At VIFreepBritish Virgin Islands NewsCaribbean News

BVI Wants Crackdown On Journalists Who Expose It As A Tax Haven


Mitt Romney made tax havens like the Cayman Islands household words.

But even Willard might blush at how much money the BVI took in last year.

That’s right, while we were eating cheese and bread, my neighbors 40 miles to the north were raking in $92 billion in 2013.

That’s more than Brazil and India combined, but less than the United States, China and Russia did individually. In fact, little old Road Town, Tortola, where the fresh smell of the Caribbean Sea is around every corner – lost the bronze to Russia by only $2 billion – making them a close fourth in “foreign direct investment” worldwide.

In case you’re wondering, Brazil brought in $63 billion and India netted $28 billion. The world’s biggest economy, the United States, saw $159 billion last year, while China took in $127 billion and Russia got $94 billion.

The BVI government says its country is NOT a tax dodger’s paradise. But with 500,000 shell companies established just last year, the International Consortium of Investigative Journalists (ICIJ) said it discovered “clear evidence of financial fraud” in 2,500 documents it examined.

At least 60 percent of the British Virgin Islands’ revenues come from offshore account fees, so there is little wonder why that Caribbean dependency is seeking to crack down on journalists who publish leaked confidential financial information.

Shell company registrations fell by 23 percent in the final quarter of 2013 after the ICIJ made its disclosure. Le Monde newspaper reported earlier this year that the BVI was concerned it would lose its confidential clients to Hong Kong and Singapore.

Now that a bill has passed the BVI’s House of Assembly mandating that people who leak or share the names of secret investors face a sentence of 20 years in prison and a $1 million fine – it only needs the signature of British-appointed Governor Boyd McCleary to become law.

This Freedom FROM Information Act from a country that only made incest a crime in the 1980s – and is now proposing to make child pornography illegal in this The Year of Our Zombie Apocalypse – 2014. For those who like to watch adult pornography don’t worry it’s still going to be legal so you’ll still be able to go online to sites like videoshd and partake in some online pleasure.

The United Nations and the Group of 20 Leading Economies (G20) say they want to put pressure on “non-cooperative jurisdictions” like the British Virgin Islands and Cayman Islands because they say such notorious tax havens have sucked an estimated $20 trillion out of the world economy.

The lack of transparency in Tortola made it easier for jailed fraudster Achilleas Kallakis to pull off the biggest mortgage con in history – worth an estimated $750 million. Kallakis used BVI shell companies to hide his fraud from lax British and Irish banks.

The BVI government’s clients also include Scot Young, a London property magnate and “fixer” for deceased oligarch Boris Berezovsky. Dundee-born Young is in jail for contempt of court for concealing assets from his ex-wife. Young’s lawyer allegedly controls interests in a Road Town company that owns a Moscow development worth $100 million.

India, Pakistan, Iran, China, Thailand and former communist states are also in the running in the BVI shell game lottery. The Cayman and Cook Islands are represented in the 2,500 documents, but most of the offshore accounts are in Road Town, Tortola, BVI.

Since the 1980’s, the BVI has attracted more than one million offshore “companies.” Here is a list of the main offenders:

  • Denise Eisenberg-Rich of the United States, the former wife of commodities trader Marc Rich, who was controversially pardoned by President Clinton on tax evasion charges. Eisenberg-Rich put $144 million into the Dry Trust, formed in the Cook Islands.
  • Dictator’s daughter Maria Imelda Marcos Manotoc, a provincial governor in the Phillippines, is the eldest daughter of former President Ferdinand Marcos, known for deep pockets of corruption.
  • A senator’s husband in Canada. Anthony “Tony” Merchant, a Saskatchewan lawyer, deposited more than $800,000 into an offshore trust. Merchant paid fees in cash and demanded that written communication to be “kept to a minimum.”
  • Jean-Jacques Augier of France was Francois Hollande’s 2012 election campaign co-treasurer. Augier set up a Cayman Islands-based distributor in Beijing with a 25 percent partner in a BVI company. He says his partner is Xi Shu, a Chinese businessman.
  • Spain’s wealthiest art collector, Baroness Carmen Thyssen-Bornemisza, a former beauty queen and widow of a Spanish steel billionaire. The Baroness uses offshore accounts to buy paintings and avoid a Value Added Tax (VAT).
  • The wife of Russia’s deputy prime minister. Olga Shuvalova. Her husband Igor Shuvalov has denied charges of wrongdoing about her offshore accounts.
  • Mongolia’s former finance minister, Bayartsogt Sangajav established “Legend Plus Capital, Ltd” with a Swiss bank account while he served as finance minister from 2008 to 2012. Sangajav says he goofed in not declaring the money and “is considering resigning” from his position in the 19th largest country in the world.
  • The president of Azerbaijan and his family. A construction mogul there, Hassan Gozal, launched paper entities in the names of President Ilham Aliyev’s two daughters.

The result of the BVI’s boom in offshore accounts is that the government there has sported an upscale “glass elevator” for several years so that visitors and officials alike can travel indoors in style. It has been the source of public envy of U.S. Virgin Islands Gov. Kenneth Mapp for donkey years.

Although it has been known for decades that the BVI provides safe harbor for the “ethically challenged” investment community, the Financial Secretary in Tortola, Mr. Neil Smith, denies wrongdoing on the part of the government.

“Our legislation provides a more hostile environment for illegality than most jurisdictions,” Smith said.

Meanwhile the British Foreign Office is able to subsidize the costs of running an empire based on its cut of the $92 billion Tortola took in. Lawyers and accountants based in London also heavily benefit from these offshore accounts when they act as intermediaries.

Tortola means “land of the turtle dove” and certainly most contributors were safe and sound when the ICIJ looked under the turtle’s shell.

Secretary Smith promises that the BVI will act “swiftly and decisively” if any of “legitimately private” companies are implicated in illegal activity.

In the meantime, if Mitt really is running again in 2016 as Bob Schieffer first reported, he might be wise to move his money from the Cayman Islands to the British Virgin Islands.

Maybe by then Tortola will have turned completely turtle – locked up all the journalists who sought to expose corruption – and made the only money there that is visible the bills that drop into the ocean at the Soggy Dollar Bar.

Previous post

Malaysian PM Threatens To Sue WSJ Over Money Hidden In BVI

Next post

Mexico 'a death trap for migrants' one year after new border program launched

The Author

John McCarthy

John McCarthy

John McCarthy is primarily known for his investigative reporting on the U.S. Virgin Islands. A series of reports beginning in the 1990's revealed that there was everything from coliform bacteria to Cryptosporidium in locally-bottled St. Croix drinking water, according to a then-unpublished University of the Virgin Islands sampling. Another report, following Hurricane Hugo in 1989, cited a Federal Emergency Management Agency (FEMA) confidential overview that said that over 40 percent of the U.S. Virgin Islands public lives below the poverty line. The Virgin Islands Free Press is the only Caribbean news source to regularly incorporate the findings of U.S. Freedom of Information Act requests. John's articles have appeared in the BVI Beacon, St. Croix Avis, San Juan Star and Virgin Islands Daily News. He is the former news director of WSVI-TV Channel 8 on St. Croix.

No Comment

Leave a reply

Your email address will not be published. Required fields are marked *