Licensed under the fiduciary laws of Panama

 

The Company was established in Panama in 1981, originally by Inchcape Plc, a British multinational public corporation.  The Company is Panama’s prime licensed offshore trust company, providing services to professional firms, institutions and private individuals. Our credentials give us the unique ability to offer those specialist services found in the leading British offshore centres. This distinguishes us from every other local provider. We are able to assist you with the preservation of assets, the protection of family finances, the building of wealth with the potential for tax savings. We are international service providers and your business will be discreetly, personally and professionally managed. Wherever your activities are based or domiciled (including foreign trusts and companies) we can offer professional management from our offices in Panama.

 We believe in strategic alliances and welcome working with lawyers, accountants, bankers and other professionals in providing a client with the best possible service and structure. Our policy is never to accept commissions from any of the professionals we work with.  Our experience, breadth and depth of knowledge is unrivalled in Panama. We offer considerable private and public sector experience of international financial services in Africa, Europe, North and South America and the Caribbean.  

SIXTH ANNUAL OFFSHORE INVESTMENT CONFERENCE IN PANAMA,
MARCH 2017.
PRESENTATION BY DEREK R. SAMBROOK,
MANAGING DIRECTOR OF TRUST SERVICES, S.A.

OFFSHORE INVESTMENT CONFERENCE
TRUTH AND REALITY TALK
MARCH 2017 – PANAMA

In this current tide in the affairs of man, with waves of protectionism and populism reaching the shore, it is still too early to know whether it will lead to fortune or failure. 
It is also a time when a business conference in Panama has never been more relevant as we enter the new age of alternative truth, fake news, fake facts and post- truth politics.  Certainly, Panama has been the victim of some of these devices, especially following the Panama Papers which became a source of intrigue.  More on the subject to follow.  The conference will be the ideal forum for those who are committed to business in Panama and yet want to be reassured about the country’s financial services credentials. I am pleased to once again serve as its chairman.
So it is my distinct pleasure to open the 6th annual financial services conference in Panama on behalf of the Offshore Investment magazine.  We have a cross-section of speakers, local and international, presenting talks on wide-ranging topics.
This first day mixes Panamanian themes with the current state of play after the advent of OECD initiatives which have put the offshore world at odds with the policies in advanced countries.  There will also be a panel discussion on what the future holds for the country.  Tomorrow compliance and reputation will be considered alongside other important services plus the Asian perspective.  In the afternoon a panel will look at protecting a client’s information.
As a resident of Panama for more than 20 years, I have seen a complete transformation of the offshore financial services industry here.  The laissez-faire regulatory approach of the past, not distinct to Panama, has given way to a regulated and supervised environment that reflects the realisation on government’s part that everything has changed in the 21st century.  The same can be said of other countries in the region from an economic and political standpoint.  Unlike Panama, some have not enjoyed the constant steady hand of democracy, nor healthy economic growth.  Many today look enviously at Panama’s economic progress; the World Bank expects the tiny republic to be the star economic performer in the region in 2017.
In the West, however, we are living in a topsy-turvy environment that Lewis Carroll, author of Alice’s Adventures in Wonderland, would readily understand if he were alive today.  As one commentator put it, Carroll’s book is about survival and adapting to sudden change.  Well, Alice is not alone there and certainly the offshore world can identify with her; but the changes onshore are more profound. 
From the Latin American point of view it sees Asian values as that constant, flowing stream which has been steady and sure.  Tomorrow my friend Joe Field will give us two talks about doing business in Asia and will doubtless touch upon those values.  But in the West, values (certainly in politics and business) have been turned on their head.  In 2017 people are beginning to look for safe havens as opposed to tax havens.  You will hear about residency in Dubai and Panama.  Duplicity has been around forever.  Plato wrote of the noble lie and Machiavelli was right to say that “Those princes who do great things have considered keeping their word of little account, and have known how to beguile men’s minds by shrewdness and cunning”.  But with the aid of technology we have gone beyond speech, pamphlets and books to inform ourselves.  To read history is to get a clearer picture of today and to realise that only man’s clothes, not his character, has changed through the centuries.  Mark Twain said that history might not repeat itself but that like poetry it rhymes; poets through the ages have been commentators of their times, and in that context consider today’s political and social environment with these three quotes: 
“Our earth in 1969 is not the planet I call mine” what was true almost 50 years ago when W. H. Auden wrote that, is most certainly appropriate today.
“Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world”;
The condition described is as relevant now as it was when W. B. Yeats penned those words at the beginning of the last century and which, for me, draws worrying parallels to our own.
Speaking of topsy-turvy no one puts his finger on it better than the 19th-century’s Lord Tennyson, as we watch developments in the West:
“The old order changeth yielding place to new
And God fulfils himself in many ways,
Lest one good custom should corrupt the world”.
