Angola Tax Code, EU Bank Losses, Tax Havens: Compliance

May 6 (Bloomberg) -- Angola, Africa’s second-biggest oil producer, plans to simplify taxation and more than double revenue from sources other than petroleum to curb the government’s reliance on crude.

The target is to pass three tax codes this year that will cut fees and modernize laws, some which date from 1948, Gilberto Luther, director of the reform project, said in an interview on April 29 in Luanda, the capital. The changes will increase receipts from industries including manufacturing and retail to about 20 percent of gross domestic product by 2017 from 8 percent in 2011, he said. In Nigeria, Africa’s largest crude producer, non-oil tax was 6.3 percent of GDP in 2011.

Oil-industry tariffs accounted for 79 percent of tax revenue in 2011. Plans to earn more from other areas come as Angola rebuilds from a 27-year civil war that ended in 2002 and as growth excluding oil reached 9.1 percent last year. The $114 billion economy is forecast to expand 7.1 percent this year from 7.4 percent in 2012, according to the government and budget documents.

By 2017 or soon after, a value-added tax on finished products and services will replace a consumption tax that’s charged on each stage of manufacturing, Luther said. The new levy will cut the “cascading effect” of the previous tax, which increased inflation by making prices higher than a lone tariff on the final product, he said.

Angola has separate tax regimes for petroleum, negotiated with companies including Total SA, Exxon Mobil Corp. and BP Plc in production-sharing agreements. Tax authorities are guiding the reforms by looking at South Africa, Ivory Coast, Morocco, Zambia and Mozambique, Luther said. The International Monetary Fund forecasts Angola’s government revenue this year at 44 percent of GDP, the second-highest in sub-Saharan Africa.

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Compliance Policy

Australian Bank Regulator Keeps Tighter Timetable for Liquidity

Australia’s banking watchdog will stick with its timetable to implement new liquidity rules and won’t widen the range of permissible assets, declining to follow global peers who have softened their stance.

The Australian Prudential Regulation Authority will impose the so-called liquidity coverage ratio starting Jan. 1, 2015, the regulator said yesterday after concluding a review. The list of high-quality liquid assets that banks can hold to meet the requirements remains unchanged, APRA said.

The stance contrasts with global central bank chiefs, who in January agreed to loosen the rules after warnings that the proposal would strangle lending and stifle the economic recovery. Australian banks didn’t require bailouts during the global financial crisis, which drove financial institutions to raise $1.6 trillion of capital and spurred the Basel Committee on Banking Supervision to revamp global rules.

The rule requires banks to hold easy-to-sell assets to survive a 30-day credit squeeze. Under the deal struck in January, global banks will only have to meet 60 percent of the LCR obligations by 2015, with the full rule phased in through 2019. Those lenders may also use assets including some equities and securitized mortgage debt to meet the requirements.

While banks in most countries will meet the LCR predominantly through holding government bonds, Australia’s A$271 billion ($279 billion) sovereign debt market isn’t big enough to meet the requirements. The central bank is providing a standby funding facility to help lenders meet the gap.

ECB Bid for Fast Start to Bank Loss Rule Blocked by Nations

The European Central Bank and Germany met resistance from national governments in their bid to bring forward the start date of European Union rules that would force losses on failing banks’ creditors.

France and Spain were among a large group of EU nations to weigh in against the proposal, which would have seen the start date of the so-called bail-in rules shunted forward to as early as 2015 from 2018, at a meeting of national ambassadors May 2 in Brussels, according to an EU official.

Nations were concerned that a faster timetable wouldn’t leave banks with enough time to prepare, said the official, who couldn’t be named in line with EU policy. The deadline is one of several splits between governments concerning the debt writedown powers, with France and the U.K. seeking to hand regulators the ability to exempt some creditors from losses, the official said.

EU leaders have set a June deadline for governments and the European Parliament to agree on the law, aimed at taking taxpayers off the hook for bank failures. In the absence of such a system, nations have injected 1.7 trillion euros ($2.2 trillion) into their banking systems since the 2008 financial crisis.

