bankruptcy, Castor denied any wrongdoing.

AUSTRIA WON'T RELAX BANK SECRECY

Date: Apr. 7, 2000 Source: Reuters

Austria is not prepared to relax its bank secrecy laws to unblock an impasse over tax harmonization in the 15-member European Union.

"That's a constitutional principle which we shall hold on to," said Austrian Finance Minister Karl-Heinz Grasser recently.

Britain has already vetoed a proposed common withholding tax on savings.

Portugal is set to propose a short term solution based on the coexistence of a withholding tax and the exchange of information between tax authorities. The idea would be to move to a system based purely on information exchange, which the British strongly support, at an unspecified future date.

INSURANCE LEGISLATION WOULD HIT ALL OFFSHORE COUNTRIES

Date: Apr. 5, 2000 Source: The Royal Gazette

Other offshore financial jurisdictions will also be hit if the US Congress decides to pass legislation to ensure Bermuda-based insurance companies pay tax on business conducted on American soil, a leading US economist has

said.

Robert Hartwig, the chief economist at the Insurance Information Institute, said it was possible Congress will pass these kinds of laws by the end of the year.

However, he added that other jurisdictions such as Guernsey, the Isle of Man and the Cayman Islands would also be affected.

"I would be surprised if Bermuda would be singled out - the law would probably apply to most offshore jurisdictions," said Hartwig.

The tax loophole allows insurance companies based in Bermuda but actually operating in the US to avoid paying income taxes in America.

OECD ISSUES BANK SECRECY REPORT

Date: Apr. 13, 2000 Source: Tax-News.com

The OECD has issued a unanimous report on improving access to bank information for tax purposes.

The report, approved by all 29 member states, contains only statements of intent, because of the wide divergences over how to improve tax collection in general.

The report does not call for any general opening-up of banking affairs or for the end of bank secrecy. However, it calls for giving greater access to national tax authorities to obtain information about specific individuals or companies suspected of engaging in tax evasion or criminal activity.

Some of the desired measures would include: the proper identification of all bank customers and beneficial owners of accounts, the elimination of the "domestic tax interest" requirement for exchanging information (some countries won't obtain bank information for a treaty partner if they receive no tax benefit), and improving information exchange in both criminal and civil tax cases.

US AGREES TO KILL TAX BREAK FOR OFFSHORE SUBSIDIARIES

Date: Apr. 8, 2000 Source: International Herald Tribune

The US has decided to comply with a World Trade Organization ruling stating that the multi-billion dollar tax breaks given to offshore subsidiaries of American companies violated global trade accords.

Some of the biggest names in corporate America, including Boeing, Microsoft, Ford and Exxon, have used the tax break, called the "foreign sales corporation tax," to benefit from tax exemptions on export sales. The tax break amounts to a five per cent cut in tax rates for US exporters.

European Union officials argued that the tax break amounted to a massive subsidy giving US companies an unfair advantage in export markets. The EU estimates half of all US exports are funnelled through foreign sales

corporations

The US is expected to change its tax law to comply with the ruling, although US officials say an October 1 deadline set by the EU seems unrealistic.

(SLIGHTLY BETTER NEWS DEPT.) OECD BACKPEDALS ON BLACKLIST

Date: Apr. 26, 2000 Source: Tax-News.com

The OECD has called off the planned June imposition of sanctions on offshore jurisdictions which will be included on its much-criticised 'tax havens black list'.
The news was given to the offshore jurisdictions by letter, and was confirmed yesterday in Paris by Frances Horner, head of the OECD's Tax Competition Unit, who said that the jurisdictions were being given a further year to adjust their regimes to conform with OECD guidelines, and that this was a direct reflection of their co-operative attitude towards the OECD initiative.
The OECD's 'Harmful Tax Practices Forum' was set up in May, 1998, although Switzerland and Luxembourg abstained from the OECD report on Harmful Tax Competition which created it. The jurisdictions may have been co-operative in private with the OECD - indeed many contacts and visits have been reported in the last year - but in public many of them have vociferously attacked the OECD's 'Harmful Tax Practices' Forum as nothing more than an
expression of the rich countries' desire to prevent the growth of 'offshore' and the consequent leakage of tax revenues.
Mrs. Horner said that the list of non-conforming IOFCs would still be published in June as planned, but that a further list would be published in June, 2001, of just those jurisdictions which had failed to adjust their regimes, and would be the target of sanctions. But it is possible that the OECD's move marks a tactical withdrawal from what had begun to seem an uncomfortable goal.
Rumours of dissent within the OECD over the fiscal unit's initiative have surfaced (how can competition be unfair?) and some member countries at least are uneasy about appearing to bully small, poor islands which are largely dependent on financial services income. The OECD's recent report on information-exchange and banking secrecy was approved unanimously, and it may be that a global regime designed to detect and punish money-laundering is both more achievable and 'fairer' than the imposition of arbitrary standards on taxation regimes.

