With TV and film production heading overseas, should Uncle Sam get into showbiz?

LOS ANGELES (TheWrap.com) – Is it time for Uncle Sam to go Hollywood?

With the exodus of film and TV production to foreign shores – and with the states’ incentives plans frequently out-gunned by countries outside the U.S. – there is some thought that it may be time for the federal government to step in.

The idea of the federal government helping out Hollywood while it is drowning in red ink is sure to raise hackles in some quarters. But filmmaker Michael Moore, for one, thinks it’s an idea whose time has come. And he’s not alone.

“That is one good thing the government can do in terms of being helpful and supportive, whether it’s filmmaking or other artistic endeavors,” Moore told TheWrap.

And he added, it’s also time for the states to stop fighting each other with differing tax-incentive plans. “I’ve always opposed New Mexico against North Carolina, or Michigan against L.A. I don’t like that. It’s not right. We’re Americans.”

Moore is not alone.

There are reasons to keep TV and film production from going abroad. The industry provides more than 2.4 million American jobs and adds nearly $ 180 billion to the U.S. economy annually and $ 15 billion in federal and state taxes, according to the Motion Picture Association of America.

Joe Chianese, executive VP at showbiz payroll giant Entertainment Partners Financial Solutions, believes the idea of getting the feds involved makes sense.

“You watched the debates and heard both President Obama and Gov. Romney talking about how it’s all about jobs, and they talked about how the manufacturing industry has basically been lost to overseas,” Chianese told TheWrap. “Well, we’re looking at the same sort of situation with the TV and film industry if something isn’t done.”

As he spoke to TheWrap, Chianese was about to set off for Japan, where government and film-industry officials were considering an incentive program that would align them with the more than 30 foreign countries trying to lure U.S. entertainment productions.

“You can’t blame filmmakers for taking their business elsewhere,” he said. “They’re taking their work overseas for the same reasons manufacturers are: It’s cheaper.”

Until recently, the federal government provided some help. Section 181 of the current tax code lowered the cost of capital for domestic film and TV production by providing immediate expensing on the first $ 15 million of production costs. To be eligible, 75 percent of the production had to occur in the U.S.

But it expired at the end of 2011.

California Republican Congressmen David Dreier has co-authored legislation to bring 181 back for another two years, but it is mired in Congress, along with a number of other tax-law extensions.

“Jobs are our No. 1 priority, and this bill will help more people find good jobs in California and across the U.S.,” said Dreier, who represents much of the San Gabriel Valley. “We need to create an environment that will keep entertainment productions here so that caterers, makeup artists and other small businesses that support them can create jobs too.”

Amy Lemistch, executive director of the California Film Commission, shares the world view on keeping show business here.

“We see California’s runaway production problem as a global issue,” she told TheWrap “not a state vs. state issue. People are going to the U.K. and Canada as much as they are going to other states.”

Smaller nations like Sri Lanka have begun offering breaks, and others like New Zealand have ramped up state-of-the-art production infrastructures. Even Iceland recently lured the HBO series “Game of Thrones” and the feature films “Noah” and “Prometheus.”

Particularly galling to California Film Commission officials is when productions set in the state are lured overseas. Recent examples would be the now-canceled Fox TV series “Alcratraz” and the L.A.-set movie “This Means War,” both of which shot in Vancouver.

Unlike Moore, Chianese, a tax specialist who worked with the commission when it was crafting its credits program, sees the federal incentives coming on top of state credits, rather than replacing them.

“You add, say, a 15 percent jobs credit, where companies would get 15 percent of the salary of every hire they make,” he said. “Add that on top of, say, the 25 percent credit California offers, and you’re up to 40 percent credit. That would make a real difference when it comes to keeping entertainment jobs here.”

Chianese said he’d be willing to see Section 181 go away in favor of more direct and immediate incentives. But with Obama and Congress focused on cutbacks and new taxes to pare down the national debt before the end of the year, the timing’s not good now.

It will always be an uphill fight, particularly with the House of Representatives controlled by the budget-conscious GOP.

“You’d face the same question you always do with incentives, which is: Why favor one industry over another?” Chianese said.

Not to mention major blowback from the segments of the right, which see liberal politicians as too tied to Hollywood already.

As for state credits, Hollywood breathed a sigh of relief in late September when California Gov. Jerry Brown signed a two-year extension of the state’s film and TV production-tax credit program. But no one expects it to be a game-changer when it comes to California’s fight to remain the world’s production capital.

New York, for example, is offering 30 percent tax credits, has $ 420 million available and recently added a 25 to 30 percent credit for post-production work. By comparison, California offers a 25 percent credit, has just $ 100 million available and has tougher eligibility rules.