Michel Barnier, the EU’s financial services chief, proposed last year that, while most of the provisions in the law should take effect in 2015, the bail-in rules should be subject to a longer timetable to avoid spooking investors.

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Money-Fund Rules Will Preserve Product’s Value, SEC’s White Says

The U.S. Securities and Exchange Commission is trying to preserve the value of money-market mutual funds to investors as it writes a rule intended to limit risk, the agency’s chairman said May 3.

Mary Jo White said in a speech at an Investment Company Institute conference in Washington that the SEC is “actively engaged” in writing the proposal, which has been anticipated by the fund industry since a similar plan failed to advance last year. White said the proposal, which she declined to describe in detail, will balance the views of commissioners and fund investors.

In her first speech as SEC chairman, White mentioned the need to address “potential redemption pressures and the susceptibility of these funds to runs,” while preserving the economic benefits of the product for retail investors.

Regulators have worked to impose tighter restrictions on the $2.56 trillion money-fund industry since the September 2008 collapse of the $62.5 billion Reserve Primary Fund.

In her speech, White also made the case for coordinating the SEC’s rules and enforcement programs with global financial regulators. The SEC’s proposal to allow so-called substituted compliance with overseas swaps rules is an example, she said.

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Spotlight on Offshore Tax Havens With 200-Year History of Wealth

More than 30 percent of the world’s 200 richest people, who have a $2.9 trillion collective net worth, according to the Bloomberg Billionaires Index, control part of their personal fortune through an offshore holding company or other domestic entity where the assets are held indirectly.

Supported by tax treaties and other legislation designed by governments to entice the wealthy and multinational corporations with low tax rates, a world of offshore finance was built during the past 200 years offering a range of financial vehicles that provided security, secrecy and control.

While island locations are the usual suspects in media coverage of tax havens and offshore finance, the largest and most powerful jurisdictions are in the U.S. and U.K., according to Katja Gey, director of the Office for Financial Affairs in Liechtenstein. The largest of them is Switzerland, which established its banking secrecy laws in 1934.

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Compliance Action

Health Management Receives SEC Subpoena on Payment Records

Health Management Associates Inc., an operator of acute-care hospitals, said its accounting procedures, including payments from U.S. government health programs, are being investigated by federal regulators.

The hospital operator received a subpoena April 25 from the Securities and Exchange Commission for documents including records of payments from Medicare and Medicaid, the U.S. health programs for the elderly and poor. The government also asked for a variety of other financial records, including data on revenue from privately insured or uninsured patients, the Naples, Florida-based company said in a statement.

The company said it’s cooperating with the SEC investigation and is unable to determine the potential financial effects.

Health Management operates 71 hospitals in 15 states.

MediaTek China Head Resigns Amid Insider Trading Investigation

MediaTek Inc.’s China head resigned May 3 as Taiwan authorities probed possible insider trading linked to the company’s planned $3.8 billion merger with MStar Semiconductor Inc., which would create a business producing 70 percent of the chips used in televisions.

Lu Hsiang-cheng is being investigated for insider trading along with four other people and posted NT$1 million ($34,000) in bail, Taipei Deputy Chief Prosecutor Huang Mou-hsin said May 3. Lu quit for personal reasons, MediaTek Chief Financial Officer David Ku said by phone. He declined to comment on the former official’s “personal conduct.”

Shares of the Hsinchu-based chipmakers have surged more than 30 percent since MediaTek announced the merger agreement June 22, compared with a 13 percent increase in the Taiwan Stock Exchange index. The deal would be the fifth-largest semiconductor acquisition globally in the past decade and would end competition between the companies as they face stagnating global demand for televisions.

MediaTek and MStar gave documents to authorities May 2, they said in separate stock exchange statements. The company named Aaron Chang as its new head of China operations, it said in a stock exchange filing May 3.

Baselitz Probed for Tax Evasion Over Swiss Account, Spiegel Says

The home of artist Georg Baselitz in Ammersee, Bavaria, was raided by Swiss authorities, Spiegel reported, without saying where it got the information.

