How Mitt Romney Set Up Offshore Shell Corporations & Bank Accounts and Paid No Taxes

Setting up an offshore corporation is not difficult, nor is it expensive.

For $650. you can set up an offshore corporation in Belize or the Seychelles Islands or the Cayman Islands, among many other places. And, for a slight additional charge, it can be linked to a bank account in a jurisdiction which is absolutely tax free and completely confidential — in other words, a tax haven. Furthermore, the shell company can be in one offshore jurisdiction and the bank account in another making any transactions even more difficult to track. These corporations and bank accounts are guaranteed absolute confidentiality. No one can obtain any information about them including the US government. It’s even against the law to inquire about these shell corporations in the Cayman Islands. You could get jail time!

For this reason, offshore companies and bank accounts are proliferating. As is well known, Mitt Romney and Bain Capital have partaken of these completely legal schemes to hide money and have it grow tax free. They’ve set up hundreds of these corporations and bank accounts. At $650 a pop, they are ridiculously cheap for the average multimillionaire. All you have to do is google “offshore company registration” and you will come up with thousands of companies who can assist you in this process. Setting up the offshore corporation can be done in 24 hours, and the only documentation required is a scanned notarized passport and a utility bill — all sent by email.

There is a Bermuda-based entity called Sankaty High Yield Asset Investors, Ltd., which has been described in securities filings as “a Bermuda corporation wholly owned by W. Mitt Romney.”  He set it up in 1997, then transferred it to his wife’s blind trust  before he was inaugurated as Massachusetts’ governor. The director and president of this entity is R. Bradford Malt, Romney’s personal lawyer. However, Romney could have gotten by without listing anyone he knew as director.

Companies that help set up offshore corporations also provide — for an extra $600 or so — what are called “nominee services.” They will provide you with a Board of Directors and shareholders as well, if you choose. That way anyone who possibly might snoop would find out nothing about the actual owners and Board. A private side agreement guarantees that the person or corporation that set things up remains firmly in control.

Sankaty was part of a number of similarly named hedge funds run by Bain Capital. The offshore company was used in Bain’s $1 billion takeover of Domino’s Pizza more than a decade ago. Since Sankaty is based in Bermuda, a tax-free jurisdiction, it would pay no income or capital gains taxes if Domino’s were to be later sold at a profit. The use of offshore companies such as Sankaty is allowed under U.S. tax laws. They are typically set up as shell corporations by private equity and hedge funds to route investments from large foreign and institutional investors, such as large pension plans, into corporate takeovers. The investors gain U.S. tax advantages by passing their funds through the offshore “blocker” corporations, avoiding a high 35 percent tax since the IRS considers the earnings to be “unrelated business income.” And Romney can fully exploit the “carried interest” loophole in the tax code so, if worse comes to worse, he pays no more than 15%. If Romney’s offshore corporation makes a profit in a tax-free jurisdiction such as Bermuda, he pays no taxes — zero, zilch.

Romney failed to list Sankaty High Yield on several financial disclosures, even though such a closely held entity would not qualify as an “excepted investment fund”. He finally included it on his 2010 tax return, the one he released. That’s the only reason we know about it. Even after examining that return, we have no idea what is in this company’s secret bank account. But it could be valuable, meaning that it is possible Romney’s wealth is even greater than previous estimates. While the Romneys’ spokespeople insist that the couple has paid all the taxes required by law, investments in tax havens such as Bermuda raise many questions, because they are in jurisdictions where there are no taxes required and absolute confidentiality agreements. Any offshore shell corporation is legally a person and has the right to set up, buy and sell other companies. They can also transfer assets from one company to another creating a labyrinthine maze of complex corporate entities, which no government could hope to unravel.

One corporation can own another and monies can be funneled between them so that any investigation by the US government to try and track monies for tax purposes becomes virtually impossible. The government would have to file suits with the governments in each different jurisdiction because that is the only possible way confidentiality can be circumvented. The companies that set up the shell corporations and bank accounts aren’t required by law to release any information — even to the US government. A full 55 pages in Romney’s 2010 return are devoted to reporting his transactions with foreign entities.

