The world’s most se­cre­tive off­shore fi­nan­cial haven

The years since 2008 have seen a global crack­down on off­shore fi­nance. Yet a tiny num­ber of places have dou­bled down on of­fer­ing secrecy to the su­per-rich. Among th­ese, Ne­vis might be the worst of­fender.

The Guardian - Journal - - Front page - By Oliver Bul­lough

Tax havens hate at­ten­tion. Places such as Jersey, Switzer­land and the Bri­tish Vir­gin Is­lands made a hand­some liv­ing from help­ing their clients break other coun­tries’ laws for decades, with­out any­one re­ally notic­ing. And they liked it that way.

Then came the 2007-8 fi­nan­cial cri­sis, and the good times ended. Rich na­tions, an­gry over the loss to their bud­gets caused by tax dodg­ing, put diplomatic pres­sure on the havens. Ac­tivists, fu­ri­ous over the theft of hundreds of bil­lions of pounds from poor coun­tries, ex­posed them in the press. The re­lease of vast troves of con­fi­den­tial in­for­ma­tion – Swis­sLeaks, the HSBC files, the Panama Pa­pers, the Par­adise Pa­pers – ce­mented a pub­lic per­cep­tion that off­shore fi­nan­cial cen­tres ex­ist to help the pow­er­ful dodge their obli­ga­tions to the rest of us, and gov­ern­ments have queued up to pun­ish them. In May, when Bri­tain’s par­lia­ment voted to force trans­parency on its Caribbean is­lands, it was just the lat­est blow to the off­shore havens.

This con­certed cam­paign has threat­ened the tax haven busi­ness model. Since Swiss banks were forced to open up by the US De­part­ment of Jus­tice in 2010, their share of the world’s off­shore wealth has dropped from al­most half to less than a third. In the Bri­tish Vir­gin Is­lands (BVI), where UK in­ves­ti­ga­tors now have ac­cess to cor­po­rate own­er­ship in­for­ma­tion, the num­ber of new com­pa­nies cre­ated an­nu­ally has fallen by more than 50% since 2012. Jersey’s bank­ing sec­tor is barely half the size that it was in 2007.

Although co­op­er­at­ing with out­siders in this way has proven ex­pen­sive, the havens clearly con­cluded there was lit­tle choice. If de­nied ac­cess to the global fi­nan­cial sys­tem, an off­shore cen­tre could be put out of busi­ness al­to­gether.

This is good. Tax havens have helped the world’s wealth­i­est and most pow­er­ful keep a dis­pro­por­tion­ate share of the ben­e­fits of globalisation, by pre­vent­ing the rest of us from see­ing how much they own. This, in turn, has eroded trust in democ­racy and cap­i­tal­ism all over the world. Re­strict­ing the op­er­a­tions of tax havens, and en­forc­ing trans­parency is cru­cial if cit­i­zens are truly to take back con­trol of their coun­tries’ des­tinies.

Yet, at the heart of this in­creas­ingly en­cour­ag­ing pic­ture, there re­main a few hold­outs. Fore­most among them is Ne­vis, a soli­tary vol­cano in the Caribbean with a pop­u­la­tion of just 11,000, which has been im­pli­cated in some of the most sor­did fi­nan­cial scams of mod­ern times, from Bri­tain’s big­gest-ever tax fraud to the fleec­ing of 620,000 vul­ner­a­ble Amer­i­cans in a $220m pay­day loan scam. The story of Ne­vis reveals the dif­fi­cul­ties the world faces in try­ing to put an end to tax eva­sion, fraud and klep­toc­racy.

While Ne­vis’s ri­vals have lost busi­ness by open­ing up, Ne­vis has dou­bled down on secrecy. Not long ago, I spoke to a lawyer with ex­ten­sive ex­pe­ri­ence of the is­land, who asked not to be iden­ti­fied be­cause he still needs to work with Ne­visian of­fi­cials. “The only good thing that Don­ald Trump could do, if he was ever so in­clined,” he said, “is take a bat­tle­ship and roll it up to Ne­vis, and lit­er­ally train the guns and say: ‘Get rid of th­ese bull­shit laws or I’ll blow you to king­dom come.’”

