It’s been a big week in the World of finance with the leak of data from International tax law firm Mossack Fonseca. The scope and criminal activity behind this has enraged the World.
What does this have to do with World Sailing?
If you’ve been following this blog, you will know that I have raised concerns about the use of tax havens and shell companies by World Sailing. For the past few months, with the help of a reporter friend, I have been investigating the role of Simon Kelly, Company Secretary of World Sailing in the questionable finances of our sport’s governing body.
Simon Kelly – Company Secretary of World Sailing
Is it a coincidence that the head office of World Sailing is less than 100m from the Isle of Man office of Mossack Fonseca and many other specialist asset hiding firms? Is it also a coincidence that Simon Kelly works in the same grubby industry as Mossack Fonseca?
Update: Within 24 hrs of this post being published, World Sailing has removed all references to it’s Isle of Man head office from their website.
Who is Simon Kelly?
Simon Kelly is not only the Company Secretary of World Sailing, he is also the Managing Director of Dixcart Isle of Man. Dixcart is a specialist asset visibility consulting firm and a major client of Mossack Fonseca. Prior to being appointed company secretary he had been consulting to ISAF World Sailing for over a decade.
What does Dixcart do?
Dixcart hides funds for clients through a number of methods including:
- Creation of shell companies and accounts in tax havens
- Asset ownership and registration manipulation
- Cryptocurrency
The creation of shell companies in tax havens is nothing new and most government agencies have the capability to track assets in most tax havens. Unfortunately governments do not have the resources or capability to track complex corporate structures like those set up set up by companies like Mossack Fonseca.
Most asset visibility reduction programs use multiple methods to create a barrier to investigation. A very effective method is the use of luxury assets such as vessels and aircraft registered in tax havens under third party ownership. Unlike bank accounts they are extremely difficult to track from a financial perspective and can create a brick wall to investigative efforts.
The latest technique is the use of cryptocurrency such as Bitcoin. Bitcoin has taken the World by storm and unfortunately the criminal World also. Bitcoin transactions are tracked through the use of a blockchain that attaches the unique identifier of the Bitcoin purchaser during transactions. Unfortunately the blockchain can be manipulated through the use of staged transactions to make the blockchain completely useless for an investigator. Once cleaned, these Bitcoins can be converted to cash. Bitcoin transactions like these create a problem for investigators and generally make it extremely difficult for any investigator.
Dixcart is not, by any means, a small player in the World of money laundering. One of Dixcart’s most high profile cases was the Kallakis property scam. Allied Irish Banks (AIB) was defrauded £850 million to fund a bogus property developer (Kallakis). This developer defaulted on payments. In 2007 AIB transferred the debt through Green Property to a shell company (Kish) created by Simon Kelly’s Dixcart. This enabled AIB to report a minor loss from the scam to shareholders. Effectively the debt and risk were still there but moved on paper from Kallakis to the various Kish shell companies. The shell companies were also used as a vehicle for tenants to record inflated expenses to Kish. A win-win situation. Due to the invisible nature of the Kish shell companies with fake officeholders, this was impossible to track.
The same scam was conducted with Anglo Irish Bank. In 2007 after a management buyout, all Anglo Irish accounts were transferred through Dixcart and on to shell companies. This enabled defaulted loans to be hidden from view. Unfortunately by the time the debts became apparent it was too late. Anglo Irish Bank collapsed and the Irish government were forced to take over the bank.
Bank of Ireland (BOI) also transferred defaulted loans through Dixcart in 2007. Again, the same scam with the same end result. In 2009 a €7 billion rescue package from the Irish government was required to save the bank. The rescue package was not successful and in 2014, regulation of BOI was transferred to the European Central Bank. Unbelievably, Dixcart is now managing the administration of unclaimed balances from Bank of Ireland accounts.
The hiding of debt by the major banks of Ireland resulted in financial disaster and almost bankrupted a nation. The residents of Ireland and the thousands of Mum and Dad creditors suffered dearly as a result. In contrast Dixcart profited greatly.
The Anglo Irish, AIB and BOI scams all involved a shell company Pencaster. This is the same company that is sole shareholder of World Sailing Events.
