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郭台铭或陷美国偷税门 最多被罚100亿美元 2009/07/27

郭台铭或陷美国
偷税门
最多被
本文地址:http://www.21cbh.com/HTML/2009-7-27/HTML_D5QOBTD2NQVP.html
郭台铭或陷美国“偷税门” 最多被罚100亿美元
21世纪经济报道记者 王康 纽约报道    2009-7-28 2:38:03
一位两岸三地风头强劲的成功人士; 一位经常上八卦新闻头条的风流人物。一位年入数亿 美元,旗下公司却不断有“血汗工厂”传言的慈善人士。
一个星期以来,集多种“形象”于一身的台湾第二大富豪郭台铭,突如其来的陷入了一 场“偷税门“。
美国当地时间7月27日凌晨,本报记者联系到了向美国国税局举报郭台铭偷漏税的几位举 报人之一。
她向记者独家提供了一份详细的举报资料。
值得注意的是,举报人并未举报鸿海集团逃税,而是举报郭台铭及其家族逃税。
据该举报人透露,该举报已经被美国国税局受理。并且代理此案的律师PAUL SCOTT已经 得到了国税局的口头通知该案案号——29-80513。该案共有三名举报人。第一举报人具有美 国国籍,符合美国国税局关于举报人的身份规定,是归化美国籍的台湾人,具有20年的律师经 验,也曾在台湾地区政界从政。
本报记者曾于当地时间7月24日向美国国税局公共事务部经理DEAN.PATTERSON查询此 案号。但是到截稿时间为止,国税局未有向记者回复该案号是否属实,以及郭台铭是否是一起 逃税案的参予者。本报特派记者向律师PAUL SCOTT致电查询,但是该律师的电话留言宣称将 于美国当地时间27日才回返办公室上班。
记者所查询的美国法院文件系统,虽然有关于鸿海及富士康的大量诉论案件,但是并无关 于此案的任何文件。
也就是说,作为此案中的核心人物,郭台铭,目前仍无法确认是否是一起逃税案的嫌疑 人,更不是一名被定罪的罪犯。
不过,此举报资料中,依然有大量关于郭台铭的“火爆”情节。也有诸多的疑点,需要未
1/4
2009/7/27
郭台铭或陷美国
偷税门
最多被
来更多的事实来厘清。
本报仅例举资料,供读者了解目前案件双方的争论所在。
台湾第二大富豪郭台铭是美国籍?
据举报资料,1984年,富士康国际注册于明尼苏达州。此公司现在仍然成立运营。
1999年郭台铭的哥哥, 郭台成注册鸿海科技,任主席。
2002年富士康科技在加利福尼亚州注册。
据举报人所接触到的一位富士康深圳工厂的经理透露,早在1988年郭台铭就已经全家移民 美国,而且是作为优先级投资移民移民美国。
经由美国的EB-5签证(该项目通过吸收投资移民创造就业),郭可以享受该签证带来的 好处:如果投资项目创造十个就业,项目申请人就可以拿到两年期的有限永久居民。如果两年 以后,投资项目依然存在,十位员工依然就业,签证申请人就可以申请永久居民,并最终成为 美国公民。
举报人声称,郭台铭拥有美国社会安全保障号码(为保证个人隐私后四位号码隐去,625-30-xxxx),但是同时具有台湾地区身份证号:A10230XXXX
另外一个证据是,据举报人接触到的另一位富士康高管透露,郭台铭持有外国护照,因此 可以方便来往各地。其中富士康在捷克开设的工厂就是他常去之地。
捷克法律规定,如果要在捷克成为公司负责人,必须要持有来自欧盟某国,或者美国,或 者其它与捷克签订过协议的国家护照。郭台铭是其在捷克设立公司的董事之一及负责人。但 是,台湾地区并无与捷克签订过类似协议。如果郭台铭持台湾地区护照去捷克,势必无法开设 捷克公司。
举报人声称,另外两个证据是,郭已病故的法定妻子林淑如拥有626-20-XXXX的美国社会 安全号码。
郭台铭的儿子(英文名JEFFERY GOU)自12岁即移居美国。郭台铭的女儿郭晓玲(英文 名SHIRLEY GOU)也拥有美国社会安全局号码609-36-XXXX。
据举报人称,郭台铭的两个哥哥郭台成和郭台强,也分别具有美国社会安全局号码。
不过,据本报特派记者查证,拥有社会安全号码并不能确认此人具有美国国籍,仅能证明 此人在美国曾经长期居住。因此,林淑如及郭台成等人是否具有美国国籍,目前尚无法证实。
