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Barclays Bank, Recipient of $9B from AIG Bailout, Promotes U.S. Tax Avoidance Schemes of Questionable Legality

One of the foreign banks that received a U.S taxpayer bailout through the AIG conduit was the Britsh bank, Barclays.

They received $9B.

It has had little coverage in the U.S press, but in the U.K. there is a major scandal breaking about an extremely profitable division of Barclays, the Structured Capital Markets division, whose sole business is to advise clients on tax avoidance schemes for many tax jurisdictions, including the United States.

A whistleblower from the division provided internal Barclays documents from this division to the British tax authorities, as well as a newspaper, The Guardian.

Here is a quote from one of the Guardian stories:

The internal Barclays memos were leaked by a mole to the Liberal Democrats. The new allegations reiterate claims that the bank’s main purpose in entering into these schemes was to make profit from tax avoidance through an intricate circuit of offshore Cayman Islands and Luxembourg companies. The profits are said to be enormous and the deals so complex that HM Revenue & Customs (HMRC) struggles to unravel them.

Barclays got an injunction to prevent the Guardian from publishing the documents; but they are all over the internet, including this site

I am not a tax expert, but it is my understanding that the U.S tax code considers that transactions made sole for the purpose of tax avoidance with no "economic value" are not legitimate. The quote from the Guardian above, certainly sounds as if there is a high degree of likelihood that the transactions executed by the Barclays Structured Capital Markets group on behalf of its clients could fall into that category.

In addition, following the collapse of Lehman Brothers, Barclays bought the Lehman broker-dealer. They have set up a Structured Capital Markets group in New York where they are also peddling these tax avoidance schemes.

I know that FDL readers are often exhorted to contact their representatives; and I know they often do, with seemingly little result to show for it.

In this case, however, I think this matter has a high-grandstanding quotient for any Congressman or Senator who gets the Internal Revenue Service to open an investigation into this matter.

So it may be well worth your time and effort.

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