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Editorial: Shame on the FBI for abandoning Olympians

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Editorial: Shame on the FBI for abandoning Olympians

McKayla Maroney’s testimony before Congress on the FBI’s failure to move quickly with the Larry Nassar sexual assault case was devastating.

This heroic Olympic gold medalist wanted to save another young woman from the same abuse she suffered from Nassar. Boston’s Aly Raisman and fellow gymnasts Simone Biles and Maggie Nichols shared the same heart-wrenching message.

All of them stood tall — the FBI did not.

The lack of urgency by the agency is unacceptable.

An apology from FBI Director Christopher Wray is not enough. He did say an agent assigned to the Nassar case was fired. That’s also not enough.

The managers, office chiefs, deputy bosses — somebody in a leadership post — needs to be fired as well. This brand of heartlessness has no place in our country’s law enforcement community.

Haven’t we learned from the Catholic Church crisis? The James “Whitey” Bulger reign?

The FBI is a broken agency that continues to be too politically charged and weak in too many areas. It’s time to fix the FBI. But don’t take our word for it. Listen to McKayla Maroney. See the tears roll down her cheeks.

“Not only did the FBI not report my abuse, but when they eventually documented my report 17 months later, they made entirely false claims about what I said,” Maroney testified. “They chose to lie about what I said and protect a serial child molester rather than protect not only me but countless others.”

She told Congress that Larry Nassar, the U.S. Gymnastics national team and Olympic team doctor, was “more of a pedophile than he was a doctor.”

Nassar was sentenced to up to 175 years in prison in January 2018 after more than 150 women and girls accused him of sexual abuse. The Olympians were among those victims.

Sadly, predators do all they can to keep abusing. All the more reason to move fast to cut them off.

Somebody at the FBI needed to realize this was the moment to act. Seize the day and protect the innocent. It’s unconscionable this did not happen. They did not give Maroney the respect she deserves.

“I then told the FBI about Tokyo, the day (Nassar) gave me a sleeping pill for the plane ride to then work on me later that night. That evening, I was naked, completely alone, with him on top of me, molesting me for hours. I told them I thought I was going to die that night because there was no way that he would let me go. But he did. I told them I walked the halls of Tokyo hotel at 2 a.m., at only 15 years old,” she told Congress.

She went on: “I then proceeded to tell them about London and how he’d sign me up last on his sheet so he could molest me for hours twice a day. I told them how he molested me right before I won my team gold medal, how he gave me presents, bought me caramel macchiatos and bread when I was hungry. … This was very clear, cookie-cutter pedophilia and abuse. And this is important because I told the FBI all of this, and they chose to falsify my report and to not only minimize my abuse but silence me yet again.”

Enough is enough. It’s time for Congress to actually do something about the FBI. Make a bold move. Do it quickly. Announce it for all to see.

How about trying — at least this one time — to be as brave as these gymnasts?

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Real World Economics: Global corporate taxes are a good step

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Real World Economics: When good intentions go bad

Usually, international finagling among rich people and corporations to minimize paying taxes, legally or illegally, is not visible to the eye.

Edward Lotterman

Occasionally it is. On a trip to Switzerland, my wife and I went for lunch in the neighboring country of Liechtenstein. We started in Chur, a pleasant regional Swiss city in the Rhine Valley. An impulsive query of a hotel clerk told us that all we needed to do to visit another country was to drive 20 miles on the freeway, turn right at the big McDonald’s sign, cross the bridge, one left, one right and we would be in the business heart of Vaduz, tiny Liechtenstein’s capital.

A neat town the size of Redwood Falls, its only notable difference from a Swiss burg was a zone of six or eight blocks on two streets jammed with small, neat office buildings closely adjoining others. Each had small brass plaques next to the doorbell, 20 in one case. Such are the Liechtenstein “headquarters” of hundreds of international businesses.

I had seen similar plaque-bedecked buildings in Barbados on a much smaller scale. Yet I don’t think I’ll see any in Sioux Falls, although the South Dakota Legislature is drumming up analogous businesses.

All this relates to a positive recent development: the agreement among 130 countries to coordinate taxation of corporations, including a minimum global tax of 15 percent. This may reduce the legal contortions so benefitting brass plaque engravers.

Let’s step back a bit: The general problem is the world has some 200 countries, each sovereign over laws seen as best benefiting the country’s and its citizens’ and residents’ needs. This can include earning a few million dollars or euros by writing laws that allow businesses in other countries to in turn save billions in taxes. This is little different from Liberia and Panama offering near-regulation-free registration of commercial ships for a modest price.

There are thousands of businesses, mostly incorporated, that do legitimate business in multiple countries. There are thousands of rich people too. Naturally they try to minimize taxes owed. This can include juggling funds between countries to lower total taxes owed or paid.

This can be, and usually is, legal — at least within the letter of the law. This is “tax avoidance,” and is little different from what accountants might tell any of us.

