Within the framework of this reflection around Tax Justice State capture, Latindadd and CDES have begun a series of notes around political power and offshore wealth. In this case, we scrutinised the candidates for presidency of Ecuador, due to the fact that there is a prohibition on people linked to offshore accounts that can apply for candidacy according to Ecuadorian law. On first revision and taking onboard investigative journalism from an Argentinean newspaper Page 12 from 2017, as well as some new data, we remind our readers of the politician Guillermo Lasso and a network of tax havens. Lasso is candidate for the right wing coalition Political Movement Creating Opportunities (CREO, acronym in Spanish) and the Social Christian Party (PSC).
According to the information available from the press, Guillermo Lasso´s economic group has a record of capital movement since 1978, with the constitution of the company Saranac S.A. in Panama, whose directors are Guillermo Lasso, Maria Eugenia Lasso de Carrera (his sister) and Danilo Carrera (his brother in law). Since then, the increase of company capital of the group grew, together with his companies located in offshore jurisdictions.
The connection of Lasso with companies located in tax havens could be considered a hinderence for participation in the presidential race for presidency of Ecuador. Just as the Argentine newspaper Página 12 reported in its articles “Lasso, el magnate de las offshore” (Lasso, the offshore magnate) and “Las mamushkas financieras de Lasso” (the financial babushkas of Lasso, both of March 2017) the CREO candidate is connected to the creation of at least 49 offshore companies (between 1999 and 2002) which allowed him to speculate during the banking holiday* of 1999, increasing his fortune from 1 million dollars (declared) to 31 million dollars. This press report based its information in public registries in the same tax havens and from filtered threads in the Panama Papers.
Specifically, according to the first report, the company that multiplied its capital in such a way, was Andean Investment Ltd (located in Cayman Islands) currently main shareholder of Guayaquil Bank through Corporación Multi BG S.A.
According to the investigation (2011) when Lasso decided to be candidate for presidency he liquidated Andean Investment (process which lasted until 2016) transfing the property to some Ecuadorian trust funds in his name, to his children and to his sister. Two months later, Lasso again transfered those shares to companies located in another tax haven: Delaware, (U.S.A.). This operation brought as a result a series of offshore companies, such as Positano LLC, Motpellier or Berlín, behind which the identities of siblings, family, directors and former directors are hidden (behind Guayaquil Bank).
As well as the content in the reports, we have identified several operations of Guillermo Lasso that involve tax havens (…)
We have identified several operations of Guillermo Lasso that involve tax havens, including the offshore group Banisi.
Banisi Holding S.A. has its H.Q. in Panama, is a property of Guayaquil Bank and has as owner Juan Emilio Lasso Alcívar (Director and Executive President) and Santiago Lasso Alcívar (Director and President of the Board of Directors), both sons of the candidate. That is to say, although Guillermo Lasso is not the direct owner of these assets (that form part of the share packet of Guayaquil Bank) he is related to them and this practise is prohibited in the final clause of article 4 of the Organic Law of the People’s Consultation, carried out on 19th February 2017 (law without number), which mentions:
“It is presumed as property of goods or capitals in those cases in which the spouse, person with whom they have a de facto union or non-emancipated children of the liable person, are the owners of goods or capital, in accordance to that established in this article, unless there is evidence to the contrary that shows that the property of such people does not tipify evasion plots around the prohibition within this law.”
The political origins of Guillermo Lasso
Available public information indicates that in the decade of the 70´s, María Eugenia Lasso, sister of Guillermo Lasso Mendoza, married Danilo Carrera. In 1977, the spouses Carrera-Lasso, created two companies: Financiera FECREDITO in Panama and ProCredito Bank in Ecuador and they named Guillermo Lasso Mendoza (who worked as collections assitant in the Casa Moeller Shop) in the role of General Manager of ProCredito.
In 1990, after the process of acquisitions of shares by the Financiera del Sur to Guayaquil Bank; these two private entities came together to give birth to what today is Guayaquil Bank. As a result of this fusion, Danilo Carrera was elected president of the banking institution and Guillermo Lasso Mendoza, manager. This was the starting point for the economic and political ascention of Lasso.
In 1993, Guillermo Lasso took up the presidency of Guayaquil Bank and, later, named also as president of the Ecuadorian Association of Private Banks. From this role, in 1994, he promoted with the then vice president of Ecuador, Alberto Dahik, the General Law General Financial Institutions. This was the legal record that opened the doors (years later) to the banking holiday.
In 1998, Guillermo Lasso was named Governor of Guayas (Province) during the presidency of Jamil Mahuad and a year later was named Super Minister for the Economy, post that he excercised during the banking holiday.
