75 U.S. billionaires parked assets in tax haven, including this oilman tight with the Bushes

Billionaire Hushang Ansary has lived his life at the junction of money and power. Once a member of the Shah of Iran’s inner circle, he later moved to the United States, started an oil business in Texas and eventually became a rainmaker for the Republican Party.

He is a close associate of the Bush family, a donor to their electoral campaigns and has a gallery named after him in George H.W. Bush’s Presidential Library and Museum. He and his wife, Shahla Ansary, also donated $2 million in 2015 to Right to Rise, a political action committee that supported the abortive presidential campaign of the former president’s son, ex-Florida Gov. Jeb Bush.

The Iranian-American businessman straddles two worlds. One is inhabited by friends at or near the upper echelons of power in the United States; the other, as alleged in a lawsuit and revealed in a global collaborative reporting project, is the opaque world of offshore finance, where domiciles change regularly and assets are moved by the fabulously wealthy to limit the reach of regulators.

The 95-year-old Ansary, whose wife last year bought a Palm Beach penthouse and cabana for $14 million, is among more than 75 Americans on Forbes’ list of American billionaires with business ties to Luxembourg, a tiny European country whose tax benefits and the alluring promise of relative secrecy have made it a favored destination for the rich and famous to park their assets.

Under pressure from the European Union, Luxembourg’s secrecy is now being whittled away with the publication of corporate records revealing once-private information on companies domiciled in the country.

The Miami Herald, el Nuevo Herald and their parent, McClatchy, partnered with 17 media outlets, including Le Monde in France, Süddeutsche Zeitung in Germany and the Organized Crime and Corruption Reporting Project, as well as the nonpartisan Anti-Corruption Data Collective, to analyze the registry, which contains more than 140,000 active companies, as part of a project that began publishing this month called OpenLux.

The project enabled reporters to peer into the still-private registry of beneficial owners, a list of who actually is behind companies registered in Luxembourg, people like Ansary, NBA legend Magic Johnson and even the brother of a powerful general who controls levers of the Cuban economy.

Aside from the Luxembourg connection, Ansary’s financial empire has attracted attention because of an ongoing civil court case in Curaçao involving ENNIA Caribe, the largest personal insurance company in the Dutch Antilles.Hushang Ansary and his wife, Shahla

The complaint, filed by ENNIA — now under control of Curaçao’s central bank — accuses Ansary of acquiring the firm in 2006 and using it as a personal piggy bank, setting up a Luxembourg-based company, EC Investments International, and transferring assets there for tax benefits.

The way those actions were carried out, the complaint filed in October 2019 says, threatens ENNIA’s ability to conduct the most basic function of an insurer — paying the claims of its policyholders.

The civil lawsuit also alleges that some of ENNIA’s revenue, coming from the premiums paid by policyholders for insurance lines like life and health insurance policies, went out as donations to nonprofits tied to President George H.W. Bush and former Secretary of State James Baker.

The complaint, brought by the new administrators of ENNIA, asks that the Curaçao court hold Ansary; his daughter, prominent academic and social commentator Nina Ansary; and three associates — Abdallah Andraous, Ralph Palm and Gijsbert van Doorn — liable for damages worth hundreds of millions.

Without going into specifics — which he says he is barred from doing by the ongoing court matter — Ansary rejected the Curaçao complaint.

“Mr. Ansary and all participants in the legal process are not at liberty to disclose or discuss the merits of the ongoing proceedings,” stated Ansary’s attorneys, in response to a series of detailed questions from the Miami Herald and McClatchy.

“Mr. Ansary’s response is, therefore, limited to a strong denial of all the allegations, which are absolutely and, in their totality, untrue and misleading as presented,” the statement said.

In a prior interview more than a year ago with a Curaçao television station, TeleCuraçao, Ansary said the insurance company was at the peak of its prosperity, liquidity and profitability when the central bank decided to take control.

ENNIA, too, declined to comment to the Herald/McClatchy, citing ongoing legal proceedings in Curaçao and the United States.

Tehran to Texas

During various points in his career, Ansary served as finance minister, state oil company director and U.N. ambassador for the government of Mohammad Reza Pahlavi, the Shah of Iran.

Pahlavi ruled from 1941 to 1979, when the Islamic Revolution ousted him amid allegations of repression and accusations that the pro-Western longtime ruler had plundered his nation’s treasury. After the shah fled, the revolution’s spiritual leader, Ayatollah Ruhollah Khomeini, returned from exile and pursued an anti-American foreign policy that remains today.

