Jens Wiesner

Student ID: 62735010410022                                              Chicago

 

 

 

 

 

 

Seminar

Law of Nationbuilding

“Charitable trusts in U.S. and Germany as vehicles for financing insurgencies, such as a possible Orange Revolution in Belarus and a possible insurgency in Tibet”

_____________________________________________________

Prof. Henry H. Perritt, Jr.

 


 

A.     Identify key issues for financing insurgencies

What are the key requirements to finance insurgencies? On the first glance, the answer to that question might seem completely trivial: You need money! But as a matter of fact, the answer to that question is a lot more complicated and will depend highly on the circumstances under which the insurgency will take place. The answer to that question therefore does not only depend on the political system where the insurgency shall take place but also on questions of economics, geopolitics and international and domestic law.

A first approach to answer this question is thus to identify common key facts that apply to any insurgency – at least to a certain extent. After these key facts are identified and explained more thoroughly the answer is refined later on when the author applies these answers to two hypotheticals.

Generally speaking, financing an insurgency is not very different from financing a corporation. Of course the return on investment is different but the main ideas remain the same. After a planning phase there is the need to raise the money and distribute it in the appropriate ways.

Three aspects are crucial to a successful insurgency. First of all one needs to have an entity (be it a natural person or a corporation) with which the insurgents can identify themselves. If possible, this entity should not only appeal to the insurgents but also the donors and other, not too closely related, persons in order to affect public opinion positively for a better standing among the common people. Second it is necessary to have means of raising money through an elaborate network. Elaborate in this case means that it will meet the specific needs and interests of the insurgency. How this network is set up and run may also depend on the form of entity one chooses. Third it is of high importance to be able to distribute the money through the right channels.

With respect to the entity, one may choose from a vide variety of legal entities, each having its advantages and disadvantages. What is most appropriate entity depends on the insurgency itself. Nevertheless the entity must fulfill some minimum standards. The entity must be suitable to represent the insurgents’ needs and interests, especially in the media, and be suitable to promote the cause. ”Public opinion” plays a major role in the fundraising process. This role is not only limited to the target contributor group but must be understood in a broader manner. The less resistance the insurgency experiences from other groups in society, the more it can focus on its goals. The entity should limit potential liability of any connected party, be it the insurgents, the board of directors, the related commercial institutions (especially private banks) or the donors. The probability of any civil or criminal liability, especially if the insurgency becomes violent, is a factor that should not be underestimated. Every day donors are usually willing to give money on the basis that they will not be held liable for their actions. Especially those donors who are sympathetic to the insurgency’s cause but do not have a direct personal stake in the outcome might be reluctant to give money if there is any chance of liability.

The entity should be set up in a way that in can operate over national borders. Since insurgencies will most likely depend on money distributions from all over the world, the entity must be able to engage in international transactions.

Setting up the fundraising network is not only a time consuming task but also should be based on further empirical knowledge regarding an optimal structure. Once again, it is impossible to give any absolute answer what the optimal structure would be but there are certain key factors that influence the fundraising process significantly. Therefore the education of those people concerned with fundraising is necessary as well as the involvement of as many people as possible to enlarge the network step by step.

The third and the last requirement – distributing the money – must be approaches separately since the distribution of the money is not merely an internal corporate problem but is related to external problems, such as anti-money-laundering legislation as well. Distributing money in a connected and globalized world might seem like a minor problem. When it comes to question of buying weapons, however, the ways of the money might have to be concealed and the identities of those distributing the money protected. This is even clearer when one looks at insurgencies in countries where the banking system is under control of the attacked regime. It is apparent that one cannot simply transfer funds to a bank account in that country since there is the danger of forfeiture of the money. The distribution of the money therefore needs to be assessed carefully.

B.      Questions of fundraising

As pointed out above, the fundraising process is one of the three important aspects to finance an insurgency successfully. Fundraising involves a variety of different aspects:  Identify possible donors and assess the likelihood of their contribution, train people to approach these donors successfully and set up a network that will produce more money then it costs to sustain itself.

1.      Identifying possible donors

The first step in the fundraising process is to identify possible donors and estimate the likelihood and magnitude of their contribution. These donors can be classified into different groups, depending on their own stake in the outcome and their personal involvement in the insurgency. One can generally distinguish among three different groups.[1] This differentiation, however, is nominal. The suggested criteria try to create a scale on which one tries to measure the “affection” or “sympathy” of the donor towards the cause and according to this scale tries to put each prospective donor into a group. Since all of the suggested criteria are subjective[2] and since there is no way to draw a concrete distinction on given subjective criteria to form distinct groups the attempt to create distinct groups is futile, since these groups will overlap considerably. One should more focus on the reason for the differentiation. The reason is to identify qualifying prospects. As the affection in each prospect will vary due to multiple factors, the question “How to approach the prospect individual?” must be answered on a case to case basis anyway. This does not mean that one can not use standardized information at all but it rather means that these standardized information have to come with a personalized explanation to achieve the best result. To achieve this one has to create a message that will resonate with the particular donor. Recognizing this fact, a rough description and differentiation between three groups is sufficient;

 

First, there are those that are directly affected by the insurgency, such as inhabitants of the insurgents’ country or nationals living in exile. These people have a strong emotional connection to the country itself and might feel strongly towards the insurgents’ goal in a positive or a negative way depending on how they are related to the current regime. In case they sympathize with the insurgents’ goals, a contribution is very likely. Nevertheless it is crucial to keep a close connection to these people since there might be different group striving for the same goals and these groups will be competing for these nationals to include them into their own fundraising network. One could argue that is does not make any difference in what fundraising network the nationals are integrated, since the money is being spent for the same purpose: the insurgents’ goal. On the other hand the different insurgent groups will have different agendas, despite the fact that they are striving for the same goal. This means the money, depending on what group it is given to, will be spent in different areas, depending on the group´ s agenda. Furthermore the larger the network of one group is, economies of scale facilitate and cheapen the fundraising process. The more people of the first group contribute to one particular group of insurgents, the higher is the peer pressure on the rest of this inner circle to do the same. Empirical data also suggests that those persons that have contributed before are more likely to contribute again.[3]

The second group of people likely to contribute include individuals having an indirect connection to the insurgents’ aims. These may be the second generation living in exile, persons of a similar ethnicity or same religion or even corporations seeing business opportunities in the insurgents’ region. This group is hard to define since the reasons why they might sympathize with the insurgents vary considerably. The difference between this group and  the first group is that the emotional connection towards the insurgency is lower in the second group. The potential of this group, however, should not be underestimated. If the insurgents aim to liberalize the political landscape which usually is accompanied by an economic liberalization, corporations may see business opportunities, which could lead them to support a particular group. To choose a recent example, the use of oil pipelines leading from the Russian oilfields through Ukraine into western Europe used to be very expensive, not only due to Russia´ s export strategy but also due to the quasi-dictatorship in Ukraine.[4] After the “Orange Revolution” these transfer rates dropped significantly.[5] It is therefore suspected that major European and international oil companies financed to a certain extent the movement for a more liberal regime within Ukraine.[6] These are factors usually nobody considers, but they are important since they could be the necessary bond to corporations which could give the necessary advantage to succeed with the insurgency.

