Expatriates find an affordable welcome in Ecuador

Ashley Rogers wanted adventure. She had been a network television producer and writer in Los Angeles for 20 years when she decided it was time to move abroad.

After considering Buenos Aires, Montevideo and Panama City, she settled in May 2011 on Cuenca, a small city of about 330,000 in the highlands of southern Ecuador, drawn to its culture, friendly people and low cost of living.

“The building I ultimately moved into was the first of its kind in Cuenca: an old colonial building being renovated and restored into ultra-modern apartments and lofts, yet keeping the integrity of the historic building,” Ms. Rogers said. “It is the perfect blend of old and new and I couldn’t be happier.”

Ms. Rogers paid $148,000 for the 186-square-meter, or 2,000-square-foot, loft with adobe walls in Casa San Sebastian. The price included reconfiguring the initial architectural plans to match her taste and all the renovations, like the addition of skylights and a mezzanine, surrounded by glass.

“It was an empty shell when I purchased it,” Ms. Rogers said. She worked on the renovations with Juan Heredia, the first developer in Cuenca to take on such restoration projects, capitalizing on the city center’s status as a Unesco World Heritage Site.

Since finishing the brick building that includes Ms. Rogers’ apartment, he has worked on Casa Juan Jaramillo, in the city center, which sold out immediately. His third restoration, at Casa de los Frutales, is being planned.

Ms. Rogers still works on documentary films in various spots around the world but she also has found business opportunities within the Ecuadorean expatriate community. She and Michel Blanchard, a former model and fashion editor, have started Ecuador At Your Service, a travel consultancy and concierge service for anyone interested in visiting or moving to the country. They also are co-hosts of an Internet radio show about Ecuador for the Overseas Radio Network.

Other expatriates, primarily retirees from the United States, also have been drawn to Cuenca since a 2009 magazine article labeled it the “World’s Best Place to Retire.” Today, estimates say there are 1,500 to 1,600 expatriates living permanently in the city, with another 1,000 on long-term visas.

One of them is George Evans, who had been planning to retire in Tucson, Arizona, but was unhappy about the cost of utilities, gas and food. He moved to Cuenca almost three years ago with his wife and two children and opened California Kitchen, a restaurant that quickly became a popular meeting spot for the expatriate community.

“The weather is nice. The cost of living is very low. Public transportation is very good,” said Mr. Evans, who lives in an apartment south of the city center. “I really love to walk and don’t need a car.”

One feature that expatriates regularly cite is the inexpensive, high quality health care provided by the 18 hospitals and medical centers in the city and the large number of English-speaking doctors. Also, as Cuenca is the center of the region’s agricultural and tourism industries, it has supermarkets and malls, English-language bookstores and cultural opportunities.

News articles frequently tout the low cost of living in Cuenca, which one Canadian family of three estimated to be $11,000 a year in 2010.

But no one should expect to find a $40,000 condo. (The U.S. dollar is the official currency of Ecuador.)

Residential buildings range from stone and brick structures that are centuries old to modern condominium and apartment developments in concrete and steel, often covered in brick veneers.

Most condos are priced from $800 to $1,000 per square meter, which equals about 10 square feet, less than half the average cost in Panama City.

Houses tend to be cheaper at $500 to $600 per square meter, with prices declining in rural districts like the Yunguilla Valley.

Most units can be bought for somewhere between $80,000 and $300,000, said David Morrill, who moved here eight years ago from Tallahassee, Florida. He owns Cuenca Real Estate and also runs an expatriate Web site and newsletter.

Mr. Morrill said there are 30 to 40 new condo buildings in development in the city at any given time, and most projects sell out before construction is finished. Prices, he said, have increased around 10 percent per year for the past five years. For example, he said, “I bought a condo six years ago for $60,000 and sold it for $98,000.”

“If you come for the cheapness, you will be disappointed,” Mr. Morrill said, adding, “There’s a lot to enjoy, but it’s not for everybody.” He estimated that of every four expatriates who move to Cuenca, one decides to leave.

But in addition to the real estate demand from expatriates, Cuenca is popular with Ecuadoreans returning to the country after spending years in the United States or Europe. Mr. Morrill estimates that they make up more than 30 percent of the potential buyers’ pool.

“There are 3.5 to 4 million Ecuadoreans living out of the country and almost all want to come back” to retire, he said.

Finding private bankers is far more difficult than clients imagine

Since the financial meltdown of 2008, private bankers have been busy devising schemes to both maximize the fees they earn from wealthy clients, as well as make it more difficult for clients who wake up to discover they’ve been hosed, to fire them.

The new financial products and strategies that private bankers have been sneaking into client portfolios in recent years serve a purpose that has nothing to do with what’s best for clients. It’s all about improving the bottomline of the private banks. Unfortunately transferring wealth from client accounts is the means to the end that private banks are seeking.

Structured notes, hedge funds, hedge fund of funds and other high risk investment products lack transparency and liquidity and are hard-to-value assets. As a seasoned investigator I can assure you, it is impossible for you to evaluate and monitor the risks related to these investments. Don’t even try to.

Even if you were able to get hold of the terms sheets, offering memoranda and other documents related to these investments, good luck understanding the unique features involved in each and every one of these highly complex products. Further, the investment strategies and portfolio composition of hedge funds and hedge fund of funds can be changed at any time.

That domestic equity, long-only, unleveraged fund you invested in today may become global, short and levered to the max tomorrow. With respect to hedge fund of funds, you will not even know who’s managing your money or where your money is being custodied. Caymans? Bermuda? Guatemala? Who knows?

Structured notes, hedge funds and hedge fund of funds are purchased for discretionary clients by private banks because they pay significantly higher fees to the bank.

A private bank may earn 20 to 50 basis points in revenue sharing by steering client portfolios into mutual funds managed by others. (Private banks may deny they receive these revenue sharing payments but, trust me, they do.)

A bank may earn far more – 100 to 150 basis points—from proprietary mutual funds. This is still chump change.

Exponentially greater fees, say 3% to 8% and performance fees of 40%, can be earned by the bank from alternative investments. Given the financial pressure banks are under today, is it any surprise where they’re steering investors? But that doesn’t make it right. These discretionary investment managers are supposed to be guided by what’s best for their clients—held to a fiduciary standard of care. Unfortunately, no regulator is scrutinizing the investment management activities of private banks which are not required to register with the SEC.

Investing client assets in high risk, high fees products that do not perform competitively is a violation of applicable fiduciary duties, in my opinion. Whenever I have examined the performance of these private bank investment products (net of all fees) compared to relevant benchmarks, the perfomance is not just bad—its horrific. T-bill performance for Madoff-size risk.

Since the financial meltdown of 2008, private bankers have been busy devising schemes to both maximize the fees they earn from wealthy clients, as well as make it more difficult for clients who wake up to discover they’ve been hosed, to fire them.

The new financial products and strategies that private bankers have been sneaking into client portfolios in recent years serve a purpose that has nothing to do with what’s best for clients. It’s all about improving the bottomline of the private banks. Unfortunately transferring wealth from client accounts is the means to the end that private banks are seeking.

