Alfredo Volio Pérez’s agribusiness, Upala Agrícola, had a growing debt with State entities, at the same time, its offshore holding company received a capital injection of almost 20 million dollars in Panama. Six years later, a government tax amnesty exempted Upala Agrícola from paying more than 62 million colones (about US$108,000).
In 2012 Alfredo Volio Pérez presided over the National Bank of Costa Rica, the largest state-owned bank in the country with commercial operations. That same year, Upala Agrícola S. A., a pineapple company of which Volio Pérez was president and shareholder, owed 72.3 million colones (at the time, about US$140,000) the Costa Rican Social Security Fund (CCSS) in social security contributions for its workers. The company’s late payments have been recurrent, according to official records.
Upala Agrícola had also failed to pay its full income tax for 2009. However, the Directorate of Taxation was able to verify the debt several years later thanks to an audit.
In 2012, while the company could not muster the funds to pay the Costa Rican government, the company Upala Investments S.A., owner of Upala Agrícola, received a capital injection of almost US$20 million. This company, however, was beyond the control of the Costa Rican authorities, as it was an offshore company created in Panama in 2008 by the law firm Alemán, Cordero, Galindo & Lee, better known as Alcogal. In the Panamanian Upala, former minister Volio was listed as shareholder and president of the board of directors.
“The injection of capital was used in its entirety for the acquisition of another agricultural operation that expanded productive capacity to current levels”, explained Volio in a written response to this journalistic team, “and has no relation to the operating flow of the company.”
Volio is linked to another Panamanian offshore company: Northern Fields S.A., also created in 2008. According to the former minister, it was never active.
The situation of the pineapple company and its links to offshore companies were brought to light for the first time by Costa Rica Noticias Canal 13 and the Latin American Center for Investigative Journalism (CLIP), after reviewing thousands of internal documents belonging to 14 law firms specialized in managing offshore companies in Panama and other countries. The discovery was part of the Pandora Papers investigation, led by the International Consortium of Investigative Journalists (ICIJ).
An anonymous source shared with ICIJ 2.94 terabytes of confidential financial records, in separate batches over several months, totaling more than 11.9 million documents. Named the Pandora Papers, these documents, which span from 1996 to 2020, are in English, Spanish, Chinese, Greek, Russian and other languages and reveal connections to companies and businesses in more than 200 countries and territories. A collaboration of 618 journalists made it possible to investigate hundreds of them simultaneously in 117 countries.
A banking and agricultural dynasty
Volio had left the second-term administration of Óscar Arias (2006-2010) a little over a year before buying the Costa Rican company, Upala Agrícola S.A. in 2008, the same year he created his holding company, Upala Investments, in Panama. In that administration, he had held the positions of Minister of Economy and Minister of Agriculture and Livestock simultaneously.
Costa Rican Upala, which exports pineapples of the golden variety to the United States, Italy, Spain, Turkey and more recently China, has over two thousand planted hectares in the district of Yolillal, in the north of the canton of Upala in Alajuela, very close to the border with Nicaragua. In 2017, the company was ranked 12th among the country’s main agroexporting companies, with pineapple being the second largest agricultural export.
Volio, who in addition to being an agroexporter was also in the board of directors of the National Bank for 14 years, eight of them as its president (first between 1994 and 2002 and then between 2010 and 2014), belongs to a renowned Costa Rican dynasty in which politics, finance and agriculture are intertwined. His grandfather Alfredo Volio Mata had been vice-president of the country, secretary of agriculture and congressman, while his father Alfredo Volio Escalante had been in the board of directors of the National Bank of Costa Rica before him.
Businessman Volio Pérez had also been vice-president of the National Chamber of Pineapple Producers and Exporters (Canapep). As a union activist, he even left the Arias government to lead the campaign in favor of the Free Trade Agreement with the United States, which was approved after winning a referendum in October 2007, and with which the pineapple sector formalized access to the largest market in the world without paying tariffs.
He was also a donor to Arias’ campaign and comptroller of Arias Presidente S.A., the company that promoted his candidacy. Although he disassociated himself from the public sector in 2014 when he left the board of the National Bank, he has remained connected to politics: in the last presidential elections he was a member of the economic team of the evangelical candidate Fabricio Alvarado.
Delayed wellbeing
In answer to written questions from this journalistic alliance, Volio said that “the wellbeing of the almost 1,000 employees of Upala Agrícola and their families, as well as the social development of the canton of Upala have always been the company’s priorities, which is why they all have 100% social security”. He explained that, like any company, they have faced difficult times and economic crises over the years, but that “nevertheless, no employee has ever seen the payment of their salary or social security delayed”.
