The Panama Papers blew open the hidden world of offshore finance and took down several world leaders. As a result of the massive leak of corporate records, multiple governments, including the United States, pledged greater oversight of the world of shell companies.
The stories also signaled the end of Mossack Fonseca, the Panamanian law firm whose records were published in the Miami Herald and other news outlets. But for many other offshore service providers, it was an opportunity to harvest more business. One of them was Trident Trust, which has offices around the world, including in Miami and New York.
Hundreds of Mossack Fonseca’s clients in the British Virgin Islands (BVI), a popular offshore haven, scrambled to move their companies to Trident, even before Mossack was shut down, according to a Miami Herald analysis of newly leaked corporate documents.
Trident employees, per emails seen by the Herald, had a name for this influx of clients: the “MossFon Project.”
The leak from Trident as well as 13 other offshore service providers shows that curbing the world of offshore finance is not as simple as putting one company — even a major player like Mossack Fonseca — out of business.
The customers that applied to make the switch to Trident are a collection of the rich, the powerful and, in some cases, those accused of criminality. The prospective clients were often investment portfolios and trusts holding millions in luxury real estate, private jets and expensive artworks.
The owners of the companies included the Thai heir to the Red Bull energy drink fortune and members of the Saudi royal family. Also included was the family of a reputed Indian drug lord who was among the prime suspects (although never charged in the incident) in the 1993 bombings in Mumbai that killed 250 people, one of the first major terrorism attacks in the country. Until his death in 2013, Iqbal Mirchi was also sanctioned by the U.S. Treasury Department. British courts denied India’s extradition requests for Mirchi for his alleged ties to terrorism. But in 2018 India did charge family members who have now appeared in the leak with money laundering. The charges have not yet come to trial.
The Miami Herald submitted a series of detailed questions to Trident. The company declined to respond on the record to specific matters, threatened litigation and provided the following statement:
“Trident Trust Group (Trident) is a global provider of professional corporate, fund and trust administration services. Each of Trident’s trust and corporate services businesses is regulated in the jurisdiction in which it operates and is fully committed to compliance with all applicable regulations. Trident routinely cooperates with any competent authority which requests information. Trident does not discuss its clients with the media.”
A few of the clients explicitly listed the reason for their switch to Trident as being a “business decision to exit Mossack Fonseca following ‘Panama Papers,'” leaked company information forms show.
The first references to the “MossFon Project” in the leaked correspondence came after April 2016, which was the month the Panama Papers investigation was published, the Herald found.
The records show that more than 700 companies applied to switch over to Trident at the time of the “MossFon Project.”
The newest leak of offshore data from around the world was obtained by the International Consortium of Investigative Journalists, which shared it with the Miami Herald and 150 other news outlets across the globe. The leak consists of 11.9 million records, including emails, company registries, shareholders’ certificates and invoices. The news partners are now publishing stories under the title “Pandora Papers”, evoking the Greek myth that signals an outpouring of woe.
ICIJ did not comment on the source of the leak.
It is not illegal to incorporate or service offshore companies. Such companies can help maximize wealth, minimize taxes, and firms may have legitimate reasons to be secretive about who owns them. While regulations vary by jurisdiction, offshore services firms and banks, including those in the BVI, are expected to carry out due diligence and cooperate with law enforcement to curb criminal activity. It was Mossack Fonseca’s failure to do so and practice of doing business with companies tied to corrupt actors that led to the firm being investigated and its founders being arrested.
Over the past decade, multiple investigations into offshores have also generated louder public demands for transparency. Through the proliferation of offshore corporations, governments lose between $500 billion and $600 billion in tax revenue annually, the International Monetary Fund estimates. Economists also estimate that the amount of money stashed offshore by individuals ranges anywhere from just under $9 trillion to $36 trillion.
“Tax policies that allow profit-shifting and offshore tax avoidance deny governments the ability to equitably and fairly fund revenue to address some of the largest challenges that we are facing as a society right now, including persistent inequities from racial or gender perspectives or even climate change,” said Ryan Gurule of the FACT Coalition, which says it promotes policies to “combat the harmful impacts of corrupt financial practices.”
The impact of offshore corporations is particularly potent in Miami: Cash from abroad, some of it illicit, helps power the proliferation of gleaming towers rising on South Florida’s waterfront and is pushing home prices beyond what many locals can afford.
The records relating to the “MossFon Project” not only paint an intricate portrait of secretive corporate maneuverings but also give a sense of the varied figures who are part of this shadowy world. Here are a few examples from the leaked data of those who applied to Trident for transfers:
▪ Three companies owned by Chalerm Yoovidhya, heir to global energy drink giants Red Bull, applied for a transfer to Trident in November 2016. The reason for the switch: “Business decision to exit Mossack Fonseca following ‘Panama Papers’.”
