The Tribune

By AVA TURNQUEST

Tribune Chief Reporter

aturnquest@tribunemedia.net

THE government yesterday defended its financial service industry after the country was indentified as a popular tax haven in a major international data leak that documented the offshore dealings of the world’s wealthy elite.

Minister of Financial Services Hope Strachan said the “disconcerting” leak challenged the work and validity of international financial centres, but maintained that the local industry was a compliant jurisdiction.

Mrs Strachan said her ministry will closely monitor the investigation as it was still too early to determine if the data leaks that have been dubbed the “Panama Papers” will have any impact on the industry in the Bahamas.

“Obviously this is a new happening and it’s a new story and we are going to wait to see how it develops,” she said. “First of all we have to confirm the facts of what has been reported and as the matter progresses we will investigate and make a determination on the issues as it moves along.

“I think we have been proactive. We are a compliant jurisdiction, we have conformed to our obligations under our international regulatory agreements and, that being the case, we can say that we are ready to deal with whatever we have to based on the fact that we are compliant. In our peer reviews we are deemed to be compliant so we have done everything we need to do in order to preserve our reputation and the sector. We’re ahead of the game.”

The Bahamas was named a key tax haven for some of the world’s wealthiest people who sometimes seek to launder money, dodge sanctions and evade tax according to the Panama Papers, a leak of some 11 million documents by a Panamanian law firm, Mossack Fonseca, to a German news agency. The news agency, Suddeutsche Zeitung, contacted the International Consortium of Investigative Journalists (ICIJ) to help analyse the data that is being described as the biggest leak in history. Mossack Fonseca reportedly played a major role helping clients use offshore centres, including 12 current or former heads of states and 17 relatives/friends of such country leaders as Russia’s President Vladimir Putin.

Argentina president Mauricio Macri, according to the Panama Papers, is listed as a former director of a company incorporated in the Bahamas between 1998 to 2009. The report further claims that the company, Fleg Trading Ltd, was not disclosed as an asset when Mr Macri became mayor of the country’s capital, Buenos Aires.

Yesterday, Argentine opposition leaders demanded that Mr Macri more fully explain his role in a Bahamas-based offshore company that lists him in the leaked documents. The Argentine president Macri has confirmed that a business group owned by his family had set up Fleg Trading Ltd in the Bahamas to do business in Brazil. According to a statement, however, Macri himself had no shares in Fleg and never received income from it so he did not declare it in financial statements.

Graciela Camano, president of the Renewal Front opposition bloc in the lower House of Deputies, says Macri should “use a national broadcast to explain to Argentines his situation.”

Mr Macri, who assumed power in December, is the son of tycoon Francisco Macri, an Italian-born businessman who is one of the richest people in Argentina.

Another link revealed in the massive leak is that the father of British Prime Minister David Cameron, the late Ian Cameron, hired Bahamians to keep his offshore investment fund - Blairmore Holdings Inc - exempt from British taxes.

One of the officers was the late Solomon Humes, a lay bishop with the non-denominational Church of God of Prophecy. Bishop Humes acted in various roles including vice-president over a number of years from the mid-1990s.

The British prime minister has refused to confirm whether his family’s money was still invested in the fund that was incorporated in Panama but based in the Bahamas since the 1980s.

The Panama Papers contain nearly 40 years of records and will be made available to the public next month.

The leaked data has sparked widespread calls for investigations, increased crackdown on financial services and even large scale protests in Iceland as its Prime Minister was revealed to have hidden offshore assets. Several countries have launched investigations from the data obtained in the leak, such as the United States and France.

Tax havens are countries or regions that feature low or non-existent personal and business taxes. The term does not only include industries with low rates but can also describe regimes that keep financial information secret.

Yesterday, Mrs Strachan explained that the term “tax haven” was a term that is often used interchangeably by groups that are not regulatory agencies to fit certain agendas.

“Unfortunately the term is interchangeable,” she said, “depending on which jurisdiction is talking about it, how they are describing it, and who they’re describing. It has different meaning for different people and different criteria is set by which the term is used.

“I think the only thing a country that has a financial services sector can do is to ensure that they are always compliant with the regulatory agencies and the rules and regulations that are set for the industry and that is what we have worked towards over the course of years and that is what we continue to do.”

Mrs Strachan said: “You’re going to have these bodies, that are not necessarily regulatory bodies, that are going to go out and label you however it suits them, but I think by any criteria you have to make sure you are conforming to those organisational regulations and rules and that is what really matters at the end of the day and that is what we are going to continue to do.”