It’s a legal entity, called a foundation, or a charitable, not-for-profit organization; and it’s established under the Foundations Act of 2003.
The Prime Minister says that it’s independent of the Government, which is how it really should be with a foundation, both in law and in fact. However, all but one or, maybe two, of the SIDF officials are on the Government’s payroll, and all are hand-picked by the Prime Minister. And not a hair is moved or a penny spent unless he approves or directs.
Further, upon the payment of a large sum of money into it by a foreigner, that foreigner, subject to due diligence, receives a passport and citizenship of the Federation of St.Kitts & Nevis?
The whole arrangement is wrong. The funds coming in need to be under the direct and official control of the Government, and the full accounts published for all to see, because it’s the country’s passports that are ( to put it crudely) being sold, and the proceeds of sale of our passports cannot be allowed to sit in the hand of a third party, even albeit notionally, who has the discretion ( again even notionally) to decide what to do with the money. That’s our money!
This approach runs contrary to that prescribed by FATF, OECD and the rest of those ‘watchdogs’ out there. And contrary to best practices.
But what the heck. That’s how ruler rolls.
Meanwhile, members of Cabinet are fed as little information as possible with regard to the SIDF. The SIDF is Dr. Douglas’ war chest, and he plans to unleash it by throwing money into the economy at what he considers the right time, so as to catch the voters.
When he’s good and ready. And all for his own convenience and political benefit.
What does he care that at this very minute, the people of this country are suffering hellishly, having their current cut off, their jobs lost , their cupboards empty, their stomachs rumbling, their creditors breathing down their throats, and their hope all but destroyed?
That’s how the ruler rolls.
The SIDF is also his baby. And a very fat baby too. I’ve heard people say that there were about 1,000 applicants in 2011.
On the basis of that sum, about US$25 million would have gone to Government in administrative fees, the SIDF would have banked about US$155 million, and Henley & Partners, the Swiss firm which has the global exclusive on marketing the program, would have been paid US$20 million (which is 10% of all of the money coming in to the SIDF). Henley & Partners get that commission regardless of who introduces the applicant to the program.
In addition to the US$ 20 million, for every applicant which they actually process, Henley & Partners would collect US$50,000.00 plus. So presuming they process half of the entire amount of applicants, that is 500, then Henley & Partners would have collected an additional US$ 25 million in 2011, making for a total take for Henley & Partners the very hefty sum of US$45 million or EC$ 121.5 million in 2011. That’s plenty money to go around.
Viva St.Kitts & Nevis! Is it any wonder that there is a firm in Dubai called Caribbean Investment Consultancy which specializes in St. Kitts & Nevis citizenships? It also happens to share the same location with the new St.Kitts & Nevis Consulate over there. Check its website.
The ruler is in Dubai any time he gets the chance. That’s where he likes to rock and roll.
When this whole story is told, it’ll make very intriguing reading. Many will cry, and many will be enraged, mostly with themselves.
Henley & Partners have an office in St.Kitts. Their local representative is Mr. Wendell Lawrence, who is the former Financial Secretary, and present Financial Consultant and Ambassador for the Federal Government. All of the work to process their citizenship applications has to be effected on the ground here in St.Kitts and that’s done by their local office.
I’m advised that Henley & Partners do not pay any taxes in St.Kitts, because they’re regarded as an off-shore, exempt company, and so their services in processing these citizenship applications are not VATable.
Not even on the US$25 million (or EC$67.5 million), which means that the Government might have lost at least EC$11.5 million last year in VAT alone from the local operations of Henley & Partners.
It’s odd that while Henley & Partners are exempt from VAT on their fees, the Government ‘s Tax Reform Unit wants to insist that every lawyer or accountant in our country who is duly licensed as a registered agent under the Financial Services (Regulations) Order, Cap.21.03 (Seventh Schedule) of the laws of the Federation, and who does the very same work that Henley & Partners are doing VAT free, in relation to citizenship applications, has to charge VAT on his or her fees.
Same work, but Henley & Partners pay no VAT while the lawyers and accountants pay it.
That puts the latter at a competitive disadvantage right off the bat.
The Tax Reform Unit is saying, however, that based on the way the law is structured, if one registers an exempt company, then that company ‘s fees charged on citizenship applications would be exempt from VAT.
So any service provided in the financial services sector to a non-resident by an exempt company is tax exempt, while the same service provided by a law firm or an accounting firm to the same non-resident is taxable.
How can that be right?