Still, Lemisch said, the extension was critical.

“It sends a signal to the production community that California is committed in the short and long term,” she said. That’s vital, she pointed out, especially for the producers of TV dramas, which are the most desirable shows to land because they’re typically an hour long and shoot multiple episodes.

California’s output of TV dramas fell more than 11 percent last year, while While New York was hitting record production levels.

California does have some built-in advantages that aren’t going away. If you’re based in Hollywood, staying here can be cheaper than going out of state even with incentives, because you’re not paying to ship equipment and transport crews. The state’s infrastructure of studios and post-production facilities is still the most extensive.

But that doesn’t mean other states aren’t beating California to the production punch.

North Carolina – which made headlines when it enticed the feature film “Battlefield Los Angeles” to shoot there instead of in L.A. – is very busy these days. The first “Hunger Games” was filmed there, as was “Iron Man 3.’ NBC’s new drama “Revolution” and Showtime’s “Homeland” are in production there now.

Georgia, too, has seen a recent surge in feature filming. Paramount’s “Flight,” Fox’s “Parental Guidance” and Warner Bros.’ “Trouble With the Curve” all shot there.

(Steve Pond contributed to this report)

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Brain Lesions Linked to Women Who Suffer From Migraines

Dutch researchers studying headaches have linked a higher-than-normal incidence of brain lesions to women who suffer from migraines. However, they found no relationship between the severity, frequency, or number of migraines and the progression of the lesions.

Scientists from the Leiden University Medical Center followed subjects — patients who had migraines and brain lesions identified via MRI — for 10 years, according to Medical News Today. Around 15 percent of Americans suffer from migraines.

The researchers found that women who experienced migraines had a greater risk of a significant increase of deep white matter hyperintensities — brain lesions — than those without the headaches. The increase had no significant impact on poorer cognitive performance during follow-up, however.

Migraines come in various types. They can last from hours to days without relief. The Mayo Clinic says that as many as 90 percent of migraine sufferers have a family history of the condition. Among the most common signs are pain on one side of the head, auras, blurred or lost vision, diarrhea, and speech and language problems.

While experts believe that genetics and environmental factors play roles in migraine development, they really don’t know a lot about the cause of these headaches or how the pathology actually functions. As a result, there is no absolute cure for migraines, according to the National Institute of Neurological Disorders and Stroke. However, behavioral changes such as avoiding triggers and taking certain medications sometimes help prevent the attacks.

The Dutch research team wanted to learn if migraine patients experienced an increased prevalence of brain lesions nine years after each had an initial MRI. They hoped to learn whether the frequency of migraines was tied to the progression of brain lesions and if a progression was associated with cognitive decline. Lesions are associated with an elevated risk of ischemic stroke, cognitive decline, and atherosclerotic disease.

At the study’s inception, 295 subjects made up the group with migraines. The control group had 140 patients. Nine years later, 203 subjects from the migraine group and 83 from the control group underwent MRIs to look for the progression of brain lesions. Variables included age, sex, hypertension, level of education, and presence of diabetes.

In the migraine group, 77 percent showed a progression. For the control group, 60 percent experienced it. Researchers noted no relationship between migraines and lesion progression in male subjects.

I have had two headaches classified as atypical migraines. Five years apart, they had no identifiable triggers and lasted six weeks each before suddenly disappearing. By the time I could get an appointment for an MRI for each headache, the symptoms were gone. I wondered why I should bother. However, considering the link between brain lesions in women who suffer from migraines and the problems sometimes associated with the lesions, I’ll head toward that big tube if there’s a third headache.

Vonda J. Sines has published thousands of print and online health and medical articles. She specializes in diseases and other conditions that affect the quality of life.

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More to Petraeus story than meets the eye

It's the soap opera that shocked official Washington and ensnared a previously squeaky clean CIA director at a time when he was supposed to play a role in the accounting for a possible security misstep in Libya.

We don't know all the facts of why the FBI started investigating David Petraeus' biographer and how it ultimately led to his resignation.

But a growing number of conservative commentators contend that the resignation of former CIA Director David Petraeus is more than simple amends made for a personal wrong.

Charles Krauthammer, the Fox News and Washington Post commentator, believes the Petraeus' sex scandal is linked to a closed briefing that he gave two days after the attack that killed four Americans, including Ambassador Chris Stevens, in Benghazi, Libya.

Petraeus is set to speak about circumstances surrounding the tragedy again before a House committee on Friday and possibly at a Senate Intelligence Committee hearing, as well.

