By Sandra Crucianelli, Emilia Delfino y From Buenos Aires Times

When Luis Caputo became Finance secretary in 2015, he failed to declare in affidavits lodged with the Anti-Corruption Office (OA) that he had shares in two companies, and that he owned an investment fund management firm based in Miami.

When Finance Minister Luis Caputo became a public servant in 2015, he failed to declare information about his stake in offshore companies that manage hundreds of millions of dollars in tax havens.

The information came to light through documents obtained from the Securities and Exchange Commission (SEC) by Perfil and the group of local journalists who compose the so-called Argentine “Paradise Papers” team.

From August 2009 to July 2015, Caputo was the major shareholder of the Princess International Group based in the Cayman Islands. He held more than 75 percent of the company’s shares.

However, he failed to include this information in legally-required affidavits for the 2014 financial year, which were presented to Argentina’s Anti-Corruption Office (OA) when he became a public servant in December 2015. He also withheld information in 2016 regarding the 2015 financial year. The omission of this kind of information is a crime in Argentina and is punishable with up to two years in prison.

Caputo’s role in the Princess International Group is telling and reasserts how tax havens facilitate the concealment of goods, information and money. By means of his shares in the company, the minister was also the owner of between 50 and 74 percent of another offshore firm, Affinis Partners II, also based in the Cayman Islands, and the owner of Noctua, an investment fund management firm based in Delaware and Miami. The corporate structure of Noctua functioned like a Mamushka doll: a firm that owns another firm that manages another firm.

Aside from concealing information from Argentine authorities, Caputo also denied this information when consulted by the Argentine Paradise Papers team in November last year, following the publication of an investigation by the International Consortium of Investigative Journalist (ICIJ) and the German newspaper Süddeutsche Zeitung. Caputo was consulted again last Friday but continued to deny what Noctua had reported in documents lodged with the United States government.

The shares held by Caputo in these offshore firms again exposes a possible conflict of interest for the minister.

Noctua administers high-risk investment funds in the Cayman Islands, where financial obscurantism reigns. Six months before joining President Mauricio Macri’s Cabinet in December 2015, Caputo had played a key role as a shareholder and manager of these secret investments, which included defaulted Argentine sovereign bonds. Later, in 2016, he was in charge of negotiations with the so-called “vulture funds” that were demanding payment on these defaulted sovereign bonds.

Caputo is also currently Argentina’s representative before the G20, a group of countries whose aims following the Panama Papers and Paradise Papers scandals include reducing the operational capability of tax havens and bringing transparency to the international financial system.

MONEY

In July 2015, when Caputo was a shareholder, Noctua managed investments totalling US$251,296,483, according to documents the same fund management firm lodged with US authorities. The company had between 11 and 25 employees. Its main investment funds were – and are – Alto Global Fund and Argentina Fund, both based in the Cayman Islands.

The majority of the firm’s clients are not from the United States but neither their identities nor nationalities are known. Noctua defines them as “high net worth individuals.” The company also manages, to a lesser extent, money from “pooled investment vehicles”, from “corporations and other businesses” and “trusts.”

Asked by the Argentine Paradise Papers team, the minister again denied his role in the firm: “I was never an owner or a shareholder of Noctua or of Princess, rather I was an adviser, administrator, fiduciary and/or manager. For this reason, I was not required to declare this neither to the AFIP (tax office) nor to the OA, as I have said before.

“Let me reiterate that since December 2015 when I became a public servant I ceased to provide any professional services to said companies,” he added.

In November, the ICIJ investigation had revealed that Caputo was an administrator of Noctua’s investment funds in the Caymans. Now, the documents obtained via a request of information lodged with the SEC reveal much more. Caputo was also the owner of a company that administered secret investments. And he did not declare this to Argentine authorities.

The minister said in November that Noctua managed money from “friends and family” – suggesting its clients could be Argentines – and denied being an owner of Noctua. “I was just an administrator” that advised on investment funds and derived potential clients. “I had no role as a shareholder as far as I am aware. However this is not important because the company, which is not worth anything, is a fund whose worth depends on the portfolio that it is managing,” he said.

PARTNERS

Noctua has had a public face since it was founded in 2009: Martin Guyot, an Argentine who lives and works in Miami, Florida. He is responsible for lodging documents before the SEC. When buying and selling bonds that are traded on the US stock exchange, a Cayman Island fund manager must declare before the SEC what type of investment funds it is managing.

Guyot has been a partner of Caputo’s. The owner of Noctua, Affinis Partners II, had at least two shareholders between 2009 and 2015: Guyot and Princess International Group (Caputo’s offshore firm). What is more, Caputo and Guyot had in their names at least five percent or less of shares in Noctua.

The share structure changed in 2016. In documents lodged with the SEC that year, Caputo no longer appeared as a participant in the companies and control rested in the hands of Guyot, who appeared as an Affinis shareholder.

With no shares in Noctua, Caputo began his role as Finance secretary and negotiated the value of defaulted sovereign debt bonds with holdouts.

In Argentina’s federal courts, two cases have kept a low profile but should deepen the investigation into the connections between Caputo and Cayman Island-based investment funds.

THE INVESTIGATION

The investigation into Minister Caputo and his connections with tax havens began with a set of data from Excel documents created by the law firm Appleby, the main target of the Paradise Paper leaks. The documents, dated 2010 and 2011, contained information about Alto Global Fund, an investment fund based in the Cayman Islands. Caputo appeared as a “manager” of the fund. The administrator of the fund is Noctua, which also manages Argentina Fund, another investment fund that Caputo controlled.

The Argentine ICIJ team found other documents that broadened the investigation. These documents about Noctua were found on a sub-website of the SEC. One of these was the ADV document which requires detailed information about companies and funds registered in the United States.

This first batch of documents from the SEC was dated 2016. But these papers did not mention Caputo. The digital trail did not allow the ICIJ team to obtain documents prior to that date. Logic indicates that the SEC could have more documents on Noctua given that the firm has operated since 2009.

At the end of November, the Argentine team lodged a request for freedom of information. This tool for obtaining public information is available to any person, US or foreign.

The documents reveal Caputo was not only a manager or administrator of investment funds in the Caymans but also the owner of two offshore companies in that jurisdiction through which he possessed the majority stake in Noctua.

IMAGE: Shares that were held by Luis Caputo in these offshore firms again exposes a possible conflict of interest for the minister. Foto:PERFIL/JUAN OBREGON

For more on this story go to: http://batimes.com.ar/news/argentina/caputo-concealed-cayman-island-offshore-firms-from-argentine-authorities.phtml