The action was in connection with a probe for tax evasion over a Swiss account, Spiegel reported. The artist’s name appeared on compact disc with Swiss bank account data acquired by German authorities, according to Spiegel.

Baselitz didn’t immediately reply to an e-mail by Bloomberg News asking for comment and sent via his Berlin gallery.


Bayer Ordered to Pay Ex-Schering Shareholders More, Lawyer Says

Bayer AG must pay some former shareholders of Schering AG more money after a Berlin court ruled that their compensation in the $17 billion takeover wasn’t sufficient, according to the lawyer representing shareholders.

The additional payments will cost Bayer more than 300 million euros ($391.7 million), based on 7.2 million Schering shares outstanding, Peter Dreier, a Dusseldorf-based lawyer for Dreier Riedel Rechtsanwaelte, said in an e-mailed statement May 3. Shareholders in the 2006 deal who got 89.36 euros a share will get an additional 46 euros a share, including interest, Dreier said.

Bayer fought off another German drug and chemical maker, Merck KGaA, to win Schering. The deal, which formed Germany’s biggest health-care company, was complete on Dec. 29, 2006, according to data compiled by Bloomberg.

“We are not aware of any decision,” Guenter Forneck, a spokesman for Leverkusen, Germany-based Bayer, said May 3 by phone. “We will evaluate the ruling upon receipt and take legal action as necessary.”

Bayer said it believes the terms and conditions set at the time of the takeover were adequate, Forneck said.

Dreier predicted the decision would influence a separate case pending at the same Berlin court involving Bayer’s later squeeze-out of remaining Schering minority shareholders.

Commerzbank Admits Defeat in $66 Million Dresdner Bonus Case

Commerzbank AG said it won’t appeal a U.K. court ruling that paves the way for 104 bankers to recover 50 million euros ($66 million) in bonuses after four years of legal skirmishing.

The bank, which is 25 percent government-owned after receiving an 18.2 billion-euro bailout in 2009, can put its resources to better use on current and future activities, according to Margarita Thiel, a company spokeswoman.

The German lender reduced bonuses by as much as 90 percent after taking over Dresdner in 2009. Two U.K. courts ruled the cuts were illegal because of a pledge by Dresdner’s then Chief Executive Officer, Stefan Jentzsch to set aside 400 million euros for compensation.

While European banks are facing proposals for some of the world’s toughest pay curbs, Frankfurt-based Commerzbank has fought legal battles in Germany, Italy and Japan to defend the Dresdner bonus cuts. The bank maintains the reduction was reasonable because of a 6.5 billion-euro loss at the division.

Two Former Day Traders Settle SEC Lawsuit Over Insider Tips

Two former day traders who were convicted of trading on stock tips gleaned from the wife of a former Lehman Brothers Holdings Inc. salesman settled claims by the U.S. Securities and Exchange Commission.

Jamil Bouchareb agreed to pay $1 million and Daniel Corbin $191,000 to settle an SEC lawsuit. Bouchareb pleaded guilty to conspiracy and securities fraud in May 2009. Corbin pleaded guilty in May 2011 to the same charges.

Bouchareb was sentenced to 30 months. Corbin got six months. The SEC settlements come in addition to the $1.6 million Bouchareb was ordered to forfeit in the criminal case and Corbin’s $1 million criminal forfeiture.

The case is Securities and Exchange Commission v. Devlin, 08-cv-01101, U.S. District Court, Southern District of New York (Manhattan).


Arthur Levitt Talks with Author Anat Admati About Banks

Arthur Levitt, former chairman of the U.S. Securities and Exchange Commission, interviewed Anat Admati, a professor at Stanford University and coauthor of “The Bankers’ New Clothes: What’s Wrong With Banking and What to Do About it.”

They spoke on Bloomberg Radio’s “A Closer Look With Arthur Levitt.”

For the audio, click here.

To contact the reporter on this story: Carla Main in New York at

To contact the editor responsible for this story: Michael Hytha at

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