DNB Nor plan of setting up a Carlson Funds as a “Societe Anonyme” (S.A.) to initially save taxes and write of their subsidiary in Luxemburg; they might claim differently to save face, but the agreement with Luxemburg Authorities says otherwise!

The Company in Scandinavia famous for getting George Clooney to be parts of their commercials and being synonymous with the Norwegian National Team of biathlon, making Ole Einar Bjørndalen wearing a Vital hat to the races and competition as a display of one of the main sponsors of the National Team. That is ordinary in sports, and is ordinary in the time we live in. So that a big bank is supporting a National Team is everyday event, but that is not what I will write about and discuss. As I got to read one of the papers in the Panama Papers leak. Here it is and hope you can see how DNB Nor ASA used the opportunities for meager taxation and higher earning for their subsidiary.

Before you continue her is a classy ad from the company:

Now we will see how the Norwegian Company can also be a little greedy and trying to avoid taxes in Norway, but still earning the profits and having accounts, but using the PriceWaterCoopers (PWC) offer for a Shell Company in Luxemburg to save taxes and still keep the funds in safety in Luxemburg. That is the grand DNB Nor who is the largest bank group in Norway.

Here is how they do it, and it is epic ways of using the shell-companies to avoid Norwegian tax regime and use a Corporate Fund that is a S.A. “Societe Anonyme” as financial company in Luxemburg to simply benefit from the specific tax status for a company in Luxemburg instead of the Norwegian one. Let me take you for a ride!

What is the Carlson Fund Management Company S.A.:

“Carlson is a Luxembourg resident company incorporated on August 14, 1990 as a limited company (“Societe Anonyme”) in order to develop the German and other European markets” (…) “Carlson is a company of DnB Nor group (hereafter the “Group”). The Group is Norway’s largest financial services group with total combined assets of NOK 1,834 billion. It includes strong brands such as DnB NOR, Vital, Nordlandsbanken, Cresco, Postbank.en, DnB NORD and Carlson” (…)”Carlson is part of the life and asset management branch of activities of the Group, DnB NOR Asset Management. It is Norway’s largest fund manager and has a leading position within discretionary asset management for institutional clients in Norway and Sweden” (…)”Until July 28, 2006, the purpose of Carlson was the creation, management and administration of a unique fund, Carlson Fund, created in Luxembourg on August 31, 1990. In this respect, based on the Luxembourg law on UCis, Carlson benefited from a specific tax status exempting the company from Luxembourg corporate income tax, municipal business tax and net wealth tax”.

You think that is saga in the making just see what more they did to secure lesser tax in Norway and close to none in Luxemburg, because corporate greed is what makes the world run like Ussain Bolt!

“By resolution of the Extraordinary General Meeting (“EGM”) held on July 28, 2006, Carlson has amended its by-laws in order to comply with the law of December 20, 2002 transposing the UCITS III Directive 85/611/EEC into Luxembourg law. Since the EGM, Carlson has been responsible for the management and administration of several investment funds. Carlson currently manages a portfolio of funds under 3 fund umbrellas: Carlson Fund, DnB NOR Fund and more recently DnB NOR Part II Fund since February l, 2008 (hereafter the “Funds”)” (…) “As from the date of the EGM (i.e. July 28, 2006), Carlson became subject to an unlimited tax liability and is considered as a newly incorporated entity for tax purposes”.

You think that is bad and telling how the Carlson entity of Luxemburg, which funds and fueling money from the DNB Nor and their subsidies and banks in Norway. As he Tax is high here for any profitable business, this kind of transaction and order clears lots of funds from the Company and banks, which gives higher profits, because of less tax as they follows through consultation to follow the exemptions laws in the tax-haven. Here we go!

How do they secure the tax-exemption with the laws in Luxemburg?  

“Based on article 35 (4) of the Luxembourg Income Tax Law (“LITL”), when a company becomes taxable, all its assets and liabilities have to be valuated, at the time of the conversion, at their fair market value The assets and liabilities concerned are those “contributed” to the fully taxable entity, including intangible assets (article 59 (2) LITL)” (…)”the tax balance sheet has to take into account all the assets and liabilities of Carlson (i.e. the whole assets and liabilities whose, by nature, intend to serve the activity of the company2) including the valuation of the management contract. The administrative doctrine precises that is assimilated as an asset all the potential assets that can be exploited in the context of the activity of the company and with an individual economic value” (…)”Carlson has to revalue its capital in its opening tax balance sheet. The revalued capital includes the share capital of the formerly tax exempt company, the reserves accumulated by Carlson until the moment of the conversion, as well as the revaluation reserves resulting from the step-up at the moment of the conversion. The revalued capital is treated as “fiscal capital” in the hands of Carlson from a tax point of view. Any repayment (of part) of this “capital” to Carlson’s shareholders will therefore not be subject to withholding tax in line with the provisions of article 97 (3) b LITL”.

