Offshore Tax Havens for beginners: Pick an inoffensive name
Simon Montlake, Forbes
The patrons of offshore tax havens may not think too hard about naming their discreet entities. Most are content to let the lawyers or bankers pick a name. That’s how you end up with plain-vanilla names like Value Addition and Peak Investments in jurisdictions like the Cayman Islands. Or Sankaty High Yield Partners II (principal: Mitt Romney). Bland, unassuming titles. A recent data dump of offshore trusts and companies to an investigative journalism group, which has caused a stir in austerity-bound Europe and beyond, is replete with such names. A textbook example: Anon Trust. Get it? Anonymous. For other wealthy individuals, though, the temptation to telegraph their wishes, or to invoke fortune and glory, is just too strong. Never mind that the whole point is to stay in the shadows. Some people just can’t help themselves.
Which brings us to the curious case of the Indochina railway and its Kiwi benefactor. Last November, an obscure Malaysian company agreed to build a 220km rail link across southern Laos at a cost of $5 billion. Malaysia’s prime minister attended a signing ceremony with his Lao counterpart. A worthy project, no doubt, and helpful for overland transportation between neighbouring Thailand and Vietnam. But an expensive undertaking in a poor, aid-dependent country with a 2012 GDP estimated at $9.3 billion. However, financing for the railway has reportedly been secured from a New Zealand lender. Which reliable lender would that be? Try Rich Banco. A Lao government official told Radio Free Asia that the Malaysian builder Giant Consolidated Limited (GCL) had arranged a loan from Rich Banco Berhad (a Malay term for LLC) and was preparing to start on an environmental impact study. Now I’m not familiar with this bank. Nor, it seems, is New Zealand’s central bank: Rich Banco is not registered there. All of which tell me that this railway is a long way from completion.
Still, the nomenclature got me thinking about other offshore entities. Then I remembered Shin Corp., the telecoms conglomerate sold by Thailand’s then-premier Thaksin Shinawatra to Singapore’s sovereign wealth fund in 2006. The $2.3 billion deal was hugely controversial and contributed to Thaksin’s eventual downfall. One reason was tax avoidance. Thaksin had transferred shares in Shin Corp to his children via a company registered in the British Virgin Islands, thus circumventing capital-gains tax in Thailand. And the name of the offshore company? Ample Rich. A fitting name for an entity owned by an ebullient tycoon-cum-politician accused of gaming the system. Thai courts agreed and later confiscated a substantial portion of the Shin proceeds. Ample Poor doesn’t have the same ring.
So who stands behind Rich Banco, the mystery lender from New Zealand? I tried to contact GCL, the Malaysian railway concession holder, to clarify how it would be funding its railway. But the company isn’t listed and doesn’t have a website. It’s not even registered in Malaysia. No. Try the British Virgin Islands.
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