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National Geographic : 1993 Jan
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flying to Hawaii on weekends to play golf-that was cheaper than playing here. Could this go on much longer? When I visited the Tokyo Stock Exchange on December 5, 1989, its Nikkei index was at 37,494.17 yen. I didn't know then, nor did any one else, that at the end of the month it would reach a historic high 38,915.87 yen. As of this writing, the Nikkei has dropped more than 50 percent. Land prices are falling too. Zaiteku has faded; the baburu keizai, the bubble economy, has burst. The big Tokyo banks are pulling back on overseas loans. T OWARD THE END of my money travels, I found myself in the Republic of Nauru, an island on the Equator in the western Pacific. Only four miles long and three miles wide, it has 1,000 to 2,000 for eign corporations and banks. "They come and they go," said Leo D. Keke, then Nauru's act ing secretary for justice; but that's only in a manner of speaking-they have no offices here, no personnel. Mr. Keke had to approve the foreign applications. What Nauru gets out of this, he said, is fees. What do the foreign ers get? Secrecy and reduced taxes. "It's arranged through lawyers and accountants in Hong Kong. .. " In Hong Kong a partner in the international accounting firm of Ernst & Young told me that these Nauru banks and cor porations exist as computer entries elsewhere, maybe in a bank in New York City. Money can go via electronic transfer directly to New York-say to Citibank for account of Bank XYZ, Nauru. It can then be invested in anything, anywhere. Nauru, he said, is an extreme example of the worldwide phenome non of tax havens; others like it are the Cook Islands and Vanuatu in the Pacific and the Turks and Caicos in the Caribbean. Considered more solid are Bermuda, the Bahamas, and the Cayman Islands, and especially Luxembourg, Switzerland, and Liechtenstein. They may all be used not only for commercial transactions but also to keep one's money safe. A trust fund for the children. Or to protect your money against wild inflation or political upheaval. Much tax-haven activity is completely aboveboard -but some is not. Dirty money cries out to be laundered, and I caught a glimpse of The Powerof Money 103
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