Petraeus' resignation from his post at the CIA in light of his extramarital affair raised the possibility that he would not testify. But on Wednesday morning, Sen. Dianne Feinstein, D-Calif., told ABC News Petraeus had agreed to do so.

Krauthammer said on Fox News Tuesday that ties he sees between what Petraeus' told the Congress in September and his fear for his future at the CIA make his affair with biographer Paula Broadwell important to the public.

"The reason that it's important is here's a man who knows the administration holds his fate in his hands, and he gives testimony completely at variance with what the Secretary of Defense had said the day before, at variance with what he heard from the station chief in Tripoli and with everything that we had heard," Krauthammer said. "Was he influenced by the fact he knew his fate was held by people in the administration at that time?"

Krauthammer's comments seemed to imply that the man who wrote the book on the wars in Afghanistan and Iraq lied to the House Intelligence Committee to save his skin when he said that the attack was a spontaneous mob spurred by the film, "The Innocence of Muslims."

At the time of his briefings, no one in the White House was aware of the FBI investigation into Petraeus' relationship with Broadwell.

As ABC News' Martha Raddatz reported on "World News with Diane Sawyer," the FBI got involved around May or June tracing emails from Broadwell to Jill Kelley in Tampa, Fla., but President Obama was not informed about Petraeus' indiscretions until November

Former New Jersey Superior Court Judge Andrew Napolitano wrote an op-ed for the Washington Times Wednesday in which he said Petraeus was clearly forced to resign his post in an effort to keep him quiet.

"In the modern era, office-holders with forgiving spouses simply do not resign from powerful jobs because of a temporary, non-criminal, consensual adult sexual liaison, as the history of the FDR, Eisenhower, JFK, LBJ and Clinton presidencies attest. So, why is Gen. Petraeus different?" Napolitano wrote. "Someone wants to silence him."

Napolitano offered no guesses as to what those pressuring Petraeus might be hoping to suppress.

Rudy deLeon, senior vice president for national security and international policy at the Center for American Progress, said the American people should allow Petraeus to "speak for himself."

"Anyone who knows Gen. Petraeus, and I've known him since my Pentagon days, knows that his integrity comes first, that he's not a political guy, and that being straightforward is what his considerable reputation has been based on," deLeon said.

In late October, Petraeus personally traveled to Libya to investigate the CIA personnel who were in Benghazi on the night of the attack.

Read more about that trip  HERE.

On the night Petraeus first announced his resignation, Krauthammer said the affair would spur the mainstream media to dig deeper into what transpired in Benghazi.

"It will now become the hottest story around and you can be sure that even the mainstream papers, which did not show any interest whatsoever in this story up to and into the election, are going to get on it," Krauthammer said. "It will unravel."

Implications that Petraeus was covering for the White House play into a larger theory floating around conservative circles that Obama administration officials like Petraeus and U.N. Ambassador Susan Rice purposely misled the American people following the attack in Benghazi.

Sens. Lindsey Graham, R-S.C., and John McCain, R-Ariz., told ABC's Jon Karl Wednesday that they would oppose Obama's hypothetical nomination of Rice to Secretary of State, with Graham saying he didn't "trust her."

President Obama responded to this opposition Wednesday at his first press conference since taking reelection, defending the U.N. ambassador.

"She made an appearance at the request of the White House in which she gave her best understanding of the intelligence that had been provided to her," Obama said. "If Sen. McCain and Sen. Graham and others want to go after somebody, they should go after me."

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In UK, Twitter, Facebook rants land some in jail

LONDON (AP) — One teenager made offensive comments about a murdered child on Twitter. Another young man wrote on Facebook that British soldiers should “go to hell.” A third posted a picture of a burning paper poppy, symbol of remembrance of war dead.

All were arrested, two convicted, and one jailed — and they’re not the only ones. In Britain, hundreds of people are prosecuted each year for posts, tweets, texts and emails deemed menacing, indecent, offensive or obscene, and the number is growing as our online lives expand.

Lawyers say the mounting tally shows the problems of a legal system trying to regulate 21st century communications with 20th century laws. Civil libertarians say it is a threat to free speech in an age when the Internet gives everyone the power to be heard around the world.

“Fifty years ago someone would have made a really offensive comment in a public space and it would have been heard by relatively few people,” said Mike Harris of free-speech group Index on Censorship. “Now someone posts a picture of a burning poppy on Facebook and potentially hundreds of thousands of people can see it.

“People take it upon themselves to report this offensive material to police, and suddenly you’ve got the criminalization of offensive speech.”