In short, he said, “A bright light needs to be shone on this cock­roach.”

Tax havens are of­ten lumped to­gether as if they all do the same job. In re­al­ity, they are dis­tinc­tive and highly spe­cialised preda­tors in the fi­nan­cial shark tank. At the top of the food chain are places such as Lon­don, Switzer­land and New York. Th­ese apex preda­tors are sur­rounded by clouds of pi­lot fish that snap up the scraps: places such as Monaco, Jersey and the Cay­man Is­lands.

Th­ese all play dif­fer­ent as­pects of the off­shore game: Jersey spe­cialises in trusts, the BVI in in­cor­po­ra­tion, Liecht­en­stein in foun­da­tions. They also dif­fer in their tol­er­ance for crim­i­nal­ity: Gi­bral­tar is dodgier than Guernsey, but cleaner than An­guilla. And they serve dif­fer­ent re­gions: Mau­ri­tius for Africa and In­dia; Cyprus for the for­mer Soviet Union; the Ba­hamas for the US.

In the world of off­shore, Ne­vis is a bot­tom-feeder. It spe­cialises in let­ting its clients cre­ate cor­po­ra­tions with greater anonymity than al­most any­where else on earth. Last year, in­for­ma­tion on 70,000 Ne­visian com­pa­nies was leaked as part of the Par­adise Pa­pers in­ves­ti­ga­tion, but that didn’t help us find out who owns them: own­er­ship in­for­ma­tion is so se­cret there that even the is­land’s own cor­po­rate registry doesn’t know.

“We feel very strongly that peo­ple are en­ti­tled to some sem­blance of fi­nan­cial pri­vacy,” the Ne­vis premier,

Mark Brant­ley, him­self an off­shore lawyer, told me in Jan­uary. “Why shouldn’t you be en­ti­tled to a se­cret?”

The se­crets don’t be­long to res­i­dents of Ne­vis; they be­long to for­eign­ers and are be­ing kept from other for­eign­ers, with Ne­vis paid to pro­tect them.

We can see that th­ese se­crets ex­ist thanks to the UK’s Land Registry, which re­leases spread­sheets list­ing all off­shore-owned prop­erty in the coun­try, along with the reg­is­tered ad­dress of the com­pany that owns it. Some of the se­crets could be en­tirely in­no­cent. For in­stance, who is be­hind Shi Li Gao Trustees Ltd, the Ne­vis­in­cor­po­rated com­pany that owns 13 Brunswick Gar­dens, a hand­some ter­race a short walk from Kens­ing­ton Palace? Some of them are in­trigu­ing: for what rea­son would a Catholic pri­mary school in Liver­pool be held via this lit­tle Caribbean vol­cano? And some are de­cid­edly weird: who on earth de­cided to struc­ture their own­er­ship of a room in a ho­tel on Llan­dudno’s North Pa­rade through Caribbean Es­tab­lish­ment LLC?

But all of th­ese ques­tions are im­pos­si­ble to an­swer since the se­crets are sealed away in Ne­vis. If th­ese prop­er­ties were owned via a Bri­tish com­pany, the true owner of that com­pany would have to be de­clared to Com­pa­nies House, and would be vis­i­ble to any­one with ac­cess to the in­ter­net. If they were owned via a BVI com­pany, that in­for­ma­tion would be avail­able to the Bri­tish po­lice. But a Ne­visian com­pany is a closed book, and some peo­ple re­ally like it that way.

While the BVI has seen the num­ber of com­pa­nies cre­ated there each year col­lapse, the num­ber cre­ated in Ne­vis has stayed sta­ble. Since 2012, the is­land’s fi­nan­cial ser­vices sec­tor has grown by more than a quar­ter, as peo­ple with se­crets have moved to a place that still keeps them. That is a pretty good ar­gu­ment for Brant­ley’s gov­ern­ment not to fol­low the BVI in open­ing up its cor­po­rate reg­istries to for­eign­ers. Secrecy pays.

