Kalistan

[Doc]

Finance Minister faces scrutiny over ForIn Bank
Critics call Investment Bank a "Black Market Money Laundromat"
Kaliburg, Grand Duchy of Ananto
July 1, 5669


Dr. Michael King, Finance Minister answers questions from National Assembly on ForIn Deposits

Dr. Michael King, Her Imperial Majesty's Minister of Finance was in front of the National Assembly's Finance Committee, who is charged with Oversight of the Activities of the Finance Ministry, to answer questions about the activities of the Kalistani Foreign Investment (ForIn) Bank. The primary function of the bank is to provide foreign investors more or less an escrow to hold money that they intend to invest in Kalistani industries and stocks. It provides capital standardization with the Empire, and also operates the various Cambios across Kalistan. Below is a Narrative transcript of the first set of questions faced by the Finance Minister during the hearing.

"Kalistan is not a place a lot of people travel to, specifically," said Minister King. "But it is a place a lot of people travel through, in all directions. While they are here, we tend to provide the least expensive cambio services in the world, and travelers transiting through Kalistani Airports know that: most nations exchange currency with a 2.5% fee for all transactions while Kalistan is usually between 1.5% and 1.8% depending on convertibility, so international travelers flying through Sulari or Kaliburg tend to exchange large sums of money, and save on the excess fees that they will pay in their destination country. Yes, Kalistan undercuts foreign banks who exchange currency, but it's a small part of the operation of ForIn that visitors appreciate."

The Committee Chairman, Deputy Robert Hassleback of Suldanor, informed the Finance Minister that he wasn't in the Committee to provide advertisement for the Cambio. "We have troubling, albeit anecdotal reports regarding the use of ForIn as a Black Market Money Laundromat," said Deputy Hassleback. "The stories we are hearing are that Kaliburg is a frequent destination for, shall we say, black market drug smugglers, gun runners, mafioso, and other kinds of shady characters of every description, who utilize the bank's similarly world famous secrecy provisions to both hide illicitly acquired profit, and launder money through Kalistan."

"Mr. Chairman," answered the Finance Minister. "I am not at liberty to discuss with you or anyone the character of those who have accounts with ForIn. That would be against the law. And if any of these anecdotal stories came from any bank staff, that would also be against the law."

"Alright Doctor," continued the Chairman. "Can you characterize the general nature of the the more than ₭27.3 Billion that ForIn saw last year in deposits that your audit shows?"

"The general nature of..." asked the Minister

"...of the ₭27.3 Billion in deposits that the bank under your direction accepted last year, according to your own public audit records?"

"Mr. Chairman, as I said, I cannot characterize any of the deposits made at ForIn as that would be a violation of the law."

The chairman was, by this time, becoming more frustrated. "Mr. Minister, can you even confirm that ₭27.3 Million were deposited at the ForIn Bank last year?"

"Excuse me, Mr. Chairman, Million or Billion," asked the Minister.

"Excuse me, ₭27.3 Billion Imperial... 27.3 Billion, with a B."

"No sir," was his response. The Chairman was incredulous and pushed him, to which the Finance Minister stated, "Mr. Chairman, it is a crime for me to state anything specific to do with the Foreign Investment Bank deposits or depositors on the public record. This body wrote that law. If you wish to compel me to answer, you had better change the law, but I am not interested in violating the law as it is written."

The Finance Minister and the Chairman of the Committee went back and forth about definitions of the words and the meaning of the law, and ultimately the Minister lost patience, and asked flat out, "Mr. Chairman, what is the source of these allegations? Who are you referring to that is leading you to request this information from the Government, when you know it is flat out illegal for me to provide it to you?"

"Well, Dr. King, I saw it with my own two eyes, that's who, and I have numerous reports from others that known international criminals, gangsters, and terrorists are doing business right here in Kaliburg, now I want answers."

The Minister was shocked. "We have very strict guidelines about who we let invest in ForIn," responded the Finance Minister. "We work with foreign investors who wish to invest in our economy. And ForIn provides a very valuable set of banking services for foreign nationals who wish to bring their money to Kalistan and make more money."