NAURU FACES FINANCIAL REFORM

Date: Apr. 26,2000 Source: Tax-News.com

A Pacific island tax haven which has 400 offshore banks registered to a single mail box says it will undertake wholesale reform.
Nauru's President Bernard Dowiyogo, who was elected last week, says his new Cabinet is concerned by reports of criminals using the country's offshore banking facilities.
The president says his government does not approve of such activities and will take urgent steps to rectify the situation. Nauru has recently faced increased pressure for reform from the Group of Seven industrialised nations.
However, Mr. Dowiyogo, who helped set up the tax haven, has named outgoing Finance Minister, Kinza Clodumar, to his Cabinet as Minister for Industry and Economic Development. Observers believe Mr. Clodumar runs Nauru's tax haven operations.

G7 ACCORD BACKS BRITAIN ON WITHHOLDING TAX

Date: Apr. 17, 2000 Source: Financial Times

The UK government has hailed an agreement by the Group of Seven finance ministers on combatting tax evasion as a victory in the fight against a European withholding tax on non-resident savings.
The ministers have made an unexpectedly strong commitment "to work rapidly towards" a position where bank information could be obtained and exchanged by tax authorities.
Gordon Brown, the UK chancellor of the exchequer, has sought to promote information exchange as an alternative to a withholding tax as a way to stop European citizens avoiding tax.
London-based securities houses have said that the withholding tax would threaten the City of London's US$3 billion euro-bond market, driving it offshore to a lower tax jurisdiction.
Brown needs the support of international groups such as the G7 and the OECD, since his proposals require an international cooperation agreement that would go beyond the European Union.

So much news out there! You should see the cutting room floor!!

This issue's "how to avoid being the victim of a scam" article: Safety Spar & Darlehenskasse (SSD) and their Internet Website at Hypermart, Parex Bank (Latvia), Ron Higgins aka Robert Sirtaki aka Sylvain, Morrison Group. (All lifted from and courtesy of OPC, which holds the copyright and, like this newsletter, also hosts a newsletter at topica – information below)There are indications that Parex Bank, Latvia's largest bank, is infiltrated by the Mafia, with one Parex' highest executives providing inside assistance to scamsters, thieves and other criminals. To name just one recent example, Parex Bank provides a safe haven for the "Safety Spar & Darlehenskasse" (SSD), which is a fraudulent operation designed to rip off unsuspecting offshore investors.

We were able to gain some insights on how this particular scam operates; I'm quite sure that these fraudsters (SSD) operate under many different names and that there are other quite similar scams out there, so try to understand the patterns of this scam and you'll be able to identify and avoid dozens of others as well.

SSD pretends to be a "licensed banking company", claims to be incorporated on the Isle of Sark, and offers anonymous and high-yield bank accounts to the public through their Internet Website at Hypermart. Apart from that, they "boast" about being able to hack into the computer systems of various law enforcement agencies, including Interpol and FBI.

