Privacy rules tightened
The Government has tightened the law to ensure the real ownership of companies registered in Bermuda stays secret.
The change was backed by MPs a week before David Burt, the Premier and Minister of Finance, said that Bermuda was “an open, transparent jurisdiction” in the wake of the massive “Paradise Papers” hack of information from island law firm Appleby.
The Companies and Limited Liability Company (Beneficial Ownership) Amendment Act 2017, designed to stop the public getting company ownership details under public access to information — or even from finding out if anyone else has requested it — was passed with the full support of the One Bermuda Alliance.
Information commissioner Gitanjali Gutierrez told The Royal Gazette she was not consulted about last month's change to the law.
She added: “This is the first legislation to appear to try to keep secret the existence of a Pati request itself.
“This is different than ensuring the confidentiality of a record, and overreaches.
“If that is the intention, it is inconsistent with the standard of transparency our jurisdiction is striving to achieve.”
The island's beneficial ownership register has information on the actual owners of Bermudian-based companies and is maintained by the Bermuda Monetary Authority. The BMA shares information from the register with other authorities, but it is not open to the public.
Mr Burt has said it would not be made public until all members of the international G20 group of nations, which includes Britain, do the same.
Requests made to the BMA under the Public Access to Information Act for records revealing beneficial ownership have been denied, including one from The Royal Gazette, which asked for the entire register. To avoid disclosure, the BMA has cited sections of the Pati Act and the Bermuda Monetary Authority Act.
Part of the Pati Act says records are exempt if disclosure is prohibited by other legislation.
And a section of the Bermuda Monetary Authority Act rules that the authority cannot disclose information about anyone that “may come to its knowledge in the course of its duties”.
The Pati exemption is absolute so, unlike many other exemptions in the Act, public authorities do not have to consider whether disclosure would be in the public interest.
In a recent decision by Ms Gutierrez, made after a Pati requester appealed a decision by the BMA to deny disclosure, she agreed with the authority that access to information on beneficial ownership could be denied on the grounds that the BMA Act prohibited disclosure.
The commissioner's decision, in favour of the BMA, was released on September 15 this year.
Economic development minister Jamahl Simmons last month briefed the House of Assembly on the amendments to beneficial ownership rules.
He told MPs: “Protections against certain disclosures of beneficial ownership information will be set forth, including protection against any disclosure pursuant to a request made under the Public Access to Information Act 2010.”
Mr Simmons did not explain in Parliament why the additional secrecy measures included in the Bill were needed, when the BMA's withholding of beneficial ownership information under existing legal provisions had already been endorsed by Ms Gutierrez.
Asked about the move by The Royal Gazette, Mr Burt said: “We have been very clear, Bermuda does not have a public register of beneficial owners. To ensure that Bermuda is compliant with our international commitments and obligations, beneficial ownership information is held in a central database and the information is made available to legitimate tax authorities pursuant to a valid request for tax information.
“A company or individual's details are filed with the Bermuda Monetary Authority and must also be made available to the Registrar of Companies for compliance purposes.
“Both of these entities are subject to disclosure requirements under the Pati Act.
“The legislation, which was tabled in the House of Assembly recently, ensures beneficial ownership information is exempt from Pati requests and therefore not available to the general public.
“This exemption provides reassurance to everyone who is required to disclose their personal information to the BMA and RoC, that it is held in confidence and shared only when requested by a legitimate tax authority.
“I will repeat what I have said in the past, Bermuda is no place to hide money. We are a co-operative, compliant and transparent jurisdiction.”
Ms Gutierrez told the Gazette: “In the past, the ICO has provided consultation to ensure that any restrictions on the right to access are narrow and appropriate to meet the public authority's needs.
“The information commissioner's involvement ensures that the public's right to access is safeguarded during the amendment process. This process has been effective with past legislative changes.”
She added: “As the office with responsibility for the protection and enforcement of the right to access information, it was surprising to read about these amendments after the fact. I hope this proves to be the exception and not the rule going forward.”
MPs on both sides of the House spoke out in support of the extra protections.
Deputy Opposition leader and shadow tourism minister Leah Scott insisted the change was needed because disclosure could lead to “kidnapping or blackmailing or other” and said the island had to maintain its competitive edge.
Ms Scott, who declared an interest as a trust lawyer, added: “As a private client lawyer, our concern is reconciling our clients' privacy with also managing revenue-hungry governments who are trying to do whatever they can to get money out of high net-worth individuals.
“Most high net-worth individuals will pay their taxes and do the things that are necessary, but if a client wants to set up a structure to manage their assets, they should not be penalised for doing so.”
Shadow economic development minister Grant Gibbons said: “It is an issue that is really important for us. And I think people may say ‘well, why shouldn't people be prepared to operate in the public light of day? Why shouldn't everybody know who owns companies and who doesn't?'
“And I think the answer to that is, there has always been a certain sense, for competitive reasons or other reasons, that there needs to be, at least from the public, a certain sense of privacy.”
He added: “This issue is a critical one and one that, I think, from a competitive perspective, Bermuda needs to make sure that they are very clear in terms of protecting this information from public perspective.
“There is a provision, as the Minister mentioned, in the Bill to address the issue of a Pati request, which is, obviously, not being allowed. And I think this is a good thing.”
Secrecy over offshore company ownership was forced back into the spotlight after the Paradise Papers revelations by the International Consortium of Investigative Journalists and other media.
Almost 100 media organisations around the world revealed how the rich hide their money after client data hacked from Bermuda's Appleby law firm was leaked.
The reports, and comments by the British Opposition leader Jeremy Corbyn, branded the island as one of the world's most secretive jurisdictions.
Mr Simmons and the BMA did not respond to a request for comment on the amendment by press time.
Pati request refused
The Royal Gazette made a public access to information request for the registry of beneficial company ownership held by the Bermuda Monetary Authority on February 8, 2017.
The BMA denied the request on February 15, citing an exemption under the Pati Act which allows authorities to refuse to release records if disclosure is prohibited by other legislation.
In the BMA's case, it said section 31 of the Bermuda Monetary Authority Act meant its employees had to “aid in preserving secrecy with regard to all matters relating to the affairs of the Government of Bermuda or the Bermuda Monetary Authority or of any person that may come to his knowledge in the course of his duties”.
Gerald Simons, BMA board chairman, upheld that decision on May 23 and this newspaper appealed to the information commissioner. The appeal is ongoing.