Now we have seen how the DNB Nord have put a S.A. Society Anonyme with the Carlson Funds to drop money into the Tax-Haven of Luxemburg as the DNB thinks the suits of Luxemburg to perfection and wondered if Barney Stinson bought suits made for Luxemburg.

DNB set up the Society Anonyme is set up with a new “EMG” to get unlimited tax-liability in Luxemburg. So the advice made the funds from the company under the Carlson from the time of the board-meeting by law of the 28. July 2006. The continued thing they did was to take their assets and monies fueled into the Carlson Funds, so the liabilities together with all of contracted value and management in the tax-balance sheet. So there fueling of moneys into the Fund is also fiscal capital and because of the status of the S.A. hide more in the secret company there.

Then the control of Carlson Funds is by all means controlled by DNB Nord as written here:

“As an example, a major part of the support activities (e.g. accounting) is done in close collaboration with the members of the Group located in Sweden/Norway. Moreover, the members of the team managing Carlson in Luxembourg are all senior officers originated from the Group. Consequently, the distribution of the Funds in Luxembourg is mainly performed thanks to the support of the Group”.

Here is what the group is supposed to pay in tax:

“Taking into account the total 2006 and 2007 value of the business compared to the total 2006 and 2007 annual profit before tax, Carlson will pay an annual and arm’s length remuneration in accordance with articles 56 and 164 (3) LITL to the Group for its support representing 65,92% of its annual profit before tax” (…) “Carlson will benefit from such retrocession of fees over a period of 10 years. As the taxable activity of the Company started in 2006, we propose to recognize such retrocession as from August I, 2006 until the financial year 2016” (…)”The computation of the percentage of notional retrocession of fees will be subject to a supervision period of 4 years (2006-2010). In case of significant/major changes in the business in Luxembourg, Carlson commits itself to inform the Luxembourg tax authorities of any significant changes that would modify its business and/or its tax position in order to agree on the more appropriate tax treatment”.

If you wonder what retrocession means that is planned underwritings of the earnings of the company. Underwritings or retrocession is usually a volunteer act of a company to return property or ceding property, though usually by request and not by forced transaction. Also the underwriting is also done to diversifying assets by consolidating them amongst the stakeholders. That means the last one the percentage of the company which is 65 % of the profits of DNB NORD’s Carlson Funds will dived 65% of the funds to the stakeholders of the company. Initially meaning that the Stakeholders or the Owners  of the DNB NORD and that before any tax in Luxemburg, which is beautiful business model for the Stakeholders and for the ones owning DNB, and by literal controlling Carlos Funds.

The Company found another way to dodge a little more tax:

“Net Wealth Tax: As no intangible asset is recognized in the tax balance sheet of the Company, there is no increase of the unitary value of Carlson for net wealth tax purposes”.

This is initially saying that since they have not written any assets of value when they started to operate, therefore they does not have assets or monies worth to be classified for the Wealth Tax Purposes in Luxemburg. Here was yet another way of using the loopholes in Luxemburg to get even less taxation and a favorable way of using the tax-system there.

This article in the middle of the charter of Carlson Funds says the truth of the company:

“The purpose of the corporation is the creation, administration and management of one or several Luxembourg and/or foreign collective investment funds in transferable securities authorized according to the Directive 85/611/EEC, as amended (”UCITS”) and of other Luxembourg and foreign collective investment funds not covered by trus Directive (“UCI”) (all together the “Funds”) on behalf of their unitholders or shareholders in accordance with the provisions of chapter 13 of the Luxembow-g law of December 20, 2002 on undertakings for collective investment, as it may be amended from time to time (the “2002 Law”) , and the issue of certificates or statements of confirmation evidencing undivided co-ownership interests in such Funds. The corporation shall manage any activities connected with the management, administration and promotion of the Funds. It may on behalf of the Funds, enter into any contracts, proceed to any registrations and transfers in its nam~ or jn third parties’ names in the register of shares or debentures of any Luxembourg or foreign companies, and exercise on behalf of the Funds and the holders of certificates of the Funds, all rights and privileges, especially all voting rights attached to the securities constituting assets of the Funds. The foregoing powers shall not be considered as exhaustive, but only as declaratory”.