Ansary moved to the United States and launched Parman Group, a holding company for businesses ranging from real estate and oil to textiles. It prospered, elevating Ansary’s political and financial status.Henry Kissinger

A staunch supporter of Republicans, Ansary assembled a network of influential friends that included former U.S. Secretaries of State Henry Kissinger and James Baker. Ansary was on the finance committee of the Geore W. Bush 2004presidential campaign. Together the Ansarys donated $2 million to Donald Trump’s presidential inauguration in 2016.

Why Luxembourg?

There is nothing inherently wrong or inappropriate about setting up a business in an offshore haven like Luxembourg, and there are legitimate reasons for a company to obscure the identity of its owners.

Some companies go to Luxembourg to “minimize the tax drag,” explained Stephen E. Shay, a senior tax fellow at Boston College and former international tax affairs specialist at the U.S. Treasury Department.James Baker Rodger Mallison Star-Telegram archive

Tax drag is financial parlance for the difference in the returns on investment between a tax-sheltered investment and one that isn’t. Taxes eat into returns on investment. When a company chooses Luxembourg it hopes to reduce the amount of income potentially subject to taxes, thus leaving more money available for investment or profit for investors.

In January 2006, an Ansary company, Parman International BV, acquired ENNIA Caribe Holding BC and Banco di Caribe, a Curaçao financial institution. ENNIA controlled large parts of the insurance market in the former Dutch Antilles, including the market for retirement pensions.

According to the complaint, Ansary used roughly $90 million from his new acquisition and $5 million from still another Ansary company, Parman Capital, to purchase a Houston-based oil company, Stewart & Stevenson. The complaint alleges that some of the proceeds from this investment improperly went to Ansary and his daughter Nina, a director of multiple Parman companies and until recently a director of ENNIA.

From 2006 to 2009, Ansary and his associates downgraded the value of ENNIA and Banco di Caribe stake in Stewart & Stevenson and moved the two Caribbean companies’ assets into newly created holding companies that were not subject to supervision from local regulators, the complaint asserts. Ansary then took complete control over their financial decisions. In 2012, ENNIA transferred its interests in Stewart & Stevenson first to a Cypriot company and then to EC Investments International in Luxembourg, the complaint says.

The 2012 annual report for EC Investments — the first filed report — records $279 million in assets. The last filed report from 2019 shows that that value had risen to $303 million. The assets reported in that time period included loans to Stewart & Stevenson and Parman Capital Group and full ownership stake in the Cypriot company, Onafield Limited. Ansary is listed as owning a 77.1% stake in EC Investments International, according to the Luxembourg registry.

Hopscotching jurisdictions ⁠— as ENNIA did when it moved its assets from Curaçao to Cyprus to Luxembourg in a short span ⁠— can be a red flag to regulators, said William H. Byrne, a law professor at Texas A&M University specializing in global taxation and money-laundering prevention.

“When you leap-frog, there is really no reason for a business to do that,” he said.

The civil complaint says Ansary, through Parman, reaped the full benefit of investment in which ENNIA had actually contributed more capital.

The complaint says that when Stewart & Stevenson was sold in June 2017, ENNIA received $286 million while Ansary and his other entities made considerably more: $458.5 million.

During the period of Ansary’s control of ENNIA, internal and external auditors voiced solvency concerns that were ignored by directors, according to the complaint.The Shah of Iran, Mohammad Reza Pahlevi, and his wife, Empress Farah Diba, in 1979. RANDY TAYLOR AP

All the while, the complaint alleges, Ansary used private jets, paid for with ENNIA funds, for personal use and spread money, also originating from ENNIA, to “American political institutions and charitable organizations.” This allegedly included:

▪ $800,000 in 2011-2013 to the Points of Light Institute, a nonprofit founded by former President George H.W. Bush.

▪ $550,000 that went between 2010 and 2013 to Rice University’s James Baker Institute, a public policy research center based in Houston.

▪ $6.5 million that went in 2010-2011 to the U.S. Peace Institute, a Washington-based think tank established by Congress in the 1980s for which Ansary is a benefactor.

▪ $3.4 million spent from 2006 to 2017 on advisors to Ansary and Parman International for services not related to ENNIA, and roughly $6 million to people on ENNIA’s payroll who did not actually work for the company but were employees of Ansary or his other firms from 2008 to 2018.

▪ $8 million spent by ENNIA between 2009 and 2018 in “excessive” remuneration to supervisory directors who were, the complaint alleges, “confidants of Ansary.”

▪ $2.5 million spent by ENNIA on travel and accommodation for meetings of the supervisory directors at luxurious hotels, and around $15 million for two private jets that Ansary used for trips not related to ENNIA.

The Points of Light Institute confirmed receiving donations from Ansary and his foundation but stated that he had never held any formal position with the organization. The James Baker Institute declined to comment. The Peace Institute did not respond.