Figures obtained by The Associated Press through a freedom of information request show a steadily rising tally of prosecutions in Britain for electronic communications — phone calls, emails and social media posts — that are “grossly offensive or of an indecent, obscene or menacing character — from 1,263 in 2009 to 1,843 in 2011. The number of convictions grew from 873 in 2009 to 1,286 last year.

Behind the figures are people — mostly young, many teenagers — who find that a glib online remark can have life-altering consequences.

No one knows this better than Paul Chambers, who in January 2010, worried that snow would stop him catching a flight to visit his girlfriend, tweeted: “Crap! Robin Hood airport is closed. You’ve got a week and a bit to get your (expletive) together otherwise I’m blowing the airport sky high.”

A week later, anti-terrorist police showed up at the office where he worked as a financial supervisor.

Chambers was arrested, questioned for eight hours, charged, tried, convicted and fined. He lost his job, amassed thousands of pounds (dollars) in legal costs and was, he says, “essentially unemployable” because of his criminal record.

But Chambers, now 28, was lucky. His case garnered attention online, generating its own hashtag — (hash)twitterjoketrial — and bringing high-profile Twitter users, including actor and comedian Stephen Fry, to his defense.

In July, two and half years after Chambers’ arrest, the High Court overturned his conviction. Justice Igor Judge said in his judgment that the law should not prevent “satirical or iconoclastic or rude comment, the expression of unpopular or unfashionable opinion about serious or trivial matters, banter or humor, even if distasteful to some or painful to those subjected to it.”

But the cases are coming thick and fast. Last month, 19-year-old Matthew Woods was sentenced to 12 weeks in jail for making offensive tweets about a missing 5-year-old girl, April Jones.

The same month Azhar Ahmed, 20, was sentenced to 240 hours of community service for writing on Facebook that soldiers “should die and go to hell” after six British troops were killed in Afghanistan. Ahmed had quickly deleted the post, which he said was written in anger, but was convicted anyway.

On Sunday — Remembrance Day — a 19-year-old man was arrested in southern England after police received a complaint about a photo on Facebook showing the burning of a paper poppy. He was held for 24 hours before being released on bail and could face charges.

For civil libertarians, this was the most painfully ironic arrest of all. Poppies are traditionally worn to commemorate the sacrifice of those who died for Britain and its freedoms.

“What was the point of winning either World War if, in 2012, someone can be casually arrested by Kent Police for burning a poppy?” tweeted David Allen Green, a lawyer with London firm Preiskel who worked on the Paul Chambers case.

Critics of the existing laws say they are both inadequate and inconsistent.

Many of the charges come under a section of the 2003 Electronic Communications Act, an update of a 1930s statute intended to protect telephone operators from harassment. The law was drafted before Facebook and Twitter were born, and some lawyers say is not suited to policing social media, where users often have little control over who reads their words.

It and related laws were intended to deal with hate mail or menacing phone calls to individuals, but they are being used to prosecute in cases where there seems to be no individual victim — and often no direct threat.

And the Internet is so vast that policing it — even if desirable — is a hit-and-miss affair. For every offensive remark that draws attention, hundreds are ignored. Conversely, comments that people thought were made only to their Facebook friends or Twitter followers can flash around the world.

While the U.S. Supreme Court has ruled that First Amendment protections of freedom of speech apply to the Internet, restrictions on online expression in other Western democracies vary widely.

In Germany, where it is an offense to deny the Holocaust, a neo-Nazi group has had its Twitter account blocked. Twitter has said it also could agree to block content in other countries at the request of their authorities.

There’s no doubt many people in Britain have genuinely felt offended or even threatened by online messages. The Sun tabloid has launched a campaign calling for tougher penalties for online “trolls” who bully people on the Web. But others in a country with a cherished image as a bastion of free speech are sensitive to signs of a clampdown.

In September Britain’s chief prosecutor, Keir Starmer, announced plans to draw up new guidelines for social media prosecutions. Starmer said he recognized that too many prosecutions “will have a chilling effect on free speech.”

“I think the threshold for prosecution has to be high,” he told the BBC.

Starmer is due to publish the new guidelines in the next few weeks. But Chambers — reluctant poster boy of online free speech — is worried nothing will change.

“For a couple of weeks after the appeal, we got word of judges actually quoting the case in similar instances and the charges being dropped,” said Chambers, who today works for his brother’s warehouse company. “We thought, ‘Fantastic! That’s exactly what we fought for.’ But since then we’ve had cases in the opposite direction. So I don’t know if lessons have been learned, really.”

