a little thing called Capital Flight and the fine art of re-invoicing.

[joeblow]

http://www.gnn.tv/headlines/20031/Venez ... izes_Ports



What, oh what, is Chavez doing? Why is he taking over ports and airports, of all things?

What he's stalking, my friends, is a little thing called Capital Flight and the fine art of re-invoicing.

This is a fundamental property of international capital. Some half a trillion US a year gets siphoned out of local economies into offshore accounts, and this is how its done.

The first thing they do is they set up an offshore shell account. Then, from their offshore shell account they buy 4 rolls of toilet paper, from China, for whatever the hell it costs them (25 cents?) and then they resell it to themselves for $4,121.81.

Got that? They write themselves a check for $4,121.81 (I'm actually NOT making that number up) to "cover the cost" of a kilo of toilet paper. The "surplus" $4,121.56 goes into their offshore account with the added bonus that they never turn a profit — so what is the government going to tax?

The other thing they do is they sell themselves whatever they're exporting really cheap (in Venezuela that would be steel, aluminum, coffee, beef, etc etc . . .) and then their offshore account charges the going rate to the end user.

So that's what Hugo's Posse is looking for, at the air and seaports of Venezuela. $5,000 US rolls of toilet paper.

And, perhaps not obviously, taxable profits that are going undeclared because they're being offshored.