2/4
2009/7/27
郭台铭或陷美国
偷税门
最多被
据美国税法IRC §862(at)条款规定,如果郭氏家族成员拥有美国国籍,或者具有双重国 籍,或者拥有在美国的永远居留权(未入籍),其在全球的收入,就均属美国国税局的征税范 围。甚至,如果郭氏家族不拥有美国国籍及永久居留权,但是其源自美国的贸易及任何商业活 动的收入,也属于征税范围。
郭台铭的财富
举报人资料中称,郭台铭于1974年成立鸿海精密有限公司(HON HAI PRECISION),成 立资本新台币50万元。1991年鸿海上市。上市价40新台币每股。
据福布斯2007的统计数据,郭台铭拥有30%的鸿海股权。郭因此而名列全球第142位富 豪。
而郭台铭的哥哥郭台强所拥有的富士康国际(FOXCONN INTERNATIONAL)则在香港公 开上市。
鸿海系公司在2006年的营收达到400亿美元。鸿海系遍布美国,加州、内华达州、得克萨 斯州、特拉华尔州、新泽西州均有分公司。
作为鸿海系的控制人,根据鸿海年报资料,郭台铭作为董事长及CEO的工资收入,2006年 达902万新台币。2004年更高达4929万新台币。2001-2006年,郭台铭总计收入折合美元约 计235万美元。
据鸿海1995到2007年资料显示,郭台铭还多次出售所持有的鸿海股票套现,总计5.5亿美 元。
另外还有作为奖金下发的鸿海证券和现金奖励以及股票分红。
据举报人整理的公开资料,1999-2005年,郭台铭从鸿海拿到的现金部分即达32亿美元 之巨!证券部分则有1.95亿股之巨。这两项相加有38亿美元左右。
举报人称,与台湾地区法律不同的是,美国国税局征税时,依据是股票的市值而非面值。
据台湾地区媒体报道,郭台铭每年以当时市值出售鸿海股份,都声称是为了交税。而且出 售额跟当年他要交的个税相当。
举报人指出,台湾地区仅以鸿海每股面值(10元新台币)来课税,属于很低的征税。而美 国国税局所征税收将会是市值,也就是台湾征税额的10-30倍。
因此,郭台铭出售股份的现金显然够不上其上缴台湾地区及美国的两份税收。所以有逃税
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2009/7/27
郭台铭或陷美国
偷税门
最多被
的可能性。也就是说,举报人认为,郭台铭即便将这些年的5.5亿美元出售证券的收入全交 税,也够不上台湾和美国对其38亿美元收入的双重征税。
举报人认为,美国税法规定证券分红无需交税,但是郭台铭取得这些证券未花一分钱,不 属于免税范围。因此也属于逃税行为。
但是这逻辑推断显然有跳跃性,未能排除郭氏以现金方式缴纳税收。连接受此案的律师也 批示举报人另行补充证据。
举报人另外举出了郭氏家族其他人的收入。举报人称,郭台铭的亡妻林淑如在美国的社安 号码并未被上报死亡。据她说,这背后最大的驱动利益,就是郭台铭与林淑如共同拥有的财产 无需申报财产收入来源,及上缴美国遗产税收。林名下在台湾共有4幢房产。林也是鸿海主管 之一,1994-2004年共从鸿海获得9400万美元左右收入。
举报人认为,如果林是美国籍或者符合美国税法的规定,依据美国法律,房产及收入也属 于全球收入,也需要缴税。但是从林出售股份所获现金款项来看,她猜测林也象郭台铭一样, 未向美国国税局交税。
举报人还列举了郭台铭几位近亲的收入情况,并指称郭氏家族的这几位成员,跟郭台铭一 样在美国有庞大的业务运营,但是极可能并未向美国国税局缴税,构成逃税。
据本报记者所查找到的资料,鸿海也在美国国税局有前科,1998年至2002年,鸿海旗下 在美国新泽西设立的子公司E-STAR 向员工大量发放股份作为奖金,但是并未向会计师公司 普华永道提及。也并未向美国国税局交纳社会安全及医疗保健税,共计364.4万美元。
2007年,E-STAR以认罪方式(PLEA GUILTY)了结此案。判决时,E-STAR已缴纳 3200万美元罚金,总计将交纳9900万美元罚金,可见美国国税局惩罚之重。
据美国国税法条例,将按逃税额的140%-280%课以罚款,因此以举报人计算的1994至 2007年郭台铭的收入,将有可能被罚三十亿至一百亿美元。
