The International Consortium of Investigative Journalists (ICIJ) comprising of a group of investigative journalists have accused Singapore based Wealth Manager, David Chong the chairman of Portcullis Trustnet, of divulging the details of offshore companies and trusts held by his clients to the public. This investigation comes at a time when the wealth management industry faces a wave of global scrutiny from regulators trying to get rid of tax dodgers. The e-mail from a group of investigative journalists said it wanted to expose how the rich aggravate the world’s economic problems by using offshore tax loopholes to minimize tax payments. Much of ICIJ’s investigative report focused on the work of two offshore firms, Singapore based Portcullis Trust Net and BVI based Commonwealth Trust Limited (CTL) for helping thousands of people setup offshore companies, trusts and bank accounts which are very difficult to trace. ICIJ’s review of Portcullis Trustnet documents identified nearly 30 American clients accused in lawsuits or criminal cases of fraud, money laundering and other cases of serious financial misconduct. The list also includes ex-Wall Street bigwigs Paul Bilzerian convicted of tax fraud and securities violation in 1989 and Rajaratnam, a billionaire hedge fund manager who was imprisoned by U.S. prosecutors for insider trading.
One Stop Shop
Portcullis Trustnet, describes itself as a ‘one stop destination’ for wealthy individuals to manage their money. Their staffs include lawyers, accountants and other professionals who can shape ‘secrecy packages’ to fit the needs and net worth of its clients. These packages can be simple and cheap or sophisticated structures that weave together multiple layers of trusts, companies, foundations and so called ‘nominee’ directors and shareholders. Portcullis Trustnet describes itself as Asia’s biggest independent group of trust companies. The company was formed in 2004 after its merger with Trustnet; an advisory firm specialized in setting up offshore companies and trusts. Singapore has also passed a legislation to encourage the growth of trust companies.
The company has refuted all the allegations made by the investigative journalists. Its director, David Chong said the reports have unfairly singled out Trustnet as a villain.
The founder director of the Singapore based Wealth Management Company, who is a lawyer by training said “Portcullis sells companies like Victorinox sells knives”. “It would be ridiculous to blame Victorinox because one of their knives is used to commit a crime” he said in an interview at Singapore. He said the firm has complied with all the necessary regulations in all the jurisdictions in which it operates. He said “There is a triumphalism out there, but this all about data theft”, he said.
Singapore has grown as one of Asia’s biggest wealth management centre as assets under management leapt fourfold to more than $ 1 trillion. It is tipped to become the number one wealth management centre by beating Switzerland. Singapore, which has more millionaires per capital than anywhere else in the world, has reacted more proactively to push for transparency in private banking. The Tax Justice Network, a UK based advocacy group supporting transparency in international finance, estimates that nearly $ 250 million is lost every year owing to funds held offshore by individuals.
Jason Sharman, Professor at Griffith University in Australia, who focuses on offshore financial centers, money laundering and tax havens, says trust companies in Singapore and elsewhere operate in a ‘grey area’ of compliance. “They may not be breaking Singapore laws but they may be making it a lot easier for foreign clients who break laws in those clients jurisdictions.” he said.