The third group of donors is a persons or an entity that is not related to the insurgents’ goal at all, basically everybody not included in the first or second categories. Members of this group will provide money out of a general ambition such as “promoting democratic development” or to “advance humanitarian rights” in certain regions. Since this group is huge and diverse one should focus on the more potent donors such as large corporations, governments and wealthy single persons known for their charitable efforts. Special interest should be paid to democratic governments which depend to a certain extent on “public opinion”. These governments – in order to be reelected – must comply with national popular expectations. If there is an outcry in the population, demanding monetary help for insurgencies or even military intervention, it is very likely that such a government will contribute.

To give a recent and still newsworthy example, the German government gives a significant amount of money each year to the Tibetan Government in Exile.[7] There is a downside to focusing on governments, however. As soon as an insurgency starts to turn violent, foreign governments usually reconsider their engagement carefully, due to respect for the sovereignty of each state. In the international community no state wants to be related to interference with “domestic affairs” of a foreign sovereign state.[8] Arguably, financing a political movement in a foreign state is a certain kind of “interference” but this is usually within the accepted scope of foreign politics whereas financing a violent insurgency definitely is not within the scope of foreign politics. Admittedly, there are usually no such things as purely “domestic affairs” when violence occurs because violation of human rights usually goes along with violent insurgencies. And violation of human rights is per se never a purely domestic affair.[9]

Nevertheless, governments (especially European governments) are reluctant to engage in any activity that might be considered “interference with state sovereignty.”[10] This issue plays a role when finding a vehicle to finance an insurgency. If one finds ways to give this vehicle a legitimate appearance and minimize the direct involvement in any violent action, governments still may be willing to contribute under the scapegoat of “minimizing human suffering in the respective area.” This does not mean that the vehicle will refrain from funding more violent actions – it is only a matter of finding a disguised way to channel the money to the appropriate recipients in order to appear not related to violent actions at all.

2.      Concise advice on how to set up a fundraising network

To set up a self-sustaining fundraising network one should work through the described groups, beginning with the first. Self-sustaining in this context means that the network raises more money then is spent to organize fundraising activities. A good start is to acquire list of nationals that are directly affected through the insurgency. There are multiple resources, including lists of donors from event programs and plaques on buildings, media and press stories, outward manifestations of wealth, and word of mouth, local cultural clubs or sport clubs where one can start to research. Wealthy persons that are directly affected should be easily found through the internet, since they will usually be more exposed.

Before approaching these first individuals it is crucial to design a strategy for every one of them, for example depending on what their religious background is or how they present themselves in public.[11] The person “making the ask” should be able to establish an empathetic bond between him and the prospect and to convince him that they have common goals to achieve. The goal at this stage is not only to receive money but to integrate that person in the fundraising process.[12] At this stage, this might be even more valuable than just a monetary donation, since the fundraising network at this time will most likely not be self-sustaining. This can be illustrated when comparing the financing of an insurgency to financing a general business. In the beginning the business will most likely not generate enough income to be profitable. Nevertheless, at this stage usually the transaction volume is more important then the actual profit since one needs to have a share in the market first before one has a profitable business. Comparably, at the beginning time of setting up a fundraising network it will be more valuable to create “a share in the fundraising market” before looking at the actual profit.

The KLA was very efficient and effective at raising money for its cause. Therefore the fundraising network of the KLA can provide insight in how a well organized fundraising system works. Analysis of the KLA´ s methods suggests that it is advantageous to have a decentralized fundraising system. The benefit of such a system might be due to the versatile regional characteristics of religion and ethnicity. It is helpful to have an insider in the target community who can provide information regarding the community’s special customs and practices. Furthermore, individuals are more likely to respond to a familiar person, rather than a complete stranger, so having insiders doing the solicitation if possible is a good approach.  

As a second pillar of directly approaching individuals, the Internet has become more and more important. One group was especially effective using the internet to promote their cause and to find new donors: Al Quaeda. When looking at al Quaeda´ s web presence, experts say that the web presence was virtually nonexistent about two years ago.[13] Today, al Quaeda is making efficient use of the Internet, not only to promote its own cause but also to raise funds and distribute orders.[14] Its overwhelming success cannot be disputed, since publishing contents on the Internet is an easy and cheap way to reach everybody with an internet connection. The published content ranges from information regarding the latest bombing attacks, a virtual cemetery for martyrs to calls for donations. Since the Internet is so decentralized it is impossible to shut down all of the websites at once.

Another aspect of the fundraising process might be the protection of the identity of the donors. When the money is transferred to violent branches of an insurgency, there is always the pending risk of criminal punishment in several jurisdictions. As soon as this risk hangs like the sword of Damocles over the donors their engagement will vanish, unless they are very dedicated to the insurgency’s goals. Privacy of the donors plays a role with regard to criminal punishment, for example conspiracy. It might as well be that a possible donor will only contribute under the condition that his name and his involvement are not made public.

C.     Distribution of money

The fundraising process itself is only a part of a successful finance strategy. When the money has been acquired transferring it to the right destination at the right time is the next step. Depending on the aims of the insurgency, the transfer and distribution of the money is more or less complicated.

It is obvious that the transfer of money for a legitimate reason is not a problem in a connected world. But assuming that the money will not solely be used for humanitarian efforts but rather for weapons and ammunition, the transfer causes a problem. Only in the second alternative must the insurgents have to overcome several obstacles that are examined in the following sections.

1.      The Process in general

To get a picture of how complicated the distribution of money can be when there are some illegitimate uses of the money intended, one can take a look at the ways the KLA used to get the money from the fundraisers to the spenders. Illegitimate in this context means infringing domestic laws that might trigger criminal or civil prosecution in an extent that it would endanger the whole operation. After raising the money in cash, the money was sent in cash to Switzerland where it was deposited in a Swiss Bank account. From there the money was transferred to a bank account in Albania. Here local contacts could withdraw money (for example through multiple credit or debit cards drawn on one bank account) to get cash for buying weapons.

2.      The role of Swiss banks

Swiss banks play a prominent role in this system of money distribution. This role in the KLA financing system is due to several inherent factors of the KLA financing strategy. First of all, the money was raised from legitimate sources.[15] With regards to money laundering, Switzerland imposes the same rules as any other European country when it comes to depositing money in the excess of €15.000.[16] Everybody depositing that amount of money must identify himself and declare where the money comes from. Up until now, Anti Money Laundering legislation in Switzerland and Europe only applies to those actions that intend to hide the true origin of money that was generated through illegal activities[17] such as drug dealing or weapons trafficking. In case the source of the money was illegal, the money will be forfeited.[18] As long as the money comes from legal activities the insurgents do not have a problem to deposit any amount of money in Swiss bank accounts.