“The num­bers are rel­a­tively small, com­pared to other fi­nan­cial ser­vices in­dus­tries around, but bear in mind the size of Ne­vis,” Brant­ley said. “We get di­rect rev­enues of $5m-$5.5m, sim­ply from re­newal fees.” Re­newal fees are what you pay to main­tain your com­pany’s reg­is­tra­tion; the more com­pa­nies there are, the more fees you get. “When that is ex­trap­o­lated out­wards – in terms of rental of of­fice space, em­ploy­ment – we recog­nise that it does have a mul­ti­plier ef­fect on the econ­omy.”

It is this pro­vi­sion of secrecy that makes Ne­vis such an ob­sta­cle to law-en­force­ment in­ves­ti­ga­tors. If po­lice can’t prove who owns some­thing, they can’t prove it was crim­i­nally ac­quired, say, or that tax was avoided on the prof­its from it. This is what crooks are look­ing for when they send their busi­ness off­shore. Around 300 Bri­tish prop­er­ties are owned in Ne­vis, and Brant­ley was un­re­pen­tant in de­fend­ing the secrecy his is­land pro­vides to those prop­er­ties’ own­ers.

“Why should a bu­reau­crat in Lon­don, or wher­ever, cu­ri­ous about his neigh­bour’s fi­nan­cial sit­u­a­tion, pick up the phone and say, ‘You know what, I need to know if Mr John Smith, who’s my neigh­bour down the road, has an ac­count or a com­pany in Ne­vis.’ Why’s that his busi­ness?” Brant­ley asked.

It is an in­ter­est­ing philo­soph­i­cal ques­tion, but it is also a ma­jor prob­lem. Coun­tries recog­nise and re­spect each other’s laws and sovereignty, so Ne­vis cor­po­ra­tions have as much in­ter­na­tional va­lid­ity as any­one’s. So, as long as Ne­vis per­sists in deny­ing for­eign­ers ac­cess to the own­er­ship in­for­ma­tion of its com­pa­nies – no mat­ter how hard other places work to open up – scoundrels can keep rout­ing their busi­ness via Ne­vis, break­ing the chain of trace­able own­er­ship, and hid­ing them­selves and their crimes from dis­cov­ery. That means crooked politi­cians, tax dodgers and fraud­sters in Ukraine, Nige­ria, Malaysia, the US or any­where else get to mis­man­age their coun­try’s fi­nances for their own ben­e­fit.

And, thanks to Ne­vis’s cu­ri­ous con­sti­tu­tional sit­u­a­tion – it is nei­ther an in­de­pen­dent coun­try nor can it be con­trolled by any other coun­try – there doesn’t ap­pear to be any­thing we can do about it.

From the sea, Ne­vis (pro­nounced “knee-vis”) re­sem­bles a green nip­ple. It is el­e­gantly sym­met­ri­cal, a tropical vol­cano ringed with golden beaches. By sur­face area, it is roughly the same size as Bris­tol, yet its peak is taller than any moun­tain in Eng­land, so the whole is­land slopes upwards, start­ing gen­tly where the beach bars shel­ter among the palm trees, then steadily steep­en­ing, while the tree cover gets denser. If you hike up the peak, you are in true rain­for­est, and will find your­self scru­ti­nised by mon­keys in the over­hang­ing green­ery.

The is­land was once a ma­jor cen­tre for Bri­tain’s sugar grow­ers and slave traders, but it slipped into ob­scu­rity in the 18th cen­tury, when it was out-com­peted by larger and more fer­tile ri­vals. In the 19th cen­tury, Bri­tain added it to neigh­bour­ing St Kitts for ad­min­is­tra­tive pur­poses, and it was as the ju­nior half of the Fed­er­a­tion of St Kitts and Ne­vis that it be­came in­de­pen­dent in 1983.

The 80s were a bo­nanza pe­riod for Caribbean is­lands, as the global econ­omy opened up and law en­force­ment was caught flat-footed. Tax evaders and drug deal­ers from North and South Amer­ica flew planeloads of dol­lar bills into places such as Cay­man and An­guilla, stashed them in un­trace­able ac­counts, then in­vested them in prop­erty in Florida, the south of France or New York.