Corruption of World Sailing through Dixcart and Mossack Fonseca
Use of Mossack Fonseca Shell Companies to hide Event Revenue
Revenue from major sailing events, including secret government payments, is paid to the World Sailing Events company. What very few people realise , other than those in the World Sailing inner circle, is that the sole shareholder of this company is in fact Simon Kelly’s company, Dixcart Isle of Man.
Numerous shell companies have been created by Mossack Fonseca for Dixcart. Many other shell companies on the Mossack Fonseca database have Dixcart offices listed as the registered address. My investigation so far does implicate individuals connected with World Sailing with the shell companies. The purpose of these companies is clearly to hide funds from government authorities. The funds passing through these shell companies is alarming.
Dixcart uses Commonwealth Trust Limited (CTL), a company that provides services predominantly to Russian organised crime syndicates to create shell companies with fake officeholders provided by CTL. Companies created by CTL completely hide the real directors through the use of Mossack Fonseca created bearer bonds over the securities. World Sailing events use CTL shell companies to hide event revenue. The true directors of the CTL shell companies are found in the Mossack Fonseca documents. This includes individuals linked to World Sailing Isle of Man.
Dixcart also uses Portcullis Trustnet to create shell companies in the Cook Islands tax haven. This allows Dixcart, through the less stringent registration requirements, to use fake names (over fifty names) including names of deceased people as officeholders of the companies. Considering that Dixcart is already located in the tax haven of Isle of Man the purpose of these shell companies is more than just tax avoidance. The true directors of these shell companies are also found in the Mossack Fonseca documents and have links to World Sailing Isle of Man.
The future of World Sailing?
Many of us that were aware of Kelly’s history were hoping for more to be revealed from the Mitchell v ISAF World Sailing case in the Federal District Court of California involving the last America’s Cup regatta. In particular the alleged multi million dollar payment by Oracle to World Sailing to settle the cheating charges and allow Oracle to continue racing. It was although revealed that the World Sailing jury chairman David Tillet had proposed a $5 million fine and stated that this amount was not adequate. Sailor Matt Mitchell was subsequently singled out as the scapegoat for the cheating. His team went silent and suffered from selective amnesia when questioned. Mitchell, with his career destroyed, has been trying to clear his name ever since.
Companies like Dixcart and Mossack Fonseca fuel greed and corruption at the expense of hardworking honest people. Our sport’s governing body should not have any association with Dixcart. Why does World Sailing have to use shell companies in tax havens? What is the purpose and, what is the benefit for the sport?
The questionable financial activities of World Sailing will harm the sport permanently. Unaccounted funds paid by governments to World Sailing and it’s connected entities amounts in the millions. The highly secretive contracts entered into with governments destroys transparency. The International Olympic Committee is already concerned about the bad press from World Sailing and will seek to distance itself if this increases. We have already seen the exit of sailing from the paralympics. The stakes are high and we may see sailing removed from the Games in the future if World Sailing doesn’t clean up it’s act.
Stay tuned as I release further information on the details of World Sailing’s financial activities and those involved.
To report tax evasion please go to:
UK: HM Revenue and Customs (HMRC)
International: Tax Squeal
Update:
My purpose for starting this blog was to act on information I received from credible sources concerning the hiding of funds from the sport of sailing in shell companies created in tax havens. The lack of data on these shell companies made it impossible to prove the allegations beyond reasonable doubt. As a result no interest was taken by the press. The Mossack Fonseca data recently released has provided clear evidence in support of these allegations.
With the help of a journalist with access to the full Mossack Fonseca dataset the mechanics of the corruption became clearer. It is deeply saddening that this wonderful sport and it’s hard working volunteers should be taken advantage of in such a way by the actions of those we trust and, the International Olympic Committee trust, to govern our sport.
The information found has been passed on and is now being investigated further by the journalist. A small subset of the Mossack Fonseca information (about 150MB of the 2.6TB of data) is located at https://offshoreleaks.icij.org/ for those that are interested. This dataset does not show the actual Mossack Fonseca clients behind the corruption but it does show the shell companies, many of which people that have worked for International regattas will recognise.
If you would like to understand further about the details of the corruption between World Sailing, Dixcart and Mossack Fonseca you can read the blog posts below. Please make sure you share to facebook to spread the word.
If anyone has further information please do not email me. Please send your information to ICIJ Reporting page
I hope that future generations of our great sport do not suffer the consequences of these corrupt individuals.
World Sailing Corruption 
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