Even in cases where the origin of the money is in doubt there are still ways to circumvent the duty to declare the origin of the money. On the one hand one can simply deposit money in smaller denominations than €15.000 at a time. This is a more time consuming task but eventually will end up with the same result – having the money on a Swiss bank account. A problem that arises with this method is that although generally one does not have any duties to provide information as long as one deposits less than € 15.000 the Swiss government (as any other European government) implemented rules that aimed at preventing this practice. In case there are several separate deposits, each of which below € 15.000 but cumulatively more than € 15.000 and there is an apparent connection between these deposits the bank is still obliged to inquire about the origin of the money. The Swiss government claims that these anti-money-laundering rules are strictly obeyed; however, the banks usually do not ask for the origin, meaning that they usually do not implement the reporting requirement.[19] And it is of course possible to deposit money in different branches of the bank simultaneously to reduce the risk of being asked for the origin of the money.

Another method to deposit money in a Swiss bank account is to set up a business and issue fake invoices. The money can then be deposited in the company’s bank account and further distributed. This of course has more implications in national law – especially tax law – which are more complicated. Generally speaking one of the disadvantages is that the company (or the statutory owner of the company depending on the corporate form) must pay income tax on the “generated income” which reduces the available amount of money. The “generated income” is the money paid pursuant to the fake invoices.

According to recent newspaper articles, there has been established another method of depositing illegal money in bank accounts using a simple system: People that have the intent to launder dirty money approach winners of lotteries and buy the winning tickets against a premium of a certain amount. Then they turn in the lottery-tickets, cash them and deposit the money on a bank account.[20] The money is clean. 

Once the money is in the Swiss banking system, further transfers are easy, with the additional advantage that from now on one can disguise the origin of the money without any problem. Unlike most European states, a bank account in Switzerland need not be connected to an individual who is easy to identify. As an option one can also set up a numbered account which is not related to an individual whatsoever. In order to access the money one need only remember a special password.

Using Swiss banks has a further advantage with regard toward inquiries by foreign governments or foreign prosecutors. Swiss banks do not provide information about any customers. So as soon as the money is on a Swiss bank account it is fairly safe from any kind of detection. Due to these facts Swiss banks are very popular and helpful in financing insurgencies. The above stated rules have been applied since the late ´70s and have not been changed recently.

According to a recent statement the of the Financial Action Task Force, an international committee giving proposals regarding questions of anti-money-laundering legislation, the Swiss banking system has not sufficiently implemented the FATFs suggestions, especially regarding the identification of customers and the notification of the centralized agency in case of suspicious transactions.[21]

3.      European Anti-Money-Laundering Legislation

Since Swiss banks play such an important role in the financing process it is necessary to look at current trends regarding anti-money-laundering legislation on an international level, especially on the European level. Despite the fact that Switzerland is not a member of the European Community, European developments might have an impact on domestic Swiss laws despite the fact that the European Union cannot impose a duty to “harmonize” on a non member.

Depositing money within the European Community the EC anti money laundering laws impose certain duties on the depositor. Since the national anti money laundering laws were implemented due to an EC directive[22] these rules are the same within all the EC member states.[23] Banks have to identify any person that deposits more then € 15,000 in cash and inquire about the origin of the money.[24] This rule also applies if there are different transactions that amount to a sum of more then € 15,000.00 in case these transactions appear to be related to each other.[25] There is no duty of identification, however, if the money is transferred between two banks[26] or if the proprietor or employee of a company regularly deposits money in that amount.[27] These rules are similar to the domestic rules in Switzerland.

These rules are about to change. Due to the 3rd EC anti-money-laundering Directive[28], which was passed on July 25th 2005 and will come into effect on January 1st 2006, there will be other reasons to inquire about the origin of the money. This directive aims at controlling money which comes from legitimate sources but is used to finance terrorism.[29] As the source of the money is the only objective factor (other then the intended use) that can be verified, the EC directive broadens only the duty to ask for the origin of the money. Scholars argue that this is nonsensical as it impairs only the domestic economy and the supposed aim of that legislation – to control terrorist financing – is not advanced at all.[30] Nevertheless, that is the approach the EC took towards terrorist financing.[31] The rules of the anti-money-laundering laws now also apply to every business without regard to its size. The crux of this legislation is that it now also applies to every business somehow connected to financing, such as lawyers, accountants and auditors. Everyone in these professions is now obliged to report any suspicion to a centralized agency.[32] The aspect of confidentiality in a professional-client relationship is denied completely. If theses rules were adopted in Switzerland, this might harm any financing strategy of any insurgency.

D.    Hypotheticals

Imagine two clients have come to a German lawyer, and asked for professional assistance in organizing the legal vehicles for financing two insurgencies, one in Belarus, and one in Tibet with the following given facts.

I.                   Hypothetical for Tibet

The person intending to finance an insurgency in Tibet envisions a rather violent course of action. It is assumed that the insurgency, to be successful, must rely on the use of manpower and weapons as well as a well designed public relations campaign in the international context. In comparison to the methods and the equipment used by the KLA it is estimated that the amount of money needed will equal or exceed the amount raised by the KLA which ranged from $75 million to $125 million. The money will be used to finance a guerilla war; therefore, a major part of the money will be spent on weapons, training of guerilla fighters and officers, communication systems and logistics.

Furthermore it is necessary to create public interest in the need and the struggle for an independent Tibet on an international and national basis. The international community must be thoroughly informed about the current situation in Tibet as well as the Tibetans must be educated to form a united front with a common goal to achieve.

 

II.                Hypothetical for Belarus

The other client wants to finance an “Orange[33] Revolution” in Belarus. The client believes that the impetus to start the insurgency will originate in an educational environment; therefore financing university students is one of the main goals. On the other hand it is crucial to establish an independent media system which will then promote and distribute the ideas throughout the domestic population in order to find a charismatic leader which will then organize the course of the insurgency.

The money therefore is intended mainly to support the protesting students in the beginning and as soon as the movement picks up speed to give financial support to the followers in whatever ways deemed appropriate, such as but not limited to: access to international media, supply of food and shelter and money to organize and carry out protest rallies.

 

E.      Legal Advice

In order to evaluate the hypotheticals it is necessary to take a look at the possible corporate forms

I.                   Potential “corporate” forms

To finance an insurgency there are uncountable possibilities for different corporate forms that can be used. Depending on the cause one has to choose the jurisdiction and the corporate form carefully. This analysis focuses only on the simple trust under US law and the German charitable corporation.

1.      German charitable corporation

According to §§ 80-88 of the German Civil Code (Bürgerliches Gesetzbuch “BGB”) a charitable corporation is an entity with legal capacity which pursues goals as set out in the documents of incorporation with money provided by the settlor and further donations. The charitable corporation is not owned by a natural person, it is separated from natural or judicial persons as owners. It is a mere administrative entity.[34] Beneficiaries are not members of that corporation and hence do not have any duties or rights. They are simply usufructuaries.[35]

For a charitable corporation with legal capacity mainly the rules as set forth in §§ 80 ff BGB apply.[36] The separate state laws only regulate the registration process and the state supervision.

