Oh, the mercilessness of compound interest. When the computer retailing tycoon Bill Millard abandoned his half-built castle on the Pacific island of Saipan in 1990, and disappeared into obscurity, he left behind him an unpaid tax bill that the island's courts later judged to be $36.6m. Today, after private detectives tracked him to the Cayman Islands, the British tax haven in the Caribbean, the 79-year-old is facing a bill that has swollen with interest to $118m (£74.6m). And the government in Saipan is deadly serious about getting paid.
Mr Millard was one of the first computer billionaires, practically the father of computer retailing and the man who built the international ComputerWorld chain which dominated sales of the early PCs. Where decades ago he was famous for his idiosyncratic management style and outlandish spending, he has re-emerged, unwillingly, as one of the world's most elusive tax fugitives.
It took a cast of private eyes and a law firm from the big smoke for little Saipan to track Mr Millard down, and it will take forensic accountants and a battery of expensive attorneys to pursue the money the island says it is owed. Saipan, part of the Commonwealth of the Northern Mariana Islands (CNMI), has sniffed traces of Mr Millard's money in the Far East and Europe in the past, from Singapore and Hong Kong to Belgium and Ireland. But now these determined tax collectors are closing in – and they know where he lives.
"We are private people and have always been very private," is all that Mr Millard has said publicly so far, when reached by phone at his yellow mansion on Grand Cayman by a reporter from The Wall Street Journal.
The story of how CNMI officials tracked him down reads like a spy novel. A private investigator staking out one of his daughters in Florida saw him taking an afternoon stroll in her garden, after a Christmas meal last winter. He was tailed to the airport, monitored as he boarded a flight to Grand Cayman, and then tailed again on arriving in the Caribbean.