In 1984, Bill Barnard, an Amer­i­can lawyer who had taken to va­ca­tion­ing on Ne­vis, asked the is­land’s premier if he would be in­ter­ested in get­ting into the off­shore game. Thanks to the al­most com­plete au­ton­omy Ne­vis en­joys un­der the fed­eral con­sti­tu­tion, its first premier, Simeon Daniel, was free to do what he liked. He ap­proved Barnard’s sug­ges­tion, passed the in­cor­po­ra­tion and secrecy laws the Amer­i­can lawyer drafted and awarded Barnard’s com­pany, Morn­ing Star Hold­ings, the right to act as ex­clu­sive agent for creating the com­pa­nies. It was a win for both of them. (Nei­ther Morn­ing Star Hold­ings nor Barnard wished to com­ment for this piece.)

At first, Ne­vis strug­gled to com­pete, partly be­cause it had no par­tic­u­lar ad­van­tage of its own. Barnard and his lawyers had bor­rowed their leg­is­la­tion from Delaware, which acts as a sort of tax haven within the US by of­fer­ing laxer reg­u­la­tions and lower taxes than the other states, so there wasn’t much rea­son to look to a re­mote is­land for prod­ucts you could al­ready buy else­where. “It was cer­tainly suc­cess­ful,” says David Neufeld, a New Jersey lawyer and an ex­pert on com­pany struc­tur­ing and tax. “But it was never at the level of BVI or Cay­man.”

When Barnard’s mo­nop­oly ex­pired in 1994, Ne­vis took the op­por­tu­nity to re­boot. Neufeld al­ready worked with Barnard, and was asked to help Ne­vis di­ver­sify its of­fer­ing. Tax havens are al­ways bor­row­ing ideas from each other, seek­ing to im­prove on laws that are prov­ing pop­u­lar. Neufeld looked to the US, and specif­i­cally to Wy­oming, which had in­vented the limited li­a­bil­ity com­pany (LLC), a hy­brid struc­ture that al­lowed peo­ple to avoid iden­ti­fi­ca­tion and taxes, as well as other ben­e­fits.

LLCs make it hard for cred­i­tors to find your as­sets, which also helps rich peo­ple avoid pay­ing dam­ages if they lose a law­suit. Your cred­i­tors may have a court judg­ment against you, but if they can’t find your stuff, they will set­tle for per­haps 50 cents on the dol­lar to get the le­gal wran­gling over with. Lawyers call this as­set pro­tec­tion.

But in the US, it is hard to hide prop­erty, since courts can or­der dis­clo­sure of in­for­ma­tion. Handily, those courts have no ju­ris­dic­tion in Ne­vis, which made the idea of a Caribbean ver­sion of the LLC very at­trac­tive. “In my mind, I was try­ing to cre­ate an LLC for the 51st state,” Neufeld told me. “If you see your­self as some­one who could be ex­posed to some kind of preda­tory law­suit where peo­ple feel you have as­sets that are ex­posed, this gives you an op­por­tu­nity to pro­tect that.”

In sim­ple terms, Ne­vis’s laws al­low rich peo­ple to put ram­parts around their prop­erty, to pro­tect it from some­one who might want to use the courts to take it away, whether a busi­ness part­ner, a spouse, an es­tranged child, or in­deed any­one. All tax havens do this, but Ne­vis turned the ratchet many clicks fur­ther than its ri­vals, in its ef­forts to tempt busi­ness away from its ri­vals.

To bring le­gal pro­ceed­ings on Ne­vis, you have to file a bond of $100,000 with the court as proof that your case isn’t friv­o­lous. If you win, that is only the begin­ning of your quest for the as­sets. Ne­vis’s reg­u­la­tor holds no in­for­ma­tion on ei­ther the own­er­ship of the com­pany or its as­sets. Ne­vis’s LLCs can’t be wound up, mean­ing you won’t be able to con­fis­cate any as­sets they own, and you would have to seek re­dress else­where. If you seek to chal­lenge the le­gal­ity of a prop­erty be­ing put in a Ne­vis-reg­is­tered trust – for ex­am­ple, if you thought the prop­erty ac­tu­ally be­longed to you – you have to prove be­yond rea­son­able doubt that the trust’s cre­ation was fraud­u­lent, and you would have to be­gin that le­gal chal­lenge within a year of its cre­ation. This is tricky, since Ne­vis law re­quires all in­for­ma­tion on the trust to be con­fi­den­tial, so you would be un­likely to know it even ex­isted.

