Tax attorney Max Pandt. Photo Today / Hilbert Haar
St. Maarten News – by Hilbert Haar – That the name of St. Maarten will surface one day from the by now infamous Panama papers is unlikely, says tax attorney Max Pandt, whose activities as a trust service provider have withered over the years. Nevertheless, Pandt has clear ideas about the ins and outs of offshore activities and the reason companies use such constructions: to pay as little taxes as the law allows.
In the recent past, one company with local links established in Panama has surfaced: Octavio Holdings, Inc. Pandt does not expect more names to come out of the woodwork.
This entity, established in Panama, entered into a loan agreement with the St. Maarten Holding Crane Company NV in May 2009 for an amount of $3,250,000. The interest on this loan was 8 percent – the highest interest on any of the loans listed in the financial statements.’
Interestingly, according to documents provided to this newspaper, Octavio Holdings was established in Panama more than nine years ago, on April 20, 2005. More peculiar than the date of registration, is the name of the company’s president and secretary, Petrus Paulus Quirinus-Marie Soons. He is a brother of a former chairman of the harbor holding’s supervisory board, Michel Soons. There are two other directors listed: Eliseo de Leon as vice-president, and Jaime Garcia as treasurer.
De Leon is a professional representative on Panamese companies. According to datocapital.com he appears as the director of 2,450 companies and he has 1,024 appointments to various functions. No link with Mossack Fonseca, the Panamese trust provider that saw millions of documents – now known as the Panama Papers – leaked to the Süddeutsche Zeitung.
The Octavio loan was used for the purchase of a second crane. The loan agreement is for 10 years and 7 months and ends in 2020.
Another known offshore company with links to St. Maarten is Coal Pot Inc., established in the British Virgin Islands. The name surfaced in court documents this newspaper obtained in November 2014. It is linked to a bogus consultancy contract UP-leader Theo Heyliger attempted to sign with the owner of St. Maarten tender services, Bobby Velasquez, back in 2001. According to these documents, Heyliger wanted $0.25 for each cruise passenger Tender Services transported in the harbor, but Velasquez did not play ball.
And then there is of course Santana NV, the offshore vehicle of the former head of the immigration department Marcel Loor. Established in Anguilla, Santana was the recipient of thousands of dollars Loor deposited via the Standard Trust Company in St. Maarten.
These examples obviously give the offshore industry a bad name. Says Max Pandt: “I would not have let that pass. Loor was a civil servant with a fixed income. You have to figure out how he got all that money. I would not have accepted that story about an inheritance from the Netherlands because he was showing up with dollars. You have to know what you are doing.”
Pandt’s only contacts with Mossack Fonseca stem from several tax conferences in the past, but he never did business with them. He keeps an open mind about offshore constructions. “As long as countries levy taxes and as long as those taxes differ between countries, the offshore industry will remain.”
Years ago, Pandt visited the Cayman Islands. There was no pier at the time, and travelers were brought ashore in small boats. “The first thing I saw were these enormous offices of trust offices from Amsterdam,” he says.
The offshore industry in Curacao far outpaces the one in St. Maarten. The Central Bank has 88 registered trust provider companies and 85 of them are located in Curacao. Only Ideal Management NV (Pandt’s company) Smitco and Solemar have their offices in St. Maarten. Of the 92 individuals who have a dispensation from the Central Bank for trust services, 91 are located in Curacao. One – Mrs. M. Illis-Brown – is registered in St. Maarten.
How this came about? Pandt goes back to the Second World War when, after Hitler’s invasion of the Netherlands, companies like Shell and Philips moved their main offices to Curacao.
And why the Cayman Islands became a fiscal paradise? “The British government told the Caymans that they had to take care of themselves, but they didn’t tell them to abuse the system,” Pandt says.
The principle underpinning offshore constructions is capital management. “These are instruments to prevent the loss of capital.”
That the Panama Papers are an issue at all is due to the digitalization of the economy, Pandt says. “Without the internet it would have been impossible to get a hold of millions of documents.”
The impression is that offshore is big business, and on a certain level it is. But how does St. Maarten fit in? Pandt: “The volume of my own trust services has gone down; I have kept less and less. Companies were liquidated, so there is no growth. The need for companies in Panama and the British Virgin Islands has become less as well, due to changes in national legislation.”
As an example of new entities, Pandt mentions the SPF (Stichting Particulier Fonds – Foundation Private Fund) and the exempt BV. Especially the SPF has gained some popularity.
“I operate within the rules,” Pandt says. “Maybe this is the reason why these activities have ceased instead of grown for me. They say that everybody has his price, but I haven’t met my price yet.”
Pandt emphasizes that, when a name surfaces in the Panama Papers it does not immediately indicate or confirm wrongdoing. He downplays the row over the British Prime Minister David Cameron, whose name came up. “You’re not going to have an argument over $40,000. When there are millions at stake it becomes a different story.”
The tax attorney says again that offshore constructions are “an absolutely normal phenomenon.” This is where the tax attorney in Pandt wakes up: “You do not have to pay more taxes than what the law says. That is the same in all countries. But there is of course a difference between evading (ontwijken) taxes – which is legal – and dodging (ontduiken) taxes.”
Using an offshore entity as a nominee shareholder – and thereby protecting the identity of the beneficial owner of a company – is not illegal either says Pandt. ‘Therefore, you should not look at these companies if you want to blame someone, but at the legislators.”