Gibraltar is receiving unwelcome publicity over the involvement of some of its banks in the Madoff Ponzi scheme. The spotlight has first fallen on the Banque Jacob Safra just at the time the international Organisation for Economic Co-operation and Development (OECD) says Gibraltar has not complied with all its off-shore agreements.First the trustee liquidating Bernard Madoff’s brokerage is seeking the return of $150 million that an offshore investor withdrew less than two months before the jailed swindler’s arrest, saying the money should be returned to other customers.
A lawsuit was filed last Thursday as trustee Irving Picard steps up his efforts to use bankruptcy law to try to “claw back” funds withdrawn by some Madoff clients. He has already appointed a Gibraltar law firm to act on his behalf.
In the lawsuit Picard argues that whilst Madoff was running his long-standing Ponzi scheme, some customers received fund distributions that were nothing more than fictitious profits. This money, says the trustee, should be returned to help reimburse Madoff’s many victims.
The complaint was filed in the U.S. Bankruptcy Court in Manhattan against Vizcaya Partners, described as an international business with main operations in the British Virgin Islands. It seeks the return of $150 million wired from the Madoff firm to a custodian for Vizcaya on about October 31, less than two months before Madoff’s arrest. The custodian, Banque Jacob Safra of Gibraltar, was also sued.
The lawsuit says Vizcaya, according to the Madoff firm’s records, opened an account with the company in December 2001. Since January 2002, Safra or its affiliates invested about $327 million with Madoff for Vizcaya's benefit, the lawsuit said.
Meanwhile in the official OECD list, Gibraltar is one of 30 tax havens, which are ‘jurisdictions that have committed to the internationally agreed tax standard, but have not yet substantially implemented it.’ Gibraltar committed in 2002 to implement the agreed tax standard. Up to now it only has one agreement, the recent one with the USA signed just before the G20 summit in London.
Now a cynic (so that rules me out) might say that as Barack Obama has tax havens firmly in his sights Gibraltar’s actions were a ploy to take the president’s eye off their target. What is a fact is that after seven years of doing nothing the Chief Minister, Peter Caruana, rushed to London to sign the accord amidst much fanfare – so draw your own conclusions.
In the Gibraltar section of the OECD list are locations such as Andorra, British Virgin Islands, Cayman Islands, Dominica, Liberia, Liechtenstein, Monaco, Nauru, Panama, San Marino and the Turks and Caicos Islands, and others. Whilst the other British zones of Guernsey, Jersey and the Isle of Man plus the island of Malta have all been promoted above them in the OECD’s standing.
People on the Rock might question why the Gibraltar Government signed in 2002 an accord that it seemingly had little intention of implementing when it could have acted on it immediately and lead the pack of good guys in off-shore finance.
Furthermore the Gibraltar Government has argued that it is no longer a tax haven but the OECD says it is, and that organisation’s opinion that counts amongst world leaders when they view the off-shore banking scene.
