You can’t get much more offshore than the tiny Caribbean island of Nevis. (Image: www.hutterstock.com)
If company registers are to be believed then it appears that a group of just 28 people control more than 21,500 companies around the world. However, a new investigation reveals that this group of so-called nominee directors are little more than a name on a page hiding the real individuals at the wheel of these companies.
A joint investigation involving the Guardian, BBC’s Panorama and the International Consortium of Investigative Journalists (ICIJ), has delved into the labyrinthine records of offshore companies and found a hall of mirrors, where a handful of people act as figurehead directors of organisations. These nominees play a key role in keeping secret hundreds of thousands of commercial transactions reports the Guardian.
Today’s Guardian report introduces a week of stories exploring the area. They have, we are told, traced back ownership links to try and identify who really own some of the many offshore companies.
In tonight’s BBC Panorama, reporters go undercover to discover just how these legal ownership structures and offshore registrations can allow for illegal tax avoidance and abuse.
Names for sale
The game is a rather simple one: some business owners are keen to keep their connections to companies hidden, but registering a company necessitates someone to sign the documents. The solution: pay someone to act as a nominee director, putting their name to documents but also handing over all decision making power back to the real owners. Complete anonymity all for the price of someone’s name.
This process is completely legal in UK law, despite the fact that in 1999 the government claimed that sham directorships had been essentially outlawed.
According to the Guardian more than 20 UK agencies sell off-shore companies and many of those also help to supply people to take up nominee directorships.
But, while the secretive system remains legal it is also open to abuse, says the Guardian.
Where in the world is Sarah Petre-Mears?
To illustrate the complexities of tracing ownership structure the Guardian uses a case study, that of Sarah Petre-Mears. In a short video posted on the Guardian website, reporter James Ball goes in search of the elusive Petre-Mears.
On the surface Petre-Mears, 38, appears to be a business tycoon, says the reporter, adding that she is listed as director of more than 1,200 companies registered in the Caribbean, the Republic of Ireland, New Zealand and the UK.
Many of the 12 addresses listed for the UK-based companies are nothing more than PO boxes or the offices of incorporation agencies. The only residential address the investigations team could find was for a property in Sark, a tax haven in the Channel Islands.
However Petre-Mears no longer lives in Sark, instead Ball finds her home in the tiny Caribbean island of Nevis – another tax haven.
Rather frustratingly after a world-wide hunt, Ms Petre-Mears refused to answer questions from the Guardian about her role as a nominee director. However, Ball explains that ‘the evidence we have gathered suggests her impressive directorships are a complete sham’.
The pay offs
Meanwhile, in a parallel investigation, a team of undercover reporters for BBC Panorama travelled to Mauritius to explore how these offshore, secretive ownership structures could bring financial benefits. In a series of undercover stings they attempt to persuade offshore company incorporation agencies to help them dodge tax.
An undercover reporter, posing as a UK businessman trying to avoid tax, met with Jesse Hester, founder of Atlas Corporate Services. Hester’s advice is to use an intermediary company in Panama, because it is particularly secretive. He reassures the Panorama team that tax officials do not have the resources to chase everyone down.
According to the Guardian Hester’s name appears on 1,509 companies’ official records or documents.
Atlas later told Panorama that the conversations they had with the undercover reporter were ‘preliminary’ and they had rigorous procedures in place before engaging with clients and that they are now reviewing those procedures.
Today’s revelations are just the first in a week long offering from the Guardian, ‘designed to strip anonymity from offshore companies, the most shadowy aspect of the UK’s financial industry.’
The work reflects a project from the ICIJ to identify, country by country, the true owners of thousands of companies. The project is ambitious, necessitating crunching data on thousands of offshore entities, as well as conducting interviews with key insiders and will not be completed until next year.
The work is already having an impact. Today business secretary Vince Cable announced that officials would be reviewing the role of nominee directors. Cable told the BBC, ‘I can assure you that we will investigate fully any specific allegations and ensure that appropriate action is taken.’
Read the Guardian’s article here.
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