QUEEN OF THE CARIBBEES
Nevis (pronounced ‘knee-vis’) is a forest-covered, cloud-topped nipple protruding from the water where the Atlantic Ocean meets the Caribbean sea. By surface area, it is barely bigger than Manhattan, and its population is just 11,000.When it won independence from Britain in 1983 – as the junior half of the Federation of St Kitts and Nevis – its economic prospects looked grim.Simeon Daniel was head of the Nevis government at the time, and it was his job to provide for his people, but the cupboard was worryingly empty. ‘There were not,’ he reflected years later, ‘many opportunities to earn a decent living.’Yet Daniel did have one good card to play. During the independence negotiations, he had insisted on the fullest possible autonomy. Small his island might have been, but the federal constitution gave it almost complete control over its own affairs. And it so happened that a coup in Liberia had recently created a potentially lucrative gap in the market for a nation with the right get-up-and-go. American ship owners would pay handsomely for a‘flag of convenience’ for their vessels to sail under when they wanted to dodge US regulations, and they feared the Liberian flag might be taken off the market. It was an American lawyer named Bill Barnard who first invited Daniel to consider the possibilities. ‘Mr Barnard and his team set up the entire infrastructure,’ Daniel recalled. ‘They drafted and prepared the text for the relevant legislation which we then passed in the Nevis House of Assembly.’Having discovered how pliable the government was, Barnard developed grander ambitions for Nevis than a mere ship registry. Why only help ship owners dodge the rules, when you can help everyone? Barnard was taking Nevis into the secrecy business. His company, later named Morning Star, gained an exclusive monopoly over the island’s products. Barnard imported American lawyers to cook up a delicious spread of financial goodies, which Nevis dutifully copied on to its legal menu. Barnard has not returned my calls, texts or emails, but it appears that his team borrowed most of their initial raft of legislation from the US state of Delaware. It passed in 1984. A year later came a confidentiality ordinance, which banned anyone from giving financial information to anyone not entitled to hear it, and the island was good to go – not that it stopped there. David Neufeld is one of the many US attorneys who have helped build ramparts around the island’s financial system over the years. In 1994 he wrote Nevis a law that introduced a version of Wyoming’s innovative Limited Liability Companies (LLCs), which he improved by adding aspects of other laws that he felt his clients would like. ‘We cherry-picked,’ he told me. ‘It was a wayof, you know, playing God with Creation, not to be too obnoxious about it.Obviously, my creation is somewhat less ambitious than Creation. I didn’t take the seventh day off. That’s a distinction between me and God: He works faster.’The ideas that Neufeld and others have brought to Nevis have made it a formidable fortress for anyone seeking to protect their assets. Nevis doesn’t recognise foreign court judgments, so you have to bring any legal claim in the island’s court. But in order to bring that case, you must post a $100,000 bond up front as proof of your good intentions. If the abuse you’re complaining about happened more than a year before you file the papers, your case will be automatically dismissed. And even if you succeed, there is limited information to find. Nevis doesn’t require its registered structures to keep any financial documents on the island, and they face no reporting, auditing or accounting requirements. A foreign company can relocate to Nevis any time its owner likes; or a Nevis company can move elsewhere. Either way, it doesn’t have to inform the island’s registry who owns it: that information is between the shareholders and the registered agent, and can’t be shared without a court order.The lawyers who crafted these barriers have made a decent living out of their innovations, and are rather proud of them. ‘We put together a group of maybe ten people or so, from all around the United States, and we essentially got together once every other week for an hour and a half. We literally started at the beginning of the code, and we worked our way through every word,’ Shawn Snyder, a Florida trust specialist who chaired the most recent re-examination of the island’s laws, told me. ‘When I work with my clients, I always tell them there’s a new golden rule for asset protection: he who has the gold, wins.’ Lobbying takes place everywhere, but here it is stripped down to its barest essentials. American lawyers write bills which the Nevis assembly turn into law, so the American lawyers can make money and Nevis can levy fees. It is a purely transactional relationship. It goes without saying that Nevis charges no tax on the companies it hosts (unless you want it to; there can be advantages), but the island is much more than just a tax haven. It is an everything haven; a miniature exemplar of the dozens of jurisdictions that have sprung up to service ordinance, which banned anyone from giving financial information to anyone Moneyland, to shelter the assets of anyone rich enough to afford their services.There are now approximately 18,000 corporate structures based on the island, a significantly higher number than Nevis has people. The industry brings in