A cache of 1.3 million files leaked from The Bahamas' corporate registry provides names of directors and some owners of more than 175,000 Bahamian companies, trusts and foundations registered between 1990 and early 2016. The information was published yesterday by the International Consortium of Investigative Journalists (ICIJ) in the form of a free online searchable database.
And at least one Bahamian official sees the release as an attack on the jurisdiction that must be defended. That view is supported by the presence at the end of an ICIJ article of what appears to be an attack on The Bahamas' decision to implement automatic exchange of information (AEOI) for tax purposes under the Organisation for Economic Cooperation and Development (OECD) Common Reporting Standard (CRS) in 2018 through the bilateral approach, rather than signing onto the multilateral convention.
The new information reveals previously unknown or little-reported connections to companies owned or run by current or former politicians from the Americas, Africa, Europe, Asia and the Middle East. It contains what the ICIJ refers to as "the basic building blocks of offshore companies: a company's name, its date of creation, the physical and mailing address in The Bahamas and, in some cases, the company's directors. At a basic level, this information is crucial to day-to-day commerce. In other cases, police, detectives and fraud investigators use registries as starting points on the trail of wrongdoing".
The new leaked documents include the names of 539 registered agents, which the consortium describes as "corporate middlemen who serve as intermediaries between Bahamian authorities and customers who wish to create an offshore company". One such agent is Mossack Fonseca, the law firm whose leaked files formed the basis of the Panama Papers, and which set up 15,915 entities in The Bahamas.
Noting that aside from Mossack Fonseca and the Panama Papers, the leaked Bahamian files reveal details of the offshore activities of prime ministers, cabinet ministers, princes and convicted felons; the consortium acknowledged that it is generally not illegal to own or direct an offshore company, and there are legitimate business reasons in many cases for setting up an offshore structure.
"But transparency experts say it's important that public officials disclose their connections to offshore entities," the consortium said.
Skeptic
The ICIJ took a clear tone of skepticism toward Bahamian protestations of cleanliness.
"These days, The Bahamas, a one-hour plane ride from Miami to the capital, Nassau, claims to be cleaner than ever. Yet doubts persist... Tax reform advocates have criticized tax havens, including The Bahamas, for trumpeting transparency while signing exchange agreements with other tax havens or with small countries unlikely to yield much information of use to poor, tax-starved governments," the ICIJ wrote.
Attack
It is clearly this tone to which Shadow Finance Minister Peter Turnquest responded.
Said Turnquest, "It is clear that there are international interests unconcerned with the facts or the tremendous efforts the jurisdiction has been engaged in to keep pace with the changing landscape, but instead intend on dismantling this country's economic base in a most hostile way."
Turnquest added, "It is also clear that The Bahamas as a jurisdiction must become even more proactive to outthink and outmaneuver our economic detractors and to make The Bahamas a clear jurisdiction of choice, rather than one of pure convenience as alleged."
Breach
Turnquest said it is equally clear from the article that there has been a very serious data protection breach at the register general's office, which falls under the attorney general.
"This is very serious, and the attorney general must respond to the threat and advise what steps have been taken to determine if in fact there has been a breach; how extensive the problem has been; what information has been illegally accessed; any legal implications to the jurisdiction; have clients been notified of the breach and advised of steps to protect themselves from financial, legal and personal risk; was an IT (information technology) audit done; has the exposure access points been closed; have other data access points been reinforced and data security and protection been addressed."
Turnquest pointed to Minister Education, Science and Technology Jerome Fitzgerald as a "recalcitrant minister of the government who just this week indicated rather arrogantly and belligerently that he would leak private information coming into his possession from undisclosed sources again in similar circumstances".
"He was speaking to a similar alleged breach of confidential information that highlighted the serious damage that has been done to this sensitive financial services industry. We wonder if he has yet realized the danger of his actions and careless speech.
"The government cannot be taken seriously in condemning this latest breach and release of confidential data if the government system was in fact hacked, if they condone Minister Fitzgerald's actions, tone and statements in relation to the Save The Bays members email leaks. To do so would make them all hypocrites," he said.
Data protection
Turnquest also recalled that former Data Protection Commissioner Sharmie Farrington-Austin spoke out against the release of private information in any forum other than as proscribed in the Data Protection Act. She, according to Turnquest, "was rebuked and ultimately fired or quit for doing her job over the abuse of this private data release".
"We must now question whether her termination has any connection to the lack of data security generally and the weak IT security environment that may have resulted in the complete compromise of the government's database. This is a concern for not only international clients but also domestic companies and individuals," he said.
Recall
Turnquest said given all that has occurred with the involvement of Attorney General Allyson Maynard-Gibson in the Baha Mar debacle, plus what he described as "the two nolle matters, the latest ruling going against Bahamian workers in favor of foreign interests, and now this major apparent breach of data security under her watch", it would be "clearly reasonable" for Prime Minister Perry Christie to reconsider his ministeral allocations to ensure that the individuals overseeing these critical ministries are focused and fully in control of these sensitive areas.
Approach matters
The ICIJ also blasted The Bahamas for not signing onto the multilateral exchange treaty.
Said the consortium, "The OECD, the treaty's governing body, calls it the 'most powerful instrument against offshore tax evasion and avoidance'.
In August, the number of participants hit 103, which includes tax havens and some of the world's poorest countries... The Bahamas argues that the cost and administrative burden of automatically exchanging tax details is too high and that client privacy could be jeopardized. The Bahamas claims it will instead uphold international rules through bilateral, or one-to-one, agreements."
The ICIJ quotes Reuven Avi-Yonah, professor of tax law at the University of Michigan and former consultant for the United States and the OECD, who said, "I am very doubtful that jurisdictions that seek to maintain bilateralism on this issue are serious about meeting their commitments even under bilateral agreements."
Avi-Yonah insisted that the multilateral convention "is the new global standard". He said, "Jurisdictions that are serious about exchange of information sign on to it. I worry that money will flow to the bilateral jurisdictions and no information will be forthcoming."
Turnquest, after acknowledging the attack, said The Bahamas must now meet the challenge head on rather than continue to be a victim of circumstance.
"We must now reconsider our tax structure as it relates to IFC (international financial center) clients as well as domestically. We must look at our immigration policy to ensure we steer clear of the claim of [being a] jurisdiction of convenience, and we must look at our openness to transparency as defined by the OECD and others. We must redefine our value proposition based upon clarity, transparency and compliance today with full anticipation of the next OECD moves," he said.
K. Quincy Parker, Guardian Business Editor
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