2.      U.S. Charitable Trust[37]

Continental European lawyers prefer – due to their own legal tradition – an exact definition of a trust. But one of the most important American Trust-Scholars Austin W. Scott advises to refrain from such definition attempts and instead refers to the most important characteristics of a trust: “Although perhaps no perfect definition of a trust has been or can be framed, yet it is clear that certain elements are necessary to constitute a trust. There must be a trust res held by the trustee. The trust res may be an interest, legal or equitable, in property, real or personal, tangible or intangible. And he cannot be trustee of a promise made by himself to himself; he cannot, for instance, be trustee of his own note.”[38] A trust requires a trust estate and at usually two parties, the settler and the trustee. The Trustee has to manage the trust estate according to the settlor´ s wishes.

Trust law reflects the Anglo-American dualist approach towards property. In Anglo-American law, property can be divided into legal ownership and equitable ownership.[39] According to this dualist approach a trust has the following structure: The trustee manages the trust res as legal owner for the beneficiary who becomes equitable owner but without full power of disposal. Charitable trusts can be founded for perpetuity since the “rule against perpetuities” does not apply to them.[40]

The charitable trust is a very flexible entity to reach nearly any aim that is somewhat related to a charitable purpose.

3.      Advantages and disadvantages of the possible vehicles

The German charitable corporation has some distinct advantages. First of all the reputation of a charitable corporation in continental Europe is extremely positive. When talked of, every average European citizen will think that the charitable corporation has a legitimate purpose just for being a charitable corporation. This increases the chances of donations from persons that are only remotely connected to the corporations cause.

Furthermore control of the charitable corporation is straight forward. There will only be a board of directors that will manage all the activities such as the fundraising and the distribution of the money. The board of directors does not owe any special duty of care towards the organization. Since a charitable corporation in Germany does not have any members, the board of directors is free to do whatever they deem necessary to reach the corporations goals. since there are no members who can control the board of directors actions, However, there is state supervision. The board of directors has to turn in financial statements on an annual basis and these statements will be reviewed by an independent third party. This is to ensure that the board of directors acts within the scope of the aims as set out in the documents of incorporation. This is also one of the downsides of the German charitable corporation. The review process in general is lax. As soon as there is some kind of suspicion that the charitable corporation is connected to some illegal activities, there is a very detailed review, following the path of the money. Especially when the purchase of weapons is involved, a detailed inquiry is likely. This can be dangerous for the insurgency since it might cost is financing vehicle the status of a charitable corporation in Germany. If this happens, any accessible property of the charitable corporation will be forfeited. The money might still be on a Swiss bank account, but access to that bank account, although it is not connected to a special person, may become more difficult as legal enforcement agencies in Europe work together closely to prevent the circumvention of national laws.  

One of the few times the German government actually enforced the above described supervision was with regard to the German Chapter of the Kurds Workers Party. It was not a party in the legal sense but (in part) set up as a charitable corporation. Most of the funds, including some in Switzerland (German enforcement agencies found papers specifying some accounts in Switzerland), were forfeited after their activities were declared illegal due to engagement in drug and weapons trafficking.[41] Nevertheless, there are no records of other recent enforcements.

Furthermore, a charitable corporation has certain tax benefits, which come with approval as a charitable corporation by the state. The charitable corporation does not pay any income tax and donations are deductible from the donors income tax. To become a charitable corporation the settler has to file the documents of incorporation with the secretary of state. These documents are reviewed on the basis that the charitable corporation has to follow a charitable purpose.[42] This requirement is easy to meet.

Last but not least the charitable corporation has limited liability. This means that neither the settler, nor the donors, nor the board of directors will be liable for any debt that was caused by the charitable corporation.

The US charitable trust is more flexible in its basic set up. Tax advantages do not come per se but there has to be approval according to IRC Section 501(c)(3). Furthermore the trustee has further duties of care. As Judge Benjamin Cardozo points out in Meinhard v. Salmon: “A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behaviour. As to this there has developed a tradition that is unbending and inveterate. Uncompromising rigidity has been the attitude of courts of equity when petitioned to undermine the rule of undivided loyalty.” [43] This quote shows the different structure of the US charitable trust and the German charitable corporation. Whereas the German charitable corporation is a mere administrative model and is supervised by the state the US trust rather imposes a relationship among the involved parties in which the duties of care are enforced mostly by the beneficiaries or settlors rather than by the state. This has an impact on the choice of corporate form, depending on the insurgency’s goals.

4.      The best corporate form for each insurgency

Considering the above stated facts, that the best corporate form for a peaceful insurgency in Belarus would be a German charitable corporation. Not only the geographical proximity to Switzerland and Belarus are factors but also the relationship of the German government with the Belarus government. Germany has diplomatic relations with the Belarus government but is very opposed to its suppression of a free media. Therefore a charitable corporation in Germany with the aim to promote democratic development in Belarus will not face any opposition from the state.

For the insurgency in Tibet one should set up a financing form similar to what the KLA used. A decentralized system of separate Chapters which worked independently but transferred the money to a central bank account. This is due to the fact that weapons will be involved and the German government reacts very hostilely to violent ambitions of charitable corporations. The aspect of state supervision would need an immense amount of planning to hide the involvement in the weapons issue and that would swallow up to much valuable time and work force. Furthermore the American setting is much more receptive to lobbying. Looking at the KLA, lobbying prevented being characterized as a terrorist organization.[44] Presumably, this lobbying would not have affected any decision in Germany. One could argue that Germany is affected by lobbying in the same amount as the US especially, when considering the example of the recognition of Croatia. But the decision (recognition of Croatia) was not triggered by lobbying but rather was on the agenda of political foreign relations.[45]

II.                How to set up a German charitable corporation

Setting up a corporation in Germany is a fairly easy process. First of all there must be a settlor to make the first contribution and to draft the documents of incorporation. In this grant the settlor must set out the amount of money he wants to contribute and he must name the first board of directors and the members of the supervisory board. These documents will be reviewed by the appropriate state secretary and depending on the question whether or not the charitable corporation follows a legitimate charitable goal, the status of a charitable corporation will be granted.

1.      Documents of incorporation

As an example, refer to Appendix A, showing documents of incorporation for a charitable corporation supporting an insurgency in Belarus. Appendix A provides a German version, Appendix B provides an English version

2.      Time frame

The estimated time to set up a charitable corporation in Germany mainly depends on the time it takes to draft the documents of incorporation which could take, depending on the complexity, about two weeks. The approval process by the state authority takes between 2-5 weeks, depending on the current workload. So the average time frame is around 1-2 months to set up a charitable corporation.

3.      Estimated costs to set up a charitable corporation

The largest amount when setting up a charitable corporation is the lawyer´ s fees. These are highly negotiable. The registration process itself is not expensive and depends on the state in which you file for registration. The overall costs to set up a charitable corporation should be around €10.000.

F.      Conclusion

Financing an insurgency through a German charitable corporation has its hurdles. However, once the charitable corporation is approved, there are many advantages that come with that status. A German charitable corporation is not a good choice whenever violence in an international context is involved. This causes the risk of forfeiture of the money.

