America’s outpost of financial secrecy — Finance Uncovered

The UK is not the only country that has created a web of offshore secrecy. In our latest investigation published today in South Africa’s Daily Maverick in cooperation with AmaBhungane, we probe Liberia – America’s offshore outpost in Africa.

By George Turner and a Liberian journalist

Finance Uncovered, working with an anonymous Liberian journalist, has exposed a little-known offshore business registry that has created tens of thousands of anonymous companies and registered them to a non-existing address in Monrovia, Liberia’s capital city.

Although these companies are technically a creation of Liberian law, management of the registry is based in the United States and appears to have the support of the US government.

The companies, which can be purchased online, offer near-total anonymity to their clients, allowing them to hide assets without fear of being caught by law enforcement or revenue authorities.

Our investigation has discovered over half a billion pounds of high-value London property registered to Liberian offshore companies.

And there have been allegations that revenues from the registry were used to fund arms purchases during Liberia‘s violent civil war.

Liberia’s secret companies

Non-resident corporations are a particular form of corporate entity offered by the Liberian government to foreigners. They cannot do business in Liberia, and anyone in the world can set up such a corporation online within 24 hours through a corporate service provider.

Registered with the ministry of foreign affairs, they have no liability to pay taxes in Liberia, and no obligation to declare who owns them or file annual accounts.

They can also issue “bearer shares”, a legal instrument banned in most countries because of the ease with which they can be used for tax evasion and money laundering.

Bearer shares are unregistered certificates of ownership which can be physically transferred, changing ownership of a company without any record being kept. They are companies in cash form.

This means that no one, including tax and law enforcement authorities and the directors of the company itself, can find out who the owners are.

It is unclear exactly how many offshore companies Liberia has established. The Liberian government does not publish official figures, and Liberian officials repeatedly stonewalled requests for information, citing “commercial confidentiality.”

The registry is apparently a sensitive issue for the foreign ministry. The ministry’s then-deputy minister for legal affairs, Boakai Kanneh, became visibly angry when we raised the issue during a brief meeting and ordered us out of his office.

Binyah Kesselly, former commissioner of the Liberia Maritime Authority (LMA), which has oversight of the corporate registry, said in response to e-mailed questions that the number of registered companies is kept confidential because of competition in the maritime industry.

The Liberian International Shipping and Corporate Registry (LISCR), a private company that manages the registry on the government’s behalf, also cited commercial confidentiality in response to questions.

Outside LISCR, the LMA, the ministry of foreign affairs and the president’s office, few Liberians seem aware that the offshore companies registry exists.

The minister in charge of the Liberian domestic business registry until his death earlier this year, deputy minister of commerce and trade services Cyril Allen, told us in December 2015 he was unaware that Liberia had any other system of registering companies.

Some of the tax advisors who use the registry also seemed strangely unwilling to discuss it. Price Waterhouse Coopers is the only member of the “big four” accounting firms with an office in Liberia, and is listed as a “certified service provider” on the LISCR’s website.

To qualify for this program PwC must actively promote the use of Liberian companies. When we contacted them, the company said it would only respond to a letter delivered to its Monrovia office.

A letter was delivered, but no reply was forthcoming.

Liberia’s former auditor-general, John Morlu, slammed what he called secrecy surrounding the registry and the Maritime Program of which it forms part.

He told us in an email: “The Presidency has managed to conceal the corporate registry in the infamous maritime registry with 99% of the Cabinet, 99% of the legislature, and 99% of the Liberian people having no clue what a corporate registry is .

“Many Liberians know that the Maritime Program is lucrative, and since it has always been the prerogative of the presidency no one dares bother to poke into it.”

However, Finance Uncovered located an OECD report from 2013 on Liberia’s tax and transparency laws which states that 55 000 companies are registered in that country. Most are understood to be non-resident corporations.

In 2009 the trial of former Liberian president and convicted war criminal Charles Taylor heard that the offshore corporate registry had registered 40,000 companies.

Asked for comment, the Liberian government claimed that the maritime program and the registry are not secret and that President Ellen Johnson Sirleaf usually reports on the activities of the registry in her annual State of the Union address.

No mention of the registry could be found in the previous two State of the Union addresses. We Asked when Sirleaf last updated the Liberian legislature on the program, her spokesperson, Jerolinmek Matthew Piah did not respond.

In search of 80 Broad Street

To receive mail, all Liberian non-resident corporations must have an address in Liberia and a registered agent.

Under Liberian law the LISCR Trust Company, a private entity with the address of 80 Broad Street, is the exclusive agent for all Liberian non-resident corporations. This means that all such corporations have the same mailing address – 80 Broad Street, Monrovia.

Broad Street is the commercial heart of downtown Monrovia. But 80 Broad Street does not exist, and when we visited the area none of the businesses on the street had heard of it.

At the ministry of post and telecommunications, no one would say who was assigned to that address.

Finally, a DHL agent we interviewed found that mail for 80 Broad Street is diverted to LISCR, on 5th Street in Sinkor, a few kilometers away.

At the LISCR offices, we-were told that the managing director, Joseph Keller, was on long-term sick leave in the US and no one had replaced him.

Asked whether anyone at LISCR’s Monrovia office could explain what happened there, we were told “no”.

LISCR’s Monrovia office appears to be little more than a mail room, receiving correspondence for the thousands of companies registered there, which is scanned into computers and e-mailed to LISCR’s US headquarters.