CAPITALISM'S ACHILLES HEEL Dirty Money and How to

Playing the Game 31
were valued in rand at R290,195,906, equivalent to $48 million, for an average
price of $715 per carat. 8 The point is, when opportunities become
available to suborn a whole government, strike quickly, because, even after a
century, you never know when they will change their minds.
Arrangements for mispricing in transactions between unrelated parties
to generate foreign kickbacks or transfer pricing between affiliates intending
to reduce taxes are not matters that either buyers or sellers particularly like
to record permanently. Most such arrangements are based on verbal agreements
between cooperating parties, perhaps put into e-mail communications,
but seldom reduced to paper with a signature. This is because in many
countries it’s against the law to file a false customs declaration. An import
coming into the United States on which a duty is to be levied, for example,
would result in undercollected customs charges if the invoice was intentionally
underpriced. Similarly, an artificially-priced export going out of the
United States, whether above or below its true value, results in erroneous
data being forwarded to the Customs service. These are felony offenses. And
they are probably the most frequently committed white-collar felony offenses
in the United States. The same is true for many other countries. The
fact is, the customs declaration is almost always filled out by a freight forwarder
handling the paperwork for the buyer or seller. So long as the freight
forwarder enters on the customs declaration the same price that appears on
the commercial invoice, hardly anyone cares or ever pays attention.
Nevertheless, if erroneously pricing a transaction, which leads to filing a
false customs declaration, which can land you in jail, really worries you,
never mind. There are other ways to accomplish the same end without quite
so overtly counterfeiting the invoice. Let’s go back to the Venezuelan businessman
who wanted his purchase priced at $1.2 million instead of $1 million.
In lieu of asking for the kickback to be sent to his bank account, he can
offer an alternative arrangement. The agreed price will be $1.2 million, and
you will please contract with my brother-in-law to do a market survey for
you in Venezuela, Guyana, Suriname, Colombia, and Panama and pay him
$200,000 into his Panama bank account. Again, agreed. It would be preferable
if the U.S. company ultimately received a few pages of paper purporting
to be the market survey, but if it never shows up, the company can claim it
just made a bad business deal.
Same thing for the Ukrainian art dealer. If the German gallery suddenly
gets pangs of conscience about depositing a C= 100,000 kickback into her