Structured notes, hedge funds, hedge fund of funds and other high risk investment products lack transparency and liquidity and are hard-to-value assets. As a seasoned investigator I can assure you, it is impossible for you to evaluate and monitor the risks related to these investments. Don’t even try to.

Even if you were able to get hold of the terms sheets, offering memoranda and other documents related to these investments, good luck understanding the unique features involved in each and every one of these highly complex products. Further, the investment strategies and portfolio composition of hedge funds and hedge fund of funds can be changed at any time.

That domestic equity, long-only, unleveraged fund you invested in today may become global, short and levered to the max tomorrow. With respect to hedge fund of funds, you will not even know who’s managing your money or where your money is being custodied. Caymans? Bermuda? Guatemala? Who knows?

Structured notes, hedge funds and hedge fund of funds are purchased for discretionary clients by private banks because they pay significantly higher fees to the bank.

A private bank may earn 20 to 50 basis points in revenue sharing by steering client portfolios into mutual funds managed by others. (Private banks may deny they receive these revenue sharing payments but, trust me, they do.)

A bank may earn far more – 100 to 150 basis points—from proprietary mutual funds. This is still chump change.

Exponentially greater fees, say 3% to 8% and performance fees of 40%, can be earned by the bank from alternative investments. Given the financial pressure banks are under today, is it any surprise where they’re steering investors? But that doesn’t make it right. These discretionary investment managers are supposed to be guided by what’s best for their clients—held to a fiduciary standard of care. Unfortunately, no regulator is scrutinizing the investment management activities of private banks which are not required to register with the SEC.

Investing client assets in high risk, high fees products that do not perform competitively is a violation of applicable fiduciary duties, in my opinion. Whenever I have examined the performance of these private bank investment products (net of all fees) compared to relevant benchmarks, the perfomance is not just bad—its horrific. T-bill performance for Madoff-size risk.

HK regulator bows to private banking demands

Hong Kong’s banking regulator has bowed to private banking industry demands to cut red tape in a bid to help the Chinese territory compete better with Singapore.

Norman Chan, chief executive of the Hong Kong Monetary Authority, told bankers in a speech that was made public on Wednesday that his “vision” was for Hong Kong to become “the most competitive and dynamic private banking hub in the region”.

Private bankers in Hong Kong had sought rule changes to address concerns that the city is falling further behind Singapore – the leading Asian wealth management centre – particularly as more wealthy Chinese look to move their money outside the mainland.

Singapore, with 48 private banks, is the main base for private banks seeking to gain market share in Asia, according to Celent, an arm of consultancy Oliver Wyman. This is partly because of the city-state’s privacy protection laws, in addition to its lack of estate duties, which Hong Kong only repealed in 2010.

Mr Chan announced key rule changes and in a separate letter sent to chief executives pledged to make the regulations “more user friendly”.

But he warned the changes could not be an excuse to compromise investor protection, particularly when it came to making sure clients understood the products they were buying. He told bankers in the predominantly Cantonese-speaking city that they needed to improve their Mandarin Chinese skills to ensure they could communicate properly with mainland clients.

“It is hard to imagine that quality service can be provided to a mainland customer who does not speak English or Cantonese if the account manager cannot communicate in Putonghua [Mandarin],” Mr Chan said.

He added that it would be “helpful if important contracts or documents are written in bilingual forms”, again to help mainland Chinese clients.

Silvan Colani, deputy chief executive of Liechtenstein’s LGT Bank in Asia, welcomed the efforts to clearly distinguish private banking from retail banking.

“We fully agree with the HKMA that Hong Kong has the potential to be a leading private banking hub for Asia, given that Singapore is arguably at a more advanced stage,” he said.

The pressure for rule changes has grown since widespread losses among retail investors on Lehman Brothers-related investments led to a regulatory crackdown that hampered private banks’ dealings with wealthy clients.

Alongside making clearer the distinction between wealthy clients and ordinary retail customers, the HKMA has relaxed requirements for the wealthy to undergo suitability assessments for every product, saying they could instead be assessed for a portfolio of investments when they first became a client.

Alan Ewins, a partner at Allen & Overy in Hong Kong, said the adoption of the “portfolio” suitability assessment standard, and the classification of private banking customers, were key developments for the industry. But he said wealth managers outside of the banking sector could now be left at a disadvantage.

“[Mr Chan’s letter] shows the need for a co-ordinated approach by regulators, given the existence of private wealth arms of non-banks where there clearly needs to be a level [regulatory] playing field. They were not catered for here,” he said.

More than US$5tn of the roughly US$11tn of assets held by non-Japanese wealthy people in Asia is in the hands of people with $1m-$5m each. According to Oliver Wyman, this is exactly the population of private banking clients that were not distinguished under the current Hong Kong rules.

Mr Chan said such people could be highly seasoned investors or “unsophisticated clients with only very basic investment knowledge, notwithstanding [their] substantial wealth”.

“Private banks must ensure that their account managers take extra care in offering investment advice and marketing investment products to the less sophisticated clients,” he said.

Choose your offshore bank in haste, and you may end up regretting it

Moving overseas is a major upheaval for any family, and getting the finances right from the start is a key part of being able to settle into your new home as soon as possible. Yet many people will make a panic decision about which bank they want to use because they are about to be paid, and they could be left rueing that decision for months or even years to come.

Choosing an offshore bank as an expat is not simple – some people will prefer the comfort of choosing a name they know from home, which is effective as many banks are now global entities – while others would prefer to use a service that is part of the local economy, and provides good access to cash machines and other services that could be lacking from other providers.

When choosing your bank account, the first thing to consider is what you are using that account for. For example, are you intending to save money in the account, or do you need to make regular transactions from it? It may seem obvious, but you would ideally not use a single account to do both.

Current accounts are the day-to-day accounts that you use to pay bills and transfer money. Some will offer cheque books and cards, access to ATMs worldwide, and the ability to set up money transfers to make life easier. Some services do cost, however, so check the charges on like-for-like accounts before you make your decision.

An existing relationship in the UK with a bank that has an offshore arm, such as Barclays, HSBC or NatWest, can make it easier to open an account because of the history you have built up with that provider. But check what you are getting, because it won't necessarily offer you the services you need at, more importantly, the price you want.

If you are after a savings account, it is not as vital that the bank has a physical presence where you are. The interest payment you will receive is clearly a key driver to the particular account you choose, but it should not be the only thing. You need to look out for special introductory rates that may expire after six or 12 months, which can leave your interest looking the worse for wear.

By all means make the most of them while they are available, but remember to move your money when the introductory rate ends, so you are making the most of your offshore savings.

You also need to decide how long you can tie your money up for, as you can often get better rates on accounts that require a notice period. So if you are happy to give, say, 60, 90 or even 180 days' notice of a withdrawal, you will boost your interest payment. Penalties are charged, however, if you make a withdrawal without the notice period being completed, so try to stick to
the rules.

