usa today
Monaco steers clear of once-shifty image
By Jeffrey Stinson, USA TODAY
MONACO — Casino gambling. A fairy tale palace. Yachts in the harbor. The Monaco Grand Prix, which returns here this week for the famed Formula One auto race through Monte Carlo's streets and past its jet-set beaches.
Of all of the images that this tiny principality on France's Riviera coast evoke, there is one that its ruling monarch, Prince Albert II, son of Prince Rainier III and the American actress Grace Kelly, wants to erase.
That's British writer Somerset Maugham's description of Monaco as "a sunny place for shady people." Or, more to the point, the image that Monaco's penthouses offer refuge to scoundrels, and its confidential bank accounts provide a haven for laundered money.
"I don't want Monaco to be perceived that way," says Albert, 48, who, when he took Monaco's throne last July 12 after the death of Rainier in April 2005, declared that "money and virtue must go together."
Since then, Monaco has cracked down on what Albert calls "people who have had doings with illicit activities" and has declared persona non- grata anyone with a reputation that the prince doesn't care for.
"We're not going to tolerate the presence of people or allow people who are passing through to establish residency here if their reputation precedes them," Albert told USA TODAY in an interview in his office, which used to be his mother's, in a turret atop his palace. "I don't think we were always careful in the past. Now, we are."
In addition, Monaco has worked to comply with European Union banking regulations and to get itself off a list of allegedly "uncooperative tax havens," posted by the Organisation for Economic Co-operation and Development, the Paris-based group of 30 nations, including the United States, that are committed to spreading democracy and market economies.
For instance, Monaco in the last year has:
• Told Sir Mark Thatcher, a son of former British prime minister Margaret Thatcher, on Dec. 11 to leave this summer when his temporary visa runs out. Sir Mark had sought permanent residency in Monaco last year after being denied an entry visa to the USA following his conviction by a South African court for plotting a coup in Equatorial Guinea.
• Frozen about $25 million from the local branches of two Swiss banks at the request in January of Sicilian authorities who prosecuted Francesco Zummo, a Sicilian businessman charged with aiding and abetting the Cosa Nostra, Italy's Mafia.
• Pressed ahead with the prosecution and trial of American William Hobbs Fogwell, his daughter Shelley and three other associates of the Hobbs-Melville brokerage firm based in Monaco. They were accused of defrauding up to 500 clients of about 140 million euros (about $170 million) from 1993 to 2000. Prosecutors are seeking five years imprisonment and fines of 90,000 euros (about $115,000) each against the Fogwells. A verdict is set to be announced July 12.
• Began on July 1, 2005, to comply with the European Union's directive to impose a withholding tax on the interest income of EU citizens earned in Monaco accounts and rebate it to the account holder's country. Monaco's government also agreed to provide bank account information on request in criminal or civil cases of tax fraud, while maintaining most confidentiality.
To enforce Albert's wish that Monaco shed its shady image, his government has beefed up its intelligence operation to monitor people's comings and goings and its accounting staff to scan the source of funds coming in to the principality.
"We have access, with certain intelligence, to where people come from and what their activities are," says Jean-Luc Allavena, director of Albert's Cabinet in this constitutional monarchy.
Allavena says that the principality responds quickly to every request from any nation about the source of money in Monaco bank accounts. In addition, he says, the 50 banks and 20 other financial firms here have been "sensitized" to the prince's desires. Bankers know that "you cannot just close your eyes and get money when it arrives," he says.
"There are a lot of good reasons for people to come here," Allavena says. "But we want people that are actively involved in life here. It's important that they know what the rules are."
A tiny strip of land
Monaco, a strip of land three-quarters of a mile long on the Cote d'Azur, is on the southeastern-most part of France. The principality is a little more than half the size of New York's Central Park.
Its beaches, yachts, the palace atop the hill, the grand casino, high-speed cars racing through the streets and even James Bond-like characters remain essential parts of the tiny nation.