___

Jill Lawless can be reached at http://Twitter.com/JillLawless

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Marco Rubio talks 2016, Romney, Rice, immigration reform

Florida Sen. Marco Rubio at the 2012 Republican National Convention (Getty)

On Thursday in Washington, D.C., Florida Sen. Marco Rubio sounded very much like he's embracing his role as a rising star in the Republican Party, but he dismissed the notion that an upcoming visit to Iowa puts him on the presidential grid for 2016.

"My trip to Iowa has nothing to do with 2016," Rubio said during a wide-ranging interview at the Atlantic's Washington Ideas Forum. "I'm one of 100 senators."

Rubio noted that when he agreed to attend the Nov. 17 fundraiser for Iowa Gov. Terry Branstad he believed Mitt Romney would be the 45th president. Romney's loss in the election, he said, underscored the GOP's need to reconnect with the middle class. "If we don't, we'll have more days like last Tuesday. What makes America vibrant is a middle class. My dad is a bartender, my mom is a maid. ... [But] our country is not creating middle-class jobs" like it used to.

On Wednesday at the same forum, Republican Sens. John McCain and Lindsey Graham made headlines when they said they would do everything they could to block U.S. Ambassador Susan Rice from being appointed secretary of state should she be nominated for the position. Both have said Rice is "unqualified" and that she misrepresented the events leading up to the attack on the American Consulate in Benghazi, Libya, on Sept. 11.

On Thursday, Rubio took a more diplomatic tack, saying he would go into a confirmation hearing with an open mind and would not "prejudge" Rice.

Rubio did say, however, that questions about the attack in Benghazi would come up. "I think we need to know the truth," he said.

On the subject of the looming "fiscal cliff," Rubio said both Republicans and Democrats need to take responsibility. "The fiscal cliff is a complete and total congressional creation," he said. "It's bipartisan dumb."

Rubio, who lives in Miami, said it's also critical that the Republican Party not alienate Hispanic voters with a hard line on immigration. "Rhetoric is important," Rubio said. "We're speaking not about statistics, but about human beings."

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“Twilight Saga” ends with movie love letter to fans

LOS ANGELES (Reuters) – “Twilight” fans bid an emotional farewell this week to Bella, Edward and Jacob in “Breaking Dawn-Part 2,” the romantic book and movie franchise that ignited a pop culture infatuation with blood-sucking vampires and werewolves.

The tumultuous love triangle between human girl Bella Swan, vampire Edward Cullen and werewolf Jacob Black, that has gripped avid fans known as “Twi-hards” for seven years, comes to a tantalizing end as “Breaking Dawn-Part 2″ hits movie theaters around the world.

The “Twilight” film franchise, based on a series of novels by Stephenie Meyer, rocketed the three main stars, Kristen Stewart (Bella), Robert Pattinson (Edward) and Taylor Lautner (Jacob), into the spotlight and the first four films have grossed more than $ 2.5 billion at the worldwide box office.

For director Bill Condon, who shot both parts of “Breaking Dawn” together and split into two movies post-production, the fifth and final film was all about the fans – who get a surprise twist to the ending.

“The real challenge was to make sure it was a satisfying climax,” Condon told reporters. “The film opens with an overture of all the main scenes from all five movies, and at the end, I…brought (it) back to the spirit of the old movies.”

The movie pays homage to the angst-ridden teenage romance between Bella and Edward that was underscored by the off-screen real-life romance between Stewart, 22, and Pattinson, 26.

“Breaking Dawn-Part 2″ shifts the action from a love story to a family story, as the Cullen clan recruit their extended vampire family to protect Bella and Edward’s daughter Renesmee from an ancient vampire coven.

“I think it’s very sweet, especially the ending of it, I think it’s very close to the book as well. It seems to be that it’s really made for the fans,” Pattinson told Reuters.

GOING OFF BOOK

While the past four films have stayed true to the books, author Meyer and screenwriter Melissa Rosenberg came up with a plot twist that adds a major scene that may surprise movie-goers.

“(The action) is off screen in the novel because we only see what Bella sees, and this was just a way of making visual what some of the other characters might have seen,” Meyer told reporters.

“It does feel very surprising. There’s something new to see but to me it doesn’t seem like it’s going hugely off the page,” she added.

While the fourth film saw Bella’s human life draw to a conclusion when she died giving birth to a human-vampire hybrid baby with new husband Edward, “Breaking Dawn-Part 2,” sees Bella as a mother and a newly-transformed vampire.

“The coolest thing about vampire Bella is that I got to play her as a human for so long, and the special parts of each vampire are always informed by the great things that they were as a human and so I got to walk in those shoes,” Stewart told Reuters.