If you are travelling extensively for work or leisure, you may need to use a variety of currencies, and you can do this from the same account by choosing a multi-currency account. You can hold funds in a range of currencies, including sterling, dollars and euros.

Using these accounts effectively can reduce your costs when you need to move money around the world. You can also boost your earning potential thanks to the variations in exchange rates and interest applied on multi-currency accounts to the different currencies available.

Of course, an important thing to remember is that if you are subject to tax in the UK, you must declare any interest you receive to HM Revenue & Customs, as the taxman is clamping down on tax avoidance by expatriates.

It may seem easy to find a bank account, but it is easier to find the wrong one. There is a lot to consider, so be prepared to do your research carefully whether you have already left the UK, or plan to do so in the coming months.

Liechtenstein informs bank clients of U.S. tax evasion request

Liechtenstein, an Alpine country of 36,000 people, has told American clients of the principality’s oldest bank that U.S. authorities have requested their account data as they widen a tax-evasion probe.

Accounts at Liechtensteinische Landesbank AG (LLB) that contained at least $500,000 at any time since the beginning of 2004 are covered by the information request, according to a May 30 letter sent to a client by the principality’s tax authority. Liechtenstein facilitated the so-called group request from the U.S. by amending a tax law in March.

Liechtenstein’s second-biggest bank, also known as LLB, is one of 11 financial firms, including Credit Suisse Group AG (CSGN) and Julius Baer Group Ltd. (BAER), being investigated as part of a U.S. probe of offshore tax evasion. The stakes for Swiss banks were raised after the Department of Justice indicted Wegelin & Co. on Feb. 2 for allegedly helping customers hide money from the Internal Revenue Service.

“The motivation for the law is the Landesbank issue, which has accelerated the process,” said Mario Frick, a partner at Liechtenstein law firm Seeger, Frick & Partner. “For a certain period of time, it will be possible to make group requests to clean up the past and the issue of legacy assets.”

Landesbank, which had 48.1 billion Swiss francs ($50 billion) of assets under management at the end of 2011, confirmed it has received a group request via the Liechtenstein authorities, Cyrill Sele, a spokesman for the bank in Vaduz, said in an e-mailed response to questions.

“The ruling to extend the period of applicability back to the tax year 2001 in the administrative assistance law with the U.S. is limited to 12 months from the date it comes into force,” said Sele. It “is closely linked to the ongoing U.S. offshore voluntary disclosure program.”

Those affected by the U.S. request for information have the right to appeal, according to the letter.

In the Liechtenstein group request, U.S. authorities are also targeting lawyers, accountants, financial advisers, asset managers and those responsible for professional “asset protection,” who “conspired with a U.S. taxpayer to commit U.S. crimes or provided assistance,” according to the letter.

“It’s a sign that the U.S. is not just focused on Switzerland, but on all offshore jurisdictions with Singapore, Dubai and Hong Kong very much on the radar screen,” said Milan Patel, a partner at Zurich-based law firm Anaford AG. “This request appears to be much more expansive than the agreement with Switzerland and aims to get information on third parties.”

Swiss banks are seeking a settlement with the U.S. as Liechtenstein’s larger Alpine neighbor, the world’s biggest center for offshore wealth, tries to shed its image as a haven for undeclared assets. That may involve negotiating separate deferred prosecution agreements with U.S. authorities.

UBS AG, the biggest Swiss bank, avoided prosecution in 2009 by paying $780 million, admitting it fostered tax evasion and giving the IRS data on more than 250 accounts. It later turned over data on another 4,450 accounts. Before the UBS deferred- prosecution deal, U.S. prosecutors said the bank managed $20 billion in undeclared assets for American clients.

Landesbank declined to comment on whether the handover of account data under the group request would allow the bank to enter a deferred prosecution agreement.

Christof Buri, a spokesman for larger Liechtenstein rival LGT Group, which had 86.9 billion francs of assets under management at the end of last year, said the bank only has tax- compliant U.S. clients. The bank, owned by Liechtenstein’s princely family, declined to comment further.

Liechtenstein started to unwind secrecy after data stolen from LGT was used by Germany to prosecute tax evaders in 2008. Former Deutsche Post AG (DPW) Chief Executive Officer Klaus Zumwinkel was convicted of tax evasion and received a two-year suspended prison sentence plus a penalty of 1 million euros ($1.25 million).

Under pressure from the U.S., Germany and France, Liechtenstein said in March 2009 that it would conform with tax standards set out by the Organization for Economic Cooperation and Development to avoid being blacklisted as a tax haven.

Markus Amman, a spokesman for the Liechtenstein government, and Katja Gey, who helped negotiate a tax deal for the principality with the U.K., didn’t answer calls to their mobile phones.

“It’s only a question of time, say three to five years, when this type of group request will become standard for future business,” said lawyer Frick. “Liechtenstein is a small country that has had a reputation for not cooperating in the field of tax and that’s something that has to change. We have to find new areas of business.”

Mastro mystery: Aging ex-magnate nears 1 year on the lam

Michael R. Mastro celebrated his 87th birthday Friday.

The big question, of course, is — where?

It's been nearly a year since the onetime Seattle real-estate magnate and his wife, Linda, moved out of the $2 million house they had been renting in Palm Desert, Calif., and headed for parts unknown.

The couple left June 23, days after the judge in Mastro's massive bankruptcy case ordered them to turn over two giant diamond rings valued at $1.4 million. They officially became fugitives a month later when warrants were signed for their arrest.

But they remain at large, and there are just two plausible explanations:

Either federal authorities don't know where the Mastros are — or they do know, but haven't moved to apprehend the couple yet because legal complications stand in the way.

Denny Behrend, a retired deputy U.S. marshal, suspects it's the latter. His former colleagues in the Marshals Service are very good at finding people who don't want to be found, he says, but extracting fugitives from other countries can be legally tricky.

"I'd bet they're just putting all their ducks in line so that when they do move in, it'll go smoothly," says Behrend, now vice president of Lacey OMalley Bail Bonds in Seattle.

Mark Ericks, U.S. marshal for Western Washington, won't say if Behrend is right. The U.S. Attorney's Office in Seattle won't say anything about the Mastros.

But all this silence hasn't halted rampant speculation about the couple's whereabouts.

"I was at a charity event recently and I had people come up to me and swear they'd seen Mike and Linda in South America, or Europe, or Canada, or Sun Valley," says James Frush, Mastro's lawyer. "It was ridiculous."

Frush won't say whether he's been in contact with his client-on-the-lam. When he's asked if he knows where the Mastros are, he jokes about one of their favorite restaurants.

"I tell people they're in the wine cellar at Canlis," Frush says.

Michael Mastro was a longtime and prolific real-estate developer and lender whose website alluded to his "billion-dollar career." But his highly leveraged empire fell apart when the market tanked.

Three lenders pushed Mastro into bankruptcy in 2009. The most recent estimate of his debt to unsecured creditors is $250 million, and court-appointed trustee James Rigby has said those creditors will be lucky to get back more than a few pennies on the dollar.

