NEWS

20 February, 2009 About all at once: crisis and banks, consulting and extradition, taxes and interests...

Business Optimization, elimination of negative consequences of crisis, reorganization of banks, financial and industrial structures – the primary goals of the world economies.

According to information received by «Midland Consult», such is the opinion of a number of the European analysts, who are considering ways of exiting from the economic crisis, in which many states were involved due to the financial collapse which has burst in the USA. However, some believe that financial crisis has not strongly affected a number of European countries. For instance, in conversation with the representative of "Midland Consult" the Minister of Finance of Cyprus Charilaos Stavrakis has noticed that «the Cyprus banks and financial structures mainly did not co-operate with the USA banks and consequently have not incurred any losses». Addressing journalists at the beginning of February the President of Cyprus Dimitris Christophias confirmed it, having told that «the bank sector on Cyprus works normally and stably, and is not affected by the crisis». The Bank of Cyprus has just reported a profit of €508m for 2008, as confirmation of the above view. None of the other Cyprus banks have declared any losses either. Meanwhile the largest Swiss bank UBS has received last year the record loss in the history of the Swiss bank system – almost 17 billion dollars. Many other financial structures of Europe have suffered losses as well.

It is curious that with such an unfavorable European background, the Senate of the USA has approved an allocation of 787 billion dollars in stimulating the American economy. That is, having started the printing- press, the American authorities intend to give to the population of the country the tax privileges, new workplaces, to carry out the repayment of long-term assets at large banks, to create investment fund for liquidation of debts in the credit system of the USA. Probably that means that Americans should overcome the crisis in the nearest future. But how about the following? After all they cannot just print dollars to support the economy. In Switzerland because of crisis in 2008 11 thousand bankers have lost workplaces. Besides catastrophic situation with the financial system of Iceland, difficulties and reductions of workplaces in Germany, France and other European countries, crisis has also affected the Eastern Europe states, including Russia. The total financial condition of the 10 richest people of Russia has decreased for a year for 66 % - from 145 billion dollars to 76 billion. The number of dollar billionaires, naturally, has decreased too: instead of one hundred & one persons in a last year's rating there are only 49 of them now. It is less, not only than in record 2008, but also than in two previous years. The growth of unemployment and the prices has led last year to the fact that expenses of Russians, according to the mass-media, have exceeded the incomes for the first time.

In 2007 Russians have received 18,2 billion euro more incomes than last year. Despite that, many Russian experts come finally to a conclusion that a number of large structures use world financial crisis for carrying out of internal reorganization and production optimization. Some representatives of business declare even that they do not feel any negative consequences of the crisis. However, as they say, time will tell. Anyway, in the consulting business if there was some decrease in the end of 2008 - the beginning of 2009 many explain it, first of all, by prolonged New Year's holidays. There is a hope that in this and other areas there can be a fast revival…

The Ukrainian vessel "Faina": 4 months in the centre of attention of mass-media, however...

The Ukrainian vessel "Faina" transporting military cargo from Odessa to Kenya and hijacked by the Somali pirates more than 4 months ago, all this time remained the centre of attention of the world mass-media. However very few people have paid attention to the fact that on its board, near to the vessel’s name there is one more inscription - "Belize". The ship "Faina" and many other vessels in the world use Belize, Panama, Cyprus and other jurisdictions with the preferential taxation for simplification of tax payments. Such schemes with Belize, BVI and other countries are used not only in shipping, navigation, but also in construction, commerce and other areas. This topic and correct registration of courts, yachts, the companies with the preferential taxation will be discussed at the conference in Moscow organized by "Midland Consult" in business centre "Daev-plaza" on April, 3rd, 2008. The detailed information on this conference is on the company’s website.

Extradition: less than 10 % of requirements of Moscow about delivery of the Russian citizens are satisfied with law enforcement bodies of foreign countries.

The annual number of inquiries of the State Office of Public Prosecutor of the Russian Federation about an extradition of Russians is measured by the hundreds. The newspaper “Nasha Versia” states that the last of such inquiries was that Basmanny Court of Moscow gave out the sanction on the arrest of businessman Evgeniy Chichvarkin who left for Christmas to London and not returned. In Russia the former co-owner of "Euroset" - the largest company on trade in mobile phones in the Eastern Europe – is accused of abduction of a person and extortion. Probably the Russian authorities will send to London the official inquiry about his extradition in the near future . How many chances are there to hide abroad from the justice system? «Midland Consult» has received an irrefragable answer from one of the higher ranks of the Ministry of Internal Affairs of Cyprus. The official who wished to remain undisclosed, has answered that the arrest process and the subsequent transfer of the foreign citizen on demand of law enforcement bodies of other country is a long legal procedure in which course all formalities should be observed. In particular, for Cyprus it is first of all strict performance of requirements both by the Cyprus Office of Public Prosecutor, and rules and regulations of the European Union which the Republic Cyprus has entered in 2004. And thus, to foresee in advance an outcome of such invention is rather problematic.

