We noted with considerable interest and dismay a Bloomberg item, "Bear Stearns Caymans Filing May Hurt Bankrupt Funds' Creditors."
According to the item, "Bear Stearns Cos.' decision to liquidate two bankrupt hedge funds in the Cayman Islands instead of New York may limit creditors' and investors' ability to get their money back."
The item goes on, "While most of their assets are in New York, the funds filed for bankruptcy protection July 31 in a court in the Caymans, where they are incorporated."
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Talk about protecting the clients' interests as a richly rewarded "custodian"!
It reminds us of the current TV advertisement in which the customers of a bank are robbed by their bank manager who shouts, "Get down on the floor!"
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Hedge fund owners are very highly paid. We have no objection to that.
But, when a hedge fund goes offshore to evade the legal, American protections offered to its clients, we are shocked. We feel that such conduct is immoral, even for corporate lawyers.
However, Bear Stearns only went offshore for part of the deal.
As the Bloomberg article reported, "The bank [Bear Stearns] also used a 2005 bankruptcy law to ask a U.S. judge in Manhattan to block all lawsuits against the funds and protect their U.S. assets during the Caymans proceedings."
So, it appears that, in order to shield themselves from their clients (for whom they had lost 100s of millions of dollars) Bear Stearns did not merely go offshore, but cherry-picked between U.S. domestic and offshore legal jurisdictions to work against the interests of their clients.
Talk about integrity, morality and the American Way!
Of course, the rot, as it so often does, started at the top.
In order to deny prisoners of war their internationally recognized legal protections under the Geneva Convention and U.S. citizens their inherent protections under the law, our government established an illegal looking prison, offshore at Guantanamo Bay.
Also included in this neo-con dragnet, were citizens of allied nations.
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Today the Financial Times (FT) ran a front page item stating, "U.K. seeks U.S. detainees." This of course, was the latest in a series of repeated requests that have embarrassed the British government at home and helped to cause Tony Blair to lose the office of Prime Minister.
The FT article continued, "Britain has asked the U.S. to release five U.K. residents held at Guantanamo Bay in a policy reversal that could mark a tougher stance on the Bush administration's detention policy."
The frightening message for all our citizens is that neither our government nor big business is embarrassed to go offshore to circumvent the laws of our land.
In our view, this bodes ill for all of us over the long-term and must be stopped in the interest of law and order.
Editor's note:
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