According to an investigation by Cinthya García of Página 12, by 1999 Guillermo Lasso was associated to 49 companies addressed in tax havens. Of all of them, Andean Investements Ltd., addressed in the Cayman Islands, had an asset growth of one million dollars in 1999, to 31 million dollars in 2002.
According to a report from the El Telégrafo newspaper, the reason for this incremental asset was due to the price speculation in the values market of Deposit Certificates that proved that a person had a certain amount of money in their account, but could not withdraw it. The bankers started to speculate with the economic and social crisis and repurchased the certificates at 40 or 50 percent of their value. Later, it was the very Ecuadorian State that carried out a bank ‘bailout’ and repurchased these certificates at 100 per cent of its value, through the Corporación Financiera Nacional (National Financial Coorporation). In those years, Andean Investment grew thanks to the purchase of the certificates that the Ecuadorians had with their frozen deposits.
According to information from the CIDOB – Centro de Pensamiento Internacional , after his exit as finance minister and with the overthrow of Jamil Mahuad´s government, Lasso carried on being linked to the Mahuad administration as president of the Transit Comission of Guayas, where he stayed until the first months of the government of Gustavo Noboa Bejarano.
On the same source, in January 2003, in the government of Lucio Gutiérrez Borbúa, Lasso was offered the role of embassador for the United States within its political strategy, however, he refused this diplomatic post, but did accept being economic adviser and “itinerant embassador”. In the months that Lasso carried out this role, he led missions in Washington to prepar and accompany Gutiérrez´s visit to the White House and clear the way for the resumption of credit talks with the International Monetary Fund (FMI). It was in 2003, when at the suggestion of Lasso (the then president Lucio Gutiérrez) on his main visit to Washington he declared himself a main ally of hte USA, ratifying his support for the government of Bush.
After the fall of Gutiérrez, Guillermo Lasso, had no other roles in public posts (as indicated by CIDOB), however, during the time he excercised these public roles, he always remained as president of the Guayaquil Bank.
Then, Guillermo Lasso applied as a candidate for the presidency of the republic for the CREO movement, political organisation that he founded and that even today covers is political career.
Lasso´s Offshores
In the report by Página 12, “Las mamushkas financieras de Lasso” it is said that Banisi Holding, is an offshore company belonging to Guillermo Lasso in Panama. This company has in turn as shareholder Banisi, created in December 2015 and the trust funds: Banisi Reporti and Futurfid S.A. Banisi is a paper bank with address in Panama. Likewise Banisi, has as shareholder Pietro Overseas S.A., a smaller offshore that belongs to Guillermo Lasso in Panama.
Now, the Banisi Reporti trust fund is constituted by Banisi (offshore belonging to Lasso); by Reporti S.A (company addressed in Ecuador, created in 1996 that currently to this date has a positive balance); and by the Futurfid S.A. trust fund (created in 2000 and likewise has two shareholders: Fartupsa S.A. and a natural person). It is a trust fund, apparenty without activity since 2004.
The current and old links of the candidate Guillermo Lasso with a network of companies established in tax havens not only is worrying from point of view due of the legal breach in Ecuador but also due to the clear relationship between the political power and offshore businesses.
What is relevant in this first of Lassos offshore is that the constitution of Pietro Overseas S.A. is as consequence of a series of sales of offshore companies owned by the candidate, that are constituted, or well by trust funds in inactive state, or well by companies that have the same shareholders of the other ones. This shows a type of carousel whose objective would be to secure the trust funds capital so that they mantain Lassos money in tax havens. This is a track that must still be investigated since it is about someone who has aspirations to govern.
(*) BANKING HOLIDAY:“On 8th March 1999de 1999, a year after being electedo, president Jamil Mahuad declared a banking holiday. This was a freeze of the citizen´s savings for 24 hours: the savers could not take out their money from the banks nor carry out any transaction. This measure sought, desperately, avoid the massive withdrawal of money from the banks and protect the bank´s stability, that was totally banrupted. The Bank´s Superintendant at the time, Jorge Egas Peñafiel, gave this news to the country. In spite of the fact that Mahuad had said that “the government shall never seize anyone´s account”. That day, on national (TV) network, Egas said “we have consiered necessary to prolongue the banking holiday for one day, decreed today by the Banking Council”. Although the banking holiday was going to last for 24 hours, it was extended for a year.” (Taken from the article: Causes for the dollarisation of the Ecuadorian economy, in Spanish)
Source: Centro de Derechos Económico y Sociales – CDES (Economic and Social Rights)
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