Four Nicaraguan and one Costa Rican businessman, all of them linked with large regional economic groups, justified their ties with the Mossack Fonseca law firm and the creation of offshore enterprises in Panama, the Virgin Islands and other fiscal paradises. They affirm that these are lawful business strategies for investing capital and assets of entirely recognizable origin.
Businessman Manuel Ignacio Lacayo, a shareholder with Invermedia – the company that own Confidencial – and a member of our editorial board, is among those mentioned in the leaked Mossack Fonseca files. His ties with Confidencial have never represented a conflict of interest or an obstacle to the media outlet’s independent investigative reporting on Nicaragua’s links to the “Panama Papers” that has been going on for several months.
In June, 1998, the Dresdner Bank Lateinamerika AG, a client of Mossack Fonseca, inquired about the availability of the name Ingeniería Creativa S.A. (Creative Engineering Inc.) for setting up an offshore society in Panama. The society was registered in that same month in Panama, under public deed 6495, according to the Panamanian Public Registry.
In declarations to Confidencial, Lacayo acknowledged that his offshore society was registered with Mossack Fonseca; he explained in detail how this was used for the development of operations related to the real estate business. The businessman stated that the reason for registering as an offshore company in Panama was for the “protection” of his family’s economic assets and that “there’s nothing to hide.”
“Obviously, the goal is protection. After the confiscations [of the eighties] in Nicaragua, the funds that we managed to salvage were invested in different places; after the negative experience in Nicaragua, that money wasn’t going to enter there again,” Lacayo assured.
He indicated that his family “has had investments outside of and within Nicaragua for many years. As a result the funds and the profits come from different countries, and each company pays taxes in the country of origin.”
“That is, money has never left Nicaragua illegally nor has money entered Nicaragua illegally,” he summarized.
Lacayo confirmed that Ingeniería Creativa S.A. is still an offshore society, now administered by a new Panamanian legal firm specialized in the management of this type of company. According to the businessman, the majority of the shares and all of the society’s accounts are based in the U.S. and “everything is legal, everything is transparent. It’s nothing more than a way to protect my assets,” he emphasized.
Ceguel and Dicegsa use offshore accounts for financing
The registries of the Mossack Fonnseca law firm list Ceguel Laboratories Inc. as an active client. The four companies are registered in Panama under four different names and registration dates: American Trading Associates Inc., or Amtrasa, in 1999; Orwell Global Corp. in 2002; Ariona Company Group Inc. in 2005; and Edward Resources Inc. in 2007.
Eugenio Guerrero Lugo, CEO of Ceguel Laboratories, justifies the use of Panamanian offshore companies as a way to save enough to maintain a “strategic reserve.” According to Guerrero, they managed to do this by registering four offshore enterprises that the Mossack Fonseca firm still administers in Panama, serving as their legal resident agent. With these measures, he asserts that they’ve managed to get a return on savings and guarantees for a part of the companies’ profits.
Guerrero adds that if we look at the movement of the 3.8 million dollars in loans that are mentioned in the firm’s files “as part of the group’s total operations, this corresponds to 1.5% of the annual volume of all of the group’s companies.”
In an additional comparison, he notes that the quantity corresponds to merely 13% of the group’s total financial operations with the private bank. “It’s not such a large resource as to substitute for the banks, nor is it an urge to create dividends, but to continue growing so that the company can be passed on to other generations,” he argues.
As to the nature of their relationship with Mossack Fonseca, Guerrero says that he had never heard any negative references to the firm, not even when it was mentioned in the scandal of Aleman’s “stash”. “For me, this is the first time. Truthfully, when I saw the news about Alemán, I only noted the words ‘Alemán’ and ‘stash’ and never noticed the name (of the law firm). It’s a pity that I didn’t notice (he smiles), because I would have taken the necessary measures at the appropriate time.”
Nonetheless, he also sustains that at this moment they are not considering replacing Mossad Fonseca as their legal agent. “Running away would make it seem like we were hiding something, and that’s not so,” he concluded.
Jaime Montealegre, from Costa Rica and the Dominican Republic
The Nicaraguan most frequently mentioned in conjunction with the creation of offshore companies managed by the Mossack Fonseca firm is business owner Jaime Montealegre Lacayo, currently residing in Costa Rica. He is a consultant for the Nicaraugan Superior Council of Private Enterprise COSEP and a strong investor in diverse initiatives of the region.
Montealegre appears as a shareholder in a number of companies, among them Mesoamerica Media Ltd. and MerInvestors Corp., both registered in the Virgin Islands, in association with the Mesoamerica regional consortium, with its seat in Costa Rica. He is also involved in Lochfield Trading Inc., Fairdawn International Group and Brookboard Business Inc., associated under the Brownsville Business Corporation which operates from the Dominican Republic, mostly engaged in the real estate business.
He also appears on the board of private foundations such as the Atwood Foundation and other companies and foundations registered in Panama, including Kadney Holdings, Kelsey Trading Business, Molin Industries and the Pearcedale Foundation, which operates companies that promote residential developments in Costa Rica. Consulted by Confidencial, Montealegre downplayed the importance of the services offered by Mossack Fonseca in his business activities.
The magnate affirmed that together with his brother Rodrigo Montealegre Lacayo he maintains real estate development investments in the Dominican Republic and confirmed the legal make-up of the Brownsville Business Corporation, or BBC, registered on that island. Nevertheless, he said that “no one remembers” what function the offshore companies served, but it seems to him that it could have been some auxiliary activity that has “nothing to do” with the businesses they own in that country.
Regarding his relationship with Mesoamerica and two of this group’s offshore enterprises in which he’s mentioned, Montealegre affirms: “I’m not in any of their structures. I could be listed as an executive in some investment, but I’m not an executive of Mesoamerica. I’m not a company director there, nor anything else; I’m a close friend who’s invested in them for some things,” among them the purchase of a leading construction company and the sale of a scaffolding business called ESCO.
Costa Rican Luis Javier Castro presides over the Mesoamérica group, a regional initiative that identifies investment opportunities in Central and Latin America. Over the past 20 years, this firm has mobilized from 400 – 500 million dollars in investments in renewable energy, communications, construction and diverse services. Castro heads Mesoamérica together with Harry Strachan, formerly a professor and rector of the INCAE (Central American Institute for Business Administration). Strachan has served as a mentor for some of the principal regional business groups in Central America.
Castro confirmed that Mesoamérica sought out Mossack Fonseca to create holding companies based in Panama (parent corporations that hold other companies’ outstanding stock), which in turn develop investments and operations in different countries within the region. He emphasized the advantages of Panamanian legislation for “operational aims” and added that “we do the same in Delaware, Spain and other countries,” indicating that at times they buy and sell companies and also offer financial advice. Castro described the participation of Nicaraguan businessman Jaime Montealegre in Mesoamérica as “a minority partner, an investor, who – like many from others from different countries – has participated in diverse projects,” but who doesn’t have any management responsibilities.
Asked about the level of transparency of these operations and the murkiness associated with the Mossack Fonseca operations, Castro defended the legality of the offshore operations and called for “separating the wheat from the chaff.” “If there are people who take advantage of this to do bad things, they should be corrected and their activities followed up on, right through to the final consequences.”
Castro believes that the Mossack Fonseca scandal holds a lesson for the companies that work with different law firms in the United States, Spain, Costa Rica and other countries: the user “should perform the background research with all due diligence” about the service provider. He noted that there are more than fifty law firms that offer this type of service, approving that “the press can point out those who have something to hide. However, you also have to separate those situations from people that use [offshore companies] to create new investments.”
This article has been translated by Havana Times.