Th­ese for­mi­da­ble de­fences are not re­ally in­tended to be used, but in­stead – like the bright colour­ing of a poi­sonous tree frog – they ex­ist to warn you off at­tack­ing in the first place. If they can per­suade a plain­tiff to set­tle out of court for less than is owed, then, for a rich per­son with vul­ner­a­ble as­sets, they are well worth pay­ing for.

Brant­ley, the Ne­vis premier, is pas­sion­ate in his de­fence of the ram­parts that Ne­vis builds for rich peo­ple look­ing to pro­tect their as­sets from cred­i­tors. “All it does is say that you’re creating a locked box, so to speak, if you want to pro­tect as­sets,” Brant­ley said, when we met in his of­fice up the hill from Charlestown, Ne­vis’s cap­i­tal vil­lage. “And peo­ple pro­tect as­sets for a va­ri­ety of rea­sons. It’s not al­ways to get away from a pend­ing di­vorce.”

The trou­ble is that when you cast your eye be­yond the di­vorce cases, Ne­vis’s busi­ness model be­gins to looks even worse. The Ne­vis fi­nan­cial sys­tem is rudi­men­tary com­pared to places such as Jersey or the Cay­man Is­lands, which have ma­jor ac­coun­tancy firms, fund man­agers, large banks and other global be­he­moths. In Ne­vis, there’s pre­cious lit­tle money for any­one to avoid tax on. But then, it isn’t re­ally a haven from taxes at all, so much

‘We feel strongly that peo­ple are en­ti­tled to some fi­nan­cial pri­vacy. Why shouldn’t you have a se­cret?’, said Ne­vis’s premier

as a haven from scru­tiny of any kind. The same laws that ap­peal to the kind of ner­vous and wealthy men who want to hide their as­sets from their wives, have been reg­u­larly ex­ploited by crooks from all over the world.

Bri­tain’s big­gest-ever tax fraud – for which five men were jailed in Novem­ber, after at­tempt­ing to scam the Trea­sury out of £107m in tax – in­volved Ne­vis-reg­is­tered com­pa­nies, which were help­ing to hide the iden­tity of the fraud­sters. The fam­ily of a for­mer pres­i­dent of Taiwan used a Ne­vis trust to help to hide its own­er­ship of cor­ruptly ac­quired US prop­erty. Ukraine’s de­posed pres­i­dent, Vik­tor Yanukovych, used Ne­vis struc­tures to hide his stolen as­sets, as did cor­rupt Rus­sian of­fi­cials who stole $230m from the bud­get in 2007. (When the ac­coun­tant Sergei Mag­nit­sky un­cov­ered the scam, they ar­rested him and left him to die in jail.) Bri­tish trader Navin­der Sarao, who pleaded guilty to fraud for help­ing cause 2010’s flash crash, di­verted some of his prof­its to a Ne­vis struc­ture called the NAV Sarao Milk­ing Mar­kets Fund.

Ac­cord­ing to the Tax Jus­tice Net­work, Ne­vis out­o­b­scures all the tra­di­tional off­shore cen­tres: BVI, Switzer­land, Guernsey, the Isle of Man, Lux­em­bourg, and even fel­low bot­tom-feed­ers such as Belize and the Cook Is­lands. And its en­thu­si­asm for se­crets im­pedes other coun­tries’ ef­forts to en­force trans­parency.

To see how, just look at the UK. In the­ory, it has al­ways been pos­si­ble to find out who a Bri­tish com­pany’s share­hold­ers are, but un­til re­cently there was a loop­hole. If a com­pany was owned off­shore, share­hold­ers could pre­serve their anonymity. To com­bat this, in 2016, the gov­ern­ment brought in a law that re­quires UK com­pa­nies to de­clare the iden­tity of their true owner or own­ers: any per­son with sig­nif­i­cant con­trol (PSC). This new sys­tem is im­per­fect, not least be­cause Com­pa­nies House doesn’t check the in­for­ma­tion pro­vided to it, but it’s a step to­wards full trans­parency, and part of the UK’s com­mit­ment to stop its com­pa­nies be­ing used to en­able tax dodg­ing and klep­toc­racy.

