The Sunday Leader

Off Shore Leaks Stir Hornet’s Nest

  • Full details revealed
  • Exchange Controller silent on investigation

By Faraz Shauketaly

Revelations of full details of various ‘off shore’ companies held for the benefit of Sri Lankans and Sri Lankan companies has caused great consternation amongst sections of the business community whose involvement has been revealed by the International Consortium of Investigative Journalists (ICIJ). The ICIJ released details of corporations held under ‘trust’ arrangements in a number of territories including the British Virgin Islands, Singapore and the Cayman Islands.

 

 

We publish full details that have been released by the ICIJ on their web site. A total involvement of 29 beneficiaries has been identified with Sri Lankan connections appearing under the Sri Lanka listing. A number of others held to be Sri Lankan also appear from other territories like Britain for example.

A further – believed to be far more substantial than the current release – tranche of details is expected to reveal even more names originating from Sri Lanka. Contrary to widely held hope, politicians from Sri Lanka have not been identified by their own names in these listings.

Several weeks ago, The Sunday Leader reported on court proceedings in the Supreme Court of Gibraltar initiated by Raj Obeysekera and Zaki Aliff in connection with Milford Exports Ceylon Limited. They were protesting an attempt by their business partner Harry Jayawardena’s attempt to transfer the assets of five Gibraltar registered companies into his own name and that of his wife (see box).
The Sunday Leader contacted the Exchange Controller in Sri Lanka for a comment as to what the department intends to do. The response received at the time was that the Exchange Controller “can only speak to a Court not a newspaper.”

Following the revelations made by ICIJ on their website we contacted the Central Bank urging that an investigation be held to establish if any Exchange Control rules have been violated. In the instance of the Harry Jayawardena connected matter – where the beneficial owners of those five Gibraltar companies have confirmed that the beneficial ownership is with a Sri Lankan registered company, Milford Exports Ceylon Limited – the Exchange Control Departments appear to have all the proof that is required for a bona-fide investigation.

Of particular interest to investigators at the Central Bank may well be details of entities that may be linked to the Golden Key scandal in Sri Lanka. Companies listed as Golden Key Worldwide and Golden Key Global appear on the offshore leaks.

 

Inaction of the Exchange Controller

Governor
Central Bank of Sri Lanka
Colombo
Dear Governor

The Sunday Leader as a national weekend newspaper has been concerned for a while at the seeming inaction of the Department of Foreign Exchange Control inspite of compelling evidence of wrongdoing by various individuals and entities.

For example over eight weeks ago, our newspaper highlighted court proceedings that were heard in the Colombo Commercial High Court in which significant shareholders and senior executive officers of Milford Exports Ceylon Limited, provided sworn depositions to the Court that their companies (including Stassens Exports Limited) were the beneficiaries of a group of 5 Gibraltar companies that were held under trust arrangements  by a Gibraltar bank.

These shareholders also confirmed by way of sworn depositions and audited financial statements, that the assets of these ‘off-shore’ companies were in excess of USD 200 Million.
Inter-alia these shareholders who are officers of a business that has been incorporated under the laws of the republic of Sri Lanka have confirmed that these assets in these ‘off shore’ jurisdictions remain outside of Sri Lanka and have so remained for several years, and do so in blatant disregard of the Exchange Control laws of Sri Lanka applicable at that time.

In recent weeks the International Consortium of Investigative Journalists (ICIJ) has released details of ‘off shore’ companies created, held and maintained under Trust arrangements in many jurisdictions. The details included who the beneficial owners of these off shore companies are.

There are a number of Sri Lankan individuals and corporates who are named in this report.
We note with some amusement that the response of the Exchange Controller has been that he cannot proceed on the basis of newspaper reports. Indeed when this journalist called him several weeks ago, his response was that he could only speak to a Cout. Does that also mean that before he functions in his capacity he needs the direction of a Court? Perhaps the good officer has not heard of the various mechanisms that exist within the Central Bank to investigate credible allegations of impropriety and possible violations of the rules and regulations.

We are acutely aware that there exists perfectly legitimate reasons for the use of off shore companies and trust arrangements and it is not our intention to cast aspersions on this type of financial and commercial mechanisms.

