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Seychelles Investment Law Draws Criticism

January 02, 1996|From Washington Post

WASHINGTON — The list of countries that give the United States serious grief doesn't usually include Seychelles, a nation of 73,000 people scattered on an archipelago of remote islands in the Indian Ocean.

But the government there got Washington's attention in December when it enacted an investment law that officials here describe as a "Welcome, Criminals" act.

The law says that anyone who invests $10 million or more in Seychelles--no questions asked as to the source--is entitled to protection from extradition and from seizure of assets and to any other "concessions and incentives . . . commensurate with the investment."

U.S. officials said they regard that as an open invitation to money launderers and other criminals to set up shop there with impunity. Under the statute, they said, the Seychelles government could grant diplomatic passports and other protections to such people, shielding them from international law-enforcement agencies.

"This is a law that would have made Meyer Lansky proud," said Jonathan M. Winer, deputy assistant secretary of state in the Bureau of International Narcotics and Crime, alluding to the gangster's claim to have "bought Cuba" as a refuge.

"We do have concerns about the law," another State Department official said. "No one has yet benefited from the status granted in the law. We will watch very closely to see if people do, and what type of people. We have been assured that it is not a secret process for shady people to come in there in the dark of night."

One U.S. official, citing intelligence reports, said the first beneficiary could be a white South African "who made his fortune as a sanctions-buster" in the days of international economic sanctions against the apartheid regime there.

Officials said the United States, Britain and France have made strong protests to France Albert Rene, president of Seychelles since 1977, who under the law runs an economic development board responsible for approving proposed investment projects and negotiating the concessions to be granted to the investors.

The Seychelles foreign ministry has distributed a memo defending the act. According to this document, made available by Seychelles Ambassador to the United States Marc Marengo, the investment law "does NOT provide a haven for criminals in Seychelles nor a haven for fugitives from justice from anywhere in the world."

The economic development board to be headed by Rene "will screen any potential investor prior to any incentives or concessions granted to him/her. This will eliminate the possibility" that Seychelles would become "a haven for criminals," the memo says.

But U.S. officials said that whatever Rene's intentions, the act as adopted gives the appearance of offering shelter to unsavory characters. It offers "immunity from prosecution for all criminal proceedings whatsoever" except those committed in Seychelles.

The Seychelles diplomatic memo said this provision does not conflict with the country's obligations under extradition treaties, but U.S. officials say it does. "Domestic law always overrides extradition agreements," one said.

Tourism is the mainstay of the economy in Seychelles, a 90-island archipelago. The tourism business fell off sharply during the Persian Gulf War five years ago, and the government has been seeking to diversify the economy and entice foreign investment. The investment law is billed as a legitimate tool of that endeavor.

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