But a search of the Com­pa­nies House web­site reveals how Ne­vis is able to de­fang Bri­tain’s at­tack on secrecy. For in­stance, I re­cently came across three LLPs, all of which are owned by the same two Ne­vis com­pa­nies: Tall­berg and Uni­well. Ac­cord­ing to data gath­ered by the Or­gan­ised Crime and Cor­rup­tion Re­port­ing Project, one of th­ese LLPs con­trolled a Lat­vian bank ac­count used in a money-laun­der­ing scheme; the other two have not been im­pli­cated in any wrong­do­ing (and nei­ther have Tall­berg and Uni­well).

Ac­cord­ing to Com­pa­nies House, the three LLPs have the same own­er­ship struc­ture, which means that their per­son or per­sons with sig­nif­i­cant con­trol should be the same. Mys­te­ri­ously, how­ever, each of the LLPs is listed as hav­ing a dif­fer­ent PSC. Log­i­cally, this can­not be true. But we have no way of know­ing who the real PSC is, since Ne­vis does not co­op­er­ate with the UK in al­low­ing law en­force­ment of­fi­cers to see who re­ally owns Ne­visian com­pa­nies such as Tall­berg and Uni­well. Th­ese three LLPs are not iso­lated ex­am­ples – Tall­berg and Uni­well alone have owned dozens of Bri­tish com­pa­nies, and there are many more Ne­visian cor­po­ra­tions like them.

The new UK law re­quir­ing dis­clo­sure of true own­ers is use­less if that own­er­ship can just be hid­den in Ne­vis. And this is why Ne­vis-con­trolled but Bri­tish-reg­is­tered com­pa­nies have been in­volved in many of the mas­sive east­ern Euro­pean money-laun­der­ing scams known as the “laun­dro­mats”, which have moved tens of bil­lions of dol­lars out of the for­mer Soviet Union. Ne­vis own­er­ship can trans­form a sup­pos­edly trans­par­ent Bri­tish com­pany into a secrecy ve­hi­cle as in­iq­ui­tous as any­thing on earth.

Charlestown is a hand­some place, con­sist­ing of a long street of two-storey build­ings par­al­lel to the shore, many with first-floor bal­conies for catch­ing the sea breeze. Its most strik­ing fea­ture, how­ever, is the truly re­mark­able num­ber of signs ad­ver­tis­ing lawyers, ac­coun­tants and ad­min­is­tra­tors. The Devon town of Il­fra­combe, with its 11,000 in­hab­i­tants, has two lawyers’ of­fices, an in­sur­ance com­pany and two sets of ac­coun­tants, as well as a branch of Lloyds and a Na­tion­wide. The 11,000 Ne­visians, by con­trast, host six do­mes­tic banks, one in­ter­na­tional bank, 18 in­sur­ance man­agers, seven in­ter­na­tional in­sur­ance en­ti­ties, four money ser­vice busi­nesses and 58 reg­is­tered agents, many of them law firms. Ne­vis may be the most over-lawyered place on earth.

When I got off the ferry, I was keen to find the reg­is­tered ad­dress of Tall­berg and Uni­well, in the for­lorn hope that I could find some­one who would give me in­for­ma­tion about them. Their reg­is­tered ad­dress was the same as that of the Ne­vis In­ter­na­tional Trust Com­pany (NITC), which, ac­cord­ing to its web­site, will sup­ply you not only with a shell com­pany, but also with nom­i­nee di­rec­tors and share­hold­ers, which will fur­ther ob­scure your in­volve­ment in it, as well as a bank ac­count, a credit card and a stock trad­ing ac­count. “Ne­vis is an ex­cel­lent lo­ca­tion for: pri­vacy, es­tate plan­ning, as­set pro­tec­tion, tax re­duc­tion plan­ning, hold­ing in­vest­ments, roy­alty and li­cens­ing own­er­ship,” the web­site states.

I had an ad­dress for the NITC, but no one on the is­land was able to tell me where it was. I spent a hot and thirsty morn­ing search­ing for it and, when I fi­nally got through on the phone, was brushed off. “I’m not a rob­ber,” I told the woman who an­swered the phone, after she had re­fused to help me. “I don’t know that, do I?” she replied.