本报记者致电鸿海科技集团发言人丁祈安,求证郭台铭国籍事宜,以及郭台铭是否有向美 国国税局交税的记录。至截稿时止,没有得到鸿海集团发言人的官方答复。
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本文地址:http://www.21cbh.com/HTML/2009-7-27/HTML_D5QOBTD2NQVP.html
郭台铭或陷美国“偷税门” 最多被罚100亿美元
21世纪经济报道记者 王康 纽约报道    2009-7-28 2:38:03
一位两岸三地风头强劲的成功人士; 一位经常上八卦新闻头条的风流人物。一位年入数亿 美元,旗下公司却不断有“血汗工厂”传言的慈善人士。
一个星期以来,集多种“形象”于一身的台湾第二大富豪郭台铭,突如其来的陷入了一 场“偷税门“。
美国当地时间7月27日凌晨,本报记者联系到了向美国国税局举报郭台铭偷漏税的几位举 报人之一。
她向记者独家提供了一份详细的举报资料。
值得注意的是,举报人并未举报鸿海集团逃税,而是举报郭台铭及其家族逃税。
据该举报人透露,该举报已经被美国国税局受理。并且代理此案的律师PAUL SCOTT已经 得到了国税局的口头通知该案案号——29-80513。该案共有三名举报人。第一举报人具有美 国国籍,符合美国国税局关于举报人的身份规定,是归化美国籍的台湾人,具有20年的律师经 验,也曾在台湾地区政界从政。
本报记者曾于当地时间7月24日向美国国税局公共事务部经理DEAN.PATTERSON查询此 案号。但是到截稿时间为止,国税局未有向记者回复该案号是否属实,以及郭台铭是否是一起 逃税案的参予者。本报特派记者向律师PAUL SCOTT致电查询,但是该律师的电话留言宣称将 于美国当地时间27日才回返办公室上班。
记者所查询的美国法院文件系统,虽然有关于鸿海及富士康的大量诉论案件,但是并无关 于此案的任何文件。
也就是说,作为此案中的核心人物,郭台铭,目前仍无法确认是否是一起逃税案的嫌疑 人,更不是一名被定罪的罪犯。
不过,此举报资料中,依然有大量关于郭台铭的“火爆”情节。也有诸多的疑点,需要未来更多的事实来厘清。
本报仅例举资料,供读者了解目前案件双方的争论所在。
台湾第二大富豪郭台铭是美国籍?
据举报资料,1984年,富士康国际注册于明尼苏达州。此公司现在仍然成立运营。
1999年郭台铭的哥哥, 郭台成注册鸿海科技,任主席。
2002年富士康科技在加利福尼亚州注册。
据举报人所接触到的一位富士康深圳工厂的经理透露,早在1988年郭台铭就已经全家移民 美国,而且是作为优先级投资移民移民美国。
经由美国的EB-5签证(该项目通过吸收投资移民创造就业),郭可以享受该签证带来的 好处:如果投资项目创造十个就业,项目申请人就可以拿到两年期的有限永久居民。如果两年 以后,投资项目依然存在,十位员工依然就业,签证申请人就可以申请永久居民,并最终成为 美国公民。
举报人声称,郭台铭拥有美国社会安全保障号码(为保证个人隐私后四位号码隐去,625-30-xxxx),但是同时具有台湾地区身份证号:A10230XXXX
另外一个证据是,据举报人接触到的另一位富士康高管透露,郭台铭持有外国护照,因此 可以方便来往各地。其中富士康在捷克开设的工厂就是他常去之地。
捷克法律规定,如果要在捷克成为公司负责人,必须要持有来自欧盟某国,或者美国,或 者其它与捷克签订过协议的国家护照。郭台铭是其在捷克设立公司的董事之一及负责人。但 是,台湾地区并无与捷克签订过类似协议。如果郭台铭持台湾地区护照去捷克,势必无法开设 捷克公司。
举报人声称,另外两个证据是,郭已病故的法定妻子林淑如拥有626-20-XXXX的美国社会 安全号码。
郭台铭的儿子(英文名JEFFERY GOU)自12岁即移居美国。郭台铭的女儿郭晓玲(英文 名SHIRLEY GOU)也拥有美国社会安全局号码609-36-XXXX。
据举报人称,郭台铭的两个哥哥郭台成和郭台强,也分别具有美国社会安全局号码。
不过,据本报特派记者查证,拥有社会安全号码并不能确认此人具有美国国籍,仅能证明 此人在美国曾经长期居住。因此,林淑如及郭台成等人是否具有美国国籍,目前尚无法证实。