Their correspondent account details are as follows:

BANK: PAREX BANK, RIGA

SWIFT CODE: PARXLV22

ACCOUNT:

Account Name : Safety Spar & Darlenskas (SSD) LTD

Account # 000706357

After several of our clients had sent substantial funds to this bank account, only to never see them again, we demanded an explanation from SSD. After weeks of strange excuses, we directly contacted Mr. Pildegovis, the relationship manager of Parex Bank - and were in for a big surprise.First, Mr. Pildegovis denied that the account "000706357" even existed. Second, he said that Parex Bank's vice president had authorized him to tell us that "Safety Spar & Darlenskas (SSD) LTD" is *not* a client of Parex Bank. How could this have happened? Tens of thousands of dollars successfully sent to an account which doesn't exist and whose owner isn't even a client of the bank? We had our clients forward some faxed transfer confirmations; only then did Mr. Pildegovis find the account - in his own words, after a "thorough search". (Presumably Parex Bank's computers were down for Y2K maintenance...?)The procedure he finally suggested to recover the stolen funds was as follows:"At the current stage we would advise You to act in accordance to the legislation of Your jurisdiction. We will be able to report further on the account in question only after receipt of appropriate inquiry approved by the chief prosecutor of the Republic of Latvia." Now, this is the very banking law which has enabled Latvia to attract billions of dollars from all over the world - not only from the Russian Mafia, but also from thousands of legitimate companies and individuals from Western countries desiring to save taxes and to protect their privacy and assets.So far, so good - but it doesn't stop here - not by a long shot! Another Big Surprise. Right from the start, we had asked Mr. Pildegovis to keep the matter fully confidential, and chances are that he informed only the highest bank executives. (He had previously honored this request of confidentiality, and had been authorized by one of the bank's highest officials - "by the bank's vice-president" - to inform us that SSD is *not* a client of Parex Bank, and that the account number does *not* exist.)Still, whenever we sent an email to Mr Pildegovis, we were sure to receive an email from the *scammers* at SSD only a couple of hours later, referencing and ridiculing the very email we had sent to Mr Pildegovis.Here's the most revealing example:From: SSDMy associate contacted me urgently some hours ago, telling that we have been warned by the bank where we have one of our accounts, the bank that YOU know. Yes, we have a very high contact in this bank :) He told us that you warned the bank about us. [...] Here you have it - conclusive proof that Parex Bank is either infiltrated by a hacker who reads all emails to bank employees (and probably plays around with the account balances as well in his spare time...) *or* by a fraudster at executive level who assists these scammers in their illegal operations, among them bank fraud, extortion and money laundering.We are therefore issuing the following urgent warning to all offshore investors:Think twice before you do business with a "banking company" having a correspondent account with Parex Bank, especially if that banking company uses the name "Safety Spar & Darlehenskasse". As they are operating under a variety of names, it might be wise to be careful with all "banking companies" that have a correspondent account at Parex Bank.Needless to say, the account mentioned above is *still* active and is *still* being used to receive and launder the proceeds from extortion and bank fraud. If some of the Latvian law enforcement officials or some of the international journalists among our visitors dare to take up this case, the persons who are familiar with the details and who you should have a chat with are as follows:Mr Pildegovis (Relationship Manager at Parex Bank) The Vice President of Parex Bank (as of Oct 1999)

Mr Mafia (hint: check out the employee who opened SSD's account)

And last not least...

Ron Higgins, SSD's "Director", who resides in Belgium at ballie.customer.chello.be (cable-195-162-213-149.customer.chello.be [195.162.213.149]) Total, initially estimated loss: $280,000+Update Dec 21, 1999: $1,500,000+

The story continues, draw your own conclusions ...

(Yes, they sent this twice!)

Date: Dec 20, 1999

From: Anonymous User nobody@lobeda.jena.thur.de

Date: Dec 21, 1999

From: lcs Mixmaster Remailer mix@anon.lcs.mit.edu

Salut Robert !

My friends and I did appreciate your comments on the "scam pages" of your website, concerning the SSD :)))

Really !

But we hope that you got more details about the SSD, as these described on your website are really... poor :(

We will let you investigate :) But we were really surprised when you wrote the "estimated scam" is about $280k ! Robert, you can easily multiply this amount by 5 or 6 :))) And THANKS about your warning ! Do you know that we received emails from people telling "I was about to send money to the SSD, but have been warned by [you], so I prefer send to YOU"You understand of course, that we have one other structure, whose name is not SSD, and without any account in Parex :)))

Thanks to your warning, we got at least 3 Clients for a total of (today) about $ 170k :))) Best wishes for 2000, Robert ! And sincerely, I hope that you will be more lucky in the future ! SSD team :)