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Published: April 2nd 2008
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I’m in my usual sweaty, overcrowded, noisy Jamaican/Bahamian cyber cafe and DVD pirating shop, after a strange day. First off, I had a meeting with a lawyer specializing in offshore work. Her offices are in the building adjoining the Hilton Hotel, Nassau’s finest. I won’t give her name, because I got the introduction through the Ministry of Tourism, and I don’t want to offend anyone. As James explained yesterday, if you want anything done here, you gotta bribe people; then you really can get ANYthing done...
Let’s just say that this was a pretty swanky firm of lawyers, and their suite of offices was plush, so plush that it seemed almost impossible that the squalor that I had seen yesterday could be just a two minute drive away.
I wanted to find out about offshore companies and how I might research them. But first, here’s a little background on IBCs, because Headless Ltd is an IBC, an International Business Company.
IBCs were born in the Bahamas in 1990, and became hugely popular during the offshore boom of that decade. An IBC is a simplified offshore company, making it easy to set-up and run your offshore business. At least a hundred thousand IBCs were set up here in just ten years. IBCs offered:
Tax free trading
Total anonymity, with no public register of shareholders or directors
Any kind of business allowed (except insurance and banking)
Modest annual fee and no other admin (no accounts to be submitted)
Quick to set-up (24 hours)
Anybody could have one. And absolutely nobody else in the world would know about it. If you registered your company here on the Bahamas and put your profits through it, even if your business was relatively small, you were suddenly a lot richer. So were the Bahamas: 100,000 IBCs paying $300+ per year in fees, that’s $30 million per year easy money. For a total Bahamian population of around a third of a million, that’s quite a windfall. Where the fuck did it all go?
The IBC boom didn’t last. In 2000, the OECD (Organization for Economic Cooperation and Development) cited the Bahamas on a blacklist of offshore regimes practicing ‘harmful tax competition’; the Bahamas was also accused by the OECD of tolerating money laundering. The Bahamian government got scared, and passed new laws opening up the secrecy laws surrounding IBCs, much to the shock of the offshore banking community. IBCs are still pretty good, but the IRS can now request info on the ‘beneficial owners’ (i.e. the real, hidden owners) of IBCs, and the Bahamas usually complies.
Hence, most Americans now shun IBCs here for their tax-evasion planning. The Bahamas has lots of other offshore activity, not least banking. But all those easy IBC dollars in fees have drifted away. Although, after seeing the poverty that remains here on the island, I guess the government never spent too much of the easy money on social projects anyway. (NB advice given to me yesterday: if you feel a cold coming on, get on a plane to Miami, the health system here is negligible. That’s somewhat ironic; the health system in nearby Cuba, struggling without inward investment of any kind, is said to have pretty reasonable public health care.)
Anyway, this is what we know about Headless: it is an IBC, and thus falls under the 2000 IBC legislation. There is public access to company files. You can find out the names of the ’subscribers’ (those who administer the incorporation, in this case Sovereign in Gibraltar), and you can see the company’s resolution at which it appoints directors (it is a legal requirement to file this at the Registrar’s). Offshore directors are usually token document-signers, people who effectively stand-in for the ‘real’ owners (the ‘beneficial owners’) who in this way manage to keep their names off all the company documents, essential to keep tax authorities off your tail. The ’real’ owners typically give instructions on what needs doing (transfers of funds, documents signed, etc) and the dumb directors sign all this without question.
I have no chance of finding out who the ‘beneficial owners’ of Headless are, unless I:
a) bribe someone (an option which my lady lawyer seems to accept as a perfectly natural possibility);
b) hold a gun to someone’s head (actually, she just shrugs at this, too).
Before 2000, the ‘beneficial owners’ of a company were not always verified when a company was registered, making total anonymity possible. But the 2000 legislation meant that banks or other intermediaries submitting companies for incorporation must establish the true identity of these real owners.
Up in the plush, plush offices we move on to discuss some related issues, procedures for changing company names, that kind of thing. Then I go back to the Registrar’s to check the file again.
*
The lady who deals with me this time is not the long fingernailed one, but the one who did the photocopies for me last Friday.
“You back again?” she says, recognizing me. She isn’t annoyed to see me. I don’t know about secrecy, but everyone here seems happy to divulge the information available. Although I guess that’s not really very much.
“Where’s the register of directors?” I ask her, after she gets me the Headless file.
“It’s not here?” she says, rummaging through the file.
“I should be in here, right?” I ask.
“Yes. You better ask them. Probably not got around to it.”
Sovereign’s offices are only a minute away, but I’m kind of jaded of meeting people and asking slightly stupid questions whilst they wonder what the hell I’m doing here. So I decide to use my time well in the Registrar’s Office, instead.
I now know that a company that changed its name is traceable through the records via the OLD name. So I ask the lady to do another search for Headless.
She peers at the computer screen for a while, but comes up with nothing.
“Not even for 2002” I ask.
Nope.
I ask another question: if a shelf company* was bought and subsequently changed its name to Headless, that would show up in the records.
Yep, she says.
*(A shelf company is a pre-made company that is registered but never traded under. You can buy them and start trading right away. You can also subsequently change the name of the company.)
She looks yet again, but I guess it’s just to please me. Her mouth is pursed almost in a smile. They can’t ask you what you need this information for, so it’s awkward but funny, because I am clearly not the average customer here. On the other hand, it’s air conditioned and the counter has padded chairs for the customers.
She draws another blank. Headless does not appear in the Bahamas register until four weeks ago in any form.
To help her make the search, I have written the word HEADLESS on a page of my notebook and pushed the notebook across the counter so she can read it.
“You want me to look for Ace.. Acephale?” she asks, squinting to read the other word written there.
I see no reason to say no.
It takes her an age to type and retype Acephale. But eventually she draws another blank. No company called Acephale has ever been registered here.
“That’s a ‘ph’, right?” she says, trying to pronounce the word, looking down at the notebook again.
I tell her it is.
Then something very very obvious hits me.
I thank her, and head off to the Jamaican/Bahamian cyber cafe to type this, and also to send a plea for help to a Greek linguist I know. It really is too obvious...
More tomorrow.
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Acéphale
This is getting extremely interesting! Just one thing ... as far as I know, Acéphale does not come from greek, but from latin: a-cephalus. http://www.artandpopularculture.com/Acephale Another thing: You say that Headless was incorporated on Bahams just weeks ago, but in the photos of the documents you showed some days ago, the date seems to be in early 2007, not early 2008!