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Saturday, December 27, 2008

In Providenciales

We arrived at the High Country Club condo in Providenciales, Turks and Caicos, today. The days between Christmas and New Years of course are prime, peak season -- the anomalies of the Destination Club booking systems mean this is either a great bargain, or a great waste (depending on whether High Country Club can survive the real estate implosion/recession.)

Nevertheless, this Caribbean Island is close to our hearts -- we celebrated our honeymoon here 15 years ago, and visited again five years later, when Eric was a little less than two years old. (Now he is a strapping 11-year-old.)

I chose Provo for our honeymoon in part because of its obscurity -- and decided to use the visit to research the offshore financial industry. A Canadian tax lawyer, then associated with the Greater Ottawa Home Builders' Association, referred me to Richard Hape at British West Indies Trust to learn how offshore financial centres work. At the time, I published a general business newspaper for Ottawa, and figured the story about offshore finance would make good reading.

While we stayed at the Club Med on Provo, Hape's office was on one of the other islands, the capital, Grand Turk, requiring a local flight in a small plane. Hape, knowing my business is publishing but perhaps not appreciating I was there as a journalist rather than business owner wishing to dodge taxes, proceeded to explain things to me in a surprisingly candid interview.

"What we say on this island doesn't go outside," he said. "So, we'll prepare financial reports showing you are receiving a three per cent return on your investment, when you are really earning 15 per cent. You would declare your tax on the three per cent." In other words, Hape told me he would co-operate in cooking the books.

I wrote the story about the offshore financial industry and its shady practices for my business publication and enjoyed the sweet irony of claiming half the cost of my honeymoon as a legitimate business expense (after all, this is a story I could not get by phone -- and the primary costs of getting to and from Turks and Caicos, plus at least a couple nights accommodation, would be deductible expenses.)

Five years later, Vivian and I decided to return to the Turks, and I thought of looking up Richard Hape. He didn't return my phone calls. Perhaps this is because he was in Canada at the time, about to be captured in a sting operation by the Royal Canadian Mounted Police. With the co-operation of BWI police, his trust company offices were raided and information dug up to lay charges of drug and money laundering.

Hape took the case all the way to the Supreme Court of Canada (probably using some of his ill-gotten gains to pay for the lawyers). The judges ruled his conviction would stick, but declined the government's bid to seize further assets. I'm not sure how much time in jail he served.

There are ironies in life. When I married Vivian, the North American economy was digging out of a major recession. A couple of years before we married, I thought my then new business would fail; but had a moment of insight. "I'm responsible for myself, have my health, and will do whatever I can to make it right," I thought to myself. And with that attitude, i set out to do what needed to be done to restore the business. The maturity in solving the business issues also indicated to Vivian that indeed I was ready for marriage.

Now, another major recession is in the early stages. It may end in months, but more likely will last years. Crooks and con artists who lived high during the good times are discovering they can't hide any more -- as (alas) new con games are in the works; exploiting desperate people wondering how they will keep their businesses alive. Some people who had played tax dodging games during the good times are experiencing the double whammy -- their income has dried up as authorities are coming at them for back taxes. These stories happen again and again.

Life goes on. We'll retrace old steps, remember shared experiences, and discover new things during our week here. The basic rules of business (and life) are consistent, however.


Anonymous said...

You are a sick person.
How can you say something is ironic in relation to a person going to jail.

Construction Marketing Ideas said...

Well I wasn't committing a crime or trying to suck others into criminality.

Nick said...

... I cannot believe how judgemental you are, even though you only know scrapes of information! Have you ever though of the fact that you do not have all the facts available to you? Most of this is your opinion or what you probably gathered from bystanders, you will never know exactly what happened, because you have NOTHING to do with it... so you should keep it that way and stay out of things that aren't your business....

Thinking it's ironic that a person has to go into jail is such a messed of train of thought, have you ever considered the effects on Mr. Hape's family? No, of course you haven't.

If you would try being less judgemental and look into these events with more insight you would maybe understand better, but I don't expect that from you.

Construction Marketing Ideas said...

Well, when I met Mr. Hape in person in 1993, he advised me how to cheat and lie to evade Canadian taxation. He initially perceived me to be a tax-evading client, rather than a journalist, though I didn't hide anything up front about my identity or my business/profession.

I obviously did not arrest nor convict him of any crimes when he was charged several years later, but the courts found him guilty and convicted him.

I respect there are many sides to every story but have based my observations only on first hand experience and published reports and documentation about his criminal conviction. The offences for which he was found guilty is consistent with my first-hand impressions of our meeting some 18 years ago.