There also is “tax evasion,” or fraud, in which laws are broken. Sometimes this is from otherwise legitimate businesses. Other times it’s hiding dirty money garnered from government corruption, criminal activity or simple personal crime.

The global agreement just reached aims to reduce avoidance strategies by legal companies, not crime, but the incentives and mechanisms for legal avoidance overlap those for illegal acts.

For example, Minnesota’s own Medtronic has its “legal headquarters” in Dublin, Ireland, even though its “operational headquarters” remains in Fridley. Johnson Controls is another major U.S. business nominally headquartered in Ireland. And hundreds of other corporations still legally based from this country have subsidiaries in Ireland. This has been part of the Celtic boom that propelled Ireland from poverty to prosperity.

Many also may have wholly-owned subsidiaries in Liechtenstein, Panama, Bermuda the Bahamas or similar havens. Frequently these have some innocuous name that gives no indication of the true owner. Transfers between subsidiaries of one corporation across several countries can move money so that low or even zero income taxes are paid.

In 2017, Google reportedly moved $22 billion in income to a Dutch company that transferred it to an Irish company, but one with a subsidiary in Bermuda. Bermuda has no tax on income. The Bermuda entity can “loan” funds back to Google’s home office in California, funds on which no U.S. corporate income tax was ever paid. All of the entities involved were owned 100 percent by Google and under their exclusive control.

So how does one transfer money in this way? Usually, it is through an old dodge known as “transfer pricing” already common and legal when much multinational business was in manufacturing.

For years, my favorite surplus machinery outlet in south Minneapolis had dozens of metal skids marked “Return to Ford, Taubate BR.” The St. Paul Highland Park Ford plant used four-cylinder engines produced in one of Ford’s Brazilian factories. Ford do Brasil is a separately-chartered Brazilian corporation owned entirely by the Michigan-based parent.

So when Ford-Brasil sells to U.S. Ford, money must change hands, but at what price per engine? There is no market price for these as there is for the soybeans Cargill trades, for example.

Set this transfer price high and it increases Ford profits in Brazil but reduces them in the U.S. Ford as a whole has more income here and less in Brazil. Price the engines low and Ford’s Brazil profits drop but those of U.S. Ford rise.

There are limits to this with physical products. One engine is not worth $1 million nor is it worth $100. But with software or intellectual property or pure service-based businesses, the sky’s the limit. What does one subsidiary charge another for design of an implanted medical device, but not the actual device? Writing advertising and designing logos for hamburger wrappers? Writing code for a search engine or social media? Accounting and legal services?

For years, McDonald’s, using the “double-Irish with a Dutch sandwich” ploy so beneficial to Google, moved franchise-fee income versus corporate overhead to lower taxes. It’s all legal, and corporate transfers between subsidiaries based in myriad locations will remain legal. Countries will retain control over their own tax laws, subject to the new provision that a multinational business will have to pay a 15 percent tax on corporate profits to some country. There inevitably will be hitches, but “progress, not perfection” applies here.

The recent ”Pandora papers” leak revealed how South Dakota changed its laws governing trusts at the dictation of law firms specializing in such work, so as to make it a favorable location for them to be established in that state. As for Liechtenstein or Bermuda, there is nothing illegal about this. But in both cases, such favorable rules can attract illegal money as well as legal. A U.S. state or a sovereign nation may gain economic activity and employment, but society on a global whole loses.

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Jackknifed tractor-trailer closes Interstate 70 eastbound at Eisenhower Tunnel

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Jackknifed tractor-trailer closes Interstate 70 eastbound at Eisenhower Tunnel

A jackknifed tractor-trailer shut down Interstate 70’s eastbound lanes Sunday morning at the Eisenhower Tunnel, according to the Colorado Department of Transportation.

The eastbound interstate was closed between mile markers 206 and 213 around 8 a.m. and is expected to reopen around 10:15 a.m., according to CDOT.

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Denver barbecue restaurant Smōk opens in Fort Collins

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Denver barbecue restaurant Smōk opens in Fort Collins

Smōk opened a location Monday in Fort Collins at the Foothills shopping district.

This is the third site for the barbecue restaurant and the first outside of its Denver base. The 3-year-old chain has locations in RiNo and at Junction Food Hall.

Executive chef and owner Bill Espiricueta worked with Chef Steve Redzikowski at Acorn in Denver and at Oak in Boulder. Prior to that, he worked at Nobu in Dallas and Bluestem in Kansas City, Missouri.

Smōk’s rotating menu includes burnt ends, turkey, pork spareribs, chicken, brisket, wings, sausages, smoked meat sandwiches and “southern-influenced sides [and] house-made pickles,” a press release said.

“Chef Bill executes an easy-going barbecue-joint vibe with the high expectations of a fine-dining chef,” the release said.

Beverages include beer, “boozy slushies and balanced cocktails.” There are eight TVs and room for 155 people in the restaurant and on the patio.

© BizWest Media LLC

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