 


Appendix A

Satzung der … (-Stiftung)

 

§ 1 Name, Rechtsform, Sitz

 

(1)     Die Stiftung führt den Namen Destination Democracy

 

(2)     Sie ist eine rechtsfähige Stiftung des bürgerlichen Rechts.

 

(3)     Die Stiftung hat ihren Sitz in Hamburg

 

 

§ 2 Zweck der Stiftung, Gemeinnützigkeit

 

(1)     Zweck der Stiftung ist es, demokratische Entwicklungen in Weißrussland zu unterstützen

 

         Der Stiftungszweck wird insbesondere verwirklicht durch die Unterstützung von Studenten an öffentlichen Universitäten in Weißrussland und durch Finanzierungshilfen für öffentliche Informationsquellen.

 

(2)     Die Stiftung verfolgt ausschließlich und unmittelbar gemeinnützige (mildtätige/kirchliche) Zwecke im Sinne des Abschnitts "Steuerbegünstigte Zwecke" der Abgabenordnung.

 

(3)     Die Stiftung ist selbstlos tätig; sie verfolgt nicht in erster Linie eigenwirtschaftliche Zwecke.

 


(4)     Mittel der Stiftung dürfen nur für die satzungsmäßigen Zwecke verwendet werden. Niemand wird durch Ausgaben, die den Zwecken der Stiftung fremd sind, oder durch unverhältnismäßig hohe Vergütungen begünstigt. Die Stiftung darf jedoch einen Teil ihres Einkommens, höchstens aber ein Drittel, dazu verwenden, um in angemessener Weise den Stifter und seine nächsten Angehörigen zu unterhalten, ihre Gräber zu pflegen und ihr Andenken zu ehren.

 

(5)     Es besteht kein Rechtsanspruch auf Gewährung von Stiftungsleistungen.

 

 

§ 3 Vermögen der Stiftung

 

(1)     Die Stiftung ist mit einem Vermögen ausgestattet, welches im Stiftungsgeschäft näher bestimmt ist.

 

(2)     Umschichtungen des Stiftungsvermögens sind zulässig.

 

(3)     Die Stiftung erfüllt ihren Zweck aus den Erträgen des Stiftungsvermögens und aus Zuwendungen Dritter, soweit diese nicht zur Aufstockung des Vermögens bestimmt sind (Zustiftungen). Die Stiftung ist berechtigt, Zustiftungen entgegenzunehmen.

 

(4)     Rücklagen dürfen gebildet werden, soweit die Vorschriften des steuerlichen Gemeinnützigkeitsrechts dies zulassen. Der Vorstand kann freie Rücklagen dem Stiftungsvermögen zuführen.

 

 

§  4 Organe der Stiftung

 

Organe der Stiftung sind

 

a)      der Vorstand und

b)      der Stiftungsrat.

 

 

§ 5 Anzahl, Berufung, Berufungszeit und Abberufung der Mitglieder des Vorstands

 

(1)     Der Vorstand der Stiftung besteht aus drei Personen. Er wird vom Stiftungsrat auf die Dauer von drei Jahren gewählt. Wiederwahl ist zulässig. Nach Ablauf seiner Amtszeit führt der amtierende Vorstand die Geschäfte bis zur Wahl des neuen Vorstands fort. Mitglieder des Vorstands scheiden in jedem Falle mit Vollendung ihres siebzigsten Lebensjahres aus dem Vorstand aus.

 

(2)     Die Mitglieder des Vorstands können vor Ablauf ihrer Amtszeit vom Stiftungsrat nur aus wichtigem Grund abberufen werden. Die Rechte der Stiftungsaufsicht bleiben unberührt.

 

(3)     Scheidet ein Mitglied des Vorstands vor Ablauf der Amtszeit aus seinem Amt aus, wählt der Stiftungsrat für den Rest der Amtszeit ein Ersatzmitglied. Bis zur Ergänzung verringert sich die Anzahl der Mitglieder des Vorstands um die Anzahl der ausgeschiedenen Personen.

 

(4)     Der Vorstand wählt aus seiner Mitte einen Vorsitzenden und einen stellvertretenden Vorsitzenden auf die Dauer seiner Amtszeit.

 

(5)     Die Mitglieder des Vorstands sind ehrenamtlich für die Stiftung tätig. Ihnen können ihre not­wendigen Auslagen, die durch ihre Tätigkeit für die Stiftung entstanden sind, ersetzt werden.

 

(6)     Der erste Vorstand wird durch den Stifter bestellt.

 

 

§ 6 Aufgaben des Vorstands

 

(1)     Der Vorstand hat für die dauernde und nachhaltige Erfüllung des Stiftungszwecks zu sorgen. Er führt die Geschäfte der Stiftung. Zu Beginn eines jeden Geschäftsjahres hat der Vorstand einen Haushaltsplan aufzustellen.

 

(2)     Der Vorstand vertritt die Stiftung gerichtlich und außergerichtlich mit mindestens zwei seiner Mitglieder. Eines dieser Mitglieder muss der Vorsitzende oder der stellvertretende Vorsitzende des Vorstands sein.

 

(3)     Der Vorstand hat für den Schluss eines jeden Geschäftsjahres eine Jahresabrechnung zu erstellen.

 

 

§ 7 Einberufung, Beschlussfähigkeit und Beschlussfassung des Vorstands

 

(1)     Der Vorstand wird von seinem Vorsitzenden - bei seiner Verhinderung von seinem stellvertretenden Vorsitzenden - schriftlich unter Bezeichnung der einzelnen Punkte der Tagesordnung mindestens zweimal im Kalenderjahr einberufen. Die Ladungsfrist beträgt mindestens zwei Wochen. Der Vorstand ist auch einzuberufen, wenn ein Mitglied es verlangt; das Verlangen hat den Beratungspunkt anzugeben.

 

(2)     Der Vorstand ist beschlussfähig, wenn mehr als die Hälfte seiner Mitglieder anwesend ist.

Der Vorstand beschließt außer in den Fällen des § 11 mit der Mehrheit seiner Mitglieder. Der Vorstand kann einen Beschluss auch schriftlich fassen, wenn alle Mitglieder dieser Form der Beschlussfassung schriftlich ihre Zustimmung erteilen (Umlaufverfahren).

 

(4)     Über die in den Sitzungen des Vorstands gefassten Beschlüsse ist eine Niederschrift zu fertigen. Sie ist von dem Vorsitzenden und einem weiteren Mitglied zu unterschreiben. Alle Beschlüsse des Vorstands sind zu sammeln und während des Bestehens der Stiftung aufzubewahren.

 

 

§ 8 Anzahl, Berufung, Berufungszeit und Abberufung der Mitglieder des Stiftungsrates

 

(1)     Der Stiftungsrat besteht aus drei Mitgliedern. Sie dürfen nicht zugleich Mitglieder des Vorstands sein. Sie scheiden jedoch mit Vollendung des siebzigsten Lebensjahres aus dem Stiftungsrat aus. Der erste Stiftungsrat wird durch den Stifter bestellt.

