Branson Joins Buffett’s Charitable Pledge
(Bloomber News) The first billionaires from outside the U.S. today announced they would donate at least half of their wealth to philanthropy, joining the Giving Pledge initiative started by Warren Buffett and Bill and Melinda Gates.
The twelve new signatories include U.K. entrepreneur Richard Branson, Russian nickel and media mogul Vladimir Potanin and India’s software magnate Azim Premji. A total of 105 families from nine countries have now signed the pledge.
“I genuinely believe that wealth should work for the public good,” Potanin said in a letter to the Giving Pledge. “The decision I made is not just an attempt to be remembered as a philanthropist. I also see it as a way to protect my children from the burden of the extreme wealth, which may deprive them of any motivation to achieve anything in life on their own.”
The other new participants announced were John Caudwell, Chris and Jamie Cooper-Hohn, Andrew and Nicola Forrest, Mo Ibrahim, Patrice and Precious Motsepe, Victor Pinchuk, Hasso Plattner, David Sainsbury and Vincent Tan Chee Yioun.
Members of the Giving Pledge commit to give away at least half their wealth to charitable organizations and philanthropic causes. Co-founder Buffett, 82, is the fourth-richest person on the planet with a net worth of $53.5 billion, according to Bloomberg’s daily ranking. Gates, 57, has a fortune of $66.2 billion.
“I am excited about the conversations and ideas that will happen thanks to this impressive group of international philanthropists,” Gates, the world’s second-richest person, according to the Bloomberg Billionaires Index, said in the statement.
Branson, the founder of Virgin Group Ltd., said his family will invest in “entrepreneurial approaches to help make a difference in the world” when they take their wealth out of Virgin’s airline, media and other holdings.
“‘Stuff’ really is not what brings happiness,” Branson said in his letter. “Family, friends, good health and the satisfaction that comes from making a positive difference are what really matters. Happily our children, who will be our principal heirs, agree with me on this.”
Hedge Fund Managers Flock To Bermuda Tax Haven
(Bloomberg News) Last year, about $450 million belonging to top executives at billionaire hedge fund manager John Paulson’s New York firm took a quick round trip to Bermuda.
In April, the executives sent the money to a reinsurance company that they’d set up on the island 650 miles off the North Carolina coast. By June, the Bermuda company, which has no employees and sells far less reinsurance than the industry norm, had sent all the cash back to New York, to be invested in Paulson & Co. funds.
By recycling the funds through Bermuda-based Pacre Ltd., the Paulson executives are positioned to legally exploit a little-known tax loophole, reduce their personal income taxes and delay paying the bill for years.
“These types of reinsurance companies are permitting U.S. taxpayers to defer -- indefinitely -- U.S. tax,” said David S. Miller, a tax lawyer at Cadwalader Wickersham & Taft LLP. For some, he said, it’s “an unjustified benefit.”
A decade after the U.S. Internal Revenue Service threatened to crack down on what it said were abuses by hedge-fund backed reinsurers, more high-profile money managers are setting up shop in tax havens. Paulson, SAC Capital Advisors LP’s Steven A. Cohen and Third Point LLC’s Daniel Loeb have started Bermuda reinsurance companies since 2011, following a similar Cayman Islands venture by Greenlight Capital Inc.’s David Einhorn.
Other top money managers, including some in London, are hiring advisers to explore setting up reinsurance companies in Bermuda, said Timothy Faries, an insurance lawyer at Appleby, one of the island’s largest law firms.
Fund managers are “trying to find a way to have a vehicle that can go offshore and avoid paying taxes,” said William Berkley, founder of W.R. Berkley Corp., a Greenwich, Connecticut-based insurer. “You have one company that does it and nobody pays attention. You now have four or five and it’s likely to get more people’s attention.”