It’s widely acknowledged in the world that the extradition of the citizen on request of foreign law enforcement bodies is not a state duty, but only its right. And consequently every year more and more people from different countries, without waiting arrest, disappear in other states or ask for a political asylum there. There are two ways for the law enforcement bodies to catch the victim abroad. First, the Interpol in mostly used for this purpose. The Office of Public Prosecutor of the country demanding an extradition, should direct to its headquarters an inquiry explaining who is the person and on what basis he or her is accused. If the Interpol makes the decision on the announcement of the given person in the international search he or she can be arrested on the territory of any state. According to official figures, one of five criminals hunted by the Interpol is arrested. However it is not the end of the story, but frequently only a preamble. The court of that country where the searched person has been detained, should make the decision on its extradition. And it is a process with unforeseen outcome, accompanied by bureaucratic correspondence between the countries. Usually it lasts for several months. Thus it is necessary to consider that according to the European convention on the delivery (extradition) signed among others by Russia, the extradition of persons accused of political crimes, offences connected with civil-law and is administrative-legal responsibility is not allowed. Besides, the state should refuse extradition of those persons who ask and receive the status of the refugee (there are several thousands of such persons in Cyprus.) And finally, any country should not return the citizen to other state if there are bases to believe that in this country human rights are broken and application of tortures can threaten the accused person.

Because of rigid international norms there the number of extraditions to Russia is much less than number of the ineffectual inquiries directed by the State Office of Public Prosecutor of the Russian Federation. So, last year 58 of its citizens have been extradited to Russia from 23 states. And, according to the State Office of Public Prosecutor of the Russian Federation, annually Russia directs to the different countries about 700 inquiries for the extradition. 1248 Russians are now put on the international wanted list. Meanwhile the head of National central bureau of the Interpol at the Ministry of Internal Affairs of the Russian Federation Mr. Timur Lahonin named the year 2008 as the "most fruitful" from the point of view of "extradition" for the last five years. In previous years successes of the State Office of Public Prosecutor of the Russian Federation were even more modest. So, in 2007 hardly more than 30 persons were extradited to Russia. Differently, the law enforcement bodies of foreign countries satisfy less than 10 % of inquiries of the Russian authorities. Among the countries which actively promote capture and detention of criminals from Russia, Lahonin named Germany and Spain.

Cyprus - Municipality tax

The Nicosia Municipality is one of the first municipalities to adopt the amendment to the Municipality Law which permits them to impose a tax on international companies which have their registered office in the Municipality borders. The amendment to the Law came out in 2008. It permits municipalities to impose a tax of €250 for international companies which maintain their registered office within the Nicosia boundary which have no business activity (dormant companies). For companies which are active and maintain a registered office within the Nicosia boundary, they will be charged a tax of €450.

Already the Municipality has communicated with lawyers, accountants and other financial providers who host these companies to provide them with a list of such companies so that the tax bills can be facilitated.

This move by the Municipality has raised many questions by financial providers who object to the imposition of such tax on the basis that such a move will affect negatively the efforts by them to attract new investment into the service sector of the Cyprus economy.

Cyprus - Interest rates

At a time when, due to the financial crisis, other countries in the Eurozone, the UK and USA enjoy exceptional low interest rates, Cyprus is probably the exception. Until a few days ago a depositor could receive interest on their Euro deposits of 8%, when the Euro base rate as fixed by the European Central Bank is 2%. Following interventions by the Governor of the Central Bank and the Minister of Finance, this has now been reduced to around 6%, which is still three times the EU base rate.

One wonders who really pays for this market anomaly. It seems that the borrower has to pay for this high deposit rates. In a study published by the European Central Bank, ranks Cyprus first in the highest interest charged on housing loans. Cyprus rate on housing loans is recorded as 6.84% followed by Slovenia and France with rates of 6.64% and 6.01% respectively. The lowest rate is that of Finland of 4.25% with the EU average at 5.31%.