For some western commentators today’s good custom is democracy which they say has slowly mutated into something which is not for the better.  The Economist Intelligence Unit, part of the Economist newspaper, has downgraded US democracy to “flawed” from “full”.  Latin American populism has been exported to Europe and America whereas much of the subcontinent has imported orthodoxy, once the norm in the West.
It is somewhat lamentable, therefore, that this bewilderment comes at a time when Latin America is expected to begin to pull out of its longest recession for 30 years, ending two consecutive years of economic contraction.  Although for South America, the economic malaise will remain and probably be exacerbated by Washington’s anticipated hostile trade policies.  It is Central America where the action is, particularly Panama.
With all that said and bearing in mind the title of Krys Robinson’s and my talk “Truth and Reality” let me begin with my contribution.
I am neither an apologist, nor Panama’s Panjandrum, on the subject of the Panama Papers, but my views have been shaped by the relevance of close to 40 years offshore experience, earned as a practitioner in several jurisdictions, with part of that time spent wearing a regulator’s hat before donning the Panama hat I wear today. 
Mossack Fonseca was the casualty of a hacker who launched a campaign against the international sinister elements of offshore financial activities, wherever they are to be found, not necessarily in Panama, and it is a crusade fuelled by resentment, bordering on rage, shared, I should add, by large swathes of citizens around the globe.   The law firm has been the catalyst, and just like the play Hamlet, written by another fine poet and social commentator, the Mossack Fonseca law firm – and by association Panama – are but the play within a play.  A play with the largest number of characters and enablers happening to reside well beyond Panama’s shores; or to put it another way, as a reporter in another seminar in Oxford recently did, after months of searching through millions of leaked documents:  “What we learned from the Panama Papers is that it is the economic system”.  He could have added “stupid”.
Panama prejudice, glaringly obvious today, reminds me that people in the past have believed or perceived things to be true that were not, all based on what was regarded as reliable knowledge.  We can see that they still do and I call them barnacle believers.  In centuries past it was believed that barnacles hatch to produce barnacle geese, that lions are frightened by cockerels, and that magnets smeared with garlic will cease to work. We hear what we want to hear and so often suffer from what has been called confirmation bias, concentrating on events that support our world view, casting to one side those that do not.  Besides financial bubbles there are information bubbles occupied by those who share common views, listening only to those who agree with them and reading papers that mirror their views.   We are still susceptible, without close analysis, to accept what we are told; if you don’t think so, consider, as examples, the reckless rhetoric during the UK’s Brexit campaign and the warm-up to the war in Iraq, the facts of which were laid bare by the chilling conclusions of the public enquiry chaired by Sir John Chilcot in the UK.  Trumpery (with no connection to any living person), is a centuries’-old word described in the Oxford dictionary as representing practices or beliefs that are superficially or visually appealing but have little value or worth.  I’m sure we can all relate to that as we view the world in 2017.  Mark Twain once again gave us another fine quote when he said that man is the only animal that blushes or needs to. 
Panama indeed shares the dock for the illicit activities revealed; but the history in so many of these transgressions dates back to the dark ages of due diligence, well into the last century when the offshore world in general took a breezy approach to the fine detail of its clientele’s bona fides.  I know this because I have worked on islands in that world, some with four seasons and others with just two: hot and very hot.  Panama, however, in line with most jurisdictions, has introduced regulations and controls since the bad old days which would have made jaws drop on such islands back then.  I should add that  the ripple effect from the stone thrown into the Panama pool has already shone light on the shortcomings to be found, still today, and in the offshore world’s often most harshest critic, the United States of America.  For many American financial service providers catering to international clients such light has been as welcome as it would be to vampires not yet safely in their coffins.  The chaos theory butterfly that flapped its wings in Panama, in other words, has produced strikingly great consequences.  
In Dickensian terms, like the tale of two cities, it is the best of times and the worst of times for Panama.  The country is being praised on the one hand in 2017 for its economy and, on the other, pummelled for the offshore financial services transgressions of the few, not the many who apply proper controls.  Adverse publicity alone, however, is not the reason that some business is moving out of Panama.  Other locations are seen as real competitors, providing privacy and less regulation, serving as a shield against America’s tax reporting edicts and Europe’s Common Reporting Standard.  Did you know that only in 2017 Hong Kong is proposing to introduce a licensing regime for trustees?  I wonder how some of them would have fared under Panama’s strict supervision of trustees?
Joseph Stiglitz and Mark Pieth, both briefly members in 2016 of a Panama Papers panel formed by the Panama government, have since produced a report entitled “Overcoming the Shadow Economy” in which they assert that the US and the European Union “have an obligation to force financial centres to comply with global transparency standards”.  They say in the report’s introduction that “if there is any pocket of secrecy, funds will flow through that pocket”.  Their declared ambition is to see every responsible country “serve as a model, setting standards that others will eventually be forced to emulate”.  I couldn’t agree more.
