The Panamanian law firm Alemán, Cordero y Galindo (known by the acronym Alcogal) had a favored spot when it wanted to do business in Europe: the tiny principality of Andorra, a microstate nestled in the Pyrenees between Spain and France. Alcogal employees sent no fewer than 2,245 letters to Andorra between 2002 and 2018. It was the safest way to convey information about share certificates, notifications of powers of attorney, and other basic data about the companies they were registering in tax havens.
Often, these letters would wend their way to the offices of AFSI, a small law and accounting firm of which no trace remains today, either in the physical or virtual realm. For years, AFSI helped manage the registration of companies in opaque jurisdictions on behalf of clients from many parts of the world, but mostly from Spain, including Manchester City coach Pep Guardiola (having a company in a tax haven is legal provided that the assets and income derived from their activity are declared to the authorities where the beneficiary resides ordinarily).
The firm was created in 1997 by Andbank, Andorra’s second-largest bank by asset size. Its close links with a powerful financial entity in the principality made it easy to open a bank account for a beneficiary hidden by a shell company in Belize, British Virgin Islands, Panama or the Seychelles.
As part of the Pandora Papers, a massive document leak to which the International Consortium of Investigative Journalists (ICIJ) has had access, and which is being published in Spain exclusively by EL PAÍS and La Sexta, this data reveals the true role of this small firm in Alcogal’s global operations. A review of 11.9 million of AFSI’s and 14 other offshore service providers’ internal files shows a lack of control over the use of structures that AFSI helped create with Alcogal, which provided the raw materials: companies and frontmen.
The documents also reveal the role that Andorra has played in the past as an attractive tax haven for sometimes murky fortunes, aiding those accruing wealth with few questions asked until 2017. That year, Andorra abolished the principle of banking secrecy, and started automatic cross-checking of tax data with Spain and other countries. It also introduced tax crimes into its legislation and began working to rid itself of a reputation for an economy built on financial secrecy.
In the shadow of Andbank
Alcogal’s relationship with AFSI was close. The two companies began working together as early as 1998, when AFSI was only a year old. The company statutes mention an Andorran limited company and the Banc Agricol i Comercial D’Andorra SA, which is now known as Andbank, as the drivers behind its creation. Among the directors of the firm were two executives linked to Andbank Panama until 2018.
For a firm like Alcogal, an intermediary is essential for attracting people interested in circumventing European tax legislation. These intermediaries are in fact their real clients. Among its hundreds of middlemen across the world, AFSI ranked near the top for sheer number of companies registered in tax havens in 2018. It had 320: 212 in Panama, 102 in Belize, five in the British Virgin Islands, and one in the Seychelles. Maintaining this web of companies open cost the Andorran firm about $60,000 per year (€51,500), according to invoices issued by Alcogal.
Correspondence between the two firms shows just how simple its procedures were. AFSI would choose a name for the company, then send the request by email to Alcogal. Meanwhile, employees would send the original signed documentation via DHL. For years, they were uninterested in the identity of the actual owners of these companies.
But in 2016, the situation became more complicated. That year, requests about companies in Panama multiplied after the Central American country was rocked by the Panama Papers scandal, the ICIJ investigation that exposed shell company factories in the country. The government agreed to provide data to governments around the world and Alcogal employees were forced to lift the lid on their companies to find out what, or who, was lurking underneath.
Whose company is this?
In March 2017, AFSI wrote to Alcogal about a company called Lelila Inc. It wanted to dissolve the firm “due to publication of negative information” about the head of the company. Alcogal’s internal files showed the shareholder was a front man, while the true beneficiary had signed a private contract with AFSI on October 29, 2010 – a document held only by this individual and the Andorran firm.
Upon receiving this information from AFSI, Alcogal realized that the negative information was a news item in Spain’s Abc newspaper in 2015 reporting on an operation against the Chinese entrepreneur Gao Ping, whose business illegally sent about €70 million to China from Andorra. He was later tried for money laundering in one of Spain’s biggest ever mafia cases. The owner on paper of Lelila Inc, Ángel Cisneros Pérez, was mentioned as a “manager of money transfers for his own companies, to a total volume of €730,000.” The remittances related to Gao Ping dated back to 2011, but it took six years after the events and two years after the beneficiary appeared in the media for AFSI and Alcogal to begin procedures to dissolve the company.
