The Growing Abuse of Transfer Pricing by TNCs

By Kavaljit Singh | Commentary | May 28, 2007

The large-scale tax avoidance practices used by transnational corporations (TNCs) came into public notice recently when the giant drug corporation, GlaxoSmithKline, agreed to pay the US government $3.4 billion to settle a long-running dispute over its tax dealings between the UK parent company and its American subsidiary. This was the largest settlement of a tax dispute in the US. The investigations carried out by Internal Revenue Service found that the American subsidiary of GlaxoSmithKline overpaid its UK parent company for drug supplies during 1989-2005 period, mainly its blockbuster drug, Zantac. These overpayments were meant to reduce the company’s profit in the US and thereby…

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Southern Transnationals: The New Kids on the Block?

By Kavaljit Singh | Commentary | May 1, 2007

The mid-1990s witnessed the dramatic emergence of transnational corporations from the developing world. Although much of the investment by these corporations is concentrated in other developing countries (South-South), they are increasingly investing heavily in developed countries (South-North) as well. The South-South and South-North FDI flows are growing much faster than the traditional North-South FDI flows. However, 87 per cent of the total outward FDI flows in 2004 originated from just 10 developing countries.

In terms of foreign assets, the majority of top 50 Southern TNCs are headquartered in Asia (32), followed by Latin America (11) and Africa (7, all of them in South Africa). What…

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The Globalization of “Locusts”

By Kavaljit Singh | Commentary | May 30, 2005

In April 2005, Mr. Franz Müntefering, Chairman of the Social Democratic Party (SPD), the dominant party in Germany’s ruling coalition, described private equity funds and hedge funds as “swarms of locusts that fall on companies, stripping them bare before moving on.” He told a German newspaper that “some financial investors don’t waste any thoughts on the people whose jobs they destroy.” Later on, the German press published an internal SPD memo listing a dozen “locusts” (including Goldman Sachs and Kohlberg Kravis Roberts & Co.) whose short-term profit-maximizing strategies have received considerable public criticism. Several commentators discounted the remarks of Mr. Müntefering as part of rabble-rousing campaign…

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Citi Never Sleeps

By Kavaljit Singh | Commentary | February 8, 2005

From a market capitalization perspective, Citigroup ($243 billion in mid-June 2004) is the biggest financial services group in the world. With $1264 billion in assets, the US-based bank is not just a big bank but provides well-diversified financial services ranging from investment banking to insurance in more than 100 countries. According to The Banker, Citigroup earned pre-tax profits of $26.3 billion in 2003, up 15 per cent from previous year.

Despite its spectacular growth and performance, Citigroup has been in the news for its wrongdoings. Given the scale of financial scandals and market manipulations Citigroup have been recently involved, nothing appears more appropriate than its popular…

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Speculating on Black Gold

By Kavaljit Singh | Commentary | December 7, 2004

Since early 2004, international crude oil prices have witnessed a massive upsurge. For several days in the second half of 2004, oil prices remained at US$50 a barrel. Although oil prices have declined in the past few weeks, yet they still remain on a higher side. Almost 70 percent rise in oil prices in the past one year has caused widespread panic across the world. The price hike shocked the OPEC (Organization of Petroleum Exporting Countries) which expressed its inability to calm down the markets by increasing oil supply. Such an unpredictable rise in oil prices could have devastating consequences for the world economy which cannot cope…

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