IRS can seek UBS records
A US federal judge has authorized the Internal Revenue Service (IRS) to seek records from UBS AG of US taxpayers suspected of hiding their income in accounts with Swiss bank Wegelin, the oldest Swiss private bank. Wegelin pleaded guilty in a Manhattan federal court on Jan. 3 to charges of helping wealthy Americans evade taxes through secret accounts, then said it would close down as a result. US District Judge William Pauley granted the IRS’ request to issue a “John Doe” summons — which seeks information about possible tax fraud committed by individuals whose identities are not known — on UBS for the names of taxpayers who may have hidden income at Wegelin and other Swiss banks. UBS ended its own US probe in 2009 by admitting it provided tax evasion services to rich Americans, entering into a deferred prosecution agreement, turning over 4,450 client names and paying a US$780 million fine.
Moody’s downgrades banks
Moody’s Investors Service downgraded six of the nation’s major financial institutions on Monday on concerns about high levels of consumer debt and elevated house prices. The ratings affect Toronto-Dominion Bank (TD), Scotiabank, Bank of Montreal (BMo), Canadian Imperial Bank of Commerce (CIBC), National Bank and the Desjardins Caisse Populaire. Moody’s vice president David Beattie on Monday said that the banks are still among the highest-rated banks in the world. TD is the highest-rated among the six at “AA1” (down from “AAA”). Bank of Nova Scotia and Desjardins dropped to “AA2” from “AA1;” while CIBC, BMo and National fell to “AA3” from “AA2.” The nation’s commodity-rich economy has fared better than that of other countries, but there are fears of a housing bubble fueled by record-low interest rates.
Spending cuts approved
The government has released a budget for this year that cuts spending for the first time in seven years, underscoring Prime Minister Shinzo Abe’s efforts to establish fiscal discipline credentials even as he seeks to boost growth. The Cabinet in Tokyo yesterday approved a proposed spending total of ￥92.6 trillion (US$1 trillion) for the fiscal year starting on April 1. That is down 0.3 percent from this year’s main budget, which excludes a ￥13.1 trillion extra budget to pay for fiscal stimulus measures. Abe faces the challenge of leading the country out of its third recession in five years while containing a public debt that is twice the size of the economy. Most of the reduction in spending comes from the elimination of reserve funds that the previous government tapped for stimulus measures.
Nokia starts new fund
Nokia Oyj, the struggling Finnish phonemaker, plans to invest US$250 million in a fund that will invest in mobile communications companies around the world, with an increased focus on China. Nokia Growth Partners, the venture capital arm of Nokia, will continue to invest in companies in the US, Europe and Asia, Nokia said in a statement yesterday. The manufacturer canceled its annual dividend last week for the first time in at least 143 years to help it retain cash to fuel a comeback. David Tang (鄧元鋆), who was previously vice chairman of Nokia China, will join Nokia Growth Partners as a managing director, while Lu Guo joins from Keystone Ventures, where he was responsible for mobile and Internet investments. Both will be based in Beijing, the statement said.