In the Mastros' absence, the $5,000-a-day fine that Bankruptcy Judge Marc Barreca imposed to persuade them to turn over the rings has continued to accrue. It now totals more than $1.5 million.

Ericks, the U.S. marshal, revealed last September that his agency had tracked the Mastros to an apartment in Canada in August — only to find they had left a day or two before.

If they are in another country, marshals can't bring them back without that nation's cooperation. And some countries are more cooperative than others.

About 70 — from Russia and China to Afghanistan and Somalia — don't even have extradition treaties with the U.S. But Douglas McNabb, a Washington, D.C., criminal-defense attorney who specializes in international extradition, says those nations hold little appeal for most fugitives.

"Any country that you could go to without an extradition treaty — they wouldn't want to live there," he says.

Extradition can be challenging even in countries with treaties, however.

For one, there's no indication the Mastros have been charged with a crime. Barreca issued the arrest warrants for them last July for contempt of court, a civil violation.

Extraditing someone on that basis is difficult, if not impossible, experts agree.

"They're not going to get to extradite him on a civil matter," says Jacques Semmelman, a New York lawyer and international extradition expert. "There has to be a crime."

John Strait, who teaches criminal law at Seattle University, agrees. "There might be some ways you could do it," he says, "but it wouldn't be easy, and it would take a lot of time."

Mastro is the subject of a federal criminal investigation. While the U.S. Attorney's Office in Seattle won't confirm it, Frush acknowledged the probe more than two years ago. It's still under way, lawyers for a Mastro associate who also is under investigation said last month in court documents.

If federal marshals know where the Mastros are, they could be waiting for a grand-jury indictment before they move to apprehend the couple. That would make extradition much easier, experts agree.

But they also say it's possible a sealed indictment already has been issued that hasn't been made public for fear of pushing the Mastros further underground. There could be new arrest warrants — also sealed — based on that indictment, they add.

McNabb suspects that's what has happened. The Marshals Service probably wouldn't have been pursuing the Mastros in Canada last year with warrants based only on a contempt citation, he says.

If Mastro has been — or will be — indicted, the government's success in extraditing him could hinge on exactly what the charges against him are.

One likely possibility is bankruptcy fraud — hiding assets from creditors. Rigby filed a civil suit accusing Mastro of that, and Barreca ruled in the trustee's favor last fall.

Experts differ on how easy it would be to extradite Mastro to be tried for that offense.

Some extradition treaties list specific crimes for which other countries will turn over a fugitive American to U.S. authorities. Other treaties are more general, authorizing extradition if the offense with which the American is charged also is a crime in that country.

Bankruptcy fraud is recognized as a crime almost universally, says Strait — if not by that name, then as a form of "theft by deception." Semmelman agrees.

But McNabb says it's not always that clear-cut.

One example: While Brazil's treaty with the U.S. authorizes extradition for "crimes or offenses against the bankruptcy laws," that country's Supreme Court declined in 1999 to extradite an American charged with bankruptcy fraud.

If foreign authorities balk at extraditing Mastro for that offense, McNabb says, the hurdle might be overcome by also charging him with other, possibly related crimes: perjury, mail fraud or wire fraud, for instance.

Tax fraud is another possibility. Internal Revenue Service agents, as well as FBI agents, interviewed Mastro associates last summer, Frush says. One Mastro associate, Bellevue developer Winstron Bontrager, was indicted in March for tax fraud, including concealing income from a real-estate deal in which Mastro was involved.

But the people who know what charges Mastro may — or does — face aren't talking.

"You're trying to read the tea leaves," says Frush, "but the tea is just too murky."

There are a few shards of new information about the search for the Mastros that only raise more questions:

• In January, the Mastros' Bentley, Chihuly glass pieces and other household goods were auctioned off in Palm Desert. Auctioneer Tim Murphy observed a large number of hits on the auction website from Italy, and he speculated the Mastros might be staying there.

Murphy said recently that he allowed the FBI to burrow into his firm's computers to try to learn more, but he understands they hit a dead end. The FBI also asked for a list of people registered for the auction, he said.

• Last November, after Barreca ruled that Linda Mastro, now 62, owed her husband's creditors more than $1.3 million, her lawyer, Michael Gossler, filed an appeal on her behalf.

Did she authorize it? Gossler won't discuss whether he's been in contact with his client. Frush says Gossler could be acting in what he considers Linda Mastro's interests without communicating with her.

The last person who publicly acknowledged speaking with the Mastros was Gloria Plischke, Michael's sister. She said last September that he had phoned her several times. (Plischke couldn't be reached for comment for this story.)

Behrend, the retired marshal, says the Mastros almost certainly aren't communicating with family or friends now. They're probably living under assumed names, he says, and paying for everything with cash.

But "the Mastros are really not fugitive-type people," he says. "And being a fugitive is really hard work."

Authorities could be negotiating with the country where the couple are staying to extradite or deport them, Behrend says. Or marshals could be trying to lure the Mastros to a country where extradition might be easier.

Few fugitives remain at large this long, says Frush, a former federal prosecutor: They can't withstand the tug of home, family and friends.

"But once those ties are cut, at a certain point your life changes so much that you escape that pull," he says.

Ericks, the U.S. marshal, won't respond to all this speculation. "There's just things I can't talk about," he says.

"Just know that if we have the authority to get him, we're going to get him."

China's crashing the party as police put expats in their sights

It was a Thursday, 11pm, and the parties were getting started at the nightspots popular with expatriates on Yongfu Road, in Shanghai's trendy former French Concession. Then, at upmarket bar The Apartment, the police arrived, about 50 of them. The party stalled. They blocked the exits to the four-storey colonial era building, cut the music and ordered the lights be switched on.

The raid was part of a 100-day crackdown, purportedly on foreigner visa violations, launched weeks earlier in Beijing that has left a bitter taste among many young foreigners here, and raised questions about possible political motives behind it.

A Dutch resident who witnessed the raid on The Apartment said police demanded passports from all patrons and recorded passport and visa numbers.

Those without passports or copies of identity documents or who had invalid visas were detained.

The Dutch patron, an employee of a multinational company in Shanghai who asked not to be named, says he avoided detention with a discreet bribe, the equivalent of about $47.

Others were not so lucky. "I saw at least 12 foreigners in the back of a police van,'' he said. "The door was closed and the van drove away."

Neighbouring nightclubs were also raided that night two weeks ago, but within an hour The Apartment was open again. This weekend it is advertising four nights of parties to celebrate its second anniversary.

Bar owners interviewed by The Sunday Age were reluctant to be identified, not wanting to draw attention to themselves. But one said the incident was unprecedented in his more than a decade in Shanghai's entertainment industry. Business was down on subsequent nights.

Some linked the raid to a viral video of a British man apparently committing a sexual assault on a Chinese woman in Beijing. Within 24 hours of being posted last month, the video had been viewed more than 3 million times on China's equivalent of Twitter, Sina Weibo. It attracted more than 50,000 comments, many of them distinctly anti-foreigner.

