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By G.A.Dwyer AstaphanJust in case you don’t already know, here is a bit on the Sugar Industry Diversification Foundation (SIDF). It’s a legal entity, called a foundation, or a charitable, not-for-profit organisation; and it’s established under the Foundations Act of 2003.
The Prime Minister says that it is 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 the sale of our passports cannot be allowed to sit in the hands 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 the 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 of 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?