Bermuda Appellate Court Gives US Victory in Braswell TIEA Case

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Wednesday, January 1, 2003
Bruce Zagaris
On November 28, 2002, the Court of Appeals for Bermuda gave the United States and Bermuda Governments a unanimous 3-0 victory in their appeal of a decision of the lower court in efforts to obtain information for use in the case involving defendants Almon Glen Braswell, Gero Vita International Inc. (GVI), and G.B. Data Systems Inc. (GBDS). The U.S. had sought information under the U.S.A.-Bermuda Tax Convention Act of 1986 (hereafter the TIEA Act) and the 1988 Tax Information Exchange Agreement (TIEA) regarding the taxpayers in connection with a criminal investigation of their income tax affairs by the Internal Revenue Services (IRS) and US Department of Justice. The IRS believed that Braswell directed millions of dollars of GVI funds to bank accounts in Bermuda and elsewhere in the names of various entities he controlled. In explaining its decision, the court of appeals observed that Braswell and GBDS had the opportunity to adjudicate the alleged breach of legal professional privilege in the U.S. The appellate court further reasoned that the even it the Bermuda Constitution was implicated, the rights of the taxpayers under the Constitution were subject to public interest and in this case Bermuda had an important interest in complying with its international obligations under treaties.