BVI Offshore Business: Grey Area

The missing owners of a share trading company Chartwell Enterprises, which after its collapse owes millions of dollars to its staff and investors and is currently investigated by the Australian Securities and Investments Commission, now are discovered to have a company operating in the British Virgin Islands.

According to some documents, last year Ian Rau and Graeme Hoy negotiated through the Maltese Bank of Valetta to create the offshore company Blenheim House Investments (BVI) Ltd.

Blenheim House also holds all 10 shares in a holding company registered under the name of Delaware Corporation, of which Mr Hoy and Mr Rau are listed as sole directors.

Company search of Delaware showed an address in suburban East Geelong as the company’s place of business, but when it was visited by the press representatives, it was founded to be owned by a middle-aged couple for the past 35 years which did not know anything about the company’s owners.

On April 23, it was reported that there are documents, now handed to Australian Securities and Investments Commission, where it is suggested that Mr Hoy was sending millions of dollars offshore before the collapse of Chartwell Enterprises. The documents prove that Mr Hoy had established companies overseas and had channelled millions of dollars into them, and included papers referring to overseas tax havens, regular payments to and from a Vanuatu investment firm including one $9 million transaction, and Blenheim House Investments Ltd, registered in the British Virgin Islands and led by Graeme Hoy.

Also, it became known that Blenheim House operated out of the registered offices of offshore business consultants Intershore Consult. The attempts to contact Graeme Hoy and Ian Rau, as well as Intershore, have failed.

There are about two years that passed after the shares of Malaysian company Iris Corp Bhd were said to be manipulated, now the Securities Commission has filed civil action against five corporations, and sanctioned two stockbroking houses and two dealers representatives involved in the case. Formal investigation was initiated by the SC after Iris was declared a designated counter on May 11, 2006.

One of the defendants in the suit by the SC is Low Thiam Hock (known also as Repco Low), who was alleged to have manipulated the shares of Repco Bhd in the late 1990s, the other defendant is Richard Cohen, an American citizen alleged to have acted together with Low and some others, in using numerous trading accounts that contributed to the strong demand for Iris shares.  It is said by the SC that the defendants together with their representatives “worked closely with the Malaysian defendants, creating an artificial demand for Iris shares.”

The funds charged are based in the United States-based Aeneas Capital Management and its related companies Aeneas Evolution Portfolio and Aeneas Portfolio Com, and also in the British Virgin Islands-registered companies Priam Holdings Ltd and Acadian Worldwide Inc.

Now, the commission is seeking a declaration from the court that all the defendants defrauded investors and conspired to manipulate the market and share price of Iris. Also, the SC is seeking that all profits made by the defendants in the trading of Iris shares be held in a trust for the benefit of affected investors, and that the assets of the defendants should be used as a compensation for affected investors.

One of the clients of the collapsed stockbroking firm Opes Prime, who is believed to be the Sydney criminal lawyer Chris Murphy, received covering of his personal losses in the amount of $145 mln, as the value of his share portfolio fell down. The head of the firm told his staff to falsify the accounts of five more rich clients, to shield them from sharemarket losses of up to $200 mln; concerning Mr Murphy, there is no suggestion that he was aware of the alleged manipulation.

The Australian Securities and Investments Commission (ASIC) informed the Federal Сourt about the results of preliminary investigations, which indicated that the Opes shares were borrowed from other clients’ portfolios to ensure the six wealthy clients will receive the refund. ASIC also told the court that there may be involved the company controlled by Opes directors, which is registered in the British Virgin Islands but which operates in Singapore.

During the last hearing, a senior investigator of ASIC, Richard Vandeloo, told Justice Ray Finkelstein that after having a talk to the employees of the firm, the company’s receivers from Deloitte, Sal Algeri and Chris Campbell, told ASIC about allegations of fraud and manipulation of Opes clients’ broking records. Also, Mr Vandeloo told the judge that one of the six had business links to Mr Emini, and either the receivers or Opes staff had suggested to ASIC that one of the six clients was involved in the alleged fraud. ANZ Bank, Opes’s main financier, appointed receivers to recover $650 million owed to the bank.

After these allegations, Justice Finkelstein granted ASIC an order barring the head of Opes Prime from leaving the country.

About 60 websites belonging to the British Virgin Islands-based travel agency that books Caribbean vacations for Europeans have been shut down. This was done by order of the U.S. government, and became part of Washington’s long-lasting “cold war” against Cuba.

BVI-registered Tour and Marketing International has offices in the BVI, UK, and Spain. Along with other destinations, the company books tour packages to Cuba. Its websites were registered with US-based domain register eNom, which controls more than 10 mln website names around the world. In December 2004, the travel agency together with its website domains was added to a specially designated nationals and blocked persons (SDN) list. By law, US citizens and residents are forbidden from doing business with it.

In October 2007 eNom closed several sites of the BVI company, including TourandMarketing.com, AboutCuba.com, BonjourCuba.com, and Cuba-Hemingway.com. All these sites had operated since 1998. The eNom said they blocked the domains of the BVI company after receiving a call from the Treasury Department; the domain registrar said they learned the sites were on the “black list” through a blog.

By the statement of a Treasury Department, the action of closing the websites was taken as part of Washington’s policy to “choke off dollars steaming to the Castro regime, and make it more difficult for the Cuban government to harden its internal security and military infrastructure”.