“Everything made total sense to me. I waited for so long (to play a vampire), once I finally got it, it was so comfortable, I couldn’t wait,” the actress added.

“The Twilight Saga,” first published in 2005, kicked off a wave of vampire or supernatural-themes books, films and TV shows including HBO’s “True Blood,” the CW TV network’s “The Vampire Diaries” and Richelle Mead’s “Vampire Academy” series of young adult novels.

As the sun sets on the franchise Meyer brought to life, the author said that while she didn’t rule out the possibility of finding more stories in the vampire-werewolf universe, she had closed the chapter on the Cullens.

“I don’t know if I’ll ever get back to these (stories). Someday I’ll write down what was going to happen next. It’s sad knowing I don’t have another party with the kids again, I really hope I have a chance to at least see my friends again,” she told Reuters.

(Reporting by Piya Sinha-Roy, editing by Jill Serjeant and Marguerita Choy)

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Canada’s Carney says rate hikes “less imminent”

TORONTO (Reuters) – Interest rate hikes have become less imminent than the Bank of Canada once expected, although rates are still likely to rise, central bank Governor Mark Carney said in an interview published on Saturday.

“Over time, rates are likely to increase somewhat, but over time, so a less imminent timing relative to our expectation,” Carney said in an interview with the National Post newspaper.

Canada’s economy rebounded better than most from the global economic recession, and the Bank of Canada is the only central bank in the Group of Seven leading industrialized nations that is currently hinting at higher interest rates.

But Carney has also made clear that there will be no rate rise for a while, despite high domestic borrowing rates that he sees as a major risk to a still fragile economy.

“We’ve been very clear in terms of lines of defense in addressing financial vulnerabilities,” he said in the interview. “And the most prominent one, obviously, in Canada, is household debt.”

He said the bank was monitoring the impact of four successive government moves to tighten mortgage lending, which aimed to take the froth out of a hot housing market without causing a damaging crash in prices.

A Reuters poll published on Friday showed the majority of 20 forecasters believe the government has done enough to rein in runaway prices, preventing the type of crash that devastated the U.S. market.

The experts expect Canadian housing prices to fall 10 percent over the next several years, but they do not expect the recent property boom to end in a U.S.-style collapse.

(Reporting by Janet Guttsman; Editing by Vicki Allen)

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Multibillion-dollar health fund fires watchdog

GENEVA (AP) — The board of a $ 23 billion health fund trying to restore its image fired its top internal watchdog, whose office has been uncovering financial losses.

The Global Fund to Fight AIDS, Tuberculosis and Malaria said in a statement Thursday that its board had terminated the employment of Inspector General John Parsons “after a careful review of his performance, which was found to be unsatisfactory.” It said this was based on performance and independent peer reviews and a report by the board committee that oversees Parsons’ office.

The board said it would soon name an interim inspector-general and expects to find a permanent replacement within six months.

The fund also is selecting a new executive director Thursday from among four finalists. The previous director resigned because of a review panel that the fund created after Associated Press articles last year about financial losses. The articles led some donors to withhold funding, and the fund scaled back spending.

Those losses were uncovered by the office that Parsons had headed since 2007. The office — whose teams of auditors and investigators are supposed to function independently — was created in 2005 at the urging of the fund’s biggest donor, the United States.

Before joining the Global Fund, Parsons, a British citizen, had gained more than 35 years of experience in audits, investigations and evaluations and had served as a director at U.N. agencies UNESCO and UNICEF. He headed Britain’s National Audit Office from 1989 to 1996.

Parsons could not immediately be reached for comment Thursday.

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Beating tax cheats key to Italy’s recovery plan

ROME (AP) — Good plumbers may be worth their weight in gold, but when one was spotted zipping around in a bright red Ferrari, Italian tax police were fast on his trail.

Stamping out entrenched tax evasion is crucial to Premier Mario Monti‘s quest to keep Italy from succumbing to the European debt crisis, and it is critical to fellow eurozone members in more dire straits, such as Greece and Spain — which are also notorious for making cheating the taxman a way of life.

Indeed, Greece’s international rescue creditors have been pressing Greece for two years to reform its ailing tax system, citing poor collection as a key factor keeping the country mired in crisis. In Spain, where tax fraud is rampant, as much as €90 billion ($ 150 billion) is lost each year to tax fraud — the equivalent of the country’s national debt, according to Spain’s main tax inspectors union.

To succeed in Italy, authorities will have to catch the legions of self-employed and small business owners who brazenly lie about their earnings, like the plumber in the eastern town of Pescara, who socked away undeclared income in 30 bank accounts, or a successful pastry shop owner in Calabria, who on his tax return claimed he was earning next to crumbs.