When I tried phon­ing the reg­is­tered of­fice of Tall­berg and Uni­well, the re­cep­tion­ist re­fused to even tell me where the of­fice was, so I couldn’t visit. When I emailed the NITC, there was no re­ply. Even­tu­ally I had to ac­cept that it was not go­ing to be pos­si­ble to make con­tact with them, which meant the true own­er­ship in­for­ma­tion for the three LLPs was undis­cov­er­able.

And it is not just jour­nal­ists who are un­able to check the re­li­a­bil­ity of Ne­vis’ fi­nan­cial in­for­ma­tion; for­eign po­lice can’t ei­ther. That means we are all re­liant on the Ne­vis fi­nan­cial ser­vices reg­u­la­tory com­mis­sion to do it for us. The com­mis­sion is based in an of­fice in the cen­tre of Charlestown, and is run by Heidi-Lynn Sut­ton.

Sut­ton started off unfriendly, and be­came less friendly as our 45-minute chat pro­gressed. She flatly dis­missed the US state de­part­ment’s de­scrip­tion of Ne­vis as “a de­sir­able lo­ca­tion for crim­i­nals to con­ceal pro­ceeds”. It was un­true, she said, that Ne­vis had anony­mous bank ac­counts, bank secrecy and an opaque cor­po­rate reg­is­ter.

This was odd, since her reg­u­la­tor’s own web­site states that bank ac­count hold­ers on the is­land have no obli­ga­tion to pro­vide any “state­ment, re­turn or in­for­ma­tion

(to) … the reg­u­la­tor or the min­is­ter”. How­ever, Sut­ton de­fended Ne­vis against all al­le­ga­tions, no mat­ter how se­ri­ous. The heavy cost of bring­ing pro­ceed­ings in Ne­vis court, for ex­am­ple, was sim­ply to pro­tect the jus­tice sys­tem from be­ing “bom­barded with friv­o­lous law­suits”, rather than to pro­tect the wealthy.

When I ex­plained the dif­fi­culty I had faced in even find­ing NITC, Sut­ton laughed, ask­ing why I was look­ing for it. I ex­plained that I had hoped to dis­cover who ac­tu­ally owned the limited part­ner­ships on the Bri­tish registry. When I asked about whether the reg­u­la­tor she runs might have failed to no­tice a num­ber of se­ri­ous money-laun­der­ing schemes, she sim­ply said: “I can’t speak to that, I re­ally can­not speak to that.”

What about the fact that the for­mer rul­ing fam­i­lies of Taiwan and Ukraine, as well as lower-profile crooks from all over the world, had used Ne­vis ve­hi­cles to ob­scure the own­er­ship of their stolen as­sets? Sut­ton laughed again. “I can’t ac­cept that there has been multiple us­age of our struc­tures to fa­cil­i­tate what­ever. I can’t ac­cept hear­ing it from you. I won’t be able to speak to that.”

If the is­land is so clean, why did on­line trolls look­ing to smear Em­manuel Macron be­fore the 2017 French pres­i­den­tial elec­tion cre­ate fake doc­u­ments sup­pos­edly show­ing he had a shell com­pany in Ne­vis? Isn’t that a sign that the in­dus­try Sut­ton over­sees has an im­age prob­lem? “Peo­ple make things up all the time,” she replied. “Once you are an in­ter­na­tional fi­nan­cial cen­tre, and pro­vide cer­tain ser­vices, you will al­ways be a tar­get, it doesn’t mean that it’s true.”

I have spent the last four years re­search­ing fi­nan­cial crimes, and have spo­ken to dozens of reg­u­la­tors and in­ves­ti­ga­tors in multiple ju­ris­dic­tions, but never be­fore had I met one who re­sponded in such a way to al­le­ga­tions of grand cor­rup­tion, money laun­der­ing and fraud that I was mak­ing against their ju­ris­dic­tion.

Like any fi­nan­cial cen­tre, Ne­vis must choose be­tween turn­ing away dirty money, or at­tract­ing as much busi­ness as it can. I did not find my visit to Ne­vis re­as­sur­ing.