This week, for instance, is the 64th Monaco Grand Prix, where Formula One drivers race through the streets past the beaches, harbor and beneath "the rock," where Albert lives and rules from his Palace Princier, as his Grimaldi family has since 1297.
The palace, the color of Grey Poupon mustard under the sun and pinkish under the lights at night, is where Albert's father, Rainier, whisked "America's princess," Grace Kelly, off to live after their 1956 royal wedding.
The drivers also will race their Formula One Ferraris, BMWs and Mercedes in streets below the winding mountain roads where Grace Kelly and Cary Grant were chased by police in the 1955 Alfred Hitchcock thriller To Catch a Thief. That's also where Princess Grace was killed in a car accident in 1982.
The grand casino is still here in Monte Carlo. The dinner jackets, however, have given way to tourist garb, just as gambling now comprises less than 6% of the principality's revenue. The number of tourists continues to rise — to 285,675 last year, up 14% from a year before. For 10 euros (about $12.75), visitors can enter the casino and receive two 5-euro chips with which to gamble. Retail and wholesale sales comprise about 39% of economic activity.
As for James Bond, well, one of the men who played him on film, British actor Sir Roger Moore, has a residence here. John Haly, a British expatriate and owner of the English-style pub Ship and Castle in the Fontvieille section of Monaco, says Moore is well known figure around the city. "I bumped into him buying bananas at the store," he says.
Dame Shirley Bassey, who sang the title songs to the Bond films Goldfinger, Diamonds Are Forever and Moonraker, also has a place here. Like Moore, she often is seen at many of the charitable balls and galas Monaco hosts annually.
One of Monaco's attractions for the British is that Monaco's residents pay no tax on personal income, capital gains or inheritance on personal trusts unless they are French nationals. French citizens in Monaco, a protectorate of France, must pay income and wealth taxes, as do all French.
About 6,000 British can be counted among Monaco's 32,000 residents, compared with about 300 citizens of the USA, whose tax laws don't make residency here that advantageous.
Monaco keeps tabs on who comes in by having guests surrender their passports at hotels, which send the information to a central registry to be checked. It also keeps track of anyone who might abuse its residency requirements — six months and a day in the principality each year — by checking utility bills and even telephone records.
There are other reasons Monaco is attractive to people who can afford the one-bedroom condos that can sell for an average of $1.3 million or three-bedroom condos that go for $2.9 million.
The principality, which has one police officer for every 100 residents, is considered safe. Uniformed police officers are in evidence, as are security cameras. "For every policeman you see in uniform, there are two in plain clothes," says pub owner Haly.
All of this adds up to a desirable place to live, says real estate broker Pierre Mare, who like many business people here supports Albert's efforts to clean up Monaco's image. Mare also approves of Albert's vision for this city-state for the 21st century.
An American-style executive
Albert, who has the title "His Serene Highness," or HSH, graduated in 1981 from Amherst College in Massachusetts and says he is "very proud of my American heritage." He has adopted a straight-forward American corporate-style of governing, with goals and strategies for achieving his vision.
He says he wants Monaco to be known for "excellence" in everything that it undertakes, not just as a clean and virtuous financial center free from its early 20th century reputation as an outpost for arms brokers, ousted royalty, Mafia, gamblers and other ne'er-do-wells.
"To have your country portrayed as a haven for scoundrels, if that's the word you want to use, I don't really like that," Albert says. "I want people to find excellence when they visit here."
He has plans to attract more light industry, bio-sciences and educational institutions, which will in turn help the principality develop higher-skill jobs through grants and tax incentives.
To help his principality grow, he plans a new commercial and residential addition outside the port area. As an ardent environmentalist who trekked to the Arctic last month to highlight concerns over global warming, Albert insists that the addition be built on pilings rather than landfill, and that none of the new buildings be higher than 10 stories so as not to disturb Mediterranean sea life. "Our limitations (in size) don't mean that we can't do things in the right way," he says.
"He is doing a very good job," Mare says of Albert's first year on the throne. "I'm not the only one who thinks so. He has new ideas and probably 30 years to do them. So, it's good."