We are however ever mindful that the laws of Sri Lanka in terms of exchange control has been evolved and developed for good reason. It is incumbent, is it not Governor, that officials such as that manning the Exchange Control unit, exercise diligence and vigilance in their activities. It appears that for a period spanning several years the Exchange Control department have merely twiddled their thumbs and let certain individuals and entities escape the most rudimentary of checks and balances and accountability.

We notice ( and we are sending you a full version of the database which has left out the worldwide details but includes all relevant Sri Lankan details) that some of the beneficiaries named by the ICIJ includes close relatives of public officials at the time that these trust arrangements were created. Whilst entrepreneurs may have legitimate use, the use of such arrangements by serving public officials employed and paid by the republic, raises very much more than the proverbial eyebrow!

We urge you Governor Cabraal, in the interests of transparency, legitimacy, diligence and indeed fair play, to order a comprehensive investigation in order that clarity will be established and innuendo may be consigned to the waste paper bin – and that any wrong doers will be held accountable to the full extent that the rules permit.

Thank you and with assurances of the highest order,

Yours sincerely
Faraz Shauketaly
Journalist
The Sunday Leader Newspaper
Sri Lanka
e-mail: faraz@thesundayleader.lk
——————————————————————-

ICIJ Revelations Raise Far Greater Concerns

The revelations from the International Consortium of Investigative Journalists (ICIJ) has raised – in Sri Lanka – far greater concerns than those traditionally associated with offshore companies – secrecy. Offshore companies are noted for its secrecy and the use of nominees – the nicer term for ‘fronts’ where professionals act on behalf of and at the behest of the beneficial owners.

Nominees are not only used for ownership but to also setup and act as officers of companies. In Sri Lanka, because of its historically important foreign exchange rules, the fear is that millions of dollars worth of profits made have been retained outside of Sri Lanka – and therefore perhaps outside the domain of the tax and foreign exchange regulators in this country – placing an unnecessary drain on this country’s scarce forex reserves and its even more perilous Income Tax Department.

The existence of names that may well be associated with the disgraced former Ceylinco chief Lalith Kotelawala Golden Key has given hope that the Central Bank may well be able to trace some of the vital missing funds.

—————————————————-

Disclaimer

There are legitimate uses for offshore companies and trusts. We do not intend to suggest or imply that any persons, companies or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly
Data involving certain privacy concerns have been removed. Some of the information we are withholding includes:

Email addresses and telephone numbers

Passports

Bank Account information and financial transactions

Assets

Pictures
—————————————————-

Glossary

Bearer shares
Company shares that exist only in certificate form and whoever “bears” the certificate is deemed to be their owner. They allow for anonymous transfers of control.
Beneficial owner
The ultimate owner of an offshore company.

Beneficiary
A person who is entitled to certain financial benefits under a trust arrangement. Sometimes beneficiaries are not aware of their role in a trust because the settlor or the trustee has not notified them.

Dormancy Date
The date when an offshore entity stopped being active.
Incorporation Date
The date when an offshore entity was created.

Listed Address
Contact postal address as it appears in the original databases obtained by ICIJ.
Master Client
Often an intermediary or go-between who helps a client set up an offshore entity.

Nominee
A person or company that acts on behalf of the beneficial owner of an entity to provide an extra level of secrecy.

Officer
A person or company who plays a role in an offshore entity.
Offshore Entity
A company, trust or fund created in a low-tax, offshore jurisdiction.

Protector
An advisor to a trust settlor who oversees the work of the trustee.
Sundry Account
An internal account created by the offshore services firm to record miscellaneous charges of an officer or master client.

Trust
A legal arrangement in which an individual transfers assets owned by him/her to a trustee.

Trustee
A person who holds title to the assets in a trust and is responsible for administering the assets on behalf of the beneficiaries of the trust.

Trust settlor
A person who creates a trust or transfers assets to an already existing trust.
Underlying officer
A person or company who plays a role in an offshore entity but whose name appears behind the name of a nominee

——————————————

The Gibraltar Offshore Companies:
Rubicond Enterprises Limited
Placidrange Holdings Limited
Sonetto Holdings Limited
Mills Enterprises Limited
Greenfield Pacific EM Holdings Limited

Comments are closed

Photo Gallery

Log in | Designed by Gabfire themes
google.com, pub-1795470547300847, DIRECT, f08c47fec0942fa0