Together, the three firms hold millions, according to the leaked documents. Jerrard Company receives around $12 million in annual dividends from ownership shares held in Redbull UK. Karnforth Investments holds around $110 million in jewelry, artwork, real estate, boats and cars and JK Fly Limited holds a single asset: a Cessna Citation X private jet.
Red Bull declined to comment, saying the information was its shareholders’ “private matter.” Yoovidhyas’ attorney could not be reached for comment.
Trident Trust corresponded with a law firm and paid it for filing the transfer but it is unclear from the leaks whether the change was successful.
▪ Hajra Iqbal Memon, the first wife of now-deceased alleged drug smuggler Iqbal Mirchi and their two sons, Junaid and Asif Iqbal Memon. They own three companies that hold around $5 million in assets and residential properties in the United Kingdom. Their source of funds in the leaked documents is listed as “family business”.
At India’s request, Memon and their two sons were added this past March to the wanted list of Interpol, the international police agency, in connection with money-laundering charges. They are now being investigated by the United Kingdom and United Arab Emirates, according to Indian news reports.
The Panama Papers revealed some of the Memons’ dealings. In June, 2017 they applied to move to Trident Trust. By October that year, Trident had become the registered agents of at least two of the three firms.
The Memons declined to comment on the transactions but denied any connection to illicit activities.
▪ Saudi royals Abdullah bin Abdullrahman Alsaud, Fahad bin Abdullrahman Alsaud, Nouf Al-Shaikh and Latifa bint Abdullrahman Alsaud applied to transfer their companies, Afma Holding and NAMA Holding Group, in June 2017, per leaked records. They were investment vehicles doing business in the United States and Saudi Arabia and held around $8 million in assets.
When Trident’s compliance department flagged the owners as potentially having ties to people in public office and government, possibly making them Politically Exposed Persons (PEPs) and subjecting them to more rigorous greater screening, even though they had not declared so, the royals sent Trident Abdullah Alsaud’s résumé.
The Alsauds provided another piece of evidence to push back: copies of passports marked “DIPLOMATIC” and with names preceded by “HH” — His Highness.
Trident took on NAMA Holding Group as a client, leaked emails show. It is unclear from the leak if they were ultimately designated as Politically Exposed Persons.
The Saudi embassy in Washington declined to comment and the Herald did not receive any response after sending detailed questions to the email listed in the leaked documents.
Absent from transfers
Mossack Fonseca was largely absent from the process of transferring clients.
A host of other service providers who typically work with offshore companies alongside a registered agent, such as accounting or administrative firms, referred their clients who had Mossack as their agent to Trident, the leaked documents show.
Typically, when a British Virgin Islands firm wishes to change its representation, it coordinates with its existing agent and the new one to go through the transfer process. But Mossack was facing investigations and raids and Trident did not directly take on the firm’s clients in the usual manner immediately after the Panama Papers — a scandal described by a Trident employee in a now-leaked email as an “unfortunate circumstance.”
As companies scrambled to shed ties to Mossack Fonseca, Trident reverted to a workaround included in BVI laws — “transfer via legal counsel”, which allows the island’s legal practitioners to file a change on a company’s behalf, bypassing the existing agent, in this case Mossack.
When things later calmed down, Mossack Fonseca did resign from some clients that wished to leave. But Trident employees described Mossack Fonseca’s pace in since-leaked emails as being “a bit leisurely.” Because of the delays, Trident advised these clients to bypass Mossack Fonseca via the “transfer via legal counsel” option.
Trident’s compliance division reviewed the information provided by clients and if it flagged them, Trident asked for evidence such as character certificates from law enforcement or recommendation letters from banks attesting that the company and owner were in good standing. For the firms tied to the Memons, the alleged Indian drug lord’s family, for instance, when compliance flagged the application, the family proffered a certificate from law enforcement stating they had never been arrested and a letter in which they described themselves as victims of “media propaganda.”
Hopscotching between firms and jurisdictions is part of the shell company game.
The MossFon Project highlights how as the global push for corporate transparency continues, buyers and sellers of financial secrecy look for alternate jurisdictions to carry on their activities.
Trident was not alone in taking in former Mossack Fonseca clients. Hundreds of BVI companies also switched to other offshore service providers in the wake of the Panama Papers revelations, the leaked documents reveal, rendering attempts to regulate entities and jurisdictions providing these services akin to a game of whack-a-mole.
Delphine Reuter of the International Consortium of Investigative Journalists and Ben Wieder, Allie Pitchon and Deena Sabry of the Miami Herald contributed to this story.