BHP Billiton: Panama Firm Flagged Concerns over BVI Firms


Even as the shockwaves of disclosure in the Panama papers are shaking many high profile individuals and corporations, the leaked documents had a different take on mining giant BHP Billiton.

The leaks from Mossack Fonseca suggested that the law firm had raised concerns over BHP authorising two companies in the British Virgin Islands in receiving large sums of money.

Fonseca sparked a “high risk” warning, the documents revealed. The disclosure showed that BHP had at least 19 companies registered in the British Virginia Islands.  They have put it up with the assistance of Mossack Fonseca, reports The Guardian.

The Panama firm raised specific issues on two firms in the BVI companies linked with BHP Billiton – BHP Billiton Finance South Africa Limited and BHP Billiton UK Holdings Limited. The main concerns were “mandatory high risk.”

This stemmed from an “enhanced due diligence” of the law firm after identifying that the client is undertaking a riskier business venture. Assessments revealed that Mossack Fonseca was in the dark about the actual ownership of these BHP entities.

The risk assessment document for BHP Billiton Finance South Africa Limited had the region of business as Australia.  In its notings, the Panama firm observed: “Authorised capital is higher than the norm. The company’s activity is not stated.”

Mossack Fonseca wanted BHP to disclose its source of funds and source of wealth for the company and provide more information about its beneficial owners plus the reason behind the “high capital.” Beneficial owner implies the person or entity who ultimately owns the companies.

For companies, Mossack Fonseca plays the role of an agent in setting up companies in low-tax countries such as the BVI, the Seychelles, Niue and others. Offshore entities in BVI and others come handy for multinationals in slashing their tax bills.

Responding to the disclosures, a spokeswoman for BHP Billiton said it “does not engage in aggressive tax planning” and is fully committed to transparency.

Meanwhile, a CNBC report said many western financial institutions will be hurt by the Panama papers. Already, UBS and Credit Suisse had to incur large sums as compensation to settle accusations of helping rich clients evade US taxes.

That may be a precedent for banks coming under the cloud of Panama scandal and sharp sanctions can be expected to follow if they have been found breaching the law. An example is in Sweden, where authorities are probing Nordea bank for suspected help in setting up offshore accounts for clients in places considered as tax havens.

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