by Ian Rogers
The revelation that US former World Champion Bobby Fischer has been named in the Panama Papers is hardly a surprise – he had boasted that he hadn’t played tax since the 1970s – but the consequences of that discovery may turn out to be of interest to the Dutch and British governments.
In 2005, with Fischer unable to return to the US because of his sanctions-busting rematch against Boris Spassky in Yugoslavia during the Balkan war, Swiss bank UBS decided that they were no longer interested in holding Fischer’s millions.
Fischer had hidden his wealth with UBS for the previous 13 years, but UBS sent his cash and the liquidated value of his gold medals to the Icelandic bank Landsbanki. (Fischer had been earlier granted refuge in Iceland after being jailed in Japan and threatened with extradition to the US.)
Panamanian firm Mossack Fonseca, the legal firm whose leaked documents have shown that it regarded 95% of its clients as tax evaders, then worked with Landsbanki to set up a company in Panama, with suitably anonymous front men, to hold Fischer’s fortune.
Fischer died in 2008, the year Landsbanki collapsed in the financial crisis, leaving millions of savers in Britain and the Netherlands out of pocket.
The Icelandic government took over Landsbanki but resisted strong pressure from Holland and England to refund the lost money (which had been returned to savers by the two countries’ respective governments).
In 2013 a European court ruled that Iceland would not have to pay back any money, though if the receiver of Landsbanki found assets then England and Holland would be entitled to some.
This is where Fischer’s off-shore company becomes important.
It turns out that Mossack Fonseca dealt not with Landsbanki in Iceland but a secret off-shoot of the bank, Landsbanki Luxembourg SA.
The Fischer revelations have exposed the possibility that when Landsbanki went under in 2008, it retained assets in its secret off-shoot in Luxemburg. These are assets that Holland and England would now be hoping to sequester, if the mess that is now Landsbanki Luxembourg can be unravelled.
Soon after their parent company collapsed, Landsbanki Luxembourg also called in the receivers but what followed was hardly a textbook distribution of assets. Not only were principals of Landsbanki Luxembourg accused of acting improperly – as were those from head office in Iceland – but, as the problems spread across borders, French judges required that the liquidator answer charges of extorting money from those defrauded by the bank and, as a consequence, provide a 50m Euro bond. There were also suggestions that the liquidator’s actions amounted to money laundering, which tends to imply that Landsbanki Luxembourg had money to launder.
One Icelandic source has opined that Fischer may never have known that his money deposited in Landsbanki Iceland was moved to Luxemburg and then to Panama. (It was established in a number of cases that Landsbanki Luxembourg made investments without the clients’ knowledge and/or acceptance.)
After Fischer died, his estate was the subject of legal action between his sister’s relatives, his partner Miyoko Watai, and his daughter in the Philippines.
Once it had been established that Fischer and Watai had been legally married and that Fischer was not the biological father of the girl he regarded as his daughter, the legal action ended and Watai was entitled to inherit all Fischer’s assets.
Fischer’s Panamanian company was finally wound up in 2012. Whether the proceeds went to Watai is unknown.
Now the chess world eagerly awaits the next star to be unveiled by the Panama Papers, with FIDE President Kirsan Iljumzhinov at short odds.
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