An investigation conducted by Dutch news outlet Follow the Money (FTM) has revealed that Dutch legal structures known as STAKs (short for stichting administratiekantoor) are being exploited by criminals and oligarchs to hide their wealth and evade taxes.
Over the past two decades, trust office foundations, or STAKs, have gained popularity among financial service providers worldwide. These structures only disclose the names of company directors, effectively concealing the true stakeholders and their assets.
According to FTM, there are currently an estimated 21,000 STAKs registered in the Netherlands. To identify more than 50 of these secretive entities used in international corporate structures, FTM utilized data from the Pandora Papers leak, which comprised nearly 12 million documents sourced from 14 offshore services firms.
While the precise purpose of these STAKs and the beneficiaries they may conceal is not always clear, experts interviewed in the investigation expressed concerns about the potential for 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’s analysis of Pandora Papers data linked several STAKs to previously unknown stakeholders who were wealthy beneficiaries. These included two former Russian bankers accused of money laundering, a Colombian art connoisseur who operates a charitable foundation, and a Kazakh mining mogul whose multi-billion-dollar company faced investigation by the UK Serious Fraud Office for suspected fraud, bribery, and corruption in Africa.
The investigation into STAKs is the latest in a series based on the Pandora Papers, which exposed how wealthy individuals, including government officials, celebrities, and criminals, use underground economies to hide their wealth and evade oversight.
FTM also shed light on the role of global asset managers in the proliferation of STAKs. Originally designed to safeguard the assets of Dutch families and corporations, these structures have seen increased use over the last two decades. At a conference in London, lawyers promoted the use of Dutch legal structures for asset protection, describing them as “stable, safe, discrete”. These structures are largely exempt from scrutiny by authorities.
STAKs hold assets on behalf of a company’s beneficiaries, with only the STAK’s director required to be registered with authorities. There is no obligation to file annual account statements, creating a veil of secrecy around the company’s activities.
Critics of the growing use of STAKs by international corporations find the trend troubling. Some experts argue that notaries, who play a pivotal role in creating these foundations, should apply greater scrutiny to prevent misuse, such as tax evasion or money laundering. However, completely preventing the creation of dubious STAKs is deemed impossible.
Despite potential safeguards, STAKs remain a challenging area to regulate, and as one expert noted, it’s a constant “cat-and-mouse game” as individuals continue to seek ways to exploit legal loopholes in the system.