"Do you ask them their employment status?" asked the Chairman.

"Of course," said the Finance Minister.

"And so how can you say you don't know that ForIn is acting as a money launderer for gangsters, drugs lords and hosts of other unsavory characters?"

The Finance Minister laughed at the question. "Mr. Chairman, I can't say that."

The exasperated Committee Chairman closed his eyes and sighed into his microphone. "Minister King, you JUST said to me that you ask their employment status when they apply for accounts. And NOW you say you can't tell me what they do for employment? Do you really expect this committee to believe that?

The Minister calmly answered, "I can't characterize our depositors, but I can say for certain, no single person has ever put down on their application for a bank account at ForIn 'International Narcotics Trafficker' under profession. That would be ridiculous." The rest of the committee laughed at that comment as well.

"You may think this is a laughing matter," said the Chairman, "but its no joke. Moving on, what is this category, special fees? The charter says you will collect 1 percent on all withdraws into a foreign currency. And you have that sum listed on your audit. So what is this other column, special fees, in which the Bank earned ₭1.84 Billion Imperial last year in profit?"

The Finance Minister asked the Chairman to repeat the question, and the Chairman did, using a different set of words. "Special fees are fees we collect when certain of our clients ask us for particular discretion in handling their money and full accounting upon withdrawal. The Bank will offer specific accounts, as well as tax forms showing deposits, on withdraw, so they can submit those forms for tax purposes in their own nation. We will offer them interest on these special accounts, usually between 1 and 2%."

"And how much is the special fee for these select accounts?" asked the Chairman.

"ForIn charges 5.3% on those accounts," answered the Minister.

"5.3% on an interest bearing account yielding between 1 and 2% interest?" asked the Chairman incredulously. "My, these clients must not mind paying the bank to handle their money for them."

"I suppose not," answered the Minister.

"Why would someone pay 5.3% to open an interest earning account at ForIn that only pays 1-2%?" asked the Chairman. "For any normal businessman, that doesn't make any sense? Why not just invest it in their own country where there are not these 'special' handling fees?"

"The fee is for special handling, processing and accounting," said the Finance Minister. "Most of our normal accounts are treated normally, most of our depositors do not require these types of accounts. But some do, so we offer the service."

The Chairman paused. "It sounds more to me that you are allowing them to create something that looks like a business loss so they can reap a tax benefit abroad by making it look like they experienced capital losses in Kalistan, and the Bank is merely collecting their cut of that tax up front that foreign governments are being expected to recoup to the depositor. Tell me you see that! If this is the case, and the foreign investor knows that, you're telling me that ForIn is basically involved in embezzlement and defrauding foreign nations to the tune of almost 2 billion Imperial last year alone. Just by taking advantages of foreign countries' capital gains and business tax laws."

"Mr. Chairman," answered the Minister, "first, embezzlement and defrauding a foreign government is a very serious accusation you are levelling here against a Chartered National entity, and without proof of this accusation, it's some dangerous ground you are walking--but if you aren't prepared to indict me or the Bank, I hope you will refrain from making those kinds of charges. Second, ForIn doesn't write foreign tax laws, nor do we receive money from foreign nations. We can't control what stupid laws they have in place to encourage their capitalists. ForIn is not in control of any of that. And third, how can you seriously expect me to respond to this?" asked the Finance Minister. "Do you expect me to know what is in the minds of those who open these accounts with us?"

"Minister King, you are charged with oversight of a Private Financial Institution that receives money from foreign investors. I should hope you would know what they are thinking when they opt into one of these clearly for profit (from the Bank's perspective) accounts."

"Perhaps you can ask them yourself," answered the Finance Minister.

"Perhaps you will give us a few names so I can call them before this committee to receive their testimony," responded the Chairman.

"Mr. Chair, I am not at liberty to divulge the names of the Depositors at ForIn and doing so would violate the law."

The rest of the four hour hearing where different committee members repeatedly questioned, or alternatively defended the Finance Minister and ForIn went pretty much like this.

@TheRepublic