05/10/21

BAHAMAS: Jurisdiction Must Counter Punch On Offshore Leaks.

As published on tribune242.com, Monday 4 October, 2021.

The Bahamas was yesterday urged to “look for the positives in a not so positive situation” after this nation was named among the jurisdictions mentioned in the latest offshore finance data leak.

Hubert Edwards, principal of Next Level Solutions, a Bahamas-based corporate governance and risk management consultancy, told Tribune Business that this nation must stop allowing critics to “hit us on the back leg all the time” after the International Consortium of Investigative Journalists (ICIJ) and its worldwide media partners published the so-called “Pandora papers”.

While the group alleged that its revelations provided a further insight into how world leaders, public officials, wealthy oligarchs and others exploited international financial centres (IFCs) to avoid taxes and hide ill-gotten gains, Mr Edwards argued that The Bahamas needed to counter-punch by defending its products, structures and presence in the financial services industry.

While acknowledging that the “Pandora Papers” disclosure, and the inclusion of The Bahamas, “on the face of it could have some reputational damage”, he argued that the leaks appeared to be co-ordinated and designed to create “instability” in IFCs and discourage clients and their advisers from using them.

“The most important question I ask is: Are they legal? These are truly legal structures designed for tax planning,” Mr Edwards said of The Bahamas’ financial services industry’s products and structures. “In more ways than one, when we eliminate the excitement and sensationalism that comes out of this, it’s further evidence that The Bahamas offers legal, legitimate structures for tax planning.

“For The Bahamas, we need to stay focused on the fact that what is being revealed are tax efficiencies and structures that are being used by persons. This is our value proposition to the world... I’m saying that these leaks are going to happen over and repeatedly, but at some point in time we need to say these structures are legitimate, they are not illegal, and we should be mounting a defense that we are using legitimate structures anyone in the world can use.

“We are not doing anything wrong. We are providing services that are part of the whole financial system. At some point we have to stop letting these people hit us on the back leg. It means looking for positives in a not so positive situation.”

While the full ICIJ leak has yet to be published, The Bahamas was thus far mentioned in relation to the former Dominican Republic vice-president, Carlos Morales Troncoso, and his family who were said to have shifted their assets from this nation to South Dakota in the US after the Register of Beneficial Ownership Act was created in 2018.

That Act forced all financial services providers, registered agents and those entities without a registered office to supply beneficial ownership information on every Bahamas corporate vehicle to a central government database that is off-Internet. Only law enforcement agencies and regulators will have access to the information.

The “Pandora Papers” expose the role of US states such as Delaware, Nevada, Wyoming and South Dakota in international finance. Paul Moss, Dominion Management Services’ president, yesterday said the leaks confirmed his concerns that the Register of Beneficial Ownership Act could drive The Bahamas’ business to these US states.

Among the 14 providers said to have contributed to the “Pandora Papers” leak was Trident Trust Company, which has a unit in The Bahamas called Trident Corporate Services. Three other providers named in connection to The Bahamas appear to have no physical presence here.

The ICIJ yesterday said the 2.9 terabyte leak contained 11.9m files, including more than six million documents.