From Amandala Newspaper

BELIZE CITY–In what is being described as an almost certain fatal blow to offshore banking, international media broke the story on Sunday, April 3, of a colossal leak of confidential documents from a highly secretive and private Panamanian law firm, Mossack Fonseca. Eleven million documents held by that firm were passed to a German newspaper which then shared them with the International Consortium of Investigative Journalists (ICIJ), a group of 107 media organisations spread across 76 countries. This group has reportedly been analysing the dossier for at least a year now.

Mossack Fonseca is the world’s fourth largest provider of offshore services and although it is based in Panama, it provides corporate incorporation and other offshore structured vehicles across many offshore jurisdictions.

The ICIJ reported that more than 300 individual journalists reviewed the leaked documents to expose a list of clients that included those involved in bribery, arms deals, tax evasion, financial fraud, and drug trafficking. Larger than Assange’s WikiLeaks, the treasure cove of almost three terabytes of electronic data siphoned from Mossack Fonseca’s internal database is considered the biggest leak ever. The source of the leak has not been identified.

The documents, which cover the day to day business affairs of Mossack Fonseca, go back at least 40 years and reportedly show how the firm has helped clients launder money, dodge sanctions and avoid taxes. This sensational leak, which without doubt is causing trepidation and anxiety in many quarters, has triggered authorities in the U.S. and major European countries to launch far-reaching investigations. The ICIJ has been requested to share all data it has collected and analysed in this matter.

The documents, now widely referred to as the Panama Papers, reportedly show the firm’s dealings with 12 current or former heads of state and at least 60 people linked to current or former world leaders. They include the Icelandic Prime Minister, Sigmundur David Gunnlaugson, who had an undeclared interest linked to his wife’s wealth; a trust linked to the deceased father of UK Prime Minister, David Cameron; and a suspected billion-dollar money laundering ring involving close associates of Russian President Vladimir Putin.

Also named are former leaders of Georgia, Iraq, Jordan, Qatar, Sudan and Ukraine, and the BBC, which has worked on the documents, also names relatives of Syrian President Bashar Al-Assad, late Libyan dictator Muammar Gaddafi and deposed Egyptian President Hosni Mubarak. Mossack Fonseca worked with more than 14,000 banks, law firms, company incorporators and other middlemen to set up companies, foundations and trusts for customers. Based on several reports in the UK media, these included banks, firms and corporate service providers here in Belize.

More specifically and according to media reports, former British Tory peer and key principal of the Belize Bank and its related companies, Lord Michael Ashcroft, is mentioned in the documents as having used Mossack Fonseca to take advantage of tax havens. A spokesman on behalf of Lord Ashcroft responded by saying the documentation was “entirely false,” and that “these allegations are completely untrue, and the events as described never happened. The records upon which you [ICIJ] claim to rely for those allegations either do not exist or have been falsified.”

Additionally, it is reported by the ICIJ that Belize Corporate Services (BCS), a subsidiary of Ashcroft’s company BCB Holdings, had been using Mossack Fonseca to provide shell corporations for its clients since 2006. Belize Corporate Services, located on Regent St. in Belize City, is the leading offshore incorporating agent in Belize and, as a part of the BCB Group, is said to work very closely with Belize Bank International.

According to the documents leaked, Mossack Fonseca was approached by Belize Corporate Services back in 2006 to establish a working relationship in the facilitation of clients for both firms. As a part of this working relationship and according to an email sent in November 2013, BCS established a new company whose owners were Jurgen Mossack and Ramon Fonseca, the founding partners of the Panama firm, along with another partner Christopher Zollinger. The new firm was called M.F. & Co. (Belize) Limited and cooperated with BCS in facilitating the creation of companies and acting as registered agents in Belize.

These allegations come at a most inopportune time for Belize’s financial system which has been faced with an intractable correspondent banking crisis for more than a year now. Just under a year ago, in April, 2015, Belize Bank and Belize Bank International were the first banks in Belize to lose their correspondent banking service providers in the U.S. as a result of the de-risking strategy employed by large U.S. banks. Then, on September 16, 2015, just one day after Prime Minister Barrow announced he had reached a settlement deal with Lord Ashcroft for the public acquisition of BTL, the U.S. Internal Revenue Service (IRS) was granted court approval to serve ‘John Doe’ summonses on Belize Bank and Belize Bank International in order to investigate accounts held by those banks. In its declaration processed by the U.S. Federal Court in Miami, Florida, the IRS stated that “Belize Corporate Services (BCS) is incorporated and based in Belize and offers corporate services including the purchase of ‘shelf’ Belizean international business companies.”

To add to the challenges which the seemingly embattled Lord Ashcroft banking group has been experiencing over the last 12 months, and as recently reported by Amandala, in late 2015 the Belize Supreme Court handed down a US$3.5 million judgement against Belize Bank International in a case brought by Evergreen e-Pay Processing, Ltd., a company with an apparent domicile of Charlestown, Nevis, in the Eastern Caribbean. Evergreen was contracted by the defendant to process international credit card payments for clients.

While the full extent and implications for Belize of the Panama Papers leak will become clearer in the ensuing weeks, based on the early allegations and revelations, this will likely result in further pressure on our local financial system. Prime Minister Dean Barrow and Governor of the Central Bank Glen Ysaguirre have consistently told the local press that the de-risking crisis was ‘not an issue with the jurisdiction of Belize’, and that several banks across the Caribbean, are suffering the same fate. The ICIJ reports indicate that there may be other banks and offshore intermediaries in Belize that are listed in the Mossack Fonseca files. Amandala will keep following this story.

For more on this story go to: http://amandala.com.bz/news/mossack-fonseca-ashcroft/