From blog.livenewschat.tv/world-newsroom

We’re standing by the pool at the Ritz Carlton in Florida’s South Beach, attendees at a financial conference here mingle by the bar and wander through meeting rooms upstairs.

This isn’t just any industry conference — it’s the tenth annual OffshoreAlert gathering, bringing together financial advisors, Cayman Islands and other offshore bankers, and government officials.

“This is the ‘Star Wars’ bar of off-shore finance,” says one attendee by the pool bar, quoting a description of the event that’s appeared in the press. “Everybody’s here.”

But it was the presence of 19 Internal Revenue Service officials at the conference earlier this week that attracted the attention — and criticism — of Republican Sen. Chuck Grassley of Iowa, ranking member of the Senate Judiciary Committee and a former chairman of the Finance Committee.

While the IRS said the officials were learning the ins and outs of the latest offshore tax avoidance strategies and delivering a message of compliance with U.S. laws, Grassley thought that far too many U.S. government officials to be hanging around this particular Cantina.

“There is certainly no reason for 19 IRS employees to attend the conference,” Grassley wrote in a letter to IRS Commissioner Douglas Shulman and Treasury Secretary Tim Geithner Monday. “In a challenging fiscal time, this is not the best use of IRS resources.”

“OffshoreAlert is a widely attended international conference on combating offshore tax evasion attended by government officials from numerous countries,” said IRS spokeswoman Michelle Eldridge in a statement to CNBC. “The IRS sent to this conference a handful of speakers and other employees who are leading different aspects of the IRS’ far-reaching anti-offshore tax evasion initiative.”

The IRS said it did try to minimise costs, saying seven of those attending were based locally and none of the other 12 IRS stayed at the Ritz Carlton — one even bunked with his parents. The others roomed at a nearby Courtyard Marriott.

The conference itself was free for speakers — there were five IRS officials scheduled to address the group — but the tax agency says it paid more than $1,300 each in attendance fees for 13 officials, incurring expenses of under $18,000, according to the IRS.

In turn, access to those IRS officials is part of the reason other offshore financial industry participants attend the event.

“Turn to your right and you might be speaking with the head of the IRS’ offshore programmes and initiatives or the Head of Tax at the OECD, turn to your left and you might be able to engage a leading offshore provider in a conversation about how to legally minimise your taxes,” read a description of the conference networking events on the OffshoreAlert website. “Somewhere in the crowd could be someone whose assets you are trying to locate or an offshore commercial court judge before whom you might have to argue a legal case.”

Sponsors displaying their logos at the event ranged from the accounting firm Grant Thornton to Cayman National Bank. One event sponsor is a Bahamas-based computer-server company called “Secure Hosting,” which explains on its website: “In order to assure customer privacy and security, ALL customer data, web sites, email and servers are located 100 percent Offshore.”

“We sponsored the conference because we have known the organisers for years and we feel their message fits with our brand,” said Richard Douglas, CTO of Secure Host. “We are not a haven for companies involved in illegal activities.”

Sen. Grassley wrote that he was particularly upset the head of the IRS whistle-blower office, Steve Whitlock, spoke at the conference. “It was brought to my attention that the Director of the IRS Whistleblower programme is currently participating in the Offshore Alert Conference at the Ritz-Carlton in Miami Beach,” Grassley wrote. “It is not clear to me how his attendance at the Conference furthers the administration of the IRS whistle-blower programme.”

Grassley is a particular critic of the IRS whistle-blower programme, concerned it is not paying out bounties for tips on tax fraud quickly enough to incentivise people with damaging information about wrongdoing to come forward.

In his letter, Grassley pointed out the whistle-blower office has yet to submit to Congress its 2011 report — seven months after the end of the fiscal year. “The lack of progress is demoralising whistleblowers so that I am now concerned that whistleblowers will stop coming forward,” he wrote. Grassley asked the IRS for a detailed list of Whitlock’s travel for the past three years, including justifications and expense summaries. He also requested that the whistleblower director’s travel be “curtailed immediately.”

The luster of this year’s conference Monday evening in Miami was dampened by rain, which forced indoors the scheduled beach party featuring a hand rolled cigars, DJ, and cocktails. At the party, CNBC spoke to the event’s organizer and driving force, David Marchant. The shaven-headed Welshman is owner and editor of OffshoreAlert, a newsletter focusing on fraud and tax evasion in the world’s tax havens.

“Is it a good idea to attend events and speak at events that have many, many reports about topics of public interest? I would say absolutely. You’d have to be a bit of an idiot to think otherwise,” Marchant says. “The main focus of our conference is probably fraud and asset recovery. I mean I do hope you do understand this isn’t an offshore banking conference where we’re soliciting people to send their money overseas.”

“Clearly the whistleblowing chief [of the IRS] did think it is worthwhile [to attend], Marchant says. “And Grassley disagrees. America is an open society and you’re welcome to disagree.”