The “nominee services” offered by these companies that set up offshore corporations and bank accounts make it possible to hide any involvement by the private equity fund actually in charge. Many Belize based corporations have elected to have “Desiree” as their director. It is possible for Desiree to be the company’s sole director and also the company’s sole shareholder at the same time. How she can possibly keep up with her duties as director and shareholder of thousands of corporations is beyond me. Another service that companies such as Worldwide Incorporation Services provide is what are known as “shelf companies.” These are companies that have been set up years ago just waiting for someone to come along and claim them, someone who needs the gravitas of a corporation that has been around for years. You have your choice of many names to choose from such as Technologic or Advantacorp among many others.

Romney still has a financial interest in Bain Capital and still receives income from it—recently he revealed more than $2 million in new Bain income. The firm today has at least 138 offshore corporations organized in the Cayman Islands, and Romney himself has personal interests in at least 12 that are worth as much as $30 million.  All of these firms have absolute confidentiality agreements. No wonder he doesn’t want to make his tax returns public. It would ruin everything he’s so painstakingly set up. The Romney campaign insists he saves nothing on his taxes by using offshore shell corporations and tax havens, but there is no way to check this. And the real question is not whether he is cheating on taxes, but how much money is he saving by using legal tax loopholes that allow him to use shell corporations in tax free jurisdictions such as the Cayman Islands to conduct his business.

Although Romney made a fool of himself on his recent foreign policy swing through Great Britain and Israel with numerous gaffes, he has a much worse reputation in a country he purposefully left off his itinerary: Italy. That’s because Bain Capital under Romney as chief executive officer, made about $1 billion in a leveraged buyout 12 years ago while paying zero taxes to a country deeply in debt and badly in need of tax revenue. Bain had one of its shell companies based in Luxembourg buy a telephone directory company from the Italian government. Since the shell company controlled by Bain and Romney was in Luxembourg, a no-tax jurisdiction, Romney made a fortune while burning Italian tax payers. But this was all perfectly legal. Romney himself earned as much as $60 million from the Italian directory sale of Seat Pagine Gialle S.p.A. The deal turned into one of the biggest windfalls of his career. Like most of Romney’s deals, he became wealthy at the expense of someone else. No real wealth was ever created. It was just transferred from someone less sophisticated to Romney who exploited every loophole in international law.

According to

“Mitt Romney and Bain played the role of successful financial speculators at the peril of the Italian government and the small stock-market investors who were burned by the sharp decline in Seat (PG) shares,” said Giovanni Pons, a journalist for la Repubblica and co-author of “L’Affare Telecom” (2002), which recounts details of the Bain deal.

The use of offshore subsidiaries to avoid taxes has been standard practice for private equity firms such as Bain, as well as other big U.S. companies such as Google Inc., Facebook Inc. and Cisco Systems Inc.

Bain sold the company back to Telecom Italia in a deal which has been called “the beginning of the destruction of Italian industry” since Telecom Italia’s share value eventually declined 90%. Telecom Italia then sold the yellow pages directory to another group of private equity firms. Bain moved the profits from the sale of Seat Pagine Gialle through a number of shell companies in Luxembourg with the result that the profits were repatriated to the US tax free. That is a trick that not even the large tech companies like Qualcomm and Microsoft are able to do. Those companies are begging the US for a tax holiday so they can repatriate billions in profits, which would normally be taxed at 25%, now sitting in foreign banks.

All in all, thousands of US corporations — not just Bain — have set up thousands of offshore shell companies linked to offshore bank accounts. There are thousands of offshore companies willing and able to assist them in this process requiring nothing more than a copy of a scanned notarized passport and a utility bill. The whole process can be done with one phone call and a couple of emails, and can be completed in as little as 24 hours for a cost of around $600. The companies assure their customers of “absolute confidentiality” and apologize for asking for the notarized passport as required by international law. There are some countries, however, that do not require even that. The country with the lowest standards for setting up a shell corporation, even lower than Somalia, is … guess who … the United States!

Planet Money host Chana Joffe-Walt set up a Delaware corporation called Delawho? for a nominal fee. They only required the name of the director, the name of the corporation and the address where she wanted the documents to be sent. No notarized passport or nothing! 