This here says enough of the practices of the Norwegian Banking group of DNB Nor or DNB Nord ASA had a subsidiary for recess their tax-operation and use the lucrative opportunities for keeping the profit without having issues with the Tax-regime in Norway. As the Norwegian rules and tax-regulation without studying them is stricter and has to be stricter than this. Because the end of the Tax contract with Luxemburg disclose the information where they are planning not to pay for their “Net Wealth Tax Due”. So even if the funds grow massively and the monies invested in the Carlson Funds, the opportunity to underwrite 65 % before the tax on its profit and that is possible with the “underwriting” method. In that sense the taxation of the will always is 10% on very little part of the funds, as the stakeholders can theatrically take 65 Euros on the 100 euros. Leave behind 35 Euros of it profit and pay 3, 5 Euro on the 100 Euros of Profit, that is a beautiful operations. If it wasn’t for the underwriting of the revenue then the company would have by the standard tax of Luxemburg paid 10 Euros of tax. 10 Euros is not much of a profit of 100 Euros, but still vastly more than 3, 5 Euros, the difference by quick calculation is 6, 5 euros. That is nearly a price of a Big-Mac Combo-menu that cost around 8 Euros in Luxemburg.

That is because of the technic of underwriting and sharing that with the shareholders and stakeholders of the Carlos Funds S.A. in Luxemburg which is their subsidiary. As written so nicely to the Luxemburg Department of Tax Collection in 2^nd July 2008:

“on behalf of our client Carlson Fund Management Company S.A. (hereafter also referred to as “Carlson”), we respectfully request you to confirm, in writing, the content of this letter as to the Luxembourg tax treatment applicable to the situation described herein”.

That the Carlson was supposed to get the reasonable Tax Treatment for the company so there was a hashed plan from the get-go together with the Company of PriceWaterCooper. The plan was made an acted upon. This would not been possible if the DNB Nor did not use the guidance and setting up the charter after the laws there and follow the guidelines of the company setting it up for making sure of having less tax.

As explained with the 100 Euros scenario. The certainty is not any excuse from the DNB Nor can tell away.  As they explained in 2016 to the Norwegian Press:

“No, DNB Luxemburg does not help the costumers to avoid tax. The Advisors function as discussion and talking-partners when it comes to financial questions, which offers legal and legitimate tax-plan for the costumers who live abroad. It could for example be about advice about financial-solution, cross-border transactions, complicated inheritance-regulation and other taxing environment that would be different from the ones who are living in Norway” (…)”DNB does not operate in Luxemburg because of taxation (Foss, 2016).

Well, I have already explained there operation and how they get to pay as little tax as possible through their operation. So DNB Nor had or still have the Carlson Fund Management Company S.A. in Luxemburg to save taxes and earn more monies in their operation and company there. Something they would be able to do in Norway or under Norwegian taxing regulation. Peace.

Reference:

MF I/ECCi/ AEGN/C21108001 M-PEWR – “Carlson Fund Management Company S.A. – Identification tax number: 2006 2240 378- Recognition of a license fee for tax purposes” (02.07.2008) – PriceWaterCooper (PWC)

Foss, Andres Bakke – ‘DNB i redegjørelse i 2014: DNB Luxembourg hjelper ikke kundene med å unndra skatt’ (08.04.2016) link: http://www.aftenposten.no/okonomi/DNB-i-redegjorelse-i-2014-DNB-Luxembourg-hjelper-ikke-kundene-med-a-unndra-skatt-8422413.html#xtor=RSS-3

Water-Crisis in the City of Flint; Time to call in USAID to solve it as they do around the world; because water matters!

USAID and World Bank need to offer loans to Flint, Michigan; they can facilitate tap-water to the citizens of the city. This in a county where they have year after years of financial deficit and defaulted on budgeted projects of the city. This just by browsing through google after writing Flint, Michigan Budget Deficit, the articles goes back to 2009. That means 6 years where there been missing money for the county budget. This means that the country can’t deliver the community what it needs, because they don’t have the funds to finance what the town and county need.

Here is the USAID mission statement:

“Ending extreme poverty and promoting the development of resilient, democratic societies that are able to realize their potential. We fundamentally believe that ending extreme poverty requires enabling inclusive, sustainable growth; promoting free, peaceful, and self-reliant societies with effective, legitimate governments; building human capital and creating social safety nets that reach the poorest and most vulnerable” (USAID, 2016).