 

(2)     Der Stiftungsrat wählt aus seiner Mitte einen Vorsitzenden und einen stellvertretenden Vorsitzenden, und zwar für eine Amtszeit von  . . . .  Jahren. Wiederwahl ist zulässig. Der Vorsitzende und der stellver­tretende Vorsitzende bleiben auch nach Ablauf ihrer Amtszeit bis zur Neubesetzung ihrer Positionen im Amt.

 

(3)     Mitglieder des Stiftungsrates können nur aus wichtigem Grund abberufen werden. Über die Abberufung entscheidet der Stiftungsrat mit der Mehrheit seiner Mitglieder. Das betroffene Mitglied hat dabei kein Stimmrecht. Die Rechte der Stiftungsaufsicht bleiben unberührt.

 

(4)     Scheidet ein Mitglied des Stiftungsrates aus, so ergänzt sich der Stiftungsrat durch Zuwahl. Bis zur Ergänzung verringert sich die Anzahl der Mitglieder des Stiftungsrates um die Anzahl der ausgeschiedenen Personen.

 

(5)     Die Mitglieder des Stiftungsrates sind ehrenamtlich für die Stiftung tätig. Ihnen können ihre notwendigen Auslagen, die durch ihre Tätigkeit für die Stiftung entstanden sind, ersetzt werden.

 

(6)     Der Stiftungsrat gibt sich mit einer Mehrheit von ___ der Stimmen seiner Mitglieder eine Geschäftsordnung.

 

 

§ 9 Aufgaben des Stiftungsrates

 

(1)     Der Stiftungsrat hat die Geschäftsführung des Vorstands zu überwachen und insbesondere darauf zu achten, dass der Vorstand für die dauernde und nachhaltige Erfüllung des Stiftungszwecks sorgt.

 

(2)     Der Stiftungsrat ist ferner zuständig für

 

1.      die Genehmigung des Haushaltsplanes,

 

2.      den Erlass von Richtlinien zur Erfüllung des Stiftungszwecks,

 

3.      die Wahl und Bestellung der Mitglieder des Vorstands,

 

4.      die Kontrolle der Haushalts- und Wirtschaftsführung,

 

5.      die Feststellung des Jahresabschlusses,

 

6.      die Wahl und Beauftragung des Abrechnungsprüfers,

 

 

 

         Weitere Rechte des Stiftungsrates nach anderen Bestimmungen
         dieser Satzung bleiben unberührt.

 

(3)     Der Stiftungsrat ist ermächtigt, dem Vorstand insgesamt oder einzelnen seiner Mitglieder im Einzelfall Befreiung von den Beschränkungen des § 181 BGB zu erteilen.

 

 

§ 10 Einberufung, Beschlussfähigkeit und Beschlussfassung des Stif­tungsrates

 

(1)     Der Stiftungsrat wird von seinem Vorsitzenden - bei seiner Verhinderung von seinem stellvertretenden Vorsitzenden - schriftlich unter Bezeichnung der einzelnen Punkte der Tagesordnung mindestens einmal im Kalenderjahr einberufen; die Ladungsfrist beträgt mindestens zwei Wochen. Der Stiftungsrat ist auch einzuberufen, wenn zwei Mitglieder des Stiftungsrates oder der Vorstand dieses verlangen; das Verlangen hat den Beratungspunkt anzugeben.

 

(2)     Der Stiftungsrat ist beschlussfähig, wenn mehr als die Hälfte seiner Mitglieder anwesend sind.

 

(3)     Der Stiftungsrat beschließt außer in den Fällen des § 11 mit der Mehrheit seiner anwesenden Mitglieder. Der Stiftungsrat kann einen Beschluss auch schriftlich fassen, wenn alle Mitglieder dieser Form der Beschlussfassung schriftlich zustimmen (Umlaufverfahren).

 

(4)     Über die in den Sitzungen des Stiftungsrates gefassten Beschlüsse ist eine Niederschrift zu fertigen. Sie ist von dem Vorsitzenden und einem weiteren Mitglied zu unterschreiben. Alle Beschlüsse des Stiftungsrates sind zu sammeln und während des Bestehens der Stiftung aufzubewahren.

 

 

§ 11 Satzungsänderungen, Zweckänderungen, Aufhebung

 

(1)     Satzungsänderungen, die den Stiftungszweck nicht berühren, sind zulässig, wenn sie im Interesse der nachhaltigen Erfüllung des Stiftungszwecks erforderlich sind. Sie bedürfen eines mit einer Mehrheit von 2/3 aller Mitglieder gefassten Beschlusses des Vorstands und des Stiftungsrates. Das Erfordernis staatlicher Genehmigung bleibt unberührt.

 

(2)     Änderungen des Zwecks, die Aufhebung der Stiftung oder die Zusammen- oder Zulegung der Stiftung mit oder zu einer anderen Stiftung sind nur zulässig, wenn die Erfüllung des Stiftungszwecks unmöglich geworden ist oder angesichts wesentlicher Veränderungen der Verhältnisse nicht mehr sinnvoll erscheint. Sie bedürfen der Zustimmung von 2/3 der Mitglieder des Vorstands und 6/7 der Mitglieder des Stiftungsrates. Das Erfordernis staatlicher Genehmigung bleibt unberührt.

 

 

§ 12 Geschäftsjahr

 

Das Geschäftsjahr der Stiftung ist das Kalenderjahr.

 

 

§ 13 Vermögensanfall

 

Im Falle der Auflösung bzw. Aufhebung der Stiftung oder bei Wegfall ihrer steuerbegünstigten Zwecke ist ihr Vermögen zu steuerbegünstigten Zwecken iSd § 2 dieser Satzung zu verwenden. Beschlüsse über die künftige Verwendung des Vermögens dürfen erst nach Einwilligung des Finanzamtes ausgeführt werden.

 

 

§ 14 Stiftungsaufsicht

 

Die Stiftung unterliegt der Stiftungsaufsicht nach Maßgabe des Stiftungsgesetzes von . . . . .  (Bundesland).

 

 

 

 

 

 


Appendix B

 

Documents of Incorporation of the Charitable Corporation Destination Democracy

 

§ 1 Name, form of legal entity, state of incorporation

 

(1)     The name of the charitable corporation is Destination Democracy

 

(2)     The charitable corporation is a legal entity according to the German Civil Code

 

(3)     The charitable corporation is incorporated in Hamburg

 

 

§ 2 Purpose of the charitable corporation, charitable cause

 

(1)     The purpose of the corporation is to promote the democratic development in Belarus

 

         This purpose will be realized especially through the support of students at public universities in Belarus and through donations to promote an independent media in Belarus.

 

(2)     The charitable corporation follows exclusively and directly charitable purposes according to section "Steuerbegünstigte Zwecke" of the general fiscal code.

