Welcome to the second entry of DATAINT, where I will continue my totally-not-unhinged obsession with bearer financial instruments, in the Offshore Leaks Database. Most of the bearer nodes are connected to either an entity or an address, and today we will be looking at whether we can tease out any interesting information about the addresses.
The first, and easiest, thing is to sort them their edge-count, e.g., sort them by how many “bearers” they are associated with. I wont leave you in suspense, the winner is “11 Boulevard Albert; 1er MC 98000; Monaco,” with 492 “bearers” all registered at that address. 11 Boulevard Albert is the address of Credit Foncier de Monaco, which is a big fancy bank. The legality of bearer shares in Monaco is, to my eyes, unclear. The best source on the subject I’ve been able to find is the Peer Review Report Phase 2 Implementation of the Standard Practice in Monaco, which uses the most words possible to determine Monaco’s compliance with the OECD’s standards regarding money laundering and tax evasion. [OECD, Peer Review Report, 2013–11] Paragraphs 110 through 117, with all the clarity of late-stage James Joyce, seem to say that Monaco made bearer shares illegal in 2011, but that there is a grace period for two companies (the only two companies that were allowed to issue bearer shares in Monaco before the 2011 ban) that lasted until December 2016. This could be the legitimate explanation for a fancy bank holding 492 bearer shares a full four years after Monaco banned them in 2011. The most recent sources I read agree that bearer shares in Monaco today are illegal.¹
The the address with the next most bearer nodes attached to it is “1ST FLOOR; PACIFIC BUILDING PORT VILA; VANUATU” with 427 “bearers” registered. In 2012 Vanuatu “immobilized” their bearer shares, meaning that the certificates themselves must be kept with a competent institution, and that the shares’ owner’s name must be kept on file in case the authorities come calling. [Mondaq, Vanuatu Improves Transparency, 2010–12–10] As we can see here, even immobile bearer shares still provide some level of protection because they keep your name out of the papers in case some tax-loving nerd leaks your offshore law firm’s information to the press. This address is also the registered address of Geoffry Taylor, the owner of a web of companies (who have many “bearer” shareholders), one of which was the lease-owner of a plane that was stopped on the tarmac by Bangkok authorities in 2009 and found to have RPGs bound from North Korea to Iran. [Daily Post Vanuatu, Panama Papers Vanuatu Connection, 2016–05–12] There is no street number, nor google street view, for the “Pacific Building” in Port Vila, so finding out more information is difficult (it appears to be the headquarters of a Vanuatu real-estate firm), but we can safely say that this address is shady. Most importantly, there’s no way to tell why this building qualifies as a competant authority to hold bearer shares. To reiterate, this data is current through 2015.
The next bearer share superhub we’ll look into is “11; AVENUE EMILE REUTER; L 2420 LUXEMBOURG CITY; LUXEMBOURG,” the registered address of 329 “bearers” in the OLD. Some creative Googling reveals this as the headquarters of (surprise!) a fancy bank that specializes in wealth management for people of high net worth. The bank in this case is the Societe General Bank and Trust. Luxembourg has immobilised their bearer shares since 2014, so a bunch of bearer shares being registered to this address is in no way suprising. [Wildgen (a Luxembourg law firm), Reform of the Bearer Shares Regime, 2015–01–05] If authorities had legal justification, they could subpoena the names of the beneficial owners of some shares in SGBT, which is legally required to keep such information on file.
The last address we’ll look into, the fourth biggest bearer hub, is “MOSSACK FONSECA & CO. (LUGANO) S.A.G.L.; VIA D. FONTANA 8; PO BOX 5496; CH-6901 LUGANO; SWITZERLAND,” which is a headquarters of the (now defunct) Mossack Fonseca law firm, the source of the Panama Papers leak that caused so much consternation among people’s of high net worth. Switzerland is currently in the process of strengthening the restrictions on bearer shares’ use. [STEP (a Swiss estate law trade publication), Switzerland Bows to OECD, 2018–11–22] What is interesting about this is that the headquarters of a law firm, not a bank, is the registered address of those shares.
Bearer Shares in the US
Surprisingly, bearer shares are still legal in some jurisdictions in the US, a fact reflected in the OLD. For example fourteen bearer nodes have addresses registered at an HSBC branch in Flordia (“c/o 1441 Brickell Avenue; 16th Floor; Miami; Florida 33131”), and there are five registered to a bank in Texas (“24 Greenway Plaza Suites 965, Huston Texas”). At least one of the Florida bearer addresses (“3649 gulf stream way Ciudad Davie, Florida US”) is clearly not a bank (I’ve never seen a bank in a suburban neighborhood with a porch and pool before). There are single bearer nodes registered in California, Delaware, and Arizona as well. In sum, reports of the death of bearer shares in the US have been greatly exaggerated (at least as of 2015).
Stray Observations
82112 of the bearer nodes (making up 95% of them) in the OLD come from the Panama Papers leak, e.g., they come from information leaked from the law firm of Mossack Fonseca in 2015. 4261 (5%) of them come from the Offshore Leaks leak, e.g., they came from information leaked from Portcullis Trustnet in 2013 (though the information is only current through 2010). 9 of them came from the Appleby law firm, and 1 one of them came from the Malta corporate registry. Those were part of the Paradise Papers leak of 2017–2018; that information came from Appleby and the corporate registries of several “offshore” jurisdictions.
For whatever reason, I decided I needed to confirm that the country code of each bearer node matched the address node that it was connected to. In the process I found that there are 66 bearer nodes that are connected to more than one address in more than one country. For this subset, each bearer node’s country matched at least one of the addresses that the bearer node was connected to, but I couldn’t determine how a bearer node’s country was chosen, if it was attached to more than one address in more than one country. It’s not anything obvious like alphabetical, or one country always taking precidence over another country (I’ve thrown a dataframe of the 66 nodes up on my GitHub repo, the link is at the bottom of the article).
The labeling of the data in the OLD is not perfect, understandable as it involved the nodes were created automatically from millions of documents. In particular I noticed that there are a lot of bearer node addresses that are categorized as being in the US but are clearly in other places. There are several addresses that end with Lausanne (a city in Switzerland) that are labeled as being US addresses (my guess is the system got tripped up by the “usa” in Lausanne).
Footnotes
- This 2018 report from the Tax Justice Networks lists Monaco as a jurisdiction where bearer shares are illegal. This profile by the creatively named Offshorecompany.com also says that bearer shares are illegal in Monaco.
As always, here is a link to the GitHub repo where any code written and used in the course of writing this article can be viewed. There are also some csvs I created, which are just subsets of nodes.
