For decades, the U.S. government has condemned prominent offshore tax havens, where liberal rules and guarantees of discretion have drawn oligarchs, business tycoons and politicians.
But a cache of more than 11.9 million secret documents obtained by the International Consortium of Investigative Journalists and shared with The Washington Post and other media outlets around the globe found that some of the most sought-after tax havens are now in the United States — and that the expanding U.S. trust industry is becoming a repository for some fortunes linked to individuals or companies that have been accused of worker exploitation and other human rights abuses.
In South Dakota, shares of a Dominican sugar company are being sheltered, part of a $14 million portfolio connected to family members of its onetime president.
The growing American trust industry promises levels of protection and secrecy that rival or surpass those offered by overseas havens. Its expansion has been enabled by a handful of state legislatures seeking an economic boost.
Among those who set up trusts in the United States were family members of the former chief executive of the largest sugar producer in the Dominican Republic.
This company — Central Romana — produces the sugar that Americans put in their coffee every morning and use to bake their birthday cakes.
For years, Central Romana and other sugar producers in the Dominican Republic have faced allegations that they pay their workers substandard wages and force them to work in unsafe conditions. The company has denied mistreating its workers.
By 1974, when Carlos Morales Troncoso became president of operations for Central Romana, then known as Gulf and Western Industries, allegations of evictions and human rights abuses had mounted for decades.
Morales would go on to become vice president of the Dominican Republic and later the ambassador to the United States before his death in 2014. His wealth — including shares of Central Romana — now sits in trusts set up by his family in Sioux Falls, S.D., in 2019.
Through an attorney, Morales’s four daughters, who are dual U.S. citizens, declined to answer questions about why the trusts were established in South Dakota. They said they were never involved in the operations of Central Romana.
Workers for Central Romana say they earn around $125 a month cutting sugar cane, well below the country’s average monthly salary of $777, according to the latest figures from the Central Bank of the Dominican Republic. Most are migrants from Haiti, and few have the rights of full citizenship. Their status in the country is tenuous, and their lives precarious.
Cutting sugar cane is perilous work, done in the middle of the Dominican summer, when the heat index can reach 110 degrees. The leaves of the plant are sharp enough to draw blood, and the slip of a machete can lead to permanent injury. Despite the dangers, workers say they are unsupervised and that quality medical care is hard to come by.
Morales amassed millions in personal wealth, some from shares earned from Central Romana’s sugar production. In 2019, members of his family finalized the transfer of several trusts with assets worth $14 million from the Bahamas to a trust company in Sioux Falls.
The trusts were opened at Trident Trust, a global provider that opened its Sioux Falls office in 2014. Trident said it is committed to complying with all applicable regulations and routinely cooperates with authorities. The company declined to answer questions about its clients.
There is no evidence in the leaked documents that any of the trusts established by Morales’s family shelter criminal proceeds.
In a written statement, Central Romana said, “Like any socially responsible company, we strive to advance each year and continue to invest in all of our processes, including health and industrial safety, labor aspects, environmental compliances and social responsibility programs.”
It’s not just workers who have accused Central Romana of wrongdoing. The company has been blamed for a pattern of forced evictions — periodically driving people from their homes and seizing the land for sugar cultivation. In 2016, they evicted families who had built makeshift houses on land that sits right up alongside the sugar cane plantations.
Last year, families who allege they were illegally evicted from their homes in the middle of the night sued Central Romana in federal court in Florida.
The 2016 evictions took place in one of the many informal settlements scattered across the Dominican Republic, where land rights are unclear or disputed. The homes in these communities often lack electricity or running water, but some have stood for decades.
Central Romana denied wrongdoing and accused the families of squatting on company land. “Our company would not and has never engaged in the eviction of people that have the right to live on or legally own the land they possess,” the company said.
Advocates say the houses were built on a service road that had not been used in more than a half-century, the land had no clear owner and that the forced evictions — no matter who owns the property — breached widely accepted international human rights standards.
The lawsuit on behalf of the evicted families was recently dismissed. Their lawyer, Robert Vance, has appealed.
After the evictions, experts for the United Nations appealed to the government of the Dominican Republic to help the evicted families. In 2018, Maria Magdalena Alvarez spoke at a U.N. conference in Geneva.