 

(3)     The charitable corporation has an altruistic purpose and is predominantly a non-profit organisation

 


(4)     Funds of the charitable corporation may only be used according to this document. Nobody shall benefit from expenses which are not within the scope of the purpose of this charitable corporation. However, the charitable corporation may use up to one third (1/3) of its income to support the settlor or his relatives in appropriate ways to guarantee an appropriate lifestyle.

 

(5)     No person shall have any legal title to the disbursement of the charitable corporation´ s funds.

 

 

§ 3 Assets of the charitable corporation

 

(1)     The charitable corporation has assets according to the donation of the settlor.

 

(2)     Investment of the assets is allowed.

 

(3)     The charitable corporation accomplishes its purposes with the generated profit and donations of third parties.

 

(4)     Profits may be allocated to reserves as long as provisions regarding the law of charitable corporations allow such reserves. The board of directors may redirect reserves into the assets of the charitable corporation.

 

 

§  4 Organs of the charitable corporation

 

Organs of the charitable corporation are 

 

a)      the board of directors

b)      the supervisory board.

 

 

§ 5 Number, election, term of office and dismissal of members of the board of directors  

 

(1)     The board of directors consists of three persons. The board is elected for a period of three years. Reelection is possible. After the term of office is over the board will carry on the business until a new board is elected.

 

(2)     The members of the board may be dismissed only due to severe violations of the duty of care. However, the rights of the supervisory board remain unaltered by this provision.

 

 

(3)     In the case that a boardmember retires before the end of his term, the supervisory board elects an alternative member. Until the election the board is reduced by the number of the retired persons.

 

(4)     The board elects from its members a president and a vice president for the term of office.

 

(5)     The boardmembers work voluntarily for the charitable corporation. They do not receive a salary. However, inevitable expenses, which occured due to their activity as boardmembers, may be reimbursed.

 

(6)     The first board will be appointed by the settlor.

 

 

§ 6 Responsibilities of the board of directors

 

(1)     The board of directors shall ensure the enduring and sustainable promotion of the charitable corporations purpose. The board will lead the day to day business. It must prepare a business plan at the beginning of each fiscal year.

 

(2)     The board represents the charitable corporation in every legal or out of court matter with two of its members. One of these members must be the president of the vice-president.

 

(3)     The board must prepare an annual statement at the end of each fiscal year.

 

 

§ 7 Assembly, quorum and decisionmaking of the board of directors

 

(1)     The board will assemble at least twice a year upon written invitation of the president, in case of his unavailability, upon written invitation of the vice-president. The invitation must show the agenda. The invitation must be mailed two weeks prior to the assembly. The board must also assemble if a board member request assembly.

 

 

(2)     The board can make decisions (quorum) when at least half its members are present.

         The board decides with the majority of its members, except in cases according to § 11 of this document.

 

(4)     The board decisions must be documented. The protocol must be signed by the president and at least one further board member. All protocols must be collected throughout the existence of the charitable corporation.

 

 

§ 8 Number, election, term of office and dismissal of members of the supervisory board

 

(1)     The supervisory board consists of seven members. They may not be boardmembers at the same time. The first supervisory board will be appointed by the settlor.

 

(2)     The supervisory board elects a chairman from its members and a vice-chairman for the period of 5 years. Reelection is permitted.

 

(3)     The members of the supervisory board may be dismissed only due to severe violations of the duty of care. The supervisory board decides with the majority of its members over such dismissals. The concerned member may not vote in this matter. The rights of the state supervision remain untouched by this provision.

 

 

(4)     In the case that a member of the supervisory board retires before the end of his term, the supervisory board elects an alternative member. Until the election the supervisory board consists only of the remaining members.

 

(5)     The members of the supervisory board work voluntarily for the charitable corporation. They do not receive a salary. However, inevitable expenses, which occured due to their activity as members of the supervisory board, may be reimbursed.

 

(6)     The supervisory board gives itself by-laws with a majority of 4 votes

 

 

§ 9 Responsibilities of the supervisory board

 

(1)     The supervisory board has to control the actions of the board of directors, especially that the board of directors ensures the enduring and sustainable promotion of the charitable cause.  

 

(2)     The supervisory board is furthermore responsitble for

 

1.      the approval of the annual business plan

 

2.      the enactment of guidelines regarding the promotion of the charitable cause,

 

3.      the election of the members of the board of directors

 

4.      the review of the financial activities,

 

5.      the approbal of the annual accounts,

 

6.      the election of the annual auditor,

 

 

 

         Further rights and duties of the supervisory board according to this document remain unaltered

 

(3)     The supervisory board may grant the board of directors or single members of the board of directors exemption form the limitation according to § 181 BGB.

 

 

§ 10 Assembly, quorum and decisionmaking of the supervisory board

 

(1)     The supervisory board will assemble annualy upon written invitation of the chariman, in case of his unavailability, upon written invitation of the vice-chairman. The invitation must show the agenda. The invitation must be mailed at least two weeks prior to the assembly. The board must also assemble if two members of the supervisory board or the board of directors request assembly.

 

(2)     The board can make decisions (quorum) when at least half its members are present.

          

 

(3)     The supervisory board decides with the majority of its members, except in cases according to § 11 of this document.

 

(4)     The board decisions must be documented. The protocol must be signed by the chariman and at least one further board member. All protocols must be collected throughout the existence of the charitable corporation.

 

 

§ 11 change of articles of incorporation, change of the charitable purpose, liquidation

 

(1)     Amedmends or changes of the articles of incorporation that do not change the charitable purpose may be made when they are necessary to ensure the sustainable promotion of the charitable purpose. The board of directors and the supervisory board must approve the changes with a majority of 2/3 of their members. The necessity of the approval of the state authority remains unaltered.

 

 

(2)     Change of the purpose or liquidation of the charitable corporation is only allowed after the charitable purpose can not be reached any longer or if the promotion of the charitable cause seems irrational due to external changes. The changes must be approved by 2/3 of the board of directors and 6/7 of the supervisory board. The necessity of the approval of the state authority remains unaltered.

 

 

§ 12 Fiscal year

 

The fiscal year of the charitable corporation is the calendar year.

 

 

§ 13 Liquidation

 

In the case of the liquidation of the charitable corporation the assest must be given to charitable corporations according to § 2 of this document.

 

 

§ 14 Sate supervision

 

The charitable corporation is subject to state supervision according to the law of charitable corporations of the state of Hamburg.

 

 

 



[1] Some other sources try differentiate between 5 different groups: Draft Chapter 7 – Financing, on file with Prof Perritt, Page 8.

[2] One might argue that criteria such as religion or ethnicity in fact are objective criteria. This is a common misunderstanding and is due to the over- interpretation of the article “the.” The article “the” implicates that there is one distinct religion or one distinct ethnicity. But it is only the “felt” degree of membership towards a group that makes a person receptive towards certain approaches. In other words, a differentiation on these facts is hard, if not impossible. On the other hand, there are several objective criteria that one could consider, such as age or income, but these can only give a rough direction and eventually subjective criteria will have to be considered. Since most of the charity related donation are based on an emotional decision anyway, I see no direct profit from using age or income as primary criteria. As secondary criteria they play an important role.