Since Ne­visian of­fi­cials ap­pear happy with the cur­rent sit­u­a­tion, it is up to out­siders to force change on the is­land, and sadly – thanks to the con­sti­tu­tional pe­cu­liar­i­ties of the fed­er­a­tion – this is all but im­pos­si­ble. We know this be­cause it has been tried.

In 1995, in fed­er­a­tion-wide elec­tions, the St Kitts and Ne­vis Labour party swept to power with seven of the 11 fed­eral seats, and its leader, Den­zil Dou­glas, be­came prime min­is­ter. He had no seats on Ne­vis, but did not need any to pass laws for the whole fed­er­a­tion. Among his pri­or­i­ties was re­strict­ing Ne­vis’ sor­did fi­nan­cial sec­tor. “We were aware that the in­ter­na­tional com­mu­nity had be­gun to frown upon Ne­vis, and on fi­nan­cial ser­vices that were poorly reg­u­lated, not su­per­vised, etc,” said Dou­glas when we met in his of­fice in Bas­seterre, the fed­eral cap­i­tal, which is on St Kitts. “And we sought to bring in new leg­is­la­tion. So they had their ref­er­en­dum.”

The fed­eral con­sti­tu­tion al­lows Ne­vis to hold a ref­er­en­dum on se­ces­sion when­ever it wants to, and so, in 1998, an­noyed by Dou­glas’s at­tempt to rein in its lawyers, it did. And 62% of Ne­visians voted to break free of their neigh­bours, which was not quite enough to reach the two-thirds su­per-ma­jor­ity that the con­sti­tu­tion de­manded, but enough to make Dou­glas and his gov­ern­ment back down. “The gov­ern­ment has no choice,” Dou­glas said, “be­cause we’ve tried.”

In 2000, the Fi­nan­cial Ac­tion Task Force black­listed St Kitts and Ne­vis as one of 15 coun­tries deemed to be non-co­op­er­a­tive. That forced Ne­vis to agree to fed­eral leg­is­la­tion, but did not change the ba­sic dy­namic that it has much more au­ton­omy than Scot­land has within the UK, and in some ways more than individual US states. One fi­nan­cial pro­fes­sional in Bas­seterre de­scribed the re­la­tion­ship be­tween Ne­vis and St Kitts as like that of a teenager with ac­cess to his big brother’s credit card.

None of the tools large coun­tries have used against tax havens such as Switzer­land or Jersey – diplomatic pres­sure, le­gal pro­ceed­ings against banks, and so on – are ap­pli­ca­ble to Ne­vis. It is part of a fully in­de­pen­dent coun­try (un­like the BVI or Gi­bral­tar) and the com­pa­nies pro­vid­ing its ser­vices (un­like the Swiss banks tar­geted by the US De­part­ment of Jus­tice) are not large enough to fear los­ing their of­fices in the US.

Ma­jor west­ern coun­tries will have to make their crit­i­cism of Ne­vis via diplomatic chan­nels, if they want it to change its ways. Brant­ley got his re­tal­i­a­tion in first, how­ever, ac­cus­ing the Bri­tish gov­ern­ment of hypocrisy.

“It is no se­cret that the UK, and Lon­don in par­tic­u­lar, has a dis­pro­por­tion­ate num­ber of wealthy Rus­sians, for ex­am­ple, and wealthy oli­garchs from all around the world, and the ques­tion is: why? It can’t be for the weather. So, why are peo­ple flock­ing to Lon­don? So, if the United King­dom can do that, then what is the is­sue with other coun­tries, not as en­dowed as the UK, try­ing to stand on their own two feet?”

The is­sue is that if ev­ery ju­ris­dic­tion thinks only of how to stand on its own two feet – whether that’s postBrexit Bri­tain, Ne­vis or Wy­oming – we will all be pushed over sep­a­rately by the world’s crooks and thieves. Brant­ley is right that we all need to do more to fight klep­to­crats and fraud­sters, but by keep­ing their se­crets and mak­ing money from it, Ne­vis is stop­ping the rest of us from mov­ing for­ward. •

Like any fi­nan­cial cen­tre, Ne­vis must choose be­tween turn­ing away dirty money and at­tract­ing lots of new busi­ness


The Caribbean is­lands of

St Kitts (top) and Ne­vis (bot­tom)

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