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Bahamas ‘No. 1 Target’ Via Panama-Style Leak

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas yesterday became the world’s ‘number one target’ among international financial centres (IFCs), after it fell victim to a Panama Papers-style leak of 1.3 million documents.

Politicians and financial services providers warned that the Bahamas was now facing “a continual onslaught” that threatens to undermine its reputation, after data obtained from the companies registry at the Registrar General’s Department was published for a global audience to view.

The ‘leaked’ data was obtained by the German newspaper, Süddeutsche Zeitung, and published in a worldwide database built by the International Consortium of Investigative Journalists (ICIJ) - the same two organisations that disclosed the so-called ‘Panama Papers’.

The UK’s Guardian newspaper, an ICIJ member, boasted that 1.3 million “internal files” had been leaked from companies registry in the Bahamas, containing information on 176,000 companies, trusts and foundations. It described this nation as a “notorious tax haven”.

The newspaper’s article, echoing the recent piece by The Economist, went on to portray the Bahamas as a ‘rogue’ jurisdiction that gave sanctuary to fraudsters and other financial criminals, while also proving ‘uncooperative’ in the fight against global tax evasion and avoidance.

It even quoted Mark Morris, the same ‘independent tax expert’ featured by The Economist, who seized on the Ministry of Financial Services’ sponsorship of the upcoming STEP Latin American conference in Panama to allege that the Bahamas was saying “bring your untaxed money to us”.

Branville McCartney, the Democratic National Alliance’s (DNA) leader, told Tribune Business that the leak and resulting negative media coverage showed the Bahamas currently has “a bulls eye” painted on it.

He added that the nation seemed to be under a “continual onslaught” from the international community once again, and expressed concern that it would deter foreign direct investment (FDI) and financial services clients from coming to this nation.

“We have a ‘big X’ on our back. We are the bulls eye. It is quite frightening. I don’t know how else to put it,” Mr McCartney told Tribune Business.

“It seems as if everything keeps coming at the Bahamas. It’s like a continual onslaught against the country. Ultimately, we, the Bahamian people, suffer for it.”

The DNA leader was backed by Paul Moss, president of Dominion Management Services, one of the few Bahamian-owned firms in the financial industry, who agreed that this nation was “in the cross-hairs of the OECD and others”.

The Bahamas, and its international financial services industry, are now under the most sustained international pressure they have experienced since the 2000 ‘blacklisting’ by the Financial Action Task Force (FATF), supported by other G-7 groupings.

The Economist article appears to have been an attempt, sanctioned by the Organisation for Economic Co-Operation and Development (OECD), to ‘bounce’ or force the Bahamas into switching its preferred method for implementing automatic tax information exchange to the multilateral - as opposed to bilateral - approach.

Then, less than a week later, came the European Union’s (EU) announcement of the ‘scorecard assessment’ exercise, which ‘red flagged’ the Bahamas on two out of the three criteria, as part of an exercise that will lead to ‘blacklists’ and sanctions by end-2017.

This week sees the turn of the ICIJ and its ‘leak’ database, and many in the Bahamas are likely to view the timing of its publication as more than coincidental and part of a co-ordinated, concerted campaign designed to break this nation.

Allyson Maynard-Gibson, the Attorney General, who has ministerial responsibility for the Registrar General’s Department, did not return Tribune Business’s phone and e-mail messages seeking comment.

The UK’s Guardian newspaper, though, revealed the connections of prominent politicians, such as the UK’s home secretary, Amber Rudd, and former EU competition commissioner, Neelie Kroes, to Bahamas-incorporated entities.

It added that among the data were links to Cem Kinay (German), a property developer wanted by Interpol for bribery, and accused of making a possibly corrupt payment to Michael Misick, the former premier of the Turks and Caicos Islands.

However, conspicuously absent from the ICIJ database and volumes of media coverage is any suggestion, let alone evidence, that suggests any wrongdoing by Bahamas-based financial services companies and associated professionals. Neither has any suggestion emerged yet that a Bahamas-incorporated entity is guilty of wrongdoing.

The ‘leak’s’ main threat is to international investor perceptions of the Bahamas as a safe place to conduct business, especially when it comes to data security and legitimate requirements for confidentiality.

Of particular concern is the suggestion that the Registrar General’s Department is the source of the leak, as this could undermine investor trust and confidence in the Government’s ability to protect their interests and privacy.

Some cynics may suggest the Christie administration has already achieved this goal in the ongoing Save the Bays controversy, but the ‘leak’ could cost the Bahamas further financial services and foreign direct investment (FDI) business.

Still, the Bahamas-related revelations are likely to be less ‘juicy’ than those associated with the ‘Panama Papers’ because of the source where the information originated.

In Panama’s case, the revelations came from the Mossack Fonseca law firm, and included correspondence between its attorneys, clients and financial services intermediaries worldwide.

When it comes to the Bahamas, given that the material is said to have originated from the Companies Registry, the documents obtained seem likely to be fairly ‘dry’ corporate filings showing company annual returns, plus the identities of their shareholders, directors and officers.

