How Bill Gates Jr. built a private company in the British Virgin Islands, then fought to keep it hidden from prosecutors

“At first it was just a company. It was just her, and just I. There wasn’t actually anything special to it,” writes entrepreneur Bill Gates Jr. in a New York Times op-ed published on…

How Bill Gates Jr. built a private company in the British Virgin Islands, then fought to keep it hidden from prosecutors

“At first it was just a company. It was just her, and just I. There wasn’t actually anything special to it,” writes entrepreneur Bill Gates Jr. in a New York Times op-ed published on Oct. 25, detailing how he built a private company in the British Virgin Islands from the ground up with what he thought was no more than just a little help from some of his oldest friends and business partners. What happened next is a story that many investors, including Gates Sr., were unaware of: The BVI was being investigated by both the United States Department of Justice and the United Kingdom’s Serious Fraud Office for suspected money laundering, kickbacks, and tax evasion. The investigation, which was intended to go public during the summer of 2017, was abruptly stalled and has since never been released by the authorities. Gates Jr. was told by his attorneys to keep the company hidden from investigators by closing it down for business, although the lawyer was ultimately unable to find a new location to stash it.

In the meantime, Gates Sr. found himself under investigation by the U.S. Internal Revenue Service over his offshore investments. He was secretly given a number of options, such as settling with the IRS and accepting settlement, or taking out a loan to pay off his fine. The latter option allowed him to avoid a personal criminal penalty, and it would have required him to pay a discounted interest rate that could be significantly lower than the standard 12.5 percent credit card interest rate for which he is already paying. The options being presented to Gates Sr. were hardly a surprise to him. “I asked Bill Sr. about these options. All of them involved offshore corporations and the associated tax write-offs,” he writes. Although Gates Sr. has not been charged with anything, his son decided to go ahead and resolve the matter before the IRS approached him personally.

As part of that effort, Gates Sr. agreed to hand over full ownership of the BVI company to Gates Jr. in a transaction that was conducted directly between the two men and the BVI Supreme Court. Gates Jr. was given 10 percent of the company for just $160,000, and all of the assets and liabilities were drawn down over a very short period of time. However, in order to keep Gates Sr.’s name off the joint corporate entity, Gates Jr. renamed it to reflect that of the son — Bill Gates III. Gates Sr. still holds a 1 percent stake in the venture.

A formal declaration to the United Kingdom Serious Fraud Office detailed the transaction, claiming Gates Sr. had no interest in the BVI company and that he had only been introduced to the lawyers involved to ensure a simple and satisfactory outcome for all parties. However, the existence of Gates Sr.’s offshore company was likely uncovered at some point during the Brexit campaign by investigative journalist The Guardian, and Canadian human rights activists were concerned that Gates Sr.’s involvement may have been part of the Canadian Prime Minister Justin Trudeau’s 2016 campaign promises to take the fight against corruption to its “most marginalized communities.” Trudeau’s office issued a statement that reads: “The Canadian government expects all political donations, including those coming from international sources, to be transparent and subject to full public disclosure. It is important to highlight the high standards Canada sets for its political donations and Trudeau personally has instructed the Office of the Conflict of Interest and Ethics Commissioner to extend their procedures to ensure that all of his senior advisers and the Prime Minister are ethical and transparent.”

Read the full story at the New York Times.

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