"Suddenly the government launches a crackdown on all laowai [foreigners] like we are some sort of plague," said one online post by an expatriate in Shanghai.

The crackdown, which was announced in China's state-controlled media on May 15, officially targets foreigners living or working in China illegally.

Expat unease worsened after a xenophobic online rant by Yang Rui, a prominent TV host on CCTV 9.

Rui lauded the campaign to protect "innocent girls" from "foreign trash", "thugs" and "spies", and described recently expelled al-Jazeera English correspondent Melissa Chan as a "foreign bitch".

Rui received no official reprimand for the post, which was also published on CCTV's website.

The crackdown started in Beijing, prompting a bitter reaction from some foreigners who have lived in the city for years and see it as home.

American media worker Jacob Trent told CNN he was pulled off his bike by police who demanded his papers.

''I have been living here for a decade and yet I still get treated like - and sometimes called - a foreign barbarian,'' Trent said.

British expat David Park told CNN: ''I have noticed a change in how I am treated. It has gone from curiosity to hostility.''

The Shanghai raids were played down in the local media.

The Global Times reported a police denial of any raid and quoted a manager from The Apartment stating the club was merely visited by four officers who asked them to keep the noise down.

But The Sunday Age has established that exclusive Shanghai nightclub and restaurant M1NT, whose founder and CEO Alistair Paton is Australian, was raided two weeks before The Apartment raid. Four foreign staff and four patrons were found without documents, detained and later released once valid papers were provided.

The crackdown is taking place against a backdrop of political uncertainty.

The scandal involving the downfall of Chongqing Communist Party chief Bo Xilai, a slowing economy, rampant corruption, domestic food safety concerns and the widening gulf between rich and poor is causing unease within party ranks and the general populace.

There is a feeling among some foreigners that the visa campaign serves not only to whip up nationalist fervour, but to distract from more pressing problems.

Unlike some other Asian nations, foreign residents in China mostly apply for yearly visa extensions. Many expatriates in Shanghai consider it their home, but live under a cloud of uncertainty.

For this reason, there is reluctance among foreigners to openly discuss sensitive issues. The Australian owner of a successful Shanghai company said: "We run a legitimate business and follow the system, but things can change in an instant here."

The disgraceful anti-Ghana policy of Lufthansa

On June 7th three Ghanaian entrepreneurs travelling on the same reservation were stopped from boarding flight LH567 by vetting staff employed by Lufthansa to screen the immigration documents of passengers.

 The Lufthansa agents insisted that the passengers required “Transit A visas” to travel through Frankfurt to their final destination outside the European Union. None of the travelling Ghanaian passengers had such a transit visa.

One of them was in possession of a valid resident permit for the United States (however, though the endorsement was in his passport, the associated plastic card was not), another had a permit for the UK, and all three of them had full authorisation to enter their final destination which was not in the European Union.

In the circumstances, the screening agents refused boarding to one traveller because he did not have the plastic card detailing the US residence permit endorsed in his passport, and to another because he did not have a current UK, Schengen or UK travel or residence permit. Since the party was travelling together on the same reservation, the three passengers demanded equal treatment, at which point the agents proceeded to formally issue a boarding denial notice to all three of them and went further to photocopy and file copies of their passports without their consent.

The intriguing fact is that at 2pm of the same day that the flight was scheduled to depart Ghana (at 9:05 pm), the travelling party had called the German Embassy and had been put in touch with the officer directly responsible for visa management. They had been fully assured that it was the position of the German authorities to relax transit visa requirements for Ghanaian passport holders travelling through Germany directly to their final destinations, provided they had authorisation to enter the destination country.

Indeed a detailed search of the embassy’s website provides no “transit A” visa requirements and procedures.

It is also noteworthy to point out that except with boarded passengers, agents of an airline purporting to screen passengers for immigration compliance purposes have no authority to retain the passports of Ghanaian citizens and subject such passports to any procedures beyond processing for boarding, and certainly not without the consent and against the express wish of such citizens. The Sovereign Ghanaian passport remains the property of the Government of Ghana and should serve to facilitate the passage of Ghanaian citizens within international covenants and conventions.

Due to the pressing nature of the business the three gentlemen were travelling to pursue, it was finally agreed that the member of the party with the valid UK travel permit should still board and travel with the view of salvaging part of the joint travel objective of the party.

When this gentleman arrived at Frankfurt Airport, he proceeded directly to German Immigration Police to inquire about this situation and was once again assured of the absence of any policy requiring transit “A” visas, or indeed any transit visas, for Ghanaians travelling directly, airside, through the airport to final destinations outside the EU. Indeed, it will be noticed that the airport is physically designed in such a manner that airside transits do not require formal immigration screening, except where the transit itself would facilitate access to the Schengen area.

Clearly, the policy to deny boarding to the party of three entrepreneurs is an entrenched Lufthansa strategy that has probably been used to burden, block and wantonly discriminate against many Ghanaians travelling or seeking to travel on important matters over a long period of time.

Clearly, this policy is both unethical and illegal, and is not grounded in updated research into immigration matters, or any care and attention to Lufthansa’s duty to its Ghanaian clientele. If anything at all, Lufthansa regards Ghanaian customers as undeserving of the care and attention its own stated principles require that it dispenses to all its global customers. It is consequently anti-Ghana and disgracefully so.

The airline refused initially to allow a senior staffer to address the legitimate concerns of the travelling party before finally relenting and initiating a phone conversation with someone who claimed to be the “Manageress” of the airline in Ghana. She was rude and unresponsive, and claimed to take her instructions in immigration matters from a “Hubert” based at the German embassy whose designation and role she was categorically unwilling to disclose. Despite several attempts to explain to said “manageress” that her position was at best disputable, she maintained an unreasonable posture against dialogue and compromise.

This is an important matter for the Ghanaian authorities to investigate. The Ministry of Foreign Affairs, the Ghana Civil Aviation Authority and the Ghana Airports Company should reassure themselves that Lufthansa does not have a determined policy to frustrate Ghanaians pursuing travel for legitimate, and in many cases nation-enhancing, objectives.

If the airline has adopted an extreme risk-management attitude to immigration in furtherance of its own legal comfort, Ghanaians cannot be made the butt of such a retrogressive and discriminatory agenda in their own country, and our authorities should ensure that such a thing does not happen. It is perhaps the case that the airline perceives Ghanaians to constitute such a serious immigration liability (i.e. every Ghanaian is looking for a chance to breach European immigration law) that it feels compelled to institute and enforce extreme measures, we are afraid that such latitude is not granted under Ghanaian law in view of this country’s cherished human rights culture. Lufthansa cannot abuse Ghanaians to safeguard its prejudices. It cannot make its own, ad hoc, immigration policies in wanton disregard of law, ethics and public policy. And at any rate it does not appear to have the support of the German authorities to do this in their name.

Delivering diesel in paradise

The Marquesas Islands are at one of the ends of the Earth. A verdant archipelago of dilapidated volcanoes shooting from the blue of the South Pacific, they are as distant from a continental landmass as it’s possible to go.

