The Future of Shell Companies

During the forty-year tenure of her father as president of Angola, Isabel dos Santos has amassed a multi billion dollar fortune, having business interests in major companies within Portugal and Angola. Within the companies where she holds a controlling interest, shell companies registered in the Netherlands were used to embezzle and launder money. Yet now that the Dutch central bank has increased supervision on shell companies and corporate service providers, light is shed on other issues concerning corruption in Angola and the CSP sector.

At 40 Dos Santos is Africa’s only female billionaire, and also the continent’s youngest. She has quickly and systematically garnered significant stakes in Angola’s strategic industries, namely banking, cement, diamonds and telecom. This resulted in making her the most influential business person in her homeland. Over half of her wealth is invested in publicly traded Portuguese companies, besides Angola being a former colony of Portugal until 1975 and still maintaining close relations, this also increases her international credibility. Sadly, her story is no different than in any other resource rich country around the world, her wealth was built either by taking a piece of the action from companies that wanted to do business in Angola, or by decree of her father.

Because of the Luanda papers and a severe article published by Forbes in 2013, the Dos Santos family has come under a lot of scrutiny in the past years, eventually resulting in the chief prosecutor of Angola seizing over a billion in assets from Dos Santos and her husband, due to unpaid debts to Angolan state-owned companies. Moreover, her half-brother has been taken into custody due to possible embezzlement of state funds. The Portuguese government has also started an investigation into the Eurobic bank, where Dos Santos is a major shareholder. During her prosecution most companies where Dos Santos is major shareholder have left shell companies within the Netherlands, along with a significant amount of other dubious companies.

This trend has strengthened the past couple of years because of light being shed on corrupt business activities concerning ING, Dutch trade credit insurance company Atradius and some major Accountancy firms. Since legislation and supervision has tightened around corporate service providers and shell companies within the Netherlands, a majority of these companies have either ceased or taken their business elsewhere, yet an increasing portion is hopping over to an alternative which still grants the opportunity to enjoy the Dutch fiscal laws, flex offices. Since flex offices are not yet targeted by the Dutch central bank, shell companies and CSP’s are now being replaced by a flex office near Schiphol with a single appointed director.

While most legislature concerning shell companies and CSP’s are harmonized among countries globally, flex companies are still young and it’s a fresh concept that hasn’t come under any scrutiny thus far. It is only a matter of time until the governments eye is set on this new sector, but until that time it looks like dubious business activities can go on.