Dutch Trust Office Foundations: A Favored Hideaway for Global Oligarchs and Money Launderers, New Investigation Reveals

The Netherlands has unwittingly become a popular haven for oligarchs and money launderers to conceal their wealth and evade taxes, according to a new investigation by Dutch independent journalism platform Follow the Money (FTM). This article exposes the use of Trust Office Foundations (STAKs) in the Netherlands and the potential misuse of these structures.

The Rise of Dutch Trust Office Foundations (STAKs)

Financial service providers worldwide have promoted the use of Trust Office Foundations (STAKs) in the Netherlands over the last two decades. STAKs, short for stichting administratiekantoor, only reveal the names of company directors, keeping actual stakeholders and their assets hidden. The Netherlands now hosts over 21,000 registered STAKs.

FTM utilized the ICIJ’s Pandora Papers leak, which contains nearly 12 million documents sourced from 14 offshore services firms, to expose over 50 secretive entities part of intricate international corporate structures.

Alleged Misuse of Dutch STAKs

While FTM cannot confirm the exact purpose of these STAKs and the people they shield, experts warn against the potential misuse. Gerard van Solinge, a business law professor at Radboud University Nijmegen and a lawyer at Allen & Overy, described the Dutch STAK as a “kind of export product.”

FTM connected several STAKs to previously unknown stakeholders, including:

1. Andrei Melzhanov and Valeriya Boyarshina, alleged Russian money launderers
2. Juan David Ocampo, a Colombian art connoisseur, and his charity foundation
3. Azamat Kulibayev, a Kazakh mining mogul, and his multi-billion-dollar company under investigation for suspected fraud, bribery, and corruption in Africa

Cases of Misuse: Lukratief Investing

A Dutch STAK based in Amsterdam, Lukratief Investing, saw around €35 million (approximately $42.5 million at the time) transferred in 2010. The funds reportedly came from two offshore companies owned by former Russian bankers Alexander Ostrovskiy and Kirill Yuroskiy.

The former directors of the Russian Bank of Settlements and Savings in Moscow had their banking license revoked in 2015 due to repeated violations of anti-money laundering rules. The Dutch notary appointed a Cyprus-based corporate service provider, Anna Ioannou, as a ‘straw man’ director, obscuring the control of Ostrovskiy and Yuroskiy over the STAK’s shares.

Role of Global Asset Managers

Initially intended to protect the assets of Dutch families and corporations, global asset managers have played a role in the proliferation of STAKs. At the Annual International Private Client Conference in a luxurious London hotel, speakers from law firms pitched the latest legal and tax tools for safeguarding wealth to affluent clients. These structures were described as “stable, safe, discrete,” with minimal scrutiny from regulatory bodies.

Preventing Misuse: The Role of Notaries and Regulations

Christiaan Stokkermans, a business law professor, and former notary, revealed receiving several requests from international clients with questionable intentions to establish STAKs. Notaries play a crucial role in creating these foundations, and Stokkermans argues for increased scrutiny to prevent misuse.

However, he admits it’s impossible to stop their creation entirely. Lawyer Maaike Steegmans, who explored the subject in her Ph.D. thesis at the University of Utrecht, discovered numerous STAK articles of association not appropriately tailored by notaries.

Despite criticism, FTM emphasizes the importance of the Dutch Management and Supervision Act of 2021. This legislation empowers foundation shareholders to remove negligent directors if necessary.

Conclusion

“You will always see that certain people keep looking for loopholes in the law,” commented Christiaan Stokkermans. The creation and misuse of Dutch STAKs represent a cat-and-mouse game between those seeking to hide their assets and law enforcement agencies attempting to prevent nefarious activities.

For more information, read the full article at Follow the Money.