A Paradise of Untouchable Assets

rarotonga

 

Rarotonga, the main island in Cook Islands. Source: Japan Focus

 

The story about a semi-sovereign state, populated in a number barely exceeding 20,000, and hugely dependent on New Zealand, which also serves as an influential, and mostly lawsuit-free, international tax haven.

Read the full story in The New York Times.

 

Excerpt:

 

Win a malpractice suit against your doctor? To collect, you will have to go to the other side of the globe to plead your case again before a Cooks court and under Cooks law. That is a big selling point for those who market Cook trusts to a broad swath of wealthy Americans fearful of getting sued, and some who have been.

“You can have your cake and eat it too,” says Howard D. Rosen, a lawyer in Coral Gables, Fla., who has set up Cook trusts for more than 20 years, in a video on his website. Anyone with more than $1 million in assets, his firm’s site suggests, should consider Cook trusts for self-preservation, but especially real estate developers, health care providers, accountants, architects, corporate directors and parents of teenage drivers.

International regulators have become more aggressive in efforts to clamp down on tax haven countries, offshore banks and their customers, but they have paid scant attention to the Cooks. Yet Americans are the biggest customers of the trusts, which may be held only by foreigners, not Cook Islanders. The islands’ official website calls the Cooks a “prime choice” for “discerning wealthy clients.” There are 2,619 trusts, according to the Cooks’ Financial Supervisory Commission, offering anonymity as well as legal protections. The value of the assets is not disclosed and it is against the law in the Cooks to identify who owns the trusts or to provide any information about them.

The two faces of Singapore

singapore rich

 

 

The existence of this tiny, little, 5.5-million-people-strong nation is primarily due to the inflow of two main things this country critically needs: capital inflow and foreign talents.

Speaking of capital influx, it takes this city-state no more than five decades of absolute one-party control to restore law and order, from a previously poverty-laden, conflict-plagued shantytown into one of the world’s richest metropolises equivalent to its doppelgangers, either Hong Kong, Shanghai, Tokyo, New York City, or London. With social stability perfectly well-maintained, the flow of capital is well sustained. It is now one of the planet’s most promising banking hubs, and also tax havens, tantamount to that of Switzerland or Cayman Islands.

Simultaneously, as Singaporean population’s fertility rate is critically below its replacement rate (1.2 instead of 2.0), the government also finds itself increasingly necessary to attract foreigners to come, work, and also live in this tiny country whose GDP size is equivalent to that of its counterpart, Malaysia. Approximately 1 million foreign workers make up one-third of Singapore’s workforce currently, and overall, nearly 2.5 million people living in Singapore are not born in this island. The government has even announced plans to import ‘another’ 1.5 million migrants until 2030 to stabilize the population structure, which is expected, altogether with the number of migrants, to reach 7 million by that year.

Nevertheless, there are unexpected costs with such phenomena.

With global nouveau riches, and also an influx of foreign workers from Third World countries, flocking in to Singapore, problems arise. Relationship between them and the locals becomes intense, social gap widens, and most commonly, political repression prevails. Many, among the latter, who do menial jobs, complain of low pay and unequal treatment, but opinions are frequently suppressed in the highly strict government.

And with the Little India riots recently taking place two days prior (and conducted, ironically, by foreign migrant workers), this is becoming an increasingly alarming concern among all the populace in the country.

Two articles below highlight the two faces of Singapore: one dominated by the globe’s millionaires, and the other by commoners struggling for a better life in a brand-new megalopolis.

 

This is the article, about the former, from Wall Street Journal. Here is the excerpt:

 

Welcome to the world’s newest Monaco, a haven for the ultra-rich in what until recently was mocked as one of the most straight-laced, boring cities in the world. When most people think of Singapore, if they do at all, they think of an order-obsessed Asian version of Wall Street or London’s Canary Wharf, only with implausibly clean, sterile streets and no crime. The southeast Asian city-state of five million people is perhaps best known for banning the sale of chewing gum or caning vandals, including American Michael Fay in 1994 for spray-painting cars. Drug traffickers face the death penalty, and even Ault complains the authorities won’t let him import his prized gun collection, which now sits in his other homes in Palm Beach and Manhattan.

But over the past decade, Singapore has undergone a dramatic makeover, as the rich and famous from Asia and beyond debark on its shores in search of a glamorous new home—and one of the safest places to park their wealth. Facebook co-founder Eduardo Saverin gave up his American citizenship in favor of permanent residence there, choosing to live on and invest from the island while squiring around town in a Bentley. Australian mining tycoon Nathan Tinkler, that country’s second wealthiest man under 40, whose fortune is pegged at $825 million by Forbes, also chose to move to Singapore last year. They join Bhupendra Kumar Modi, one of India’s biggest telecom tycoons who gained Singapore citizenship in 2011, as well as New Zealand billionaire Richard Chandler, who relocated in 2008, and famed U.S. investor Jim Rogers, who set up shop there in 2007. Gina Rinehart, one of the world’s richest women, slapped down $46.3 million for a pair of Singapore condominium units last year.

 

And this is the latter, from The Daily Beast, primarily concerned about foreign-hired construction workers. Here is the excerpt:

 

Construction workers don’t get issued regular work visas; they are considered “transient workers,” welcome in Singapore only for the labor they are doing. The rules stipulated in their work permits bar them from marrying Singaporean citizens (unless approved by the government) and from changing jobs. With permission to be in Singapore conditional upon their employer, workers are discouraged from rocking the boat. Complain too much and you could find your work permit cancelled and your right to remain in Singapore withdrawn. An unlucky worker might even find himself forcibly repatriated.

This gives employers an enormous amount of power over their migrant workers. Activists say they’ve come across contracts with all sorts of unreasonable and downright illegal clauses. A 2008 contract from a subcontractor stipulated that workers would not be entitled to payment for overtime or work done on public holidays. Workers who complained to any government ministry could also be made to pay between $80—$240, which could account for about three to ten days’ worth of wages, for the employers’ trouble in addressing these complaints. And these are for the ‘lucky’ ones, who actually have contracts.