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Did this Panama Papers housekeeper really direct a North Korean arms deal?

Offshore corporations: The secret shell game

Offshore corporations have one main purpose - to create anonymity. Recently leaked documents reveal that some of these shell companies, cloaked in secrecy, provide cover for dictators, politicians and tax evaders.
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Offshore corporations have one main purpose - to create anonymity. Recently leaked documents reveal that some of these shell companies, cloaked in secrecy, provide cover for dictators, politicians and tax evaders.

In her passport, Nesita Manceau lists her occupation as “housewife.” But she does oh-so-much more. On paper at least, she’s a corporate titan. And she’s been tangled in an arms-running scandal involving North Korea and Iran.

Manceau is what could be called a “zombie director” of shell companies. She’s been on the boards of scores of them. Lawyers in Florida, Oregon and Nevada have clients who call on her services.

The 55-year-old Filipina, who until recently was living in the South Pacific island nation of Vanuatu, exercises what is required of an offshore corporate director: She simply signs her name. Time and time again.

Practically the sole function of an offshore corporate director is to cloak the identity of the real owner of a company or trust. The director serves as a legal shield, of sorts.

The documents known as the Panama Papers teem with these zombie directors who sign corporate papers at the bidding of unidentified owners. Such directors can oversee, at least on paper, hundreds – and sometimes thousands – of corporations.

They are a crucial cog in the machinery of foreign law firms and registration agents who churn out phantom corporations, stock them with proxy directors, slap a soothing name on them, and register them on atolls or far-away nations. It is a volume business.

True owners of the shell companies often want passive directors with no control over, or even knowledge of, actual operations. Secretaries, Burger King cooks and housewives will do.

Corporate registration agents like Mossack Fonseca, the Panama law firm whose 11.5 million leaked documents comprise the Panama Papers archive, earn extra fees when they stock the boards of offshore entities with nominees who usually have no clue as to the identity of the true owners.

“The fact is, if you waterboarded them, they wouldn’t come up with the name of the beneficial owner because they don’t know,” said Jack Blum, a Washington lawyer who has spent decades investigating money laundering and the use of offshore corporations.

But when government investigators come around trying to figure out who owns an offshore corporation, Mossack Fonseca offers up their names as if they had an actual financial stake and knowledge of operations. That happened in 2011, when the director of the Financial Investigation Agency of the British Virgin Islands, Errol George, wrote Mossack Fonseca inquiring about Fincom Trade Ltd. A company officer quickly responded.

“The Beneficial Owner of the company is Ms. Nesita Manceau whose address is: 1st Floor, Pacific Building, Port Vila, Vanuatu,” wrote J. Elizabeth Maduro.

See-no-evil nominee directors are the mirror opposite of directors in the real corporate world, who usually have firsthand business experience that they use to hire and fire chief executives, oversee corporate decisions and protect shareholder interests.

The massive leak from the Mossack Fonseca law firm, shared with the International Consortium of Investigative Journalists (ICIJ) and its partners, including McClatchy Newspapers, includes emails, copies of passports and financial records, which all cast light on the structures used in offshore companies, including the functionaries like Manceau.

Manceau was born in a remote Philippine hamlet called Cabay in Eastern Samar province. Her former husband said she once served as a housekeeper after moving to the South Pacific island nation of Vanuatu.

“She was a house girl for Geoff,” said Rene Manceau, a Frenchman who described himself as a painter. “Geoff,” he said, was Geoffrey Taylor, an eccentric Brit who emigrated to Asia in the 1960s.

“She lived here for 20 years. She’s in the Philippines now. She left Vanuatu four years ago,” Manceau said in a telephone call from Vanuatu. The couple have a daughter, Elodie, who did not respond to messages left on her Facebook account. The mother could not be reached in the suburb of Manila where she resides. “I don’t think she has a telephone. She’s very poor. She has no money. My daughter asks me to send her money.”

Manceau said his ex-wife has only a basic education – “nothing more than six years.”

In spite of her humble roots – or perhaps because of them -- Nesita Manceau directs corporations registered all over the world. She’s been a director of companies in Britain, the Ukraine, Belize, the United Arab Emirates, New Zealand, the Seychelles, Hong Kong and elsewhere. Manceau first appears in Mossack Fonseca records as a corporate director in 2001.

Exactly what she earned for each directorship is not known. But she usually worked with Taylor who set up a vast enterprise, the Vanuatu-registered GT Group Ltd., to register some 2,500 offshore companies, according to the documents. Taylor was known to pay 20 New Zealand dollars (about $13.50 U.S.) to his nominee directors.

Taylor matched Manceau’s simplicity with his own eccentricity. He claimed to hold a knighthood from the Principality of Hutt River, a secessionist village in western Australia, and also called himself Lord of the Manor of Stubbington, a feudal title dating to the 11th century that he had apparently purchased.