Trouble in Mullet Bay

When Ansary acquired ENNIA in 2006, he had promised an injection of capital into the company. He did this, the complaint says, by contributing shares purportedly worth $300 million of a resort company, SunResorts Inc., for which he was an “indirect major shareholder and director,” the complaint alleges.

Among those who had served for at least some time as a director was Henry Kissinger. The former U.S. Secretary of State could not be reached for comment.

SunResorts owned 67.7 hectares — about 160 acres or roughly 125 football fields — of real estate in Mullet Bay on Sint Maarten. The parcel includes a golf resort, a hotel and timeshare locations. The area however had not been in use since 1995, when Hurricane Luis ravaged Mullet Bay, and no substantial repairs or development had been done since then, the complaint says.A satellite photo of the real-estate tract in Mullet Bay on the island of Sint Maarten.

The Mullet Bay shares soon represented more than half of ENNIA’s total assets.

The complaint says the shares were, in fact, worth much less. Ansary, it says, inflated the price of the land which, on paper, stood at $400 million in 2014 — a 600 percent rise from its value at $55 million in 2002, before he acquired ENNIA.

At the request of the central bank, the complaint states, Cushman & Wakefield, the global real estate services firm, did a valuation in 2018, finding the property to be worth $50 million.

Moreover, in 2006, with the help of an investment firm he set up, Ansary used $35 million from ENNIA to pay off the previous apartment owners with whom SunResorts had a decades-long dispute over hurricane damages, the complaint says.

The complaint alleges that the “unsound valuations” meant that ENNIA’s books had been artificially inflated, allowing Ansary to withdraw money from ENNIA’s accounts without it being apparent that the company could not afford it — and that Parman International, Ansary and his associates then withdrew around $120 million and distributed it among themselves.

Alarm bells

ENNIA’s finances caused alarm bells to go off at the Central Bank of Curaçao and Sint Maarten, and in October 2016 CBCS started monitoring ENNIA’s compliance with its instructions.

“Ansary gave the impression that he mainly saw ENNIA as an investment, which was intended to provide him with a return,” the complaint states. “The interests of the policyholders, who actually finance ENNIA with their premium payments, were subordinate to this.”

After Ansary suddenly withdrew $100 million from ENNIA and transferred it to Parman International— with another $150 million to follow — CBCS decided it had seen enough, the complaint states. On July 3, 2018, ENNIA’s licenses were revoked and the bank took control, concerned about the company’s solvency.

CBCS sought to access $240 million in ENNIA’s assets in the United States, but Ansary attempted to block that. Then, in January 2019, a bankruptcy court in the Southern District of New York granted relief to CBCS.

Ansary would return another $50 million to ENNIA, but instead of the money coming from Parman International, it came from a private account he held, further indicating, according to the complaint, that “Ansary’s personal interests and corporate interests are intertwined.”

BEHIND OUR REPORTING

How we did this story

OpenLux is a collaboration between McClatchy, the Miami Herald and el Nuevo Herald and news organizations across the globe into the companies and wealthy individuals that have made the tiny European country of Luxembourg a global destination for offshore capital. Participating media partners included Le Monde in France, the Organized Crime and Corruption Reporting Project, Süddeutsche Zeitung in Germany, Le Soir in Belgium, Woxx in Luxembourg, IrpiMedia in Italy, iStories in Russia, Arij in the Middle East, Krik in Serbia, Bivol in Bulgaria, Investigace.cz in the Czech Republic, Piaui in Brazil, Tempo in Indonesia, Armando Info in Venezuela, La Nacion in Argentina and Inkyfada in Tunisia.

The European Union has directed countries to begin requiring companies to disclose their beneficial owners as part of an effort to crack down on money laundering in response to prior investigations into offshore finance such as the 2016 Panama Papers and 2014 Luxembourg Leaks. Luxembourg required that companies begin disclosing their beneficial owners — those who have a true financial stake — in 2019 and made the information public. However, the registry cannot be searched by owner name, but is instead only searchable by company name, making it impossible to discover whether someone is a beneficial owner of a company in Luxembourg without knowing the name of the company in the first place. Le Monde scraped the data from the registry and shared it with partners last year. It includes corporate documents, financial statements, and beneficial ownership declarations from more than 260,000 companies, covering a period from 1955 to December 2020. The records include the names of 117,424 distinct beneficial owners or administrators of Luxembourg companies.

McClatchy’s Ben Wieder, Kevin G. Hall and Michael Wilner and Miami Herald staff writer Jacqueline Charles contributed to this story.

https://www.miamiherald.com/news/nation-world/national/article248949799.html