almost $5 million a year in revenues, while the government makes another $5 million a year in fees, plus all the taxes paid by the lawyers, accountants and others that the industry employs. That may not sound like much, but for an island with the population of a small town, it’s a good living. It’s no wonder ex-premier Daniel was so pleased about the acorn he planted. ‘The financial services industry has helped to provide the economic resources to allow Nevis to grow and its people to prosper,’ he wrote.Nevis prospers by renting its sovereignty to rich people who believe America is over-litigious, that women get too much money in divorce settlements, and that lawyers lie in wait for the successful. These beliefs are widespread among the rich, and Moneyland has given them the power to do something about it.Once upon a time, if wealthy Americans felt their country was over-litigious, they would seek to influence a political party to change the laws. If they felt their spouses’ divorce settlements were too generous, they could argue for legislation to be passed to change that. It might have taken a while, and it might have been imperfect, but that’s democracy for you.That process of messy compromise, of back-and-forth, has been replaced by asset protection. Instead of campaigning to change the laws, they have opted out of them altogether. If you’re an ordinary person, you still face the risk of litigation and divorce settlements, as American law demands. But if you’re rich enough, you can avoid US jurisdiction and tunnel into Moneyland, where your money is hidden from the rest of us.‘I don’t like the word hidden. It’s protected, not hidden, there’s nothing to hide. Look at it from the other way, a lot of females are gold-diggers. You are married to a man, you don’t really love him, but he has money. People find ways and means to protect their assets,’ Laurie Lawrence, financial adviser to the Nevis government, and before that permanent secretary of finance for more than two decades, told me. ‘If you are a doctor in the US, you know that you could get a malpractice suit that could destroy you financially. So you take some step sto protect your assets, so that if something were to happen, then you’re not broken by it.’The lawyers who wrote the Nevis laws are delighted with their work, but those who come up against the island’s structures from the other side are significantly less impressed. Back in 2013, a Russian woman won what was up to that point the biggest divorce settlement in British history (£53 million), after her lawyers managed to unpick the complex web of offshore structures her husband had created to try to deny her access to the assets they had accrued over seventeen years of marriage.The couple’s names were withheld by the court, as is standard practice in most family cases in the UK, but the details of the husband’s offshore schemes were made public – he used three Nevis companies to conceal his ownership of four expensive London properties, among other things. ‘The case has been a fantastic charade with the husband a shady puppet master in the background. At fabulous cost (£1.4 million and counting), those representing the wife have crossed and re-crossed the globe in an attempt to trace the husband’s assets, every penny of which has been acquired during the course of the marriage,’Justice Eleanor King wrote in her ruling. The wife won in the end, but is it really justice if it’s only available to someone who can afford to spend £1.4 million getting it? Even bigger was a Florida divorce battle between Finnish-born tech millionaire Robert Oesterlund and his Welsh-born wife Sarah Pursglove, which was revealed in detail in a lengthy 2017 article in the New York Times.Oesterlund had, according to the paper, hidden his substantial fortune in what amounted to ‘a worldwide financial system catering exclusively to the wealthy… [which] has one main purpose: to make the richest people in the world appear to own as little as possible’. Fortunately for Pursglove, she was able to hire Jeffrey Fisher, a highly skilled attorney who assaulted Oesterlund’s protective ramparts from angles no one else would have thought of. The article is a fascinating dive into the realities of asset protection; inevitably, the case involved shell companies in Nevis.They started coming up around twelve years ago; I would say around 2005. And they’re coming around with increasing prevalence,’ Fisher told me, byte lephone from West Palm Beach. ‘I’ve been doing this a long time now – I’m a former prosecutor, and I know about the ways people hide money, and what they’ll do. My approach to getting assets that are in asset protection entities like a Nevis LLC, is that you don’t go to Nevis and try to get the money out, that is afool hardy enterprise. They passed laws and they set up structures to stop us and to make it expensive and to make it take years and years and years. What we do here is we use some more creative approaches to, for lack of a better term, make them cough up the dough.’The trouble is, if you can’t afford to hire someone like Jeffrey Fisher, who has been repeatedly listed among the top divorce lawyers in America, you don’t stand a chance. ‘Most of these cases, if you don’t know what you’re doing, you’re going to lose. And if you don’t have adequate resources to undo the insidious structure that they set up, you’re going to lose,’ he said. ‘You’ve got to realise that the asset protection