Last December, however, the Financial Action Task Force issued its first evaluation report on the US in 10 years.  The US scored very well on effective controls for countering terrorism financing but received a failing score for its efforts to prevent the laundering of criminal proceeds.  Not enough has been done, the report said, to rein in corporate secrecy and there were “serious gaps”, leaving the financial system “vulnerable” to dirty money.  The FATF deemed the US “non-compliant”, which is the lowest possible score, on its ability to determine the owners of companies.  A Washington-based anti-money laundering attorney commenting on the FATF report said that because the US did not measure up to international standards it “opens the doors to Panama papers-type transactions and schemes to hide money”.  That door, open for years, is unlikely to be closed soon, despite recent efforts in Washington, and contributes to that outward flow of business from Panama. 
I was sent an email attachment with a very picturesque scene of rural Nevada by a trust company operating there, inviting me to white-label some of my services, especially my trustee business, under the Nevada state flag.  It amounts to concealment of the reality; because it is a case of the service which is produced in Panama being rebranded in Nevada.  Suddenly, however, the stain of the word “offshore” disappears at a wave of the white label wand. 
Now, of course, concealment can have legitimate or nefarious motives; as the International Consortium of Investigative Journalists has stressed, concerning the Panama Papers, persons who have engaged the Mossack Fonseca law firm for legitimate, legal uses are named alongside those who didn’t.  In this time of transparency, “concealment” has become a very delicate word to use – whether it’s a whitewash versus white label situation.  I have absolutely no doubt that the offer made by my counterpart in Nevada, like its motive, is genuine and above board.  So why would this trust company in Nevada feel that a Panamanian trust company would want to operate behind this façade?  A clue lies in comments made by that Washington attorney and the phrase “privacy environment” which was used in the promotion materials sent to me.
“Privacy environment” is a softer term to use today; it certainly beats “concealment”, and in that context, let’s compare Panama to Nevada.  The Panamanian government has reluctantly signed the OECD’s Convention on Mutual Administrative Assistance in Tax Matters, the legal framework for the implementation of financial transparency and international cooperation initiatives. 
Angel Gurría, the OECD’s Secretary-General, was exuberant over this transparency agreement with Panama and declared that Panama had now moved much closer to meeting “the global tax transparency standards”. 
Why Panama’s caution?  The US presidential election showed us, at a basic level, just how information stored electronically can be compromised by following the Hillary Clinton email scandal which blew up in her face last October, the very same time that Panama signed the transparency agreement with the OECD.  Professor Jason Sharman at the Centre for Governance and Public Policy at Griffith University in Brisbane, Australia, and the avowed enemy of offshore centres could not be more passionate about tax transparency, but even he has his doubts, and I quote:  “What right to financial privacy do citizens of democracies have?  Should we protect citizens from undemocratic nations?  What is legitimately private?  For example, the state knows how much I earn, but strangers do not.  Where you have states that are not bound by the rule of law, that are corrupt and commit human-rights abuses, do you want to help oppressive governments get more information about their own citizens in a way that might help those governments further oppress them?  I’m not sure that’s really been thought through enough”.  This is the par excellence of understatement and is a rare example of he and I being in agreement over offshore matters.
One must accept, however, in all this that the OECD’s initiative goes some way towards appeasing the angst of those who feel marginalised by a society that is more unequal than ever; as John Kenneth Galbraith observed, “The salary of the chief executive of a large corporation is not a market award for achievement.  It is frequently in the nature of a warm personal gesture by the individual to himself”. 
The OECD Convention document signed by Panama is at the heart of the Common Reporting Standard, developed by the OECD.  The standard, however, despite Mr. Gurría’s remark about global standards for tax transparency, is not global, simply because the US has declined to be committed to it.  So no wonder trust companies in America see opportunities abroad.  Neither trust companies nor corporate service providers anywhere in the US are as thoroughly regulated as they are offshore in responsible jurisdictions, so if you couple light regulation with the FATF’s findings, then a Nevada trust company naturally sees itself as very real competition, particularly for nearby offshore centres either nestled in the Caribbean or operating in Panama.  And, of course, the US is on the FATF’S white list; now there is a real plus.  Uncle Sam’s trousers are not the only ones with pockets in America, Mr. Stiglitz and Mr. Pieth.
But if the US remains on the FATF white list, it’s not on the European Commission’s clean list.  For corporate tax advantage and transparency of the tax system, the commission puts the US squarely alongside Brazil, Singapore and Malaysia.  Oh yes, and one other country:  Panama, understood by those confined to information bubbles to be the Mecca of mendacity.  Even so, American service providers – unlike vampires – still have little to fear from daylight. 
So when you view the landscape, is it any wonder, then, that the word “post-truth” was selected by the Oxford dictionary as the word of the year in 2016?
So what was the pin for?  To burst information bubbles before they form around me.

 

 

 

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