A small business based in a residential address in Drumcondra is one of the busier Irish clients of the Mossack Fonseca law firm, according to the leaked Panama Papers.
The Pegasus Trust, a trust and corporate service provider, of 30 Botanic Avenue, Dublin 9, offers services in relation to offshore locations such as the Bahamas, the British Virgin Islands and the Seychelles, sometimes using the services of the Mossack Fonseca (MF) group which has its headquarters in Panama but has branch offices in most of the world's tax havens.
The leaked Panama Papers include documents relating to approximately 360 companies that have recorded links with Ireland, with almost one-third of these being represented by Pegasus Trust. However Pegasus, in a statement, said these were historical clients and that no new clients had been taken on for more than a decade.
There is no sign outside the Botanic Avenue address to show it is a business premises, despite it being the registered address of Pegasus Corporate Services Ltd, Laburnum Finance Ltd, and other companies connected with the Pegasus operation.
The premises is also home to Coyle & Coyle accountants, which provides services to clients of the Pegasus Trust operation, as well companies associated with the operation itself.
According to its website, the principal figures in the Pegasus Trust are managing director Robert Becker, operations director Hugh McGowan, and business manager Paul McKenna.
Mr McGowan, as well as being the owner of Coyle & Coyle, is a former director of Laburnum Finance, the owner of the Pegasus Trust name and itself a client of MF.
The accountancy firm has acted as auditor to Laburnum Finance and to Intertrade Projects Consultants Ltd, an Irish-registered company that, according to the leaked files, is a client of the Pegasus Trust and has nominee directors provided by the MF office in Panama.
A spokesman for Pegasus said that Mossack Fonseca was introduced to it by a trusted source more than 20 years ago with a view to helping Mossack bring their company secretarial work up to date in relation to a number of their Irish company clients.
“The services we provided to these companies, and to Intertrade specifically, were of a company secretarial/administrative nature. We had no decision-making role in any of these companies, including Intertrade.”
According to a client note in the leaked files from July 1998, the Pegasus Trust was “well versed in offshore matters” and provided “tax efficient structures/trust services to their clients”.
The note said that MF in Geneva used Pegasus for a lot of its Irish non-resident work, and the relationship precluded any deal with MF in the UK and that, therefore, the offshore potential of Pegasus was “nil”. The note did not explain the thinking behind this.
Non-resident Irish companies are companies that are incorporated in Ireland, and can have their registered offices in the country, but have their centre of management elsewhere.
Irish companies with registered offices in the State that have nominee directors in Panama and elsewhere can be deemed resident in the jurisdictions where the nominees reside.
Despite a general rule that Irish companies should have Irish directors, companies can, under section 137 of the 2014 Companies Act, opt instead to take out a “revenue bond”. The bond insures the company for a sum of €25,394 to cover potential company law fines.
The Pegasus website says it can provide services in 26 jurisdictions. The jurisdictions listed on the website include the Bahamas, Bahrain, British Virgin Islands, China, Curacao, Cyprus, Dubai and Gibraltar among others.
A source close to the company said there are very many businesses in Ireland offering such services, which are perfectly legal.
The leaked MF files show that in 2007 the Panama-based group was referring to Pegasus as an affiliate company and corresponding with Mr Becker about references required in order to complete a due diligence process.
An unsigned service provision agreement refers to the “offshore” jurisdictions covered (Panama, Seychelles, Samoa, Nevada, Uruguay, Hong Kong and the Bahamas), and the know-your-client and anti-money laundering provisions that apply in each. An indemnity from Pegasus to MF forms part of the agreement, as does a commitment to keep the agreement secret.
Because the leaked files are those of MF rather than Pegasus, they often do not disclose the beneficial owner of the companies that are being represented by Pegasus.
Often the documents show nominee directors in Panama and elsewhere being asked by Pegasus to sign certain documents and accounts, with Pegasus in turn receiving its instructions from people who have been given power of attorney to act on behalf of the company by the directors, who have been instructed to do so by Pegasus.
There are no documents in the files where nominee directors are being comprehensively briefed about the detail behind the decisions they are approving as directors.
Some of the offshore companies associated with Pegasus are or were owned by way of bearer share certificates. These are certificates that purportedly give ownership of a company to whoever has possession of the share certificate, so that an owner’s name does not appear on any share register.
The Organisation for Economic Co-operation and Development, as part of its drive for greater transparency and exchange of information for tax purposes, has been pressing for the elimination of such certificates and most jurisdictions have moved to outlaw them. The 2014 Companies Act included measures to bring the use of such shares to an end in respect of Irish companies.
Laburnum Finance, which owns the business name Pegasus Trust, is owned by a company called Pegasus Nominees Ltd, with an address in the Seychelles. The leaked files indicate that Pegasus Nominees was at one stage owned by way of a trust in Niue, considered to be one of the world’s smallest nations.
In the mid-1990s the tiny tax haven decided to specialise in banking and company formation, as well as the provision of leased telephone lines for sex calls. However, under international pressure, the project came to an end.
At one stage MF played a major role in the island’s economy, even acting as the operator of its company registry.
When the operation was being wound down, MF advised Niue companies to move to jurisdictions such as Samoa, the Seychelles, the British Virgin Islands or the Bahamas.
While leaked documents from earlier decades show a lot of the Pegasus work being done by way of fax and registered post, in more recent times the bulk of the administration is done by way of email.
As nominee directors in MF often grant power of attorney to particular individuals to operate on behalf of their companies (which may be clients of Pegasus), and some of the companies are owned by way of bearer share certificates, the apparent lack of transparency involved is a striking aspect of the picture afforded by the leaked documents.