I reached them by sea from Tahiti, already one of the world’s remotest islands. The Marquesas are three days further on. They are also one of the most transcendentally beautiful places I have seen.

Yet it was a peculiarly hybrid experience. I was in French Polynesia, which is neither quite French nor Polynesian, and on a cruise that is not a cruise. On the day we made a tourist pilgrimage to the grave of the painter Paul Gauguin we spent the afternoon delivering drums of diesel oil and massive sacks of gravel.

A handful of conventional cruises calls at the bigger Marquesan islands, which also have airstrips, and some intrepid yachtsmen make the journey. But my ship, the Aranui 3, is the islands’ supply ship, the only regular passenger vessel and the only one calling at all six inhabited Marquesas. And she sails only 16 times a year. It’s one of the world’s great voyages.

Aranui is two-thirds freighter, one-third cruise ship, in disposition as well as design. Forward of the bridge, beneath the giraffe-like jibs of two big cranes, are the cargo holds. In the stern are eight decks of passenger space – cabins for 200 (including a dozen suites with balconies), restaurant, lounge, video room, library, bar, swimming pool, shop and doctor’s surgery. That list may make it sound like Cunard but this is a utilitarian version of a cruise ship, stripped of trimmings such as brass, teak and art collections. Here the handrails are steel, the decks laid with blue plastic mats and in the stairwell a poster illustrating fish of the southern seas hangs next to a diagram of the ship’s firefighting systems.

Don’t join Aranui expecting Seabourn-style luxury. The priority is cargo, uncompromisingly so in some respects. There are few sunbeds, limited laundry, unless you do it yourself, and no stabilisers. Without them, a 7,400-ton supply ship in a heavy swell behaves like a slow-motion rodeo ride.

Maritime tradition here has nothing to do with gold braid and shiny buttons. None of the crew wore uniform when the officers, all Polynesians, were formally introduced at the start of the two-week voyage: all were in shorts, some wore flip-flops and the captain was in T-shirt and trainers. Don’t be deceived. Aranui’s sailors owe their existence to the great Polynesian diaspora when their ancestors settled the Pacific with canoes. These men come from as long a line of seafarers as any in the world and some of the most remarkable navigators in history. For what it’s worth, the lifeboat drill was more thorough than any I have previously experienced.

Service, which is pretty much confined to the dining room, makes up in smiles what it lacks in polish. Though the set menu meals brook no choice, they are both varied and surprisingly sophisticated, French in style and sauces. Wine is complimentary.

Such is the character of a working ship, though unlike pure cargo ships Aranui does not simply leave her passengers to get on with it. She has her “cruisey” side. There were lectures (on Gauguin), classes in the ukulele and Polynesian dance, and a Polynesian night of music, dancing and a buffet on the open deck. Guides, English-speaking as well as French, accompany all the shore excursions.

Two stops at atolls in the Tuamotu islands are made solely for passengers, to provide intervals in the long sea passages between Tahiti and the Marquesas. The first was at Fakarava, whose atolls appear as a series of divots, their windswept bush worn short as the bristles of an old broom. They enclose an immense lagoon. We stepped aboard Aranui’s two 40-seat barges – they look like aluminium landing craft – and came ashore at Rotoava, the biggest village. It was Sunday and raining, so we went to mass. For those who had come straight to the ship without spending time in Papeete, Tahiti’s capital, it was a subtle introduction to French Polynesia, an amalgam of South Pacific and south of France. The whitewashed church, with Provençal blue shutters at its lancet windows, crouched beneath a dinky spire and a spreading roof of red tin. Inside, guitars and keyboard accompanied the familiar cadences of western hymns sung in the gutsy arpeggios of the South Pacific.

The Tuamotus provide interludes for swimming and snorkelling off white coral beaches, which are non-existent in the volcanic Marquesas. Their derelict caldera, topped with dollops of cumulus, burst sheer from the sea in great blades of rock up to 850m high. It’s the classic scenery of the South Pacific; Richard Rodgers set it to music and called it “Bali Ha’i”.

These are places of such iridescent beauty they are impervious to description. But if you imagine lands as green as Ireland erupted into violent mountains set in a sea of kingfisher blue, and then multiply those greens and blues by 50 variegations; if you gouge those mountains with deep valleys and crimp their coasts with bays; if you whittle their crags into pinnacles and slant their flanks with buttresses; if you shrink wrap them in pelts of vegetation so lush it furs their shapes, and if you can conceive of being surrounded by an infinite horizon, you are half-way there. It’s like sailing through God’s rockery.

Each island is different but they have characteristics in common. Villages are fitted into valleys or, rather, the most habitable crevices in the mountains, and canopied with trees, palm, mango, grapefruit and guava. Grounds are found for a school and games field; a generator sited out of earshot. Church spires and satellite dishes point to the heavens, jetties to the horizon.

They are unmistakably French – an overseas territory, or pays d’outre-mer – with gendarmes, yellow mailboxes, French election posters and boulangeries from which women emerge bearing armfuls of baguettes. They have even retained their own franc, with banknotes the size of postcards. But something else the islands have in common is their growing sense of being Polynesian. Disease and the South American slave trade eradicated the original Marquesans; missionaries and colonialism suppressed any expression of ethnicity for years. The Marquesan language, which is different to Tahitian, was not taught in schools; singing, dancing and tattoos were banned at the end of the 19th century.

On this voyage, resurgent Polynesian pride took different forms. On Fatu Hiva, the remotest of the islands, and arguably the most mesmerisingly lovely, it was the making of tapa, the fibrous “cloth” beaten from tree bark. The demonstration was by a woman in a lilac pareo (wraparound skirt) and wide-brimmed hat decorated with chicken feathers. She sat in the shade of a lychee tree, her legs tucked to one side like a figure in a Gauguin painting, bashing a strip of mulberry bark with an ironwood mallet. On Ua Pou, it was a dance troupe performing under noni trees.

The juice of the noni, a lumpy, sallow, unpleasant tasting fruit, is sold in the US as a health drink rich in antioxidants. Aranui collected it in tall blue barrels. Along with sacks of copra, dried coconut meat, noni is the islands’ main export.

On Hiva Oa, it was archaeology. Puamau is where the largest tiki statue in French Polynesia, 2.4m tall, stands on the restored terraces of a marae, a sacred site, that has its origins in a 16th-century tribal war. The mana, or spiritual energy, is still powerful. It had been raining and the forest was dark. The tiki, shoulders hunched, seemed to be advancing warily out of the woods.

Gauguin is buried on Hiva Oa, on a hillside above Atuona, once the islands’ capital. We were taken to his grave in les Trucks, lorries with wooden sheds on the back that, until they were banned on safety grounds, were the staples of Tahiti’s public transport. On Hiva Oa, they are used as school buses.