References: Planet Money How to Set Up an Offshore Company Romney Persona Non Grata in Italy for Bain’s Deal Skirting Taxes                

Vanity Fair Investigating Mitt Romney Offshore Accounts


John Lawrence

John Lawrence graduated from Georgia Tech, Stanford and University of California at San Diego. While at UCSD, he was one of the original writer/workers on the San Diego Free Press in the late 1960s. He founded the San Diego Jazz Society in 1984 which had grants from the San Diego Commission for Arts and Culture and presented both local and nationally known jazz artists. His website is Social Choice and Beyond which exemplifies his interest in Economic Democracy. His book is East West Synthesis. He also blogs at Will Blog For Food. He can be reached at


  1. avatarAnna Daniels says

    John- since Romney refuses to show the American people his taxes, perhaps you could provide more insight on other aspects of the one tax return for 2010 and the estimate for 2011.
    I would really like to know how the Romney dressage horse Rafalca could be accepted by the IRS as a legitimate business (worth a $77,ooo loss on the taxes.) The horse, by all accounts I have seen is Mrs. Romney’s hobby and also a helpful therapy that lessens the effects of her health problems. How does that translate into a losing business enterprise?

  2. avatarEarl Richards says

    Big Oil, Wall Street and the GOP are a bunch of morally, bankrupt jerks. Romney is already oil-bought. Romney/Ryan will be worse than Bush/Chenet.

  3. avatarMike1776 says

    Romney should release his tax returns in full, as other Presidential candidates do — and as President Obama already has.

    Romney obviously has something significant to hide, or maybe more than one significant thing to hide. Maybe it’s the way he devised tax write-offs for himself from the American companies he looted and destroyed (along with their employees’ jobs and retirement funds) at Bain. Maybe he had illegally hidden money in offshore accounts and not paid tax on them; then used the IRS 2009 amnesty to get off the hook for it. Maybe what he’s hiding is his real address in some of the before 2008 — which could nail him for voter registration cheating in Massachusetts.

    So far Romney has not fully revealed even one year’s tax return. For 2010, for which he claims to have disclosed his tax return, in fact the critical forms FBAR and 990-T (dealing with money in offshore accounts and tax shelters) are conveniently missing !!!

    Who in their right mind would vote for a Presidential candidate who did not reveal his tax returns in full?? Otherwise, how could you would know whether or not he’s a sleazy tax cheat? That’s why other Presidential candidates (like Romney’s father George) have fully revealed 10 years of tax returns or more.

    Only one thing is certain abut all this mess — the strong suspicion that Romney is a sleazy tax cheat as well as a financial predator will remain as long as he refuses to release his tax returns in full

  4. avatar says

    Romney does not want the American people to know that he received money from companies he owned that later went bankrupt. He also does not want them to know about all the money that was moved offshore so that he could legally avoid paying taxes. The way you do that is to have the offshore shell company own American companies that Bain later flipped and made a profit on. That money is not legally taxable because it was made in a tax free jurisdiction like the Cayman Islands and not technically by an American company. By moving ownership of various companies Bain took over offshore, the profits were not taxed when Romney and Bain flipped the company after loading it up with debt. Romney’s biggest trip was to have a company Bain took over borrow as much money as it could solely for the purpose of paying Romney a huge dividend. When Ann Romney says that her husband paid all the taxes that he was legally obligated to pay, she doesn’t mention the fact that he deliberately moved money into shell corporations offshore for the sole purpose of avoiding paying US taxes.

  5. avatar says

    Anna, Ann Romney’s horse qualifies for a $77,000. tax loss? How is this possible? The fact is that the US tax code is so screwed up in favor of the rich that such things are possible. How is it that 26 U.S. corporations last year gave their CEO more than they paid in taxes to Uncle Sam. (Ref:

    The simple reason is that the government tax code has been taken over by the rich. Their lobbyists write the rules. The little guy has been screwed for years. For example, starting with Reagan and Greenspan, income tax for the rich has been reduced while social security tax for the poor has been increased. The tax burden has been transferred from income tax to social security tax. A self-employed small operator pays both the employer’s and the employee’s share which is around 15%, more than Romney even admits to paying.

    Even in retirement, a senior working part time will pay the full 15% in social security taxes even when he or she is collecting social security!! There are no deductions and no exemptions on the FICA tax.

    Please see “How Republican Presidents Lowered Taxes on the Rich and Raised Taxes on the Poor and Middle Class – Part 1, the Reagan Years”