The Paradise Papers is the name given to the recent leak of over 13.4 million documents, some of them revealing corruption and impropriety within the global financial market.
Although the Asiaciti financial dealings disclosed are vastly outnumbered by leaked information involving the primary source of the scandal, law firm and corporate services provider Appleby, the trust company revelations shine a light on global players who shield their wealth held in trust in small island countries.
Asiaciti’s emails, trust application forms, faxes and bank statements from all of their tax haven branches, including the Cook Islands, reveal the financial secrets of well-known politicians, celebrities, billionaires and companies, most of whom are household names and brands.
Their overall client base ranges from the ultra-wealthy to the unremarkable, with a host of what could be termed “questionable’ clients in between.
At the heart of the Asiaciti leak, authorities found omissions in records and some client records lacked the information necessary to combat money laundering and tax evasion.
For example, an audit by the Cook Islands Financial Supervisory Commission in 2008 found only a 33 per cent level of compliance with regulatory standards.
“Grrr so annoying,” an employee at one Asiaciti office wrote about other Asiaciti offices, whose incomplete files involving four trusts, were highlighted by a government audit.
One of Asiaciti Cook Islands client’s included the family of Serik Burkitbayev, a former aide to Kazakhstan president Nursultan Nazarbayev and head of Kazakhstan’s state-owned oil and gas company.
In March 2009, a Kazakh court convicted Burkitbayev of embezzlement – the theft of $NZ29 million, and other crimes. Burkitbayev was sentenced to six years in prison, according to Kazakh news media.
By September 2012, as Burkitbayev languished behind bars, his wife and two daughters had set up three trusts in, as one lawyer put it, “A small island nation named after an intrepid English sea captain whose surname rhymes with book.”
The trusts listed Burkitbayev as a beneficiary, meaning he could eventually receive the offshore money. Asiaciti apparently knew of Burkitbayev’s political past, but proceeded with the family’s business, according to emails sent in 2013. Emails after 2013 make no mention of his conviction.
The trusts would be funded with $2.9 million from a real estate deal and $9.6 million from the 2011 sale of one daughter’s interest in a former Soviet cluster bomb factory that was turned into a plant for the production of oil and gas cylinders, according to an email.
Also among Asiaciti’s various US trust clients were Sean Novis and Gary Denkberg, marketing executives who targeted pensioners in a mail-fraud scheme, according to a civil complaint filed by the US Justice Department.
Novis, Denkberg and others told elderly victims they had won more than $US1 million and asked them to pay a fee – “generally in the range of $US19.99 to $US24.99” – to receive the prize, the 2016 civil complaint alleges.
Victims often received nothing in return, according to the complaint. Over four years, the marketers and others allegedly pocketed more than $US30 million.
Novis and Denkberg had one trust each with Asiaciti that, at one stage, held more than $1.46 million each, according to Asiaciti’s files. In February 2007, Novis asked Asiaciti to help him find a bank that did not have “a presence in the US”. Both men’s trusts were active in 2016 when Asiaciti learned of the civil case.
Another Asiaciti client, gold and juice trader Sherman Unkefer III, used his Cook Islands trust to “conceal his accumulated wealth”, according to a county prosecutor in Arizona who brought a civil racketeering claim in 2014.
During and after his eight years in prison on a previous fraud conviction, Unkefer concealed assets to avoid repaying $26.4 million to more than 1300 fraud victims, the prosecutor alleged.
CINews contacted Asiaciti Trust Pacific Limited’s managing director Adrian Taylor, who would only refer to their company’s media statement, that says it complied with applicable laws and regulations at all times.
“We are regulated by highly competent authorities in the jurisdictions in which we operate and are committed to achieving the standards required,” Asiaciti said. “We absolutely deny any implication of wrongdoing.”
Founded in 1978, Asiaciti has described itself as “one of the leading offshore trust groups in the Asia-Pacific region.”
The company’s files reveal a significant US client base, including a California dentist, an Alabama grocer, a US handgun and rifle manufacturer and a food-truck entrepreneur from Los Angeles.
It also includes Chinese millionaires and clients from Switzerland, Romania, Nigeria, Thailand and South Africa, in addition to an Israeli “branding” expert, an Egyptian gynaecologist and a 26-year-old British eye serum and moisturiser salesman.
Asiaciti’s services range from tax, accounting and “wealth protection” services for individuals to secretarial services for global corporations. A major money-maker is trusts.
Regarding Asiaciti Trusts’ previously low compliance record, the head of the Cook Islands Financial Intelligence Unit, Phil Hunkin said the country and its industry had developed significantly since 2008.
“We continue to work with industry to ensure that compliance achieves the necessary standards.”
Hunkin said the omissions discovered would have been through a routine compliance inspection against required regulatory standards.
“The correct remedial actions would have been recommended and implemented and no further action was necessary.”
Aside from compliance, however, offshore trusts are often inscrutable legal instruments with blurred official ownership and the details are rarely a matter of public record. Trusts allow the publicity-shy to act out of sight of creditors, former spouses or courts.
Asiaciti has specialised in establishing trusts in Samoa and the Cook Islands, nations of 200,000 and 11,000 people, respectively. Within 24 hours and for less than $440, a client could buy “state of the art offshore products” to build and preserve wealth, according to an archived version of Asiaciti’s website.
“The sad fact is that Cook Islands trusts are routinely used by people to cheat legitimate creditors,” said Jay Adkisson, an attorney and expert witness in a fraud case that involved Asiaciti’s trust division.
It’s difficult and expensive for creditors, attorneys or a tax office to access funds held by a client’s trust, Adkisson said. “They say ‘nyah nyah nyah nyah nyah, you can’t get it’.”
“I instinctively raise an eyebrow when I see a Cook Islands trust because there are so few legitimate reasons for using such a trust, but many bad ones.”