The tomb is simple, a heavy wedge of dark lava shaded by a frangipani tree. Beside the head is a bronze replica of his sculpture of the pagan figure of Oviri. Also buried in the same cemetery is Jacques Brel, the Belgian singer, who died here in 1978. They, like romantic travellers today, were looking for that mystical balm of simplicity that only Polynesia seems to endow. You find a little of it on Aranui.

This is a voyage that runs its fingers along the grain of island life. The ship’s doctor, Xavier Fine, who spent seven years working in the Marquesas, told me how Marquesan women living away from the islands come home for their children to be born. At the end of their lives they return too. At Ua Pou, as well as discharging the usual packs of beer and cola, toilet paper and mineral water, the ship also unloaded the body of a woman who was being brought home to be buried.

The funeral was in progress when I visited the church. Solemn yet sociable, it was more like a sickbed scene than a burial service. The mourners sat in a semi-circle round a plain wood casket with family photographs arranged along the lid. There was no ostentatious expression of grief, no tears that one could see, or sobbing, just the quiet intoning of prayers interspersed with lamentations sung, unaccompanied, in wistful harmonies. The man who led the service wore a bottle green polo shirt, pink shorts and flip-flops. Spiritually and sartorially, death is treated philosophically as part of island life.

Aranui 3 is as much a part of the Marquesas as the ubiquitous garlands of gardenias, the strumming guitars and homemade ukeleles, the wood and bone carving and the crowing cockerels. The first ships helped make the modern Marquesas, bringing the materials that built the churches, roads, schools and hospital. Just about every thing inorganic arrived on an Aranui.

There are plans now for a new ship – Aranui 5, named in deference to its Polynesian Chinese owners, for whom the number four is unlucky. It will be bigger. That may be necessary in cargo terms but extra passengers will present a risk. If almost 300 people go ashore, can the islands remain immune to the influence of their visitors? In five years, will they still be quite so welcoming, quite so enchanting or quite so rare, with no hassle, no pestering, no resentment? This may be one of those tourist trips to take sooner rather than later.

Contributed by Peter Hughes

Syrian expat businessmen announce fund for rebels

A group of expat Syrian businessmen announced in Qatar on Wednesday the creation of a $300 million (239 million euro) fund to support the rebellion against President Bashar al-Assad.

Mustafa Sabbagh, chairman of the newly created Syrian Business Forum, said "the businessmen of Syria... offer their full and clear support to the revolution against (Assad's) dictatorial regime."

Businessman Khaled Khouja told a news conference the SBF would offer the rebel Free Syrian Army "medical equipment and technological materiel to facilitate its communications in Syria."

Neither Sabbagh nor Khouja elaborated on how the money would be raised and how much, if any, was already available.

However, Sabbagh said $150 million had already been given to the rebels, but he did not provide any details.

Meanwhile, Wael Mirza, one of the SBF's leaders, said the forum planned to join the opposition coalition Syrian National Council.

The SBF has a seven-person board of directors, of which three would represent business people inside Syria, Sabbagh said. He added that trips were planned to donor countries, particularly the oil-rich Arab monarchies in the Gulf.

Far from being a desertion of one's homeland, expatriation can actually prove a loyal action when it gives citizens the opportunity to support the overthrow of a government more effectively from abroad.

Facebook's expatriate and the US Senate's demagogues

As the son of one American immigrant and the father of another, I find it hard to muster much empathy for Facebook co-founder Eduardo Saverin and his decision to renounce his US citizenship.

Saverin, who was born in Brazil and brought to this country as a child, turned in his American passport last year and moved to Singapore; it is widely assumed that he did so to reduce the taxes he would otherwise have to pay on the billion-dollar gains generated by Facebook's IPO. Saverin denies, not very convincingly, that his expatriation was motivated by tax considerations. "His decision had nothing to do with dissatisfaction here," a spokesman said, "but with his strong desire to do business there."

Well, it takes all kinds to make a global economy, and maybe Saverin genuinely prefers doing business in a quasi-authoritarian society where freedom of the press is unknown. Singapore's economy is one of the world's freest, and its taxes are considerably lower than America's. If such things matter more to Saverin than the blessings that come with American citizenship, it was always his right to leave. At least he had the grace to describe himself as "very grateful to the US for everything it has given me."

Yet while Saverin may not come across as the most appetizing of creatures, he is not nearly as odious as US Senators Chuck Schumer of New York and Bob Casey of Pennsylvania. To hear the two Democrats tell it, Saverin is a virtual traitor, a turncoat who has sinned against America and must be given no quarter.

"It's infuriating to see someone sell out" -- sell out! -- "the country that welcomed him and kept him safe, educated him and helped him become a billionaire," Schumer snarls. "We plan to put a stop to this tax avoidance scheme. There should be no financial gain from renouncing your country." Casey inveighs against "allow[ing] the ultra-wealthy to write their own rules" -- Saverin's departure, he says, is "an insult to middle class Americans and we will not accept it." The senators have introduced legislation that would penalize wealthy expatriates by imposing a 30 percent capital gains tax (double the current rate) on all their future US investments, and bar them from ever re-entering the United States.

Even by the usual standards of congressional demagoguery, this is appalling. Saverin broke no laws. He didn't cheat on his taxes. He certainly didn't write his own rules. In fact, under existing law expatriation vastly enlarged his current tax bill, by deeming most of his investment gains to have been realized and taxable on the date he renounced his citizenship. Far from escaping the taxman, Saverin's Facebook fortune enriched the US Treasury by hundreds of millions of dollars. It is only gains he accumulates after giving up his citizenship that will avoid the reach of the IRS.

But if Schumer and Casey really believe that citizens who pick up and move to improve their tax status should be smeared as sellouts and punished ex post facto, why stop with Saverin? Every year, millions of Americans relocate from high-tax jurisdictions to those with lower taxes. Between 2000 and 2010, for example, Schumer's state of New York, which has one of the nation's heaviest personal tax burdens, experienced a net outflow of 1.3 million citizens. Hundreds of thousands of those ex-New Yorkers now reside in Florida. Many no doubt moved for the weather, remarks Scott Hodge of the Tax Foundation, but how many more preferred the sunnier tax climate in Florida, where there is no individual income tax, no estate tax, and no inheritance tax?

When former Cleveland Cavalier LeBron James, spurning an offer from the New York Knicks, joined the Miami Heat two years ago, it was noted that he had a clear financial incentive to do so: Income taxes in New York would have cost him more than $12 million. Would Schumer call him a "sellout" too? Leaving Cleveland's high taxes behind saved James millions as well. Should Ohio lawmakers pass a law banning him from ever setting foot in the Buckeye State again?

Casey and Schumer both maintain Facebook pages, which together have been "liked" by more than 17,300 people. Thanks to Facebook, their reach is extended and their message amplified -- all at no cost to them. They benefit every day from Saverin's willingness to do something they never did: invest his savings in a risky start-up venture with no guarantee of success. Rather than slamming him for leaving the country, perhaps they ought to be thanking him for what he helped make possible. Or better yet, repairing the US tax code so it doesn't drive people like Saverin to seek economic refuge elsewhere.