据美国税法IRC §862(at)条款规定,如果郭氏家族成员拥有美国国籍,或者具有双重国 籍,或者拥有在美国的永远居留权(未入籍),其在全球的收入,就均属美国国税局的征税范 围。甚至,如果郭氏家族不拥有美国国籍及永久居留权,但是其源自美国的贸易及任何商业活 动的收入,也属于征税范围。
郭台铭的财富
举报人资料中称,郭台铭于1974年成立鸿海精密有限公司(HON HAI PRECISION),成 立资本新台币50万元。1991年鸿海上市。上市价40新台币每股。
据福布斯2007的统计数据,郭台铭拥有30%的鸿海股权。郭因此而名列全球第142位富 豪。
而郭台铭的哥哥郭台强所拥有的富士康国际(FOXCONN INTERNATIONAL)则在香港公 开上市。
鸿海系公司在2006年的营收达到400亿美元。鸿海系遍布美国,加州、内华达州、得克萨 斯州、特拉华尔州、新泽西州均有分公司。
作为鸿海系的控制人,根据鸿海年报资料,郭台铭作为董事长及CEO的工资收入,2006年 达902万新台币。2004年更高达4929万新台币。2001-2006年,郭台铭总计收入折合美元约 计235万美元。
据鸿海1995到2007年资料显示,郭台铭还多次出售所持有的鸿海股票套现,总计5.5亿美 元。
另外还有作为奖金下发的鸿海证券和现金奖励以及股票分红。
据举报人整理的公开资料,1999-2005年,郭台铭从鸿海拿到的现金部分即达32亿美元 之巨!证券部分则有1.95亿股之巨。这两项相加有38亿美元左右。
举报人称,与台湾地区法律不同的是,美国国税局征税时,依据是股票的市值而非面值。
据台湾地区媒体报道,郭台铭每年以当时市值出售鸿海股份,都声称是为了交税。而且出 售额跟当年他要交的个税相当。
举报人指出,台湾地区仅以鸿海每股面值(10元新台币)来课税,属于很低的征税。而美 国国税局所征税收将会是市值,也就是台湾征税额的10-30倍。
因此,郭台铭出售股份的现金显然够不上其上缴台湾地区及美国的两份税收。所以有逃税的可能性。
也就是说,举报人认为,郭台铭即便将这些年的5.5亿美元出售证券的收入全交 税,也够不上台湾和美国对其38亿美元收入的双重征税。
举报人认为,美国税法规定证券分红无需交税,但是郭台铭取得这些证券未花一分钱,不 属于免税范围。因此也属于逃税行为。
但是这逻辑推断显然有跳跃性,未能排除郭氏以现金方式缴纳税收。连接受此案的律师也 批示举报人另行补充证据。
举报人另外举出了郭氏家族其他人的收入。举报人称,郭台铭的亡妻林淑如在美国的社安 号码并未被上报死亡。据她说,这背后最大的驱动利益,就是郭台铭与林淑如共同拥有的财产 无需申报财产收入来源,及上缴美国遗产税收。林名下在台湾共有4幢房产。林也是鸿海主管 之一,1994-2004年共从鸿海获得9400万美元左右收入。
举报人认为,如果林是美国籍或者符合美国税法的规定,依据美国法律,房产及收入也属 于全球收入,也需要缴税。但是从林出售股份所获现金款项来看,她猜测林也象郭台铭一样, 未向美国国税局交税。
举报人还列举了郭台铭几位近亲的收入情况,并指称郭氏家族的这几位成员,跟郭台铭一 样在美国有庞大的业务运营,但是极可能并未向美国国税局缴税,构成逃税。
据本报记者所查找到的资料,鸿海也在美国国税局有前科,1998年至2002年,鸿海旗下 在美国新泽西设立的子公司E-STAR 向员工大量发放股份作为奖金,但是并未向会计师公司 普华永道提及。也并未向美国国税局交纳社会安全及医疗保健税,共计364.4万美元。
2007年,E-STAR以认罪方式(PLEA GUILTY)了结此案。判决时,E-STAR已缴纳 3200万美元罚金,总计将交纳9900万美元罚金,可见美国国税局惩罚之重。
据美国国税法条例,将按逃税额的140%-280%课以罚款,因此以举报人计算的1994至 2007年郭台铭的收入,将有可能被罚三十亿至一百亿美元。
本报记者致电鸿海科技集团发言人丁祈安,求证郭台铭国籍事宜,以及郭台铭是否有向美 国国税局交税的记录。至截稿时止,没有得到鸿海集团发言人的官方答复。
 

SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM 2009/07/20

Filed under: U.S macro economy — rogerwang2046 @ 20:15

FOR OFFICIAL USE ONLY UNTIL RELEASED BY THE

HOUSE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

STATEMENT OF NEIL BAROFSKY

SPECIAL INSPECTOR GENERAL
TROUBLED ASSET RELIEF PROGRAM

BEFORE THE
HOUSE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

July 21, 2009

Chairman Towns, Ranking Member Issa and Members of the Committee, I am honored to appear before you today to deliver to this Committee my quarterly report to Congress.

In the nine months since the Emergency Economic Stabilization Act of 2008 (“EESA”) authorized creation of the Troubled Asset Relief Program (“TARP”), the U.S. Department of the Treasury (“Treasury”) has created 12 separate programs involving Government and private funds of up to almost $3 trillion. From programs involving large capital infusions into hundreds of banks and other financial institutions, to a mortgage modification program designed to modify millions of mortgages, to public-private partnerships using tens of billions of taxpayer dollars to purchase “toxic” assets from banks, TARP has evolved into a program of unprecedented scope, scale, and complexity. Moreover, TARP does not function in a vacuum but is rather part of the broader Government efforts to stabilize the financial system, an effort that includes dozens of inter-related programs operated by multiple Federal agencies. Thus, before the American people and their representatives in Congress can meaningfully evaluate the effectiveness of TARP, not only must the TARP programs themselves be understood, but also TARP’s scope and scale must be placed into proper context with the other Government programs designed to support the financial system.

TARP IN FOCUS, AND IN CONTEXT

TARP, as originally envisioned in the fall of 2008, would have involved the purchase, management, and sale of up to $700 billion of “toxic” assets, primarily troubled mortgages and mortgage-backed securities (“MBS”). That framework was soon shelved, however, and TARP funds are being used, or have been announced to be used, in connection with 12 separate programs that, as set forth in Table 1 below, involve a total (including TARP funds, loans and guarantees from other agencies, and private money) that could reach nearly $3 trillion. Through June 30, 2009, Treasury has announced the parameters of how $643.1 billion of the $700 billion would be spent through the 12 programs. Of the $643.1 billion that Treasury has committed, $441 billion has actually been spent.

As massive and as important as TARP is on its own, it is just one part of a much broader Federal Government effort to stabilize and support the financial system. Since the onset of the financial crisis in 2007, the Federal Government, through many agencies, has implemented dozens of programs that are broadly designed to support the economy and financial system. The total potential Federal Government support could reach up to $23.7 trillion. Any assessment of the effectiveness or the cost of TARP should be made in the context of these broader efforts.

Total Potential funds subject to sigtarp oversight, As of 6/30/2009 ($ Billions)

Program

Brief Description or Participant

Total Projected
Funding at Risk ($)

Projected TARP
Funding ($)

Capital Purchase Program (“CPP”) Investments in 649 banks to date; 8 institutions total $134 billion; received $70.1 billion in capital repayments

$218.0

($70.1)

$218.0

($70.1)

Automotive Industry Financing Program (“AIFP”) GM, Chrysler, GMAC, Chrysler Financial; received $130.8 million in loan repayments (Chrysler Financial)

79.3

79.3

Auto Supplier Support Program (“ASSP”) Government-backed protection for auto parts suppliers

5.0

5.0

Auto Warranty Commitment Program (“AWCP”) Government-backed protection for warranties of cars sold during the GM and Chrysler bankruptcy restructuring periods

0.6

0.6

Unlocking Credit for Small Businesses (“UCSB”) Purchase of securities backed by SBA loans

15.0

15.0

Systemically Significant Failing Institutions (“SSFI”) AIG investment

69.8

69.8

Targeted Investment Program (“TIP”) Citigroup, Bank of America investments

40.0

40.0

Asset Guarantee Program (“AGP”) Citigroup, ring-fence asset guarantee

301.0

5.0

Term Asset-Backed Securities Loan Facility (“TALF”) FRBNY non-recourse loans for purchase of asset-backed securities

1,000.0

80.0

Making Home Affordable (“MHA”) Program Modification of mortgage loans

75.0

50.0

Public-Private Investment Program (“PPIP”) Disposition of legacy assets; Legacy Loans Program, Legacy Securities Program
(expansion of TALF)

500.0 – 1,000.0

75.0

Capital Assistance Program (“CAP”) Capital to qualified financial institutions; includes stress test

TBD

TBD

New Programs, or Funds Remaining for Existing Programs Potential additional funding related to CAP; other programs

131.4

131.4

Total

$2,365.0 – $2,865.0

$699.0

Note: See Table 2.1 in Section 2 for notes and sources related to the information contained in this table.