This was effectively conceded by the ICIJ, which admitted: “Unlike the Panama Papers, 11.5 million often-detailed e-mails, contracts, audio recordings and other documents from one law firm, the information listed in the new Bahamian documents is plainer - if still fundamental - in content.

“The new data does not make it clear, for example, whether directors named in connection with a Bahamian firm truly control the company or act as nominees, employees-for-hire who serve as the face of the company but have no involvement in its operations.”

The ICIJ said the 1.3 million Bahamian files featured the names of 539 registered agents and intermediaries who incorporated companies, before co-mingling them with the ‘Panama Papers’.

It also further admitted: “It is generally not illegal to own or direct an offshore company, and there are legitimate business reasons in many cases for setting up an offshore structure. But transparency experts say it’s important that public officials disclose their connections to offshore entities.”

One Bahamian legal source, though, speaking on condition of anonymity, questioned the ‘leak’ moniker ascribed to the documents obtained by the ICIJ, pointing out that annual returns for all companies, coupled with director and shareholder listings, were publicly available documents.

Comments

observer2 2 years, 8 months ago

https://www.icij.org/offshore/former-...">https://www.icij.org/offshore/former-...

Its worth taking the time to read the article from the ICIJ.org website link above.

One of the most damning insights from the article is that the Bahamian corporate registry database which can be searched online legally is not up to date. For us as Bahamian's this shouldn't come as a surprise. Indeed I would be shocked if the Bahamian Government could keep a database of 175,000 companies up to date with the names of all shareholders, directors, registered offices, shares issued etc. It is beyond our government's capacity. Lol...we can hardly keep the lights on much less the computers.

Of even greater embarrassment is that corporate details at the registry seem to be left off of companies used by high profile global persons. Global regulatory interrogation of the database is even more frustrated by a government cost of $10 for each page. But even if you searched the database legally it will give you nonsense in some instances because its not up to date.

Add the parts of the puzzle together including no automatic tax exchange treaty, a recalcitrant financial services industry and bad record keeping (by design, incompetence, gross negligence or worse) and you should not be surprised when we are black listed again. This time it will be ten times worse than the 2000 black listing. Correspondent banks will walk away to reduce their risk of exposure to the Bahamas. The quasi regulated web shop industry banking through the BoB with the stated aim of the Central Bank to assimilate the industry into the financial system isn't constructive.

We as a country need to reverse course. Sadly the PLP, FNM, DNA and Independent Candidates don't even grasp the severity of our financial problems including spiraling government debt and crushing corporate taxes. I think its may be beyond their intellectual capacity...they just don't know that they don't know, neither do they recognize that there is a larger problem...so it is impossible for them to resolve the issue. The G20 will sort them out.

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ExNassuvian 2 years, 8 months ago

Observer2 your "observations" are quite dead on. The leaks only confirm that the Bahamas is re-active and not pro-active to the demands and needs of the Global economy as it evolves towards transparency. This issue had been on the table for quite awhile since 1998 when the OECD was moving towards blacklisting the Bahamas as a "harmful tax regime" - I had used this term in an email response to a USA affiliate office (of a Nassau satellite office) which was inquiring about taxation issues for Americans' planning to move to the Bahamas. One of the Principal's of the Nassau office took great offense to the use of the term revealing that there is either denial or ignorance in their knowledge. So it is not just the Government but also the financial and legal professionals who may be considered as aiding and abetting this perpetuating scandal similar to the Enron collapse where Arthur Anderson was held accountable.

It is true that the broader Bahamian populace will bear the costs in lost jobs; shuttered offices etc., but the professional elite have reaped millions in fees over the years servicing this sector and as with the adage that "whom much is given" much will be expected. It is in my opinion and experience that the perceived rewards of doing something illegal or morally questionable that the personal cost often exceeds the reward that one receives - "all that glitters is not gold".

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jmilton 2 years, 8 months ago

I don't understand all the fuzz around this, and why they call it a "Leak". Bahamas Register General’s Office give access to Public Records to anybody who buy "Code" that give you an hour or more access to the Database.

It would take weeks to an human to extract all the data from this database, but a good programmer could make a BOT to automate the extract all absolutely all data in few hours (or maybe day if the server of the government is slow).

I used this service many time in past, not to check the Company Registrar but the public records of Deed & Document to see the value of Real Estate Transaction in the island. I was quite shocked to see that it was possible to download any Conveyance and see the name of the seller, buyer as well as the amount of the transaction in just few click, for any real estate transaction.

I think this is good for transparency and Bahamas Government should be actually proud to have such system in place. In the end it's Bahamas that should be making FUN to all media who create a "Bahamas Leak" moniker around something that is actually public and smell the transparency that all other country in the world want to impose to Bahamas.

As far as I'm concerned, and I'm a resident (not a citizen) : It's still better in the Bahamas.

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Socrates 2 years, 8 months ago

Brothers and sisters, this may be the dawn of 21st century style colonialism.. more subtle than before and with no obligations for the power brokers namely OECD countries and the coming beast empire, the EU.

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