By Mihai Munteanu
Reporters from the Organized Crime and Corruption Reporting Project (OCCRP) set out to find how easy it is to set up an offshore company.
They imagined a company in a remote location with good privacy laws. They decided their imaginary company needed to have proxies for both the shareholders using bearer shares and for the director of the company.
They asked Seychelles-based Fidelity Corporate Services, an online register of offshore companies that has been used in the region. Fidelity advertises such services on their website. For example, it offers “nominee” directors or proxies. “A third-party Company Manager (Nominee) would effectively shield the company owner from any publicly obvious relation to the offshore company,” the site says. For shareholders it says “in order to shield his direct link to the company, a company owner may involve services of a nominee shareholder.”
Fidelity boasts on this site that “since 1998 we have provided thousands of offshore incorporations for professional and individual clients worldwide.” Fidelity also provides services in the British Virgin Island and Belize and has offices in Riga, Latvia.
What Fidelity does is not illegal in the Seychelles. However, using their services to avoid taxes can be illegal in many countries.
When OCCRP emailed Fidelity staff, they were very accommodating, asked no questions and never discussed whether the activities could be illegal except to say where the clients could spend more money to help avoid getting caught for tax evasion. The price tag -- $1,657.
OCCRP reporters placed an online order for an offshore company. After filling out forms on Fidelity’s website, they received a prompt email message signed by Stella Constance, the Fidelity Corporate Services’ managing director. The message indicated the next steps: the reporters needed to send a notarized copy of the beneficiary’s passport, a bill that would show the beneficiary’s permanent address and the standard contract needed to establish an offshore, signed, scanned and emailed to the Seychelles. It is not clear if or how Fidelity would verify whether the information sent was real.
To dispel our concerns about protecting our identity, Stella explained: “By law (the Seychelles International Corporate Service Providers Act), we are obliged to verify the identities of our clients. This information is for our internal file only and NOT for any public registry! All licensed registered agents in Seychelles are subject to the same regulations.”
The price including the designated shareholder and director (proxies) provided by Fidelity. After the order has been placed, the documents would be sent to Europe via a fast mail courier and the offshore company should be operational in three weeks.
Another Fidelity employee, Cynthia Chehab, explained by email the costs and how the proxy system worked. The real owner can control his offshore company by means of two documents: “ General Power of Attorney” (225$) or “Special Power of Attorney” (250$). The first option gives the real owner full control over the company for an unlimited period of time. However, Fidelity lawyers do not recommend it, she said. Chehab warned the reporter in the email that “this is the new climate, the issuance of General Power of Attorney (the ones issued last year) can be extremely dangerous for the client. Please note that a General (power of attorney) can cause domestic tax liability for the client and it is a direct written evidence that the person runs an offshore company from his own home and this will make the person tax-liable in his own country, for the revenues of that offshore company, through what is called a permanent establishment.”
Instead, Chehab recommended the firm’s more expensive Business Administrative Service combined with a “Special Customized Power of Attorney.” She explained that the power of attorney only covers a few specific tasks for a limited time. “The Special (Power of Attorney) can be designated to a person to either negotiate and sign the necessary paperwork so that a company can purchase a property or to open or co-sign on a Bank Account, such will be better as it would not implicate that the user is actually running the business in regards to tax issues,” she says helpfully.
She also sold the reporter on the company’s more expensive director proxy service because “you need the professional directorship service to avoid being seen as directly managing and controlling an offshore company.”
Fidelity’s website offers us an individual director who would do the work for $1,000 per year. The registered agent informed the reporter he can also use the corporate directorship service which means for $250 your director could be -- what else -- another offshore Seychelles corporation.
The following journalists contributed to this project.