One of GT Group Ltd.’s creations was a company called VicAm (Auckland) Ltd., of which Manceau carried the title of director. In mid-2009, VicAm Ltd. spun off SP Trading Ltd. Then the company exploded into global headlines.

On Dec. 12, 2009, Thai security forces seized a Russian-built Illyushin-76 cargo plane on the airport tarmac in Bangkok. The manifest said the aircraft carried “oil industry spare parts.” But the agents discovered 35 tons of rocket-propelled grenades, missile and rocket launchers and surface-to-air missile launchers in the cargo hold.

The plane had left North Korea and was reportedly headed to Iran. It had stopped in Bangkok to refuel.

The seizure revealed a complex web of companies. The aircraft was owned by a company in the United Arab Emirates but was operated by a firm in Georgia, which in turn leased the aircraft to SP Trading, which chartered the plane to a Hong Kong company. The mastermind of the arms deal has never been publicly identified. The crew of four Kazakhs and a Belarusian pilot were held but later freed.

When you come up with a bunch of nominee directors who are on 5,000 corporate boards, there’s no way in hell they know anything about the corporation.

Jack Blum, a Washington lawyer

Employees of Mossack Fonseca stood by Taylor, who is now 73.

“He is a man of high credibility, professional history and moral standard ... We do guarantee that Mr. Taylor and his GT Group are genuine and clean partners,” an employee who signed his name as “Jiri” wrote in an interoffice email from the Prague office, where Jiri Myslivec worked, to headquarters in Panama. The Czech branch of Mossack Fonseca handled much of Taylor’s business, often setting up shell companies in the Seychelles, an archipelago in the Indian Ocean.

McClatchy could not locate Taylor. Journalists never succeeded in tracking down Manceau after the weapons seizure. And she continued to direct offshore companies registered by the Panama law firm until 2013.

Nominee directors of offshore companies that run afoul of the law rarely face penalties. The director of SP Trading was a Chinese national, Lu Zhang, who worked as a cook at a Burger King restaurant in Auckland, New Zealand. She pleaded guilty in 2010 and was convicted of making false statements on company registration forms but was released without penalty.

Manceau never ran into legal trouble. She was director of VicAm (Auckland) Limited, the sole owner of SP Trading.

Robert Palmer of Global Witness, a London-based watchdog group monitoring natural resource exploitation and money laundering, said nominee directors of offshore corporations are often seen as hapless and bearing little responsibility.

“It’s precisely because these people cut such sad figures … or because they are not seen as the real masterminds of the businesses,” Palmer said.

Nominee directors literally rent out their names, often for little money, and should face legal scrutiny, he said. “If you started prosecuting nominee directors, it would certainly become less attractive to be a nominee.”

Emails show that Mossack Fonseca would routinely keep signed resignation letters on file of zombie directors so that they could be replaced at any moment.

Manceau is also known in the United States. She is, or has been, a manager or officer in four limited liability companies registered in Florida between 2004 and 2008. The lawyer who handled the incorporations, Mark Hankins, whose website lists his office in Lutz, north of Tampa, did not respond to emails or phone messages.

She also was listed as a manager of two LLCs in Nevada and two corporations in Oregon, all of which were registered between late 2004 and 2007.

The Portland, Oregon, lawyer who handled the two incorporations there, Lake Perriguey, declined to discuss how Manceau came to be listed as president.

“I can’t really talk to you about any of my clients,” Perriguey said.

Zombie directors at least nominally oversee companies that can move huge sums of money. In March 2015, Mossack Fonseca considered cutting ties with a Seychelles woman, Elisana Marie-Antoinette Labonte, who serves frequently as a director. Her name came up on a website, whistleblowers.org, as director of a Russian-controlled company seeking to transfer 240 million euros ($273 million) for “humanitarian, social, economic and development projects.” The outcome of the debate was not immediately apparent.

As active as Manceau has been, the employees of Mossack Fonseca outpace her as corporate directors. The champion is Leticia Montoya Moran, a 63-year-old “corporate officer” at Mossack Fonseca who has sat on the boards of 10,969 companies in recent decades, according to a tally of the Panama Papers archive.

A document from the end of 2015 puts Montoya’s monthly salary at $900. Her home is in Vacamonte, a working-class Panama City area with an erratic potable water supply.

Other Mossack Fonseca employees aren’t far behind Montoya in directorships of companies in which Mossack Fonseca was the registered agent. Francis Perez has been a director of 10,544 entities, and Katia Solano of 5,296 entities. Both earn salaries similar to Montoya’s.

“When you come up with a bunch of nominee directors who are on 5,000 corporate boards, there’s no way in hell they know anything about the corporation,” Blum said. “They don’t know squat about it. Nor is it ever likely they will.”

Offshore corporations have one main purpose - to create anonymity. Recently leaked documents reveal that some of these shell companies, cloaked in secrecy, provide cover for dictators, politicians and tax evaders.

Tim Johnson: 202-383-6028 @timjohnson4

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