Protecting indicators with offshore companies
Most of what is known about offshore financial centers comes from novels describing a clandestine event in the Cayman Islands in the middle of the night behind the fourth palm tree from the left…. And, in truth, many offshore locations specialize in privacy. And privacy can be a very good tool for the corporation trying to protect its business plans, its research, and its products in development.
Let’s take the jurisdiction of Nevis, which has created a class of companies that can conduct business anywhere in the world. Well, anywhere in the world except Nevis. This class of company is relatively free from disclosure of ownership, operations, and financial condition.
How can this class of company be used to protect indicators that point to what you are doing?
• You have a large research project for which there is no statutory reporting requirement, and you are trying to keep your activities secret as long as possible. You can run the research and the contracts through a Nevis based international entity, so your competitors will have a much more difficult time following the trail.
• Your project requires that you hire a large number of people for a short period of time, either in your home country or a third party country. You could hire them through an offshore company, so that even the employees don’t know who the beneficiary of their labors may be.
• Your new product requires that you make significant purchases of a rare item. If the shipment of the rare item is linked to you by a competitor, that tell them about your future commercial activity. Purchases can be made from different shell companies in offshore jurisdictions. These shell companies can have the product shipped to a location not tied to you. The product can then, several times removed from its origin, be transshipped to you.
• You have a significant project you wish to explore in a dangerous area, where a representative of a large corporation is a prime target for kidnapping, but where the representative of a small company has a lower risk of being snatched. It may be prudent to form a number of small offshore companies in one or more offshore financial centers. The team arrives in the target country as unrelated employees of many different companies from different countries, with different cover stories. As an example, a geologist masqueraded as the buyer of mineral specimens for a Dominican manufacturing concern. The appearance of being with a small company reduces the likelihood of an individual being seen as an attractive target.
• You can avoid any obvious connection to your company by using offshore centers for the payment of travel and goods and services. How do you handle the mechanics of setting up and running these offshore companies? You do it in conjunction with a trust company in the offshore jurisdiction of your choice. The trust company will act as a firewall between you and the rest of the world, and will have affiliated service providers in other jurisdictions to provide a more scattered profile if needed.
If you are just getting your feet wet in the world of offshore finance, a good place to start exploring is through the lexicon of offshore terms at the website of Tarsus Trust (http://www.tarsustrust.com/publications.htm), of which one of our editors is a principal.
If you are looking to delve a little more deeply into the world of legitimate offshore finance, one of the best primers on the industry is The Offshore Money Book, written by our friend and associate Arnold Cornez, JD.