In 2017, exchanges of information between the two firms became more frequent, with the intention of discovering the true shareholders of many of the companies registered. In May of that year, Alcogal employees asked AFSI for information on another beneficiary whose real name they did not know, and who was involved in a company incorporated seven years earlier called Tramuntana SA. The owner was Jaume Sabater Rovira. After doing an online name search, they came across a 2016 article in the Spanish newspaper Público detailing his role in the Catalan consulting firm EFIAL. This company was dismantled after its involvement in the embezzlement of public funds from several Catalan city councils. The process of dissolving the company began but curiously nothing was done about other companies registered at AFSI’s request. Sabater Rovira appeared as a proxy to open bank accounts in the Banque Privée Edmond de Rothschild in Nassau, Bahamas. He declined to comment, citing privacy reasons.
The practice of dissolving a company many years after it could have been used to circumvent the law was not limited to companies owned by Spanish nationals. AFSI also worked with Luis Carlos Fernandes Afonso, financial director of the Petros Foundation, linked to Brazil’s Petrobras oil company and also linked to the country’s largest ever corruption scandal known as “Lava Jato” (Car Wash). AFSI opened a company on his behalf in 2011, known as Ode Investments Group. According to the Brazilian court case, that is the year when Afonso may have used several companies to hide funds received as bribes. In 2017, Alcogal received information internally that in 2012 Afonso was convicted in the first degree of misconduct, accused of having charged a fee to a foundation relating to a contract in the city of São Paulo in 2003. He was appealing the conviction at the time. The files do not make clear what happened to the company, which is now dissolved, but the latest notes from the firm point to the fact that the beneficiary [Afonso] did not authorize the release of his company’s information.
AFSI also worked with another Brazilian convicted in the Lava Jato case, Carlos Fernando Costa, the former president of Petros. This time the company told its counterparts in Panama not to dissolve the company, but to change the name of the principal shareholder. It was 2017, and Alcogal only then discovered the charges against Costa (accusations that he has always denied). On April 17 of that year they resigned as representatives of his company, which had been active for five years. Costa went to prison a year and a half later.
AFSI’s name is splashed across the Pandora Papers in dozens of cases. Many of them will be revealed in the coming days by this newspaper, while others do not have wider relevance. AFSI was forced to forward information to Alcogal regarding 90 Spanish residents due to a change in Belize’s laws in 2018. These were companies created up to 10 years earlier and, until then, only a private document between the owner and the Andorran firm revealed their true ownership.
The firm helped create complex tax structures, often linked to a bank account for someone to charge in Andorra for services offered in other European countries. One example was Jose Regojo Velasco, the Portuguese businessman who sold the Massimo Dutti clothing business to Spanish giant Inditex (owner of Zara) in January 2012. Three days before the sale was made public, the Dutch subsidiary of the Spanish textile giant received an invoice for €3 million to be paid into Petunia Enterprises’ Andbank account for “services performed during the franchise operation of the Massimo Dutti in Portugal.” AFSI had opened Petunia Enterprises only two years prior and had arranged the account for Jose Regojo Velasco through power of attorney. The company served as a smokescreen to hide the businessman’s name. Regojo Velasco did not answer questions sent to him by EL PAÍS and La Sexta.
AFSI also requested that companies be created in the Virgin Islands that acted as shareholders for companies in the Netherlands or the Dutch Antilles, which were themselves parent companies of firms based in European countries. This is known as a “Dutch sandwich:” the dividends leave a country and legally go to a Dutch company, where they are not taxed. From there they can be taken to a tax haven such as the Dutch Antilles, with a 2% tax rate. The real shareholders of this company are unknown: the nominal shares do not appear in the country’s records, but only under lock and key in the drawers of the offices that created the companies. That is, at AFSI. EL PAÍS has tried to obtain AFSI’s version of events, but questions went unanswered, and that of Andbank, which declined to comment.
Andorra faces up to the past
In March 2015, Banca Privada d’Andorra (BPA) was taken over by Spanish and Andorran regulators following accusations of money laundering after taking tainted money from Odebrecht, the Brazilian construction giant that featured in the largest bribery scheme ever seen in the Americas. As a result of the investigation that followed, another $2 billion was discovered to have been handled via “the development of shell companies and complex financial products to siphon off funds from Venezuela’s public oil company Petroleos de Venezuela (PDVSA),” according to a US Treasury statement at the time. With 9,000 clients and $8 billion in turnover, this small bank also helped prominent members of the Mexican Institutional Revolutionary Party (PRI) use Andorra to hide their money.
The Andorran authorities want to turn the page, and the principality’s courts are currently investigating a dozen cases arising from the main BPA case. The Andorran government is striving to project the image of a country committed to fiscal transparency and with a hard line on money laundering. The small state exchanges information with about 100 countries, including members of the European Union, and the Andorran Financial Intelligence Unit (Uifand) – a public body that pursues money laundering – follows 40 FATF (Financial Action Task Force) recommendations to prevent crime in a country that joined the International Monetary Fund in 2020.