I will look at some reports of the water quality that has been in media where Cher and Big Sean has donated some Dasani water to the public because the bottles settle the issue with the tap-water that the county doesn’t have money to fix or use proper water-sources. Let’s say what certain reports done by various enteritis say about the water and economy in Flint. Take a brief look:

About Jobs and Poverty in City of Flint:

In a town of “In Flint, for example, absent other factors, employment would have declined by 12.7 percent between 1980 and 2009 because nationally, the industries it specialized in actually shrank over those years. However, Flint lost jobs in those poor performing industries in which it specialized faster than other metros due to a de!cit in the competitiveness of its existing local industries” (…)”At the most basic level, poverty results in lower standards of living. However, there are other, less direct effects that are even more troubling. For instance, poverty is highly correlated with low levels of education, and can thus trap individuals and households for generations, lowering socioeconomic mobility through lack of opportunity. The failure to combat the causes of poverty is also scally unsound; if those problems are not eradicated, state and local governments face smaller tax bases as well as higher outlays to support their populations. Poverty rates were well above the U.S. metro average in 2009 in all of Michigan’s metros except Holland and Jackson” (Michigan Economic Condition Assessment).

Economic situation in 2011 in Flint:

“In 2011, the numbers bear a startling story, as of 2009, 36,2 percent of Flint’s 102,000 residents were living below the poverty level, and nearly 20 percent were at an income level that was 50 percent below poverty level” (…)”In mid-1980s, General Motors – at a time when the company was experiencing records profits – laid off 30,000 autoworkers in Flint, eventually 80,000 in all, and shut down several factories” (Smith, 2011).

Emergency Manager takes control because of budget deficit:

“However, on December 1. 2011, the Governor of the State of Michigan appointed an Emergency Manager for the City of Flint, due in part to a deficit in the general fund, the decline in pooled cash, budget issues, and unfunded liabilities for post-employment benefits. The appointed Emergency Financial Managers and Emergency Manager  were authorized by virtue of their appointment to “act for and in the place and stead of the governing body and the office of chief administrative officer of the City of Flint” (…)”The General Fund deficit as of June 30, 2013, is now $12.9 million” (City of Flint, 2013).

Assessment of the water from City of Flint in 2014:

“The City of Flint did experience drinking water issues in the summer of 2014. Issues began with areas of the city experiencing “rusty” water. This was largely due to the fact that the city distribution system contains hundreds of miles of cast iron pipe” (…)”The City of Flint received violations from the Michigan Department of Environmental Quality (MDEQ). The violations included a total coliform and E. coli in August and September of 2014, and a corresponding total trihalomethanes (TTHM) violation in December of the same year” (City of Flint, 2014).

Water quality report 2015:

“Prior to April 30, 2014, the city of Flint purchased water of the City of Detroit. On April 30, 2014, the City of Flint switched from utilizing purchased water from Detroit to a new water source, the Flint City River. Subsequently to the change in source water, the City of Flint experienced a number of water quality issues resulting in violations of National Primary Drinking Water Regulation (NPDWR) including acute and non-acute Coliform Maximum Contamination Level (MCL) violations and Total Trihalomethanes (TTHM) MCL violations” (…)”National Primary Drinking Water  Regulation (NPDWR) Violations – City of Flint:

Following the switch to the Flint River, the City of Flint experienced a series of NPDWR violations as follows:

Acute Coliform MCL violation in August 2014

Monthly Coliform MCL violation in August 2014

Monthly Coliform MCL violation in September 2014

Average TTHM MCL violation in December 2014

Average TTHM MCL violation in March 2015

Average TTHM MCL violation in June 2015” (US EPA, 2015).

Statement on quality of water in 2016:

“The American Water Works Association applauds President Obama for signing an emergency declaration that makes available federal aid for the drinking water crisis in Flint, Michigan” (…)”When a community changes water sources or water treatment, unintended consequences can occur. Water systems must be alert to these potential issues and have plans in place to address them” (…)”AWWA is committed to helping water utilities, elected leaders and customers in applying these and other lessons from the crisis in Flint” (AWWA, 2016).

Afterthought:

So with seeing this little evidence and also seeing how the state goes in with Emergency Managers both over-controlling the mayor and the city hall because of the growing deficit that surely must have taken emergency measures that must have been done to save budget funds.

