A charitable trust set up in 2002 by Bermuda’s biggest international company XL Capital has forked out $13.95 million to buy property to rent back to XL executives and staff, but has only given $200,000 to Bermudian charities during the same time. The unusual state of affairs has been revealed in a financial filing in the US by the multi-billion dollar company. The revelation is expected to come under scrutiny from Labour and Immigration Minister Derrick Burgess who remains concerned about the preservation of Bermuda property and land for future generations of Bermudians being undermined by the actions of trusts snapping up real estate.

Enquiries by the Royal Gazette to XL were not immediately returned yesterday, therefore it is not known at this time what the long-term intention for the trust-owned properties will be. However, according to the US filing by XL the purchase of the various pieces of property during the past five years is part of a strategy that will eventually generate income for the charitable trust, which is known as the Harbour View Charitable Trust.

But how that will be achieved when the trust must pay back over $12m and interest from loans from XL that were used to buy the properties is not all together clear. The trust was set up in July 2002 and the first property purchase was made the same year when $3.25m was paid for a residence that is now subleased to XL’s chief financial officer Jerry De St. Paer, who is paying rent of $18,000 a-month.

He has a reported housing allowance of $204,000 a year.

That property was paid for by a $1.35m gift to the trust from XL and a further $2m loan from XL to be repaid at 6.9 percent per annum with the principal and interest falling due in 2023.

Another eight properties were bought by the charitable trust last year. XL again loaned the trust money for the purchases, this time to the tune of $10.7m to be paid back at 3.5 percent per annum.

Explaining the deal in the Securities and Exchange Commission proxy filing yesterday, XL stated: “In 2006, in an effort to expand the trust’s charitable activities in Bermuda, the company made a loan to the Trust of approximately $10,700,000, with interest at the rate of 3.5% per annum, in order to permit the Trustees to purchase eight residential units in Bermuda.

“A portion of the loan was advanced by the company in 2002 and 2003 to the sellers of the eight residential units. The company nominated the trustees as the purchaser of the eight residential units and instructed the sellers to apply the loaned monies as consideration for selling the eight residential units to the trustees.”

The fair market rental to be paid by the trustees, who are currently non-executive XL management, will be determined on an annual basis by an independent real estate appraiser.

Under the agreement XL pays the trustees a fee based on the aggregate fair market rents for each of the residential units less the sum of all rents received by the trustees during a given year under the terms of each residential lease.

The Harbour View Charitable Trust is an unconsolidated charitable trust and established to generate income to be used exclusively for the benefit of Bermudian charities and to facilitate the provision of accommodations for certain of the Company’s employees.

To date around $200,000 has been used to benefit Bermudian charitable purposes.

The buying of land and property in Bermuda through trusts is a sensitive subject. Minister Burgess reluctantly scrapped plans to create a register of land trusts in the past few months after being warned by experts that it would cause serious damage to the Island’s trust business.

However, he has now proposed a less intrusive form of information gathering through the Bermuda Immigration and Protection Act 2007.

Mr. Burgess has said Government will not waver from its policy to ensure “the preservation of Bermuda’s land bank for future generations of Bermudians.”

No-one from the Ministry of Labour and Immigration was available for comment at press time.