OVERSIGHT ACTIVITIES OF SIGTARP

Since its April Quarterly Report, SIGTARP has been actively engaged in fulfilling its vital investigative and audit functions as well as in building its staff and organization.

SIGTARP’s Investigations Division has developed rapidly and is quickly becoming a sophisticated white-collar investigative agency. Through June 30, 2009, SIGTARP has 35 ongoing criminal and civil investigations. These investigations include complex issues concerning suspected accounting fraud, securities fraud, insider trading, mortgage servicer misconduct, mortgage fraud, public corruption, false statements, and tax investigations. Two of SIGTARP’s investigations have recently become public:

  • Federal Felony Charges Against Gordon Grigg: On April 23, 2009, Federal felony charges were filed against Gordon B. Grigg in the U.S. District Court for the Middle District of Tennessee, charging him with four counts of mail fraud and four counts of wire fraud. The charges are based on Grigg’s role in embezzling approximately $11 million in client investment funds that he garnered through false claims, including that he had invested $5 million in pooled client funds toward the purchase of the TARP-guaranteed debt. Grigg pleaded guilty to all charges and is scheduled for sentencing on August 6, 2009.
  • FTC Action Against Misleading Use of “MakingHomeAffordable.gov”: On May 15, 2009, based upon an action brought by the Federal Trade Commission (“FTC”), a Federal district court issued an order to stop an Internet-based operation that pretended to operate “MakingHomeAffordable.gov,” the official website of the Federal Making Home Affordable program. According to the FTC’s complaint, the defendants purchased sponsored links as advertising on the results pages of Internet search engines, and, when consumers searched for “making home affordable” or similar search terms, the defendants’ ads prominently and conspicuously displayed “MakingHomeAffordable.gov.” Consumers who clicked on this link were not directed to the official website, but were diverted to sites that solicit applicants for paid loan modification services. The operators of these websites either purport to offer loan modification services themselves or sold the victims’ personally identifying information to others. SIGTARP is providing assistance to FTC during the investigation.

More than 50% of SIGTARP’s ongoing investigations were developed in whole or in part through tips or leads provided on SIGTARP’s Hotline (877-SIG-2009 or accessible at http://www.SIGTARP.gov). Over the past quarter, the SIGTARP Hotline received and analyzed more than 3,200 tips, running the gamut from expressions of concern over the economy to serious allegations of fraud.

SIGTARP remains committed to being proactive in dealing with potential fraud in TARP. For example, the previously announced TALF Task Force, which was organized by SIGTARP to get out in front of any efforts to profit criminally from the Term Asset-Backed Securities Loan Facility (“TALF”), has been expanded to cover the Public-Private Investment Program (“PPIP”). In addition to SIGTARP, the TALF-PPIP Task Force consists of the Inspector General of the Board of Governors of the Federal Reserve System, the Federal Bureau of Investigation, Treasury’s Financial Crimes Enforcement Network, U.S. Immigration and Customs Enforcement, the Internal Revenue Service Criminal Investigation Division, the Securities and Exchange Commission, and the U.S. Postal Inspection Service.

On the audit side, SIGTARP is in the process of completing its first round of audits. SIGTARP issued yesterday its first formal audit report concerning how recipients of Capital Purchase Program (“CPP”) funds reported their use of such funds. In February 2009, SIGTARP sent survey letters to more than 360 financial and other institutions that had completed TARP funding agreements through January 2009. Although most banks reported they did not segregate or track TARP fund usage on a dollar-for-dollar basis, most banks were able to provide insights into their actual or planned future use of TARP funds. For some respondents the infusion of TARP funds helped to avoid a “managed” reduction of their activities; others reported that their lending activities would have come to a standstill without TARP funds; and others explained that they used TARP funds to acquire other institutions, invest in securities, pay off debts, or that they retained the funds to serve as a cushion against future losses. Many survey responses also highlighted the importance of the TARP funds to the bank’s capital base, and by extension, the impact of the funds on lending. In light of the audit findings, SIGTARP renews its recommendation that the Secretary of the Treasury require all TARP recipients to submit periodic reports to Treasury on their use of TARP funds.