[3] Draft Chapter 7 – Financing, on file with Prof Perritt, Page 7.

[4] http://www.bjrundschau.com/2003-43/2003.43-world-2.htm (last visited on October 15th 2005)

[5] Id.

[6] Id.

[7] http://www.tibet.com/Govt/green-book.html.html (last visited October 15th 2005).

[8] One should just think about the public outcry when information about the US-Interference with Nicaraguan national politics were published, http://en.wikipedia.org/wiki/Nicaragua#The_1990_elections_and_U.S._involvement (last visited October 15th 2005)

[9] That this is common sense in the international legal community can be inferred from the establishment of the European Court of Justice for Humanitarian Rights or Special Tribunals addressing warcrimes such as “crimes against humanity.”

[10] As a recent example one should look at the reasoning of many European governments why they declined to support the war in Iraq.

[11] Draft Chapter 7 – Financing, on file with Prof Perritt, Page 9.

[12] For Example one might ask the person to invite friends so you can talk to them in a more private setting.

[13] http://www.washingtonpost.com/wp-dyn/content/article/2005/08/08/AR2005080801018.html (last visited on October 20th 2005).

[14] Id.

[15] Draft Chapter 7 – Financing, on file with Prof Perritt.

[16] Switzerland is a member of the FATF (Financial Action Task Force on Money Laundering), an intergovernmental body that was set up in 1989 at the G7 economic summit in Paris and is open to most members of the OECD. This, however, may change in the near future. The EC passed a directive to counter terrorist financing through legitimate businesses. This issue will be addressed below

[17] Illegal activities in this case means illegal according to Swiss national law, http://switzerland.isyours.com/d/Bankwesen/Bankgeheimnis/geldwaesche-definition.html (last visited on October 25th 2005)

[18] Art. 240 et seq of the Swiss Criminal Code.

[19] This information, of course, is nowhere published nor advertised but the author of this essay knows of this factual situation due to personal experiences.

[20] http://www.vorsicht-geldwaesche.de/Artikel/Oktober_31_10_2005.htm (last visited on Novermber 6th 2005).

[21] http://www.vorsicht-geldwaesche.de/Artikel/Oktober_15_10_2005.htm (last visited November 6th 2005).

[22] Actually up until now there are three different directives which imposed step by step stricter duties. The first Money Laundering Directive of 1991 (1991/308/EWG) required the imposition of an obligation on financial institutions to establish customers’ identity and report any suspicion of money laundering. It was based on the 40 recommendations of the Financial Action Task Force on money-laundering (FATF), of which the EU is a member. This is an inter-governmental body established by the G7, promoting anti-money laundering policy at national and international level. The second directive of 2001 (2001/97/EG) extended the number of crimes to which the provisions applied and widened the range of professions who had to observe it to include lawyers, auditors, accountants, notaries, casinos and estate agents. It also provided for the establishment of financial intelligence units in each member state to which suspicious transactions reports (SRTs) were to be made. The third directive (http://europa.eu.int/eur-lex/de/com/pdf/2004/com2004_0448de01.pdf) is mostly concerned with terrorist financing but will not be into effect until 1.1.2006.

[23] EC Directives impose the duty to implement the given law within a certain time frame.

[24] Comp e.g. § 2 (2) of the German Anti Money Laundering Law (“Geldwäschegesetz”).

[25] Comp e.g. § 2 (3) of the German Anti Money Laundering Law (“Geldwäschegesetz”).

[26] As often, there is an exception to the exception. The German Anti Money Laundering Law empowers the government to generate a list of institutions between which any transaction must be documented. This rule limits the scope to such banks (especially foreign banks) that do not have sufficient documentation rules. Nevertheless there is no such list up until now.

[27] Comp e.g. § 2 (4) of the German Anti Money Laundering Law (“Geldwäschegesetz”).

[28] http://europa.eu.int/eur-lex/de/com/pdf/2004/com2004_0448de01.pdf.

[29] The rules are similar to the one established in Title III of the Patriot Act, Pub. L. No. 107-56 (Oct. 26, 2001), the “International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001. For an illustrative description refer to: Draft Chapter 7 – Financing, on file with Prof Perritt, Page 28.

[30] http://www.internetkanzlei.to/rechtsanwaltsexil.html (last visited on Novermber 6th 2005)

[31] Id.

[32] Id.

[33]    Orange was adopted by the protesters as the official color of the movement because it was the predominant color in opposition candidate Viktor Yushchenko's election campaign during his run for president. The symbol of solidarity with Yushchenko's movement in Ukraine is an orange ribbon or a flag bearing his "Tak! (Yes!) Yushchenko!" slogan.

[34] Decision of the German Federal Civil Court, BGHZ 99, 344.

[35] One that holds property by usufruct, comp. http://dictionary.reference.com/search?q=usufructuary (last visited November 8th 2005)

[36] The BGB does not differentiate between different forms of charitable corporations. The underlying concept is one of a Unitarian charitable corporation. However, charitable corporations can be divided into certain subcategories. Palandt, Commentary to the German Civil Code, Vor § 80, Rz. 30, 64th Edition.

[37] From a legal dogmatic point of view the differences between the charitable trust and the charitable corporation are small. The charitable corporation was a substitute for the charitable trust. The main difference is that in the case of a charitable trust a natural person is owner of the separate estate whereas in a charitable corporation a legal entity is owner of the separate estate. The trustee and the board members have the same duties of care in either institution. Story describes their role colourful as “trustees in their corporate character”, comp. The Trustees of Dartmouth College v. Woodward, 17 U.S. (4 Wheaton) 629, 670 (1819).

[38] Scott, The Progress of the Law: Trusts, 33 Harv.L.Rev. 688, 700 (1920). The usage of the term “res” is linked to the canonical law in which trust property today still is called “res”. Comp. Menges, Die kirchliche Stiftung in der Bundesrepublik Deutschland, p. 45 et seq.

[39] Holdsworth Wiliam S.: A History of English Law Volume IV, p. 432 (1966).

[40] Maitland, Frederic William: Trust and Corporation from H.D. Hazeltine, G. Lapsley, P.H. Winfield, Maitland, Selected Essays, Camebridge 1935, 128, 178. The “rule against perpetuities” established a time limit to bind property in a certain way. Background to the rule against perpetuities was to secure the availability of real estate, compare. Bascom v. Alterson, 34 N. Y. Rep. 584, 605 (1866).

[41] http://de.wikipedia.org/wiki/Partiya_Karker%C3%AAn_Kurdistan (last visited October 31st 2005)

[42] Charitable purpose is very broadly defined therefore any goal that is somewhat related to a charitable purpose in the common understanding is sufficient to fulfil this requirement.

[43] Meinhard v. Salmon, 249 N.Y. 458, 464; 164 N.E. 545, 546 (1928).

[44] Draft Chapter 7 – Financing, on file with Prof Perritt, p. 23.

[45] http://www.xs4all.nl/~tank/radikal/balkan/pag13a1.htm (last visited November 6th 2005)