Fronting Land

Fronting Land.

It seems to me that there are two hot current issues relating to land in Anguilla. They are fronting land, and selling land. Let us look at them one by one.

The first issue, fronting land, arises out of the increasing number of stories that are being brought to me about two particular lawyers who are assisting foreigners with fronting. The deal often works this way. A foreigner comes to the lawyer and says he wants advice and assistance in buying a piece of land. He has agreed a price with the owner. What is the tax? The lawyer says he knows a way it can be done with a big saving in government taxes. The client says he is interested. The lawyer then tells the client the way to do it is to let the lawyer form a company for the client. The lawyer and one or two of his friends will be the shareholders and directors of the company. They promise to carry out the instructions of the client. The client will pay for the land, but the land will be put in the company’s name. That way, the client will be saved the heavy Aliens Landholding Licence tax. The client asks if the lawyer is sure that this is legal. The lawyer promises the client that it is completely legal. The client is delighted that the Anguilla government is so stupid. He goes along with the scheme.

Of course it is not legal. It is a sham transaction. It is a fraud on the revenue of Anguilla. The court will strike it down in a moment if a case was brought. Any case brought by the Attorney General for the forfeiture of such land to the government will inevitably succeed. Any lawyer doing this type of transaction deserves to be locked up. That is the penalty for this offence provided by the law. The law office secretary or other person acting as trustee will go to jail as well as pay a heavy fine.

Not least of the client’s problems is that when the client dies, the lawyer and his friends will more likely than not cheat the client’s estate out of the property. If the lawyer is a crook, there is no saying what he will not do. Especially if he thinks he can get away with it.

It is not as if there is no way for government to solve the problem and stop this fraud. It is amazing to me that government ministers sit and gape at the problem and act as if they are helpless. There are several obvious steps government should be taking.

First, government has to go on the media and say that they will not allow it. They will severely punish any Anguillian or foreigner using this stratagem to get around the tax and the regulations. No Anguillian or, even more so, no foreigner, wants to be in conflict with the government. Foreigners are particularly sensitive. Such an announcement will result in quite a few coming clean. It is not as if this is an expensive or difficult step to take.

Second, we need government to go on the media and announce that any foreigner found holding land in this way will be declared “persona non grata”. They will be declared a prohibited immigrant and refused permission to visit the island ever again. That will put the fear of God into them and result in even the cockroaches among them coming clean. The truth is most of them are not cockroaches. They have simply been misled by the bad legal advice they got. Best of all, this step does not cost government one dime.

Third, we need government to announce on the media that any foreigner using this mechanism will be proceeded against in court, and their lands taken away and forfeited. They might be given a grace period to come clean and pay all their taxes and obtain their licence. This will squeeze the last of the probably unwitting fraudsters out of the background. And, Radio Anguilla is free of cost for ministers to use.

To really ensure this fraud comes to an end, we need a small amendment to the law. The Act which calls for foreigners to be licensed and to pay a tax needs to have a small section added. This will call for the directors of every company owning land in Anguilla to file an affidavit in the Registry of Companies every year stating on oath that no foreigner holds any interest of any kind in the land owned by the company or in the shares of the company, except such that is revealed in the affidavit. There will be a heavy penalty for not filing the annual affidavit in time. That is not all. No Anguillian wants to go to jail for ten years for swearing a false affidavit. The Anguillians who are fronting will quickly refuse to hold the shares in trust any longer. This will result in the last of the rats coming out of their holes.

Finally, government has to call on the Bar Association to back up its initiative to bring an end to fronting by members of the legal profession. The majority of lawyers would welcome this. A couple of seminars by appropriate persons from the Attorney-General's Chambers, on the consequences likely to flow from their discovering any lawyer engaging in this activity, will be bound to have a salutory effect.

So long as government continues to turn a blind eye to this type of wrong-doing it will continue to flourish.