SIGTARP also has audits nearing completion examining the following issues: executive compensation restriction compliance, controls over external influences on the CPP application process, selection of the first nine participants for funds under CPP (with a particular emphasis on Bank of America), AIG bonuses, and AIG counterparty payments. In addition, SIGTARP is undertaking a series of new audits, as follows:

  • CPP Warrant Valuation and Disposition Process: The audit will seek to determine (i) the extent to which financial institutions have repaid Treasury’s investment under CPP and the extent to which the warrants associated with that process were repurchased or sold; and (ii) what process and procedures Treasury has established to ensure the Government receives fair market value for the warrants and the extent to which Treasury follows a clear, consistent, and objective process in reaching decisions where differing valuations of warrants exist. This audit complements a July 10, 2009, report by the Congressional Oversight Panel examining the warrant valuation process.
  • Follow-up Assessment of Use of Funds by TARP Recipients: This audit will examine use of funds by recipients receiving extraordinary assistance under the Systemically Significant Failing Institutions program, the Automotive Industry Financing Program, as well as insurance companies receiving assistance under CPP.
  • Governance Issues Where U.S. Holds Large Ownership Interests: The audit, being conducted at the request of Senator Max Baucus, will examine governance issues when the U.S. Government has obtained a large ownership interest in a particular institution, including: (i) What is the extent of Government involvement in management of companies in which it has made sizeable investments, including direction and control over such elements as governance, compensation, spending, and other corporate decision making? (ii) To what extent are effective risk management, internal controls, and monitoring in place to protect and balance the Government’s interests and corporate needs? (iii) Are there performance measures in place that can be used to track progress against long-term goals and timeframes affecting the Government’s ability to wind down its investments and disengage from these companies? (iv) Is there adequate transparency to support decision making and to provide full disclosure to the Congress and the public?
  • Status of the Government’s Asset Guarantee Program with Citigroup: The audit examining the Government’s Asset Guarantee Program (“AGP”) with Citigroup, based upon a request by Representative Alan Grayson, will address a series of questions about the Government’s guarantee of certain Citigroup assets through the AGP such as: (i) How was the program for Citigroup developed? (ii) What are the current cash flows from the affected assets? and (iii) What are the potential for losses to Treasury, the Federal Deposit Insurance Corporation, and the Federal Reserve under the program?
  • Making Home Affordable Mortgage Modification Program: This audit will examine the Making Home Affordable mortgage modification program to assess the status of the program, the effectiveness of outreach efforts, capabilities of loan servicers to provide services to eligible recipients, and challenges confronting the program as it goes forward.

SIGTARP’S RECOMMENDATIONS ON THE OPERATION OF TARP

One of SIGTARP’s oversight responsibilities is to provide recommendations to Treasury so that TARP programs can be designed or modified to facilitate effective oversight and transparency and to prevent fraud, waste, and abuse. SIGTARP details ongoing recommendations concerning PPIP, TALF, and tracking use of funds and provides an update on the implementation of recommendations made in previous reports. Two categories of recommendations are worth highlighting in particular:

Transparency in TARP Programs

Although Treasury has taken some steps towards improving transparency in TARP programs, it has repeatedly failed to adopt recommendations that SIGTARP believes are essential to providing basic transparency and fulfill Treasury’s stated commitment to implement TARP “with the highest degree of accountability and transparency possible.” With one new recommendation made in this report, there are at least four such unadopted recommendations:

