BVI Offshore Business: Grey Area

Kludjeson International Limited (KIL), the company which issued a legal suit against a HK-based Hutchison Telecommunication Limited, accusing it of fraud, is currently in a legal showdown with institutions and personalities to win the ownership dispute of the mobile telecommunication company in the court.

In the ownership struggle over KIL’s subsidiary Celltel Limited, a BVI company which is now conducting business as Kasapa Communications Limited, both companies have descended on the institutions and personalities manning the affairs of the company, and accused them of fraudulent actions. The names mentioned in the joint legal suit of KIL and Kasapa Communication include the Standard Chartered Bank Limited, Pricewater House Coopers, an Accountancy and Management Consultancy firm, Bentsi-Enchil, Lesta and Ankomah, a private partnership company providing legal services and Sudan Telecommunications Limited of Sudan. Among other defendants there are Trustee Services Limited, a company issuing secretarial duties, and its General Manager Philip Dosoo, British Virgin Islands-registered offshore companies Certwell Limited, Kuwata Limited and EGH International Limited, and Expresso Group Limited of United Arab Emirates. Also, the list of defendants includes Emad H. Ahmed, Emad Sukker, both of United Arab Emirates, Ihab Ibrahim Mohammed Osman of Sudan and Lung Hien Ching, a resident of Ghana.

Among other decisions, plaintiffs are seeking a court declaration that BVI companies Certwell Limited, Kuwata Limited and EGH International Limited, as well as some other defendants, are not direct or indirect shareholders of Kasapa Telecommunication Limited, and Emad H. Ahmed, Emad Sukker, Ihab Ibrahim Mohammed Osman and Lung Hien Ching are not and never been directors or alternate directors of the mobile telecommunication. Also, KIL and Kasapa are seeking a restraining order against each of the defendants and their agents apart from Trustee Services Limited and Philip Dosoo, from holding themselves as directors, shareholders, officers and offering and receiving banking services to the telecommunication company.

The former North Las Vegas mayor Mike Montandon, who is now the governor candidate of Nevada from Republicans, last year received a $10,000 campaign contribution from the British Virgin Islands-registered company Forich Group Ltd. This BVI company is an affiliate of Runvee Inc., a development firm having real estate interests in North Las Vegas.

Meanwhile, foreign nationals and foreign corporations are not allowed by federal election law to donate to Americal political campaigns. Montandon says he will return an illegal contribution from the BVI company. By his words, accepting the donation was a simple mistake.

The owner of Runvee Inc. is the Shaw family of Hong Kong who contributed another $40,000 to Montandon’s gubernatorial campaign. The candidate says this family has permanent resident status in the US, this fact providing legal status to their donations.

FGX International Holdings Limited, located on the British Virgin Islands, is subject to investigation which was commenced in connection with potential breaches of fiduciary duty and other violations of state law by the Board of Directors of the company. The investigation was initiated by the current shareholders of the BVI holding, who purchased the FGXI shares before December 16, 2009, over the attempt of the Board of Directors to sell FGX International to the French subsidiary of Essilor International.

On December 16, FGX International announced that it has signed a definitive agreement to merge with a subsidiary of Essilor International, under the terms of which BVI holding’s shareholders would receive $19.75 per share in cash, for an aggregate value of approximately $565 million, including the assumption of FGX debt of $100 million. The agreement includes termination fee of approximately $18.3 million. Upon completion of the merger, FGX International would become a wholly owned subsidiary of Essilor.

According to the investigation by a law firm,  this transaction is unfair to current investors of the BVI holding, and “the offer to purchase FGX International Holdings Limited appears opportunistically timed to take advantage of the current economic downturn”. The matter is whether the Board of Directors of the company broke their fiduciary duty to FGXI shareholders by agreeing to sell it at an unfair price thereby “harming FGX International Holdings Limited and its shareholders”, and whether, pursuant to this proposed transaction, the subsidiary of Essilor International may be underpaying for the BVI company.

According to FGX, the Boards of Directors of both companies have approved the merger agreement, and principal shareholders have agreed to vote their shares in favor of the transaction.

Steven Michael Rubinstein, the accountant of wealthy Coral Springs company, became the first U.S. citizen charged in a wide-ranging tax probe of Swiss major bank UBS, based in Zurich. The reason for the criminal charges were the UBS records obtained by the federal government as part of a deferred prosecution agreement with the bank.  

Rubinstein admitted to the felony charge in federal court in Miami. He is alleged of creating a shell corporation in the British Virgin Islands in 2001, named Hybridge International Ltd., to hide money in the UBS account under the name of this BVI corporation. Also, he is accused of having not paid income taxes on these amounts.

The BVI company was used by the accountant to finance construction of a multimillion-dollar Florida home, deposit about $2 million in gold coins, and make different kinds of investments. All in all, Rubinstein is said to have hidden some $6 million with the UBS bank.

It was claimed by the IRS that Rubinstein failed to report UBS income on his returns from 2001 to 2007. Rubinstein agreed to pay a 50 per cent penalty for the year 2004 , which was the year with the highest balance in the account as of June 30.

The UBS representative declined to comment on the case against Rubinstein, who was one of about 300 UBS customers whose account details were turned over to the U.S. authorities as part of the agreement, in a deal that required the Swiss bank to pay $780 million in fines and restitution.

A six-storey townhouse in Mayfair, which costs £6.25 million and which can take pride of having one of London’s most exclusive addresses by the Upper Grosvenor Street, several weeks ago has been occupied by eight squatters who now plan to leave it only being evicted. According to the Land Registry, the building is held on long lease by the British Virgin Islands-registered Deltaland Resources Ltd, which leases it from the Duke of Westminster’s Grosvenor estate. A spokeswoman for the property company of the Duke of Westminster confirmed company’s awareness of the squatters and said the problem will be solved by the BVI company as the leaseholder.

Deltaland, in its turn, does not come in touch with the group of artists who had settled in the house and redesignated it as a “live-in art installation”. The BVI company  has employed Macfarlands, a City law firm, to deal with this issue.

Meanwhile, the multimillion-pound building has become one of the whole range of central London properties occupied by the group of teenagers and artists, including the addresses on Kensington High Street, in Tottenham Court Road and the former Iraqi consulate. They have changed the locks, reconnected the utilities and say they are going to pay bills. The squatters also insist that they are not making criminal offence, and that they even improve the building, which has been empty since 2005, noting that “the building is listed so English Heritage might be interested to see how the owners have let it disintegrate.”