However, Costa Rican Social Security Fund’s (CCSS) records show repeated delayed payments of the company’s social security obligations to its workers. According to CCSS accounts, from 2015 and to date Upala Agrícola has arranged nine settlements for delayed payments ranging from 72 million colones (around US$140,000 at the moment) in 2015 to 695 millions of colones (around US$1,170,000) in August 2020. Currently, the company shows no delayed payments but it continues to pay installments for settlements from previous periods.
Volio’s company has been falling behind in other payments as well.
Upala Agrícola S. A. was in default with the payment of income tax during 2009. However, this was discovered by the Directorate of Taxation years later, when carrying out an audit of the company. A part of that debt (62.4 million colones, about 108 thousand dollars at the time) was forgiven in 2019 by the tax amnesty approved by the Legislative Assembly.
Upon inquiries from this journalistic alliance, the Directorate of Taxation said that, after the audit, the company began to pay in installments beginning in February 2017.
The Directorate of Taxation did not disclose the total amount owed by the company, but did confirm that, in the payments for the months of January and February 2019, Upala Agrícola benefited from the tax amnesty. This consisted in the exemption of interest payments to those who canceled amounts owed to the tax authorities, without the need to request it.
Upala Agrícola S.A. paid 50 million colones (about US$87,000 at the time) in five installments of 10 million colones each. At the same time, 62.4 million colones of interest were forgiven.
When asked about the debt with the Treasury, Volio contradicted the data from the tax office. “There must be some error in this information since Upala Agrícola has NEVER been a part of, much less benefited from any type of tax amnesty,” he said. “There have even been direct taxation audits and all tax records have been in perfect order and concordance with our obligations”.
When asked again about this, the businessman replied: “I insist on my previous answer; the Treasury has not condoned anything to Upala Agricola and the company is completely up to date with its tax obligations. I don’t know your source of information since through official channels they could not say something like that”.
After Volio’s second response, this team checked again with the Ministry of Finance and it confirmed its original statement: “The taxpayer claims that it did not avail itself of the amnesty because payment receipts it received showed the amount of the installments broken down between principal and interest. However, since these payments coincided with the amnesty period, the total amount was applied to the principal. That is to say, the interest was not charged”.
Opaque offshores
The links of the Volio family with offshore companies are not new either. In September 2012, Alfredo Volio Escalante (father of Volio Pérez) wrote to an employee of another Panamanian law firm, Mossack Fonseca, requesting to create a company in Panama in order pay fewer taxes, as revealed by Univision News in 2016 in relation to ICIJ’s Panama Papers investigation, the same media organization that now reveals Pandora Papers.
“The purpose of this Panamanian company is to receive sums for commissions from various businesses, from the purchase and sale of products such as meat, milk, sugar, etc. We wish to have tax protection, since in Costa Rica tax burdens are very heavy,” wrote Volio Senior in 2012. However, the offshore company was never created.
When Univision asked Volio Pérez about his father’s actions, he said he was unaware of them and that it had no relation to his business. “He explained to me that it was a consultation he made on the recommendation of a local lawyer, but nothing was opened. I can assure you that as producers and exporters, we comply with all of the country’s regulations,” he replied.
Although the former minister defended his father by arguing that no tax-haven companies had been created in the end, at the time it was not known that he himself had been linked to two companies of this type in Panama for almost eight years.
An offshore company is a paper company created in countries where it has no economic activity and where no – or very little – taxes are charged on income, profits, commissions, property purchases, etc. Normally, those who set up these companies are the providers of such services, while the shareholders and final beneficiaries remain hidden.
The former can only be known, as in this case, when one gets the rare opportunity to access the internal documents of the legal firms that provide the offshore companies. Thus, on October 8th, 2008, officials associated with the creation of hundreds of companies for Alcogal, incorporated before a notary in Panama the companies Upala Investments S.A. and Northern Fields S.A.
The two companies were registered with an identical structure: Alfredo Volio Pérez appeared as president, Lionel Peralta Lizano as secretary, Vicente Ignacio Pérez Recao as treasurer and Odette Carolina Pérez Recao as comptroller. In both cases, the Costa Rican law firm Zürcher, Odio & Raven appears as correspondent, that is as an representative of the partners in that country.
Consulted by this journalistic alliance about the companies it managed for Volio and many other clients, Alcogal answered in a letter to ICIJ –the consortium that led the Pandora Papers investigation- that “the companies of the Alcogal group which engage in corporate services are fully regulated by competent authorities in the jurisdictions where they operate,” and that “it has always been our policy to fully cooperate with competent authorities upon their request.”
