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| The offshore trick: how BVI 'nominee director' system works | The offshore trick: how BVI 'nominee director' system works |
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| Nominee directors are not illegal and can sometimes be useful, for example in preparing "off-the-shelf" ready-made companies. But the legal conjuring trick behind the British Virgin Islands nominee system opens the way to abuses. It depends on three pieces of paper: | Nominee directors are not illegal and can sometimes be useful, for example in preparing "off-the-shelf" ready-made companies. But the legal conjuring trick behind the British Virgin Islands nominee system opens the way to abuses. It depends on three pieces of paper: |
| 1. A promise by a nominee director only to do what the real owner tells them. | 1. A promise by a nominee director only to do what the real owner tells them. |
| A characteristic "nominee director declaration", used in 2010 by the Vanuatu-based Taylor organisation, reads like this: "I, Ian Taylor, Director BRAD LAND LTD, having agreed to the appointment as Director of a company duly incorporated under the laws of the British Virgin Islands [BVI] … hereby declare that I shall only act upon instruction from the beneficial owners." | A characteristic "nominee director declaration", used in 2010 by the Vanuatu-based Taylor organisation, reads like this: "I, Ian Taylor, Director BRAD LAND LTD, having agreed to the appointment as Director of a company duly incorporated under the laws of the British Virgin Islands [BVI] … hereby declare that I shall only act upon instruction from the beneficial owners." |
| 2. A "general power of attorney". | 2. A "general power of attorney". |
| The nominee secretly hands back all control to that real owner. Typically, "To transact, manage and do all and every business matter … To open any bank account and to operate the same … To enter into all contracts … To collect debts, rents and other money due." | The nominee secretly hands back all control to that real owner. Typically, "To transact, manage and do all and every business matter … To open any bank account and to operate the same … To enter into all contracts … To collect debts, rents and other money due." |
| That example, signed by a Nevis-resident nominee director in 2005, gives back control of a BVI offshore company, Kordwell Holdings, to its secret Russian owner, Vladimir Bugrov, in Moscow. One typical agency, the Haslemere-based accountants Fletcher Kennedy, explicitly advertise: "Both the power of attorney and nominee director agreement are confidential documents designed to ensure our clients' privacy." They told us that the website was "a historic one dropped by us some time ago". | That example, signed by a Nevis-resident nominee director in 2005, gives back control of a BVI offshore company, Kordwell Holdings, to its secret Russian owner, Vladimir Bugrov, in Moscow. One typical agency, the Haslemere-based accountants Fletcher Kennedy, explicitly advertise: "Both the power of attorney and nominee director agreement are confidential documents designed to ensure our clients' privacy." They told us that the website was "a historic one dropped by us some time ago". |
| The more brazen nominees favour residence in self-ruling havens such as Vanuatu or Nevis because they aim to be beyond the reach of the developed world's tax and legal authorities. But they avoid the BVI itself. Because the BVI recognises British law, local residents could in theory be vulnerable to claims of legal liability from creditors and others. One offshoring agency owner told Russians, his biggest customers according to our sources, that the only people prepared to provide such secret general powers of attorney were those Britons who had emigrated from Sark to more far-flung jurisdictions. | The more brazen nominees favour residence in self-ruling havens such as Vanuatu or Nevis because they aim to be beyond the reach of the developed world's tax and legal authorities. But they avoid the BVI itself. Because the BVI recognises British law, local residents could in theory be vulnerable to claims of legal liability from creditors and others. One offshoring agency owner told Russians, his biggest customers according to our sources, that the only people prepared to provide such secret general powers of attorney were those Britons who had emigrated from Sark to more far-flung jurisdictions. |
| 3. A signed, but undated, director's resignation letter. | 3. A signed, but undated, director's resignation letter. |
| This supposedly enables a nominee to duck liability in the event of any trouble. Ted Cocks and Joseph Sparks, for example, who share a flat in the East End of London, say this was the only one of the three documents they ever signed, as nominee directors of more than 200 Russian firms, and that they were never involved with the more exotic nominee practices. | This supposedly enables a nominee to duck liability in the event of any trouble. Ted Cocks and Joseph Sparks, for example, who share a flat in the East End of London, say this was the only one of the three documents they ever signed, as nominee directors of more than 200 Russian firms, and that they were never involved with the more exotic nominee practices. |
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