The Bahamas’ reputation as an offshore tax haven was well earned from more than half century ago. Long before many Bahamians today were even born, vast amounts of money were flowing through the islands.
Much of it legitimate. Some of it, not so.
(The Daily Star, Tuesday 2nd August 1960)
Some of the earliest blacklisting of questionable Bahamian bank and trust companies, by Britain and America, came during World War II. Swedish millionaire Axel Wenner-Gren of Hog Island, had his bank blacklisted, along with other Bahamas-based businesses. Wenner-Gren’s Bank of Bahamas, was rumoured to have the Governor, the Duke of Windsor, as an invested principal.
(Chicago Tribune, Subway 17 May 1942)
For many of the so called ‘paper or shell companies,’ the only evidence trail would be secreted wire transfer, deposit and withdrawal slips to prove these banks and trusts even existed. No actual business was ever conducted in the Bahamas. Often times, the principles, the owners and directors, never stepped foot on Bahamian soil. Local law and accounting firms processed all the information. What was mostly recorded, were all the revenue and profit activities.
It was all paperwork.
Lots of it.
Banks and Trust companies were created in lawyer’s offices. Many didn’t exist beyond the grey metal filing cabinet in which their articles of incorporation sat.
One example of this was in 1960. During a fraud case involving a series of banks from Oklahoma to Texas to New York, one bank became a central focus. The Grand Bahama Bank and Trust of Freeport, Bahama Islands was alleged to have received some $1.5 million dollars from Capitol Hill State Bank, a failed bank under investigation. The Federal Deposit Insurance Corp. (FDIC) was suing the Grand Bahamas Bank in an effort to recover the fraudulently transferred funds.
There was only one problem.
Grand Bahama Bank and Trust had no assets, no offices, no address other than Freeport.
In fact, before hearings in front of the Oklahoma Bank Commissioner, the bank’s representative, Neil Brans, a Dallas Texas lawyer and secretary for Grand Bahama Bank and Trust, was forced to defend the statement that the bank was a mere figment of the imagination.
When asked where the bank was actually located in Freeport, Neil Brans said they were waiting for jungle to be cleared.
“A strictly legitimate operation,” Bran countered in his testimony. He said Grand Bahama has a room in Freeport in the Bahamas and assets in various American banks. He said it is bonded. He said a Bahama auditing firm is conducting its business pending completion of a building in an area being cleared of jungle.”
(The Daily News Friday August 5, 1960)