There’s another company called Caribbean Governance Consultants, Inc.(“CGC”)
I have no idea if there’s a relationship between Henley & Partners and CGC, other than the fact that they share the same address, and the same phone and fax numbers. Also, while Mr. Lawrence is on the Board of Henley & Partners, he’ s the owner of CGC.
Maybe the two companies share the same staff too, and other expenses. I don’t know.
Nor do I know if the Government pays the rent or part of the rent, electricity and/or other outgoings or salaries or wages for that office. We need to know.
CGC has allegedly processed about 300 citizenship applications altogether, and over 100 last year alone. And, at its advertised fee rate of US$50,000.00 per applicant ( see its website), CGC may have collected some US$15 million(or EC$ 40,500,000.00) in fees over the last four years.
By the way, has Mr. Lawrence’s high, inside position provided him with any special and unfair advantage in this business? Does the fact that he accompanies the Prime Minister on promotional tours in relation to financial and other services and investments in any way put other service providers at a disadvantage? Can the fact that the Prime Minister runs many, if not most, investment proposals by Mr. Lawrence press you to ask a question or two of the way the ruler rolls?
CGC’s fees for 2011 would have been about US$5 million (EC$ 13.5 million). And that’s also a lot of money to go around. On that amount, the VAT would’ve been EC$2.3 million.
Note that my concern is not that people are making big money. That’s good for them. My concern is for a level playing field, for everybody to make a fair contribution, for transparency from the inside, and for the world to see us in a positive and exemplary way.
Now CGC, like Henley & Partners, is also exempt. So the people of St.Kitts & Nevis lose out to the tune of EC$13.8 million in VAT for last year, just between these two ‘exempt’ companies.
Is it odd that the ruler, who is so aggressive with you and me to collect taxes, would allow such a gaping ‘loophole’ like this to exist?
The objectives of the SIDF are: to do research into the development of other industries to replace the sugar industry, to fund the development of these industries and to fund ongoing research and development to ensure the sustainability of these alternative industries.
And it’s not allowed to operate commercially except in furtherance of its objectives.
However, it has indeed made a commercial investment, by putting a reported US$22 million( in 2010 or 2011) in shares in Kittitian Hill, which, at best can be regarded as a medium –risk investment, a proposition that is not acceptable in the world of foundations and charities. Yes, they can give money to worthy causes that are within their remit, but they’re not to invest money in medium-risk situations.
I’m not even sure that its investment in Kittitian Hill is in accordance with its objective to “fund the development of these industries”. But even if it is (and I’m not conceding that it is), then would the SIDF have erred seriously by ignoring, or missing out on, the fact that the company which owns or is developing Kittitian Hill, namely Belmont Resorts Limited, has, since 2008, owed a substantial sum of money to CLICO Investment Bank and that the Bank has had an equitable mortgage and a caveat on 106 acres of the company’s land since June,2008. Long before the SIDF’s US$22 million was invested?
What rule did they follow? Or is this the ruler rolling again?
Do these folks know that following the ruler is not the same as following the rule?
Would it have been prudent of the SIDF decision makers to invest that money in Kittitian Hill at a time when they knew or must have known of the problems with the CLICO Group?
Is this a déjà vue moment? We remember the British American mess that could’ve been avoided if only our Government had taken the necessary steps to protect investors. But nothing was done, because the ruler didn’t feel that anything needed to be done, so the people of St.Kitts & Nevis lost their $130 million. If only that money was where it should’ve been, that is, in the people’s hands, then some of the anguish that’s being experienced today might be eased.
Now, what would happen if action is taken on behalf of CLICO Investment Bank to collect its money from Belmont Resorts Limited? Then what would happen when CLICO’s creditors smell possible assets in St.Kitts? How would that affect the Kittitian Hill project, if at all? And where would all of that leave the SIDF and its US$22 million investment?
Of course, it’s possible that some of the US$22 million was used to pay off the CLICO Investment Bank. But I’m going to presume that that hasn’t happened.
Similarly, speaking of déjà vue, if you check the Social Security Board’s financial reports you will see that investments of several million dollars were made in CLICO and British American at a time when the CLICO-BAICO mess had already started. Prudence might’ve caused that money to be better deployed.
Do you believe that the Social Security Board made those investments in CLICO and BAICO without some encouragement from the ruler or someone close to him?
After all, isn’t that how our ruler rolls?.
See you at Operation Rescue’s public meeting scheduled for Thursday, 23rd February, 2012, at Wigley Avenue near Tony Berry’s shop, starting at 8pm.