And those are the less sophisticated schemers.

Tax police officials say that wealthy Italians, their companies and foreigners who make their money in Italy are increasingly trying to avoid taxes by using such strategies as falsely declaring that their base of operations or residence is abroad.

Another daunting challenge is the so-called “submerged” economy, a term embracing Italians who declare only a fraction or nothing at all of their earnings — and dentists, lawyers, doctors and other big-earning professionals are frequently among the worst offenders.

Tax evasion of all types in Italy totals about euros 240 billion ($ 300 billion), or 15 percent of the country’s gross domestic product of €1.6 trillion ($ 2 trillion), tax police estimate. Winning the war on tax cheats could therefore more than wipe out the country’s budget deficit, which is expected to increase to euros 42 billion ($ 53 billion), or 2.6 percent of GDP this year. That would start knocking away at the nation’s colossal public debt of €2 trillion ($ 2.5 trillion), or 125 percent of GDP.

But “big international frauds are up,” lamented Lt. Col. Gianluca Campana, in charge of the income tax unit revenue protection office at the Guardia di Finanza, Italy’s financial police corps which reports to the Economy Ministry.

The entrenched practice by many cafes, eateries, hair dressers and similar small business of neglecting to give customers mandatory cash register receipts commonly grabs the attention in crackdowns on tax evasion in Italy.

But, cautioned Campana, “one false (big business) invoice can equal no cash register receipts for coffees for two months.”

Over all of 2011, the total of non-declared income discovered by tax police amounted to some €50 billion ($ 65 billion), of which some 20 percent was due to international tax evasion, he said. By comparison, in the first nine months of this year, tax police discovered some €40 billion in undeclared income, with 30 percent of that blamed on international tax evasion, Campana said.

With the economic crisis shrinking bottom lines, and Italy increasingly on the hunt for big-time evasion, especially by big businesses, “there is a tendency to move capital abroad, using maneuvers apparently legal but which really are not,” Campana said. A classic technique consists of declaring one’s formal residence abroad in tax havens like Monte Carlo. Also common are companies that clearly have their business base in Italy but claim it is abroad in countries with far lower tax brackets.

Campana is armed with three degrees, including a masters in tax law from Milan’s Bocconi University, the prestigious economics institute formerly headed by Monti. He brings skills to this specialized police corps that are as finely tuned as sharp-shooting.

“We are going after the big cases (of evasion) in order to rake in more money,” Campana said.

The Ferrari-driving plumber hid some €2 million ($ 2.6 million) of his income over several years by giving his customers invoices — for jobs ranging from fixing leaks to installing new bathrooms — for the actual cost of his work, but kept a second, false registry of much lower figures for tax purposes, said Pescara tax police Col. Mauro Odorisio.

Armed with a 2008 law, authorities confiscated assets belonging to the plumber equivalent to the approximately €1 million ($ 1.3 million) they contend he owed in taxes, Odorisio said.

With Ferraris in red or yellow, and snazzy Porsches parked inside, Guardia di Finanza garages practically resemble luxury car dealerships.

The cars get sold to help recoup unpaid taxes and interest.

Overall, tax revenues in Italy were up by 4.1 percent, says the Economy Ministry, when comparing figures from the first eight months of 2012 with the same period in 2011, but much of that was due to new taxes, and not necessarily a revolution in citizens’ consciences about tax obligations.

Monti’s recipe relies heavily on taxes that are nearly impossible to avoid, such as sales tax. He also revived a property tax that his populist predecessor, Premier Silvio Berlusconi, had abolished in a promise to voters.

The ministry’s report last month noted that the property tax figured prominently in the “tendency toward growth” in tax revenues. But sales tax revenue dropped slightly despite higher sales tax rates, indicating that consumers were feeling the pinch of the stagnant economy.

The heavier fiscal burden seems to have driven some honest citizens to rebel against the engrained culture of tax evasion.

The number of phone calls from the public to the tax police’s hotline to report stores, restaurants and other businesses that didn’t give customers sales receipts has almost doubled in the first nine months of this year, compared with the same period in 2011.

It’s apparently dawning on Italians that shirking taxes in the end only costs them, in terms of ever-higher levies and cutbacks in public services.

Citizens now increasingly understand that “the lack of revenue over time caused by tax evaders forced the government to stiffen the tax burden on categories where you can’t evade taxes,” Campana said, referring to workers whose taxes are deducted from paychecks. Another area where evasion is close to impossible is real estate ownership.