The result that has caused havoc now has been visible since August 2014. That is more 17 months when they had it in after changing of water sources to the Flint River. It is staggering how long the results have been – if it is the pipeline or the source it is still scary to know that there been steady violations; that have been pushed under the rug or not discussed. I don’t know why the fuzz is happening now or if it is campaign season and that is why the Americans and world hear about water-quality and crisis in Flint.

The unemployment that goes back to foreclosure of car-factories and other automobile industry has destroyed the economy while the rich have moved from the central town to the suburbs in the county while the town has had steady rise of poverty in the city of Flint. That is why I ask for USAID to do their business and bore holes in the city of Flint in the state of Michigan. USAID has an mission to work amongst poverty and create possibilities and with the amassed levels of poverty in Flint, with closure of schools and abandoned houses an such proves the need for AID from USAID. They should come in with their programs to salvage and create better water with their technicians as they have done for decades in African Countries and Latin America, and help their own as they are in need.

The bottles of Dasani given from Big Sean and Cher won’t do much but a tear-drop in the ocean. The emergency funding from the federal funds might help, but that is also done in fashionable loans so the debt burden on the City of Flint. So as a failed banana republic that usually gets programs and aid from USAID, it is time to deliver that to City of Flint. As they have unemployment on the levels of sub-Saharan Africa, they have high crime-levels and public with little faith in the government institutions. Schools are detreating and other institutions are weaker than before. People are living on non-working programs and many suspended as they have been living to long on this state-program. They work with poverty eradication that the City of Flint needs. They can start microfinancing programs to get people to start smaller businesses and grow the level of monies spent in the city. Fund them through water programs similar to WASH strategies of the USAID to secure the level of water quality and food security as a part of that. Something USAID can do in city of Flint. They have already lost some part of their autonomy as the Michigan state put in two Emergency leader both Emergency Manager and Emergency Financial Manager who overpower the people’s chosen leadership of the town and also control the monitoring of the functions of the town, this to get control of the deficit; but also leaving the limbo of the democratic institutions in the city. That means it fits perfectly to what kind of environment that USAID goes into which often is totalitarian or semi-democratic societies with big-men who are stronger control over government institution than ordinary procedure. This is the same with the Emergency leadership of City of Flint. So it not only the economic difficulties, unemployment rate, poverty standard, in the end it also fits the levels of institutional malfunctions to fix the budget deficit as the governor of Michigan has seen.

So if the USAID will follow their mission and do something good, use their skills and WASH programs, then they should put them into use in the City of Flint, Americans helping Americans. Not a vile and foolish picture, the money that US Government have put into USAID over the year, this here good be a good service back and prove that the money is well spent, as the USAID can finance and find way to fix the water and give of their knowledge to create a more prosperous society. City of Flint should try to get a Memorandum of Understanding to give way so that USAID can give the citizens of Flint what they deserve before Michael Moore makes another film displaying the deteriorating city he was raised in. USAID shouldn’t just build water wells in Afar region in Ethiopia, when there a city in America where they can’t get healthy water; their WASH personnel could really give AID and create development in Flint. This is if the City of Flint could accept it and give way to the organization to show way. USAID have the skill and manpower needed, Flint have not the funds or the situation to get out of it. This here is a decline of a city ever since General Motors starting to leave and move automobile factories since the 1980s. Therefore the reforms have to come and why not through USAID. They can bring hope and more then Big Sean’s bottles of Dasani. Peace.

Reference:

American Water Works Association (AWWA) – ‘Statement from AWWA CEO David LaFrance concerning Flint water quality crisis’ (19.01.2016)

City of Flint – ‘Annual Water Quality Paper 2014’ link: https://www.cityofflint.com/wp-content/uploads/CCR-2014.pdf

City of Flint – ‘Comprehensive Annual Financial Report for the Fiscal Year Ended June 30. 2013’

‘Michigan Economic Condition Assessment 2.0’ link: http://www.brookings.edu/~/media/Research/Files/Reports/2012/2/23-michigan-economy/0223_michigan_mid_metros.pdf

Smith, Jay Scott – ‘Flint’s economic fall like none other in the country’ (26.11.2011) link: http://thegrio.com/2011/09/26/flints-economic-fall-like-none-other-in-the-country/

USAID – ‘MISSION, VISION AND VALUES‘ (07.06.2016) link: https://www.usaid.gov/who-we-are/mission-vision-values

United States Environmental Protection Agency – ‘Transmittal of Final Report – High Lead at three residences in Flint, Michigan’ (04.11.2015)