The Panamanian firm further explained that they are “professional and law-abiding lawyers who, with hard work and professionalism, have built a successful law firm as well as a reputable incorporation business with offices in many parts of the world,” adding that they decline to represent clients in cases where they suspect involvement in money laundering, terrorist financing or other illicit activities. “Not only have we never been charged with, let alone convicted of illicit activities, but the results of the regulatory inspections we regularly undergo are the best evidence of the rigor of our compliance.”
Regarding the usefulness of creating this offshore, the former minister denied that it had any motivation to avoid taxes and as sole explanation for creating them he said: “The company Upala Investments S.A. always served only as a holding company of 100% of the shares of Upala Agricola S.A. The multinational group of partners made the decision to use a corporate structure in Panama because it is a better known place in the international arena”.
For the former vice-minister of finance, consultant and scholar Fernando Rodriguez, Costa Rica offers many advantages and political and institutional stability to foreign investors. Therefore, he explains, if the productive operation of a company is set in Costa Rica, it makes no sense to establish a holding company in Panama.
“Companies do not move around the world for any other reason than to minimize burdens of different types, be it production costs or tax burdens,” he said without referring to specific cases.
Long-time partners
Volio and Peralta have long-standing ties with the Costa Rican pineapple company Upala Agrícola S.A.: Volio Pérez is the president of the fruit company and Lionel Peralta was its secretary until August of this year, when the position was assumed by lawyer Alberto Raven Odio of the firm Zürcher, Odio & Raven, according to the Costa Rican National Registry.
In answer to this, Alfredo Volio said that Lionel Peralta has been a lifelong close friend of his and that he had been an executive at Upala Investments and Upala Agrícola as well, although he was not an executive of either anymore. He did not say why.
The other executives of the Panamanian companies are siblings Vicente Ignacio and Odette Carolina Pérez Recao, from a well-known Venezuelan business family. Their uncle was one of the architects of the Organization of Petroleum Exporting Countries (OPEC) and for that reason the New York Times once called him “the unlikely father of Arab power”. Another brother of theirs, Isaac Pérez Recao, made headlines in the Venezuelan press two decades ago when it came to light that he had been an intermediary and facilitator of the failed coup d’état against Hugo Chavez in 2002, the visible face of which was Pedro Carmona.
In his written answers to this journalistic alliance, Volio said that “the Pérez Recao family has had investments in Costa Rica since the early 1970’s when they bought a dairy farm in Cartago and have been acquaintances of my family since that time”.
The Alcogal files to which this journalistic alliance had access have little documentation regarding Northern Fields, the other offshore created by Volio in 2008, but they do shed light on the operations of Upala Investments.
The documentation obtained only shows the list of shareholders of this Panamanian company a year after its registration. In October 2009, 18 companies were listed as shareholders.
Volio also explained that “the company Upala Investments had different structures of partners through the years, due to the entrance of new partners or the exit of some”, and that “even within the Pérez Recao family shares of Upala Investments were bought and sold”.
19.9 million for growing
A few years after Panamanian Upala was created, on November 28th, 2012, Volio and his partner Vicente Pérez Recao met in San José, Costa Rica.
At that meeting, as executives and shareholders, they decided to increase the Panamanian company’s capital to US$19.9 million, divided into as many shares, as recorded in an Alcogal certification.
According to the same minutes, Volio and Pérez Recao agreed to restructure the board of directors of Upala Investments, incorporating about ten new people in the company. At least five of the executives appear connected to other offshore companies.
Regarding these new executives, Alfredo Volio explained that “as any company whose objective is to invest, the partners of Upala Investments S.A. participated in its board of directors as proprietary and acting representatives”. He also informed that the capital increase had been made in order to “acquire another company dedicated to the same line of business” in the Upala area. This company, he later detailed, is called Agrícola del Valle and was acquired with funds contributed by the partners and international financial institutions, but he did not detail which ones.
The former minister did not explain why if Upala Investments S.A., the holder of the total shares of Upala Agrícola in Costa Rica, had such a capitalization in 2012, the Costa Rican company could not catch up with its debts to the Treasury since 2009, but was able to get the money to expand its investments.
“As I mentioned, 100% of the agricultural and commercial activity is carried out by Upala Agrícola, S.A,” he said. “The legal structure of the shareholding has no relation with the operational reality of the Costa Rican company. The Costa Rican company has never distributed dividends to the Panamanian company, since 100% of the profits have been reinvested in the agricultural operation.” Later he insisted that “the legal structure of the shareholding has no relation with the operational reality of the Costa Rican company”.
Differing versions
In 2013, after a meeting of executives of Upala Investments, ten companies remained as owners of Panamanian Upala, totaling 19,900,796 shares. That is, the equivalent to the 19,900,796 dollars of the company’s increased capital. Panamanian law does not require knowing who the ultimate beneficiaries of these ten shareholding companies of Upala Investments are.