Odorisio noted the crackdown included extending the statute of limitations on tax evasion from six to eight years and establishing prison as a penalty for big-time evasion.

Other weapons include a measure promoted by the Monti government that limits cash payments to no more than €1,000. Paying by credit card or personal check is a relatively new habit for Italians, who are used to carrying wads of cash in their pockets, even for big-ticket items like home renovations or vacations.

Past governments in Italy sometimes resorted to tax amnesties to try to boost revenues. But critics, contending some Italians counted on such a possibility, described that strategy as only perpetuating the tax cheat culture.

Spain hasn’t had much success with its own tax amnesty introduced by the conservative government in March. That measure, expiring soon, allows undeclared assets or those hidden in tax havens to be repatriated by paying a 10 percent tax without criminal penalty. The amnesty is estimated to recuperate far less than the expected €2.5 billion ($ 3.25 billion).

Greece saw demands for tax system reform from international rescue creditors added on to conditions for future rescue loan payments, as Greek authorities acknowledged that a high-profile campaign to crack down on major tax cheats has produced disappointing results.

The cash-strapped government over the last 10 months recovered just €19 million ($ 25 million) of the €13 billion ($ 17 billion) of arrears on the list. A prominent Greek magazine publisher recently tapped anger over rich tax evaders by publishing a list of people allegedly holding Swiss bank accounts. He was acquitted this month of breaching privacy laws.

Meanwhile, Italian tax police are chasing after cheats who have shown some of the most chutzpah about not paying their fair share of taxes, like the Padua woman who advertised on the Internet that she had a couple of “cash-only” bed and breakfast rooms to let.

Tax police discovered the lodgings are part of an apartment in public housing she was given after falsely declaring she was indigent on her annual tax forms.

____

AP reporters Derek Gatopoulos in Athens and Ciaran Giles in Madrid contributed to this report.

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Facebook stock up as lock-up expires on largest block of shares

SAN FRANCISCO (Reuters) – Shares of Facebook Inc jumped 10 percent in early trading on Wednesday, even as the biggest block of shares held by insiders became eligible for sale for the first time since the social media company’s disappointing debut in May.

In heavy morning trading, Facebook gained $ 2.02 to $ 21.89.

“While the lock-up is expiring, there is nothing requiring anybody to sell,” said Tim Ghriskey, chief investment officer at Solaris Group in Bedford Hills, New York. “Given the low price, these long-term holders are deciding to hold the stock and that is lifting it here as the fear of the expiration subsides.”

Roughly 800 million Facebook shares could begin trading on Wednesday after restrictions on insider selling were lifted on the biggest block of shares since the May initial public offering.

The lock-up expiration greatly expanded the 921 million-share “float” available for trading on the market until now.

Facebook, the world’s No. 1 online social network, became the only U.S. company to debut with a market value of more than $ 100 billion. But its value has dropped nearly 50 percent since the IPO on concerns about its long-term money-making prospects.

Insider trading lock-up provisions started to expire in August, and the rolling expirations have added to the pressure on Facebook’s stock.

Pivotal Research Group analyst Brian Wieser said he didn’t expect Facebook insiders to sell all of their shares as the lock-ups expired.

“I would expect heavy volumes over the next few weeks, but not undigestible volumes,” said Wieser. By his estimates, roughly 486 million of the nearly 800 million newly freed Facebook shares will be sold.

There is some evidence that the heavy interest in shorting the stock was dissipating, given the poor performance since it first sold shares in May.

According to Markit’s Data Explorers, about 28 percent of the shares available for short-selling were being borrowed for that purpose, down from a high of more than 80 percent in early August.

Similarly, SunGard’s Astec Analytics, which also tracks interest in shorting, noted in a comment on Tuesday that the cost of borrowing Facebook shares is down more than 50 percent since the beginning of the month.

“Everything would seem to indicate the market is losing its appetite to short Facebook,” wrote Karl Loomes, market analyst at Astec.

Several members of Facebook’s senior management have sold millions of dollars worth of shares in recent weeks through pre-arranged stock trading plans as lock-up restrictions expired.

Chief Operating Officer Sheryl Sandberg has sold roughly 530 million shares this month, netting just over $ 11 million, though she still owns roughly 20 million vested shares in Facebook.

In August, Facebook board member Peter Thiel sold roughly $ 400 million worth of Facebook stock, the majority of his stake, when an earlier phase of lock-up restrictions expired.

Facebook’s 28-year-old chief executive, Mark Zuckerberg, has committed to not sell any shares before September 2013.

(Reporting by Alexei Oreskovic; Editing by Jeffrey Benkoe)

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