Well, a lawyer’s office (one of many) offering the founding and installation of special enterprises in rather dubious countries is (has been) “hacked” – and many people are surprised at what kinds of things happen if a part of the truth becomes public knowledge.
Naturally, the media, again, immediately published the data leak in their special and rather sensation-lusty way.
Except that we are talking about things that have been public knowledge for a long, long time. Consequently, I will now tell you a few things I personally know about corruption, letterbox companies, the methods behind them and everything else belonging in the same context.
Here are four corruption stories I myself was directly involved with
Story # 1:
How to make illegal money and invest it in a letterbox company.
Imagine yourself being a methodical counsellor and having a counselling company named “GAMMA” – a rather “normal” and more or less successful enterprise in Germany. You have an idea how to support your business and do some Excel programming on said idea over the weekend. You get a tool that supports your method, making your counselling service more efficient and setting you apart from the competition. Your employees like using the tool, your customers appreciate it and perhaps they are even prepared to pay an extra price or licence fee for it. But that is not strictly necessary.
So now you have a perfect starting point from which you can do a great job generating illegal money and transferring it into a letterbox company.
You do the following things – and it is all (almost?) totally legal.
You found a company “ALPHA“ in one of those letterbox company countries (“tax oasis”). You transfer your idea (your Intellectual Property / Geistiges Eigentum or IP) to this company. It is officially the job of the enterprise “ALPHA“ to do the world-wide marketing for your intellectual property. This is totally legal as far as prevailing law is concerned.
Only the location of the enterprise might be a little unusual; it is situated in a very exotic country that nobody really knows and that is commonly associated with the term “tax oasis”. As a general rule, the director of “ALPHA“ will be a frontman. He does not have a lot of work and also gets only a small salary.
In another (a little more trustworthy) country, for instance Ireland, you found a very small software house and name it “BETA”. It has one employee who, in his leisure time, does some functional improvement and maintenance work on your spreadsheet and is paid a little bit for his work. That, too, is probably quite legal.
Company “BETA“ will write a substantial invoice addressed to “GAMMA“ for every registered(!) use of the method and the tool. A small part of the money is used for paying the part-time employee. The bulk of the money is transferred to “ALPHA“ as IP licence fees. The money remaining with “BETA“ is down to the absolute necessities. That, too, is probably not illegal.
In this manner, you will increase the cost and decrease the profit of “GAMMA“ (and you will pay less taxes). This is how you habitually transfer quite nice sums (illegally?) from “GAMMA“ via “BETA” to “ALPHA”, your off-shore enterprise, which you own and which administers and sells your intellectual property (IP).
This method can be used for all kinds of rights, both a in small and a huge dimension.
The remaining question is:
what will enterprise “ALPHA“ do with all the money?
“ALPHA“ will invest in a house in the Ticino or on Mallorca – or in a yacht, or whatever you desire. You can let them and thus increase your capital. And, of course, you can also use both the yacht and the house if that is your desire. For instance if you wish to invite beautiful ladies and offer nice pastimes to your business partners – of course for free.
If, at some time, you want to liquidate your letterbox company “ALPHA“ , then you can do that, too. Again, the legal office that was such a great help when you founded the company will do the job for you. All moneys will be brought “back home” with as little tax paid as possible.
It is quite simple, isn’t it? However, Goddess Justitia can see it and still, as a general rule, can do nothing about it.
In my next instalment of this series, I will tell you who actually profits from the business with “secret cash” – and what role letterbox companies can play here. And afterwards, I will out myself by telling you how they wanted to bribe me, both as a customer and as a supplier (!).
RMD
(Translated by EG)
P.S.
Now I hope that there is no company called “Gamma” that actually does this kind of business.
P.S.1
I took the picture from Wikipedia – it is owned by Classical Numismatic Group, Inc.
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