From the Quinns to Apple, offshore is where it's at

The ongoing battle between Seán Quinn and his children, and Anglo Irish Bank (now part of the Irish Bank Resolution Corporation), over the family’s international property group, is many things including a waste of time, a huge loss of wealth, a shocking diversion of public resources towards legal costs, and a titillating insight into the lives of a family hitherto known for its privacy.

But it is also a reminder of how the societal model that has allowed for the creation of so much wealth in the western world over past decades is increasingly enmeshed with jurisdictions that lack the same traditions of registration, transparency and even law that have served this part of the globe so well.

It is telling, surely, that when Seán Quinn’s nephew, Peter Darragh Quinn, finally convinced his uncle that they should seek to put the family’s property portfolio beyond the reach of the hated bank, despite that bank having legal claims over the property, one of his first ports of call was Dubai.

In Dubai, Quinn met representatives of a group called Senat, which has offices in Liechtenstein and Switzerland as well as the United Arab Emirates, and provides legal, financial and accountancy services. Quinn discussed the establishment of a Swiss trust for the grandchildren of Seán Quinn, and requested the purchase by Senat of off-the-shelf companies in Panama and Belize. Peter Quinn also at around this time had dealings with a law firm in Moscow, Attorneys and Business, which involved discussions about how IBRC could be prevented from seizing the family’s property portfolio.

Just about everything that has since bedevilled the State-owned bank’s efforts to seize a property portfolio worth up to €500 million appears to have flowed from these moves.

Despite the involvement of the High Court in Dublin and its counterpart in Belfast, what exactly is going on in relation to the control of a number of valuable properties in Russia and the Ukraine remains uncertain.

IBRC’s efforts to establish who lay behind the Belize company, Galfis Overseas Ltd, involved a walk-on part for a former railway and construction worker turned “corporate strategy expert”, Yaroslav Gurnyak, a Ukrainian national the bank believes is a cousin of a lawyer in Attorneys and Business. It almost sounds amusing until you remember that the right to more than €100 million owed to a Northern Irish company, Demesne Investments, by the Quinn property group, was transferred to Galfis for a nominal sum. This was a direct loss to State-owned IBRC.

A key point is that offshore companies and locations were used to take the Irish and Northern Irish courts, and a bank that believed it had solid security in place over assets worth hundreds of millions of euro, on a merry dance. And it is at this point that this column would like to segue from a Quinn-focused theme to one focused on the offshore world generally.

Recent filings by Apple have shown it amassed up to $11 billion in offshore havens in the last quarter of 2012, money it successfully manoeuvred past attempts by a range of western and other nations, including Ireland, to submit to taxation.

Almost all the world’s major western multinationals are now involved in this type of practice, with trillions of euro that might have been otherwise taxed now lying on deposit in offshore locations that have minuscule populations. It is a huge waste of resources at a time when smaller businesses, and the population generally, are being screwed by public deficits and all but non-existent economic growth.

Of course it is not just foreign multinationals that make use of these offshore locations, as the recent coverage of Larry Goodman’s beef processing group (holding companies based in Jersey), and the tax residency choices of some of our own super-rich, have shown.

Fairness would dictate that in any forum where it has a voice, Ireland is on the side of squashing these offshore locations and the malign role they play in the modern business landscape. But you’d be worried all the same.