  • Use of Funds Generally: One of SIGTARP’s first recommendations was that Treasury require all TARP recipients to report on the actual use of TARP funds. Other than in a few agreements (with Citigroup, Bank of America, and AIG), Treasury has declined to adopt this recommendation, calling any such reporting “meaningless” in light of the inherent fungibility of money. SIGTARP continues to believe that banks can provide meaningful information about what they are doing with TARP funds — in particular what activities they would not have been able to do but for the infusion of TARP funds. That belief has been supported by SIGTARP’s first audit, in which nearly all banks were able to provide such information.
  • Valuation of the TARP Portfolio: SIGTARP has recommended that Treasury begin reporting on the values of its TARP portfolio so that taxpayers can get regular updates on the financial performance of their TARP investments. Notwithstanding that Treasury has now retained asset managers and is receiving such valuation data on a monthly basis, Treasury has not committed to providing such information except on the statutorily required annual basis.
  • Disclosure of TALF Borrowers Upon Surrender of Collateral: In TALF, the loans are non-recourse, that is, the lender (Federal Reserve Bank of New York) will have no recourse against the borrower beyond taking possession of the posted collateral (consisting of asset-backed securities (“ABS”)). Under the program, should such a collateral surrender occur, TARP funds will be used to purchase the surrendered collateral. In light of this use of TARP funds, SIGTARP has recommended that Treasury and the Federal Reserve disclose the identity of any TALF borrowers that fail to repay the TALF loan and must surrender the ABS collateral.
  • Regular Disclosure of PPIF Activity, Holdings, and Valuation: In the PPIP Legacy Securities Program, the taxpayer will be providing a substantial portion of the funds (contributing both equity and lending) that will be used to purchase toxic assets in the Public-Private Investment Funds (“PPIFs”). SIGTARP is recommending that all trading activity, holdings, and valuations of assets of the PPIFs be disclosed on a timely basis. Not only should this disclosure be required as a matter of basic transparency in light of the billions of taxpayer dollars at stake, but such disclosure would also serve well one of Treasury’s stated reasons for the program in the first instance: the promotion of “price discovery” in the illiquid market for MBS. Treasury has indicated that it will not require such disclosure.

Although SIGTARP understands Treasury’s need to balance the public’s transparency interests, on one hand, with the interests of the participants and the desire to have wide participation in the programs, on the other, Treasury’s default position should always be to require more disclosure rather than less and to provide the investors in TARP — the American taxpayers — as much information about what is being done with their money as possible. Unfortunately, in rejecting SIGTARP’s basic transparency recommendations, TARP has become a program in which taxpayers (i) are not being told what most of the TARP recipients are doing with their money, (ii) have still not been told how much their substantial investments are worth, and (iii) will not be told the full details of how their money is being invested. In SIGTARP’s view, the very credibility of TARP (and thus in large measure its chance of success) depends on whether Treasury will commit, indeed as in word, to operate TARP with the highest degree of transparency possible.

Imposition of Information Barriers, or “Walls,” in PPIP

In the April Quarterly Report, SIGTARP noted that conflicts of interest and collusion vulnerabilities were inherent in the design of PPIP stemming from the fact that the PPIF managers will have significant power to set prices in a largely illiquid market. These vulnerabilities could result in PPIF managers having an incentive to overpay significantly for assets or otherwise using the valuable, proprietary PPIF trading information to benefit not the PPIF, but rather the manager’s non-PPIF business interests. As a result, SIGTARP made a series of recommendations in the April Quarterly Report, including that Treasury should impose strict conflicts of interest rules.

Since the April Quarterly Report, Treasury has worked with SIGTARP to address the vulnerabilities in PPIP, and SIGTARP made a series of specific recommendations, suggestions, and comments concerning the design of the program. Treasury adopted many of SIGTARP’s suggestions and has developed numerous provisions that make PPIP far better from a compliance and anti-fraud standpoint than when the program was initially announced.

However, Treasury has declined to adopt one of SIGTARP’s most fundamental recommendations — that Treasury should require imposition of an informational barrier or “wall” between the PPIF fund managers making investment decisions on behalf of the PPIF and those employees of the fund management company who manage non-PPIF funds. Treasury has decided not to impose such a wall in this instance, despite the fact that such walls have been imposed upon asset managers in similar contexts in other Government bailout-related programs, including by Treasury itself in other TARP-related activities, and despite the fact that three of the nine PPIF managers already must abide by similar walls in their work for those other programs.

If nothing else, the reputational risk that Treasury and the program could face if a PPIF manager should generate massive profits in its non-PPIF funds as a result of an unfair advantage, even if that advantage is not strictly against the rules, justifies the imposition of a wall. Failure to impose a wall, on the other hand, will leave Treasury vulnerable to an accusation that has already been leveled against it — that Treasury is using TARP to pick winners and losers and that, by granting certain firms the PPIF manager status, it is benefitting a chosen few at the expense of the dozens of firms that were rejected, of the market as a whole, and of the American taxpayer. This reputational risk is not one that can be readily measured in dollars and cents, but is rather a risk that could put in jeopardy the fragile trust the American people have in TARP and, by extension, their Government.

In addition to these recommendations, SIGTARP also makes additional recommendations, concerning other aspects of PPIP and concerning the use of ratings agencies in TALF.

Chairman Towns, Ranking Member Issa and Members of the Committee, I want to thank you again for this opportunity to appear before you, and I would be pleased to respond to any questions that you may have.