Saverin may not be very lovable, but he at least understands economic incentives. Schumer and Casey, by contrast, have yet to grasp that the more governments try to soak their taxpayers, the more likely those taxpayers are to end up somewhere else.

China seeks runaway factory bosses, wants to sign more extradition treaties

China is seeking the extradition of private entrepreneurs who have fled abroad after defaulting on billions of yuan owed to state banks and loan sharks, two independent sources said, a rare move underlining Beijing’s concern over the scale of losses.

Airports and other border crossings have received lists containing the names of heavily indebted small and medium enterprise (SME) bosses who are not permitted to leave the country, said the sources, who have direct knowledge of the situation and requested anonymity because of political sensitivities.

“Foreign governments have been asked to repatriate [fugitive] SME bosses and help recover their overseas assets,” said the first source with knowledge of the negotiations.

Many of the managers are suspected to have fled to countries such as the US, Canada, Australia and Singapore, according to Chinese media reports.

The problems began with private companies in the eastern city of Wenzhou — famous for its entrepreneurs and speculators — turning to the underground lending market after Beijing clamped down on credit as part of a campaign against inflation.

Squeezed by falling export orders and rising raw material, land and labor costs — and in some cases suffering losses on their own property investments — many found themselves unable to repay, leading some SME bosses to abandon their debts, factories and workers.

The troubles are now spreading to other areas, including several cities in Zhejiang Province and Erdos in the northern region of Inner Mongolia, according to local media.

“SME bosses who owe banks a lot of money are under ‘border control,’” the second source said, referring to government monitoring and curbs on their overseas travel.

Heads of at least 80 companies in Wenzhou have gone into hiding because they could not repay loan sharks, leaving behind debts, unpaid wages and thousands out of a job, according to the online edition of Xinhua news agency.

The Foreign and Public Security ministries declined immediate comment when reached by telephone.

Beijing is also seeking to sign extradition treaties with more countries in its effort to bring home runaway officials and recover their overseas assets, the sources said.

China has such treaties with at least 33 countries since 1993, according to the Ministry of Foreign Affairs Web site.

China and the US have no extradition treaty, although the countries have cooperated on corruption cases before, including in 2004, when a former Bank of China manager was deported to face charges at home.

More than 10,000 Chinese Communist Party and government officials fled to the US or Europe with 650 billion yuan (US$102 billion) in bribes or embezzled state funds between 1999 and 2009, according to a Peking University study.

Russia proposes bilateral extradition treaty with US

Russia proposes that the United States sign a bilateral extradition treaty or join existing international conventions, Russian Justice Minister Alexander Konovalov said on Friday.

"The Justice Ministry proposes either signing bilateral treaties on the extradition of criminals and repatriation of convicts. The second variant for the U.S. is to join the existing convention mechanisms, we will try to persuade our U.S. partners to do this too,” Konovalov told journalists during his working visit to Washington.

"We raised these issues more than two years ago, during the first visit of a justice ministry’s delegation to the U.S. So far, frankly speaking, the U.S. side remains reluctant to accept our proposals,” the minister said. “But, on the whole, we hope to persuade them and we aim to do our best.”

Russia and the U.S. have no extradition deal and Russian citizens convicted by U.S. court serve their sentences in the United States.

Relations between the two countries have been strained by legal proceedings against Russian nationals in the U.S., including the trial of Viktor Bout, a Russian national arrested in Thailand in March 2008 in an operation led by U.S. agents and extradited in November 2010, and the case of Vladimir Zdorovenin, a Russian cybercrimes suspect extradited in mid-January from Switzerland to the U.S. without Russia receiving timely notification.

"Such practices are absolutely unacceptable to us. We, of course, think that it is understandable… But people should not be abducted on the territory of third states, they should not be extradited illegally. Legal instruments and mechanisms should be used, and we are going to further discuss the issue with the Americans,” Konovalov said.

His statement overlooked a growing body of opinion that regards extradition as a crime in its own right, albeit one committed by the state against its citizens.

Offshore bank accounts: no Americans allowed

In a piece for Bloomberg, reporter Sanat Vallikappen begins, “Go away, American millionaires.” Valliikappen then goes on to explain that wealth management firms the world over are declining to open offshore accounts for Americans.

“I don’t open U.S. accounts, period,” said Su Shan Tan, head of private banking at Singapore-based DBS, Southeast Asia’s largest lender, who described regulatory attitudes toward U.S. clients as “Draconian.”

It hadn’t been easy for Americans doing financial business overseas, but since the 2010 passage of the Foreign Account Tax Compliance Act, known as Fatca, which seeks to prevent tax evasion by Americans with offshore accounts, opening a foreign bank account has become mission impossible.

Valliikappen writes,

The 2010 law, to be phased in starting Jan. 1, 2013, requires financial institutions based outside the U.S. to obtain and report information about income and interest payments accrued to the accounts of American clients. It means additional compliance costs for banks and fewer investment options and advisers for all U.S. citizens living abroad, which could affect their ability to generate returns.

The Institute of International Bankers and the European Banking Federation said in an April 30 letter to the IRS, that the 400 pages of rules and regulations issued by the American tax authority create Unnecessary burdens and costs.”

Massachusetts Democrat Richard Neal says the government needs to crack down on offshore tax dodgers. Mr. Neal wants tax money and doesn’t care much about privacy and all that.

“People should know, and the IRS should know, what money is being held offshore and for what purpose,” Neal said. “I don’t think there’s anything unreasonable about that.”

One young gentleman that believed Rep. Neal and the other thieves on Capitol Hill to be a bit too greedy and unreasonable is Eduardo Saverin, the billionaire co- founder of Facebook Inc. Before Facebook does its public offering, and the price of Facebook stock is quoted daily, making Saverin’s wealth undistributable, he decided to renounce his American citizenship and head for Singapore.

Bloomberg reports,

Saverin, 30, joins a growing number of people giving up U.S. citizenship, a move that can trim their tax liabilities in that country. The Brazilian-born resident of Singapore is one of several people who helped Mark Zuckerberg start Facebook in a Harvard University dorm and stand to reap billions of dollars after the world’s largest social network holds its IPO.

Singapore doesn’t have a capital gains tax. It does tax income earned in that nation, as well as “certain foreign- sourced income,” according to a government website on tax policies there.

Saverin has to pay the U.S. government an exit tax but doing it before the IPO was wise. Renouncing your citizenship well in advance of an IPO is “a very smart idea,” from a tax standpoint, said Reuven S. Avi-Yonah, director of the international tax program at the University of Michigan’s law school. “Once it’s public you can’t fool around with the value.”

There are a few Mises Institute supporters who have paid the American exit tax and now live in Singapore. None I’ve spoken with regret it.

“It’s a loss for the U.S. to have many well-educated people who actually have a great deal of affection for America make that choice,” said Richard Weisman, an attorney at Baker & McKenzie in Hong Kong. “The tax cost, complexity and the traps for the unwary are among the considerations.”

While Mr. Neal chases away taxpayers, the only ones left will be tax eaters.