When asked about details of its clients and the offshore companies they managed for them, Alcogal said that “answering your questions, or rectifying or clarifying your statements, to the best of our ability, could be a violation of the law and of our ethical duties to our clients. We are expressly prohibited by law from publicly disclosing information about beneficiary owners or shareholders, or confirming whether or not a SAR (suspicious activity report) has been filed, except to the appropriate authorities.”
This journalistic team was able to verify that GM Ganadera Miravalles S.A., which had 646 thousand shares of Upala Investments S.A. in the table corresponding to 2013, has been registered in Costa Rica since 2004, according to the National Registry. Former minister Volio appears as president and his wife Ana Elena Guerrero Vargas as secretary.
The same happens with Grupo Transax S.A., a company that had been active in Costa Rica since 2007 and was dissolved in 2020, as certified by the National Registry. That was one of the companies listed as a shareholder of Upala Investments until 2013 and minister Volio was listed as its president.
Volio accepted that, indeed, Ganadera Miravalles has been a family company for years and that Grupo Transax “was a partner of Upala Investments at the beginning and closed years later”.
According to Panama’s Public Registry, Upala Investments is still active and Volio was appointed vice-president and owner-director in June 2018. The next change of directors was made in 2020 and notarized in March 2021, and in that last reform the president, secretary and legal representative of the company were changed. The firm Abogados Guardia & Co. was appointed as resident agent in Panama. Although according to the Registry nothing was agreed regarding the vice-president on that occasion, Volio said that he ceased to be an executive at Upala Investments on September 17th, 2020 before the assembly meeting.
Volio Pérez assured that he does not know the current status of Upala Investments S.A. “I am not an executive there”, he said, and explained that “approximately one year ago, the company Upala Investments S.A. sold its participation in Upala Agrícola. S. A.”
The Costa Rican Upala
Pineapple is the second largest agricultural export product in Costa Rica, after banana. In 2020, sales of this product abroad brought revenues to the country of over 888 million dollars. There are 40,000 cultivated hectares of pineapple, employing 28,000 people. That is why companies such as Upala Agrícola S.A. are so important.
Volio’s pineapple company took the name of Upala Agrícola in 2010, previously having been called Compañía Agrícola S.A. In September of that same year it merged with Cultivos Orgánicos de la Zona Norte, according to a public deed of September 1st, 2010, signed by notary public Guillermo Solórzano Marín.
In this deed, it is indicated that the Panamanian company Upala Investments S. A. owns all the shares of the Costa Rican company Upala Agrícola S. A., which had a share capital of US$7,419,570, and also all the shares of Cultivos Orgánicos de la Zona Norte.
After the merger of these two companies, Upala Agrícola prevailed and US$19 were added to its share capital, corresponding to the share capital of Cultivos Orgánicos de la Zona Norte.
Volio and Peralta then agreed to issue a new certificate for all of the shares of Upala Agrícola in favor of the Panamanian shareholder Upala Investments, S.A.
In order to make all these arrangements before the notary public, Volio and Peralta presented themselves as special legal representatives of Upala Investments.
According to the former minister and former president of the National Bank of Costa Rica, there is no contradiction between his private business and his role as a public official. Paraphrasing one of the members of the special legislative commission of the Costa Rican Assembly that analyzed the impact of offshore companies on State finances in 2017, following the publication of the Panama Papers by ICIJ, the previous year, we asked Volio which logic prevailed in his view: whether it was the defense of public finances, “since every five that is left unpaid in Costa Rica directly affects the welfare of citizens in general”, or the other logic, the private one of “decreasing the contribution to public finances as much as possible within the legal framework”.
“Neither one, since Upala Agrícola has always complied with its tax obligations”, Volio answered.
Then he explained that in the beneficiary reports before the Central Bank, it always consigned Upala Investments as the owner of Upala Agrícola, and that this fact does not exempt the Costa Rican company from its tax obligations in the country. “Upala Agrícola has fully complied with these obligations and we reject any insinuation that the legal structure established by the majority partners had tax motives”, he said.
Despite Volio’s assertions, tax authorities could not know who were the real owners – multiple and changing – of the offshore company, even knowing that the Panamanian Upala was the holding company of the Costa Rican Upala.
The former minister assures that Upala has always fully complied with its obligations, but documents from the Treasury and the Social Security Fund show that the company delayed its compliance with its obligations and that it benefited from an interest write-off, while at the same time they were able to raise the necessary capital to expand the operation in the Upala region.
This investigation was carried out by Contracorriente and the Latin American Center for Journalistic Investigation (CLIP) within the Pandora Papers led by the International Consortium of Investigative Journalists (ICIJ).