industry is trillions of dollars, not billions of dollars, it’s trillions of dollars. Essentially, it’s: we’re going to find a way to screw legitimate creditors out of collecting a legitimate debt, that’s the businessthese people are in, but they call it something different, and they throw a lot of money at it and they’re able to propagate it that way.’This might not be such a problem if the only takers for Nevis’ services were rich Americans keen to hide their wealth from their fellow citizens. However, just as with Warburg’s eurobonds, the island’s peculiar trade draws in crook sand tyrants from all over the world. The evil money always mixes with the naughty money. Name a scam, any scam, as long as it’s complex and international, and it will involve somewhere like Nevis. Navinder Sarao, the British day trader convicted in 2016 for ‘spoofing’ the US markets in the ‘Flash Crash’ of 2010 (when the Dow Jones Industrial Average lost more than 600 points in minutes, at least partly because Sarao sent fake orders to drive down prices, temporarily wiping trillions of dollars off the value of US shares), diverted his profits into two Nevis-registered trusts, one ofwhich he called the NAV Sarao Milking Markets Fund. In Britain’s biggest ever tax fraud, a group of conspirators made £100 million by duping celebrities into investing in bogus green technology. The cash was cycled through structures in Nevis. ‘This case involves a scheme whose chief characteristics were utter dishonesty, sophisticated planning, and astonishing greed,’ said the judge at the fraudsters’ sentencing in late 2017. ‘The time taken to investigate and charge these defendants was entirely due to the sophistication and complexity of the fraud.’A securities fraud prosecuted in New York in 2015 sent money via Nevis, as did a day trading scam tried in New Jersey in 2017. A particularly egregious conman took $161 million from 620,000 vulnerable Americans in a pay day lending scheme that ran for a decade until 2014, charging up to 700 per cent in interest, which was hidden for part of its lifespan behind Nevis structures. ‘The Hydra Lenders’ purported “offshore” operation consisted of little more than a service that forwarded mail from addresses in Nevis or New Zealand to the Kansas City, Missouri, office,’ the office of the US Attorney for Southern New York reported. Search for ‘Nevis’ on the Department of Justice (DoJ) website, and the examples pile up. There’s a $250 million money-laundering scheme used by someone who illegally manipulated the price of US shares, and who hid his ownership of his company behind Nevis structures. There’s a civil recovery case against a Nigerian businessman accused of embezzling hundreds of millions of dollars, laundering it through the United States and using it to buy an $80 million yacht called the Galactica Star. He used Nevis companies to obscure ownership of his private jet (the criminal case is ongoing in Nigeria, where he is accused of stealing $1.7 billion; he denies any wrong-doing). Back in 2012, the DoJ forfeited a Manhattan condominium, and a Virginia property, which had been bought with bribes paid to the family of the former president of Taiwan, whose ownership of them had been obscured behind a Nevis structure. Outside the United States, justice departments are not as good at publicising their achievements, but news archives reveal similar accusations made all over the world. Thanks to the documents fished out of the Dnieper river in 2014, we know that Ukraine’s ex-president Viktor Yanukovich hid his ownership of coalmines behind Nevis companies. Money stolen from the Russian budget bycorrupt policemen, in a crime exposed by the anti-corruption lawyer Sergei Magnitsky, who later died in jail when denied medical treatment, passed through Latvian bank accounts owned eventually in Nevis. Members of the ruling family of Azerbaijan, according to articles by the fearless investigative journalist Khadija Ismaylova, owned mobile phone and gold mining companies at least partly via Nevis. It is hardly surprising that bloggers who sought to damage the reputation of French presidential candidate Emmanuel Macron when he ran for election in 2017 did so by inventing a company in Nevis – La Providence LLC,purportedly named after the school he attended – and claiming it was where he hides his cash. The accusation was false, but gained publicity because having a company in Nevis is precisely the kind of thing a crooked politician would do.Jack Blum is a veteran investigator of corruption who spent fourteen years as the in-house attorney at the Senate Antitrust Subcommittee, and he is wearily familiar with the island. ‘The directors and officers have no fiduciary responsibility, and there’s no requirement that such minimal records as may exist be kept in the place of incorporation. So, if somebody finds out that there’s aNevis company involved and you go to Nevis, you could waterboard the entire board of directors and nobody would know anything,’ he told me over coffee near his house in Annapolis, Maryland. ‘You’re wasting a whole lot of time ifyou go there, because you won’t find much.’ He said it again, to underline the point: ‘You ain’t going to find anything there.’Still, one of the few advantages of being a freelance writer is that my time is my own to waste. I love a challenge, so I bought a ticket, and went to see for myself. Perhaps I might find something where others had failed?
Flying to St Kitts from Miami takes three hours, then the taxi ride to its capital,Basseterre, is about ten minutes. Basseterre is an unhurried low-rise town where neighbours gossip across the road to each other, chickens peck in side streets,and hawkers sell Bob Marley T-shirts or little bags of peeled sugar cane to the passengers who swarm down from the giant cruise liners. From there, you take a little ferry along the island’s southern shores, where the waves roll in unimpeded from the Atlantic and things get bumpy, until you arrive in the shelter of your destination and the water calms once more. Nevis is a gorgeous island to look at from the water, its gentle slopes rising ever-more-steeply towards a peak that is almost always hidden by white cloud. It looks snow-capped, which may be why the first Spaniards to see the island named it Nuestra Señora de las Nieves (Our Lady of the Snows), the term that was eventually shortened to Nevis. In the eighteenth century, this was a major sugar-growing and slave-trading centre for the British Empire. It was also the birthplace of Alexander Hamilton, first US Secretary of the Treasury turned unlikely modern day pop culture icon. During the nineteenth century, when bigger colonies had easier transport links and larger populations, Nevis lost its prominence, which is when it was subordinated to St Kitts. By the time of its independence, it was barely a backwater, and it is something of an achievement that Barnard and his offshore lawyers found it at all. North of Charlestown, Nevis’ Lilliputian capital, is the Four Seasons, a luxury resort that helped introduce Nevis to high-end tourists when it opened in the early 1990s. There is now a significant overlap between the kind of wealthy customers who visit the island’s five-star hotels and the people who make use of its asset protection products. Charlestown is a strange town to walk around if you have been studying Nevis-related business, since so many of the companies involved are nominally headquartered within such a small area. The companies that hid the involvement of Azerbaijan’s ruling family in the country’s gold and telecoms industries were housed in the building directly in front of you when you get off the ferry. Ten metres or so up the road, you will find the Edith L. Solomon Building, which has lost several of the letters from its name: it was home to a scandal-hit pay day loan company in Idaho. Thirty metres north is the Morning Star office, which is the nominal home of companies owning thirty-six houses in Britain, including one in Mayfair with a view over Hyde Park. In total, more than 300 properties in England and Wales are owned via Nevis companies, almost all of them headquartered in an area little bigger than a football pitch. I was particularly keen to investigate two companies that featured in the ownership structures of some Latvian bank accounts used to launder billions of dollars from Russia. The scheme was exposed in 2014 by investigative journalists from the Organised Crime and Corruption Reporting Project (OCCRP), who dubbed it ‘the Russian laundromat’. The companies’ home address was Suite B, Hamilton Development, Charlestown, which is also the headquarters of the Nevis International Trust Company (NITC). But no one in the town appeared to know where that was. At a loss, I enquired at the Financial Services Regulatory Commission (FSRC), where the receptionist informed me Ineeded to trek up the hill."
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