By GILBERTO LOPES*
the material of pandora papers lights up a dark side of the world
“The use of companies created in jurisdictions other than the jurisdiction where the operational investment is made (companies offshore) is very common and does not imply anything negative, reprehensible, much less illegal,” said Luis Javier Castro, owner of “Mesoamerica”. “In view of the publications on the so-called pandora papers, which implies that Mesoamerica created more than 40 companies with the aim of evading taxes, I am obliged to clarify”, says Castro, from Costa Rica.
Castro says he went through several business organizations – such as Alianza Empresarial para el Desarrollo (AED), United Way, One Young World (OYW), Yo Emprendedor, CALI and others – in search of “building a better society”. All organizations with conservative political orientation. He said he arrived "very excited" from Munich. On July 25, he spoke at the One Young World Summit held in Munich, where 203 youth delegations gathered "to discuss and be inspired to solve the great problems of humanity".
Debbie Cenzibar, Will Fitzgibbon and Salwan Georges are not investors. They are journalists from The Washington Post, the journal of Jeff Bezos, owner of Amazon. On October 4, the three signed a note in Sioux Falls, South Dakota. In front of a Holiday Inn, in a red brick building, a small financial company, then unknown, made an invitation to the rich of the world: “Trident Trust promises to protect the wealth and privacy of its new clients, based on the laws of a state that has become a global wealth destination”.
The report notes that the US trust industry is flourishing, offering the world's millionaires and billionaires levels of protection and privacy equal to or greater than tax havens elsewhere in the world. Of the 206 US-based trusts identified in the pandora papers, “nearly 30 contained funds from individuals or companies accused of fraud, bribery or human rights abuses in some of the world's most vulnerable communities,” says the report.
Some Latin Americans responded to the Trident Trust's invitation. Among them, a Colombian textile magnate caught up in a drug money laundering scheme; a Brazilian orange juice tycoon, who made a deal with the authorities to avoid a complaint about his workers' meager wages; or family members of a former vice-president of the Dominican Republic, accused of exploiting his sugarcane workers and violently evicting their families from the company's land.
In this case, it is Central Romana, the largest sugar producer in the Dominican Republic, with one of its main shareholders being Carlos Morales Troncoso. In 1986, he was elected vice president of the republic. He was later his country's ambassador to Washington and foreign minister. Questioned by The Washington Post, the Dominican Central Romana claimed to have created more than 20 jobs, built more than 5 homes and donated land for housing projects and other purposes. She added that she had negotiated wages and working conditions with the union and that she had never illegally evicted anyone from her land, but had long defended it from illegal encroachments.
The treatment given to its workers has been the subject of permanent denouncement, while Central Romana formalized trusts for 14 million dollars with the Trident Trust in 2019. Three years earlier, says the report, “the company sent armed guards and machines to expel 60 families from the shacks built on the dusty edges of the sugar cane plantation in El Seibo, one of the poorest and most remote places in the Dominican Republic”.
Mesoamerica, a small Trident Trust, claims to have generated a lot of jobs and development and “tried to contribute to a better Latin America”. It is not explained how, how much, or where in this scenario of trusts, whose characteristics, all over the world – in Europe and the United States, in Asia, Africa and Latin America – are described in detail by the The Washington Post.
Over the past decade, economists have tried to calculate how much of that wealth is hidden in trusts. offshore. Estimates vary widely: from 1 to 25 trillion dollars, according to the newspaper. The most generally accepted figures vary between 5 and 8 trillion dollars.
nothing reproachable
“When we find an investment opportunity”, explains Castro, “we structure a vehicle and offer the investment opportunity to investors who are of multiple nationalities”. We do not know the details of the investments promoted by Mesoamerica. Castro's opinion is not, in any case, widespread. There are abundant examples of money invested by other trusts, coming from businesses such as Colombian José Douer Ambar, a clothing magnate who died last year, who had a $100 million trust in Trident's Virgin Islands office. In 2004, he negotiated a $20 million settlement with the US government as part of an investigation into money laundering, according to information from the The Washington Post.
The case of Guatemalan Federico Kong Vielman, with a trust of 13,5 million dollars, is cited, whose family company producing palm oil was accused by the United States of violating the rules negotiated in the free trade agreement on the payment of fair wages. On the family's plantation – according to the complaint – people paid less than the minimum wage and workers used chemical products without adequate protection.
Orange juice producer Horst Happel did something similar in Brazil, where it paid US$88 million to the government in 2018, according to the Post, accused of making deals to pay less to local producers. The documents released by the consortium of investigative journalists do not reveal whether Trident knows the origin of its clients' funds, and the Post says the company “did not respond to inquiries about specific cases.” Neither does Costa Rica's Mesoamerica. Castro did not respond to the weekly's questions University, but published his point of view on his internet portal, after the periodical was closed.
Also Macri, Piñera and Lasso
Argentina occupies the third place in the list of countries with the most beneficiaries of the structures offshoresaid the newspaper Página12. “In these documents, the country is mentioned 57.307 times and, once again, as in the Panama Papers, the family (of former president Mauricio) Macri and his surroundings are involved”.
The paper noted that “investigators have made it clear that the use of a company offshore or the opening of a bank account in a tax haven is not, in itself, an illegal activity”. However, as the head of the General Inspection of Justice (IGJ) of Argentina, Ricardo Nissen, explained to the newspaper, “it is impossible, from any point of view, that companies offshore have a lawful purpose. By definition, they are an illicit business, something contrary to the law. It is an instrument for crime, for evasion, fundamentally for capital flight,” he said. One offshore – Nissen told Página12 – “it's money laundering, it's concealment for criminal purposes, to trick his wife into divorce, to make a succession plan that Argentine law does not allow. You hide behind a phantom figure that is very difficult to target because tax havens never give information about their accounts”.
The president of Chile, the conservative Sebastián Piñera, is also involved in a family business. It concerns the sale, in 2010, of the mining company Dominga to businessman Carlos Alberto Délano, a childhood friend of Piñera. A project valued at US$2,5 billion to extract iron and copper in the Coquimbo region, about 500 km north of Santiago, has proved controversial amid environmental and commercial accusations.
The president of Ecuador, banker Guillermo Lasso, also transferred funds to Trident in Sioux Falls in 2017, after the issues that arose at the root of the PanamaPapers, precursors of today's pandora papers. All of them – Lasso, Piñera and the others – claim to have met all their tax commitments and deny having violated any laws. In any case, the public ministry opened an investigation against Piñera and the various opposition groups decided to present a constitutional accusation against the president in Congress.
“Our companies in these jurisdictions,” Castro explained of Mesoamerican activities, “are exclusively holding that we use to raise capital from investors, and manage investments with proper corporate governance”. Certainly its activities do not have the same dimension as those of Trident, but another article in the The Washington Post describes in detail the use of these trusts in tax havens for the purchase of properties, works of art, furniture, yachts, planes...
When some of the three richest Africans needed a favor from Nigeria's energy minister, they didn't pay him cash. They gave him one of those paper companies registered without a tax haven, owner of some mansion in London, classic furniture, works of art... Thus, the King of Jordan acquired properties for 95 million dollars in the United States and England. Tony Blair, former Prime Minister of England – responsible, with President George W. Bush of the United States and José María Aznar of Spain, for the destruction of Iraq and the deaths of thousands of people – saved US$423 by buying an office in London from one of these companies offshore.
The Brazilian Minister of the Economy, Paulo Guedes, who arrived at the government with a huge privatization plan, promising to sell “everything”, including Banco do Brasil (“everything is everything”, he assured), deposited US$9,55 million in your offshore Dreadnoughts International, British Virgin Islands. Largely responsible for the devaluation of the real since taking office, last week alone he earned more than one million reais, according to the Brazilian media.
The president of the Central Bank, Roberto Campos Neto, is also the owner of a company offshore, Cor Assets SA, in Panama, according to data disclosed by pandora papers. Both will have to give explanations to the Congress of Brazil. Last year, according to Central Bank accounts, Brazilians held nearly 205 billion dollars abroad. In any case, duly declared to the tax authorities, having a company offshore is not illegal in Brazil, the country with the fifth highest number of people named in the pandora papers.
an interesting debate
The revelations of pandora papers do not leave anyone indifferent. The explanation of the owner of Mesoamerica, Luis Javier Castro, provoked several responses on the same portal. “– Excellent explanation!”, said one. “I fully support Luis!” says another. “These people don't even know what they are talking about! They only do it to sow discord, polarize and create hatred and envy among the population, as well as to unfoundedly discredit all businessmen”.
“We are criminals who get rich from the people and go abroad to undertake with all the risks involved, even though in each of these countries we have [sic] acted in a legal and correct manner, even without violating the laws of Costa Rica. In our country there is complete freedom and it is completely legal to invest abroad. There is no need to explain to these malicious ignoramuses.” “– The hunt for businessmen began as part of the electoral campaign to discredit private initiative. How sad,” says another.
Andrés Pozuelo, a well-known businessman, said: “– Don't worry, tax evasion is not immoral, it's human”. Castro, prudent, answered him: “– That is not the case”. Pozuelo insists: “– Well, we all evade taxes when we pay someone in cash without an invoice. Taxes are theft and no one can argue with that.”
Castro, however, congratulated the journalists for “investigating and bringing to light structures that can facilitate tax evasion, corruption and other crimes. It is essential to separate the wheat from the chaff,” he said. But his supporters or admirers have not spared criticism of the media. “The press is full of half-truths, sensationalism, innuendo and can destroy anyone's reputation. In our graduation speech, Father Juan Álvarez Iglesias told us to seek the truth. Maybe it was referring to bigger things, but it's still practical advice for everyday situations,” recalled Mary Joseph. Carlos Esquivel encouraged him: “The explanation is enough for the good connoisseur. It is not right to demonize a common practice that is 100% in compliance with the law. However, I assume it was necessary to explain it to those who only seek to attack without real foundation”.
*Gilberto Lopes is a journalist, PhD in Society and Cultural Studies from the Universidad de Costa Rica (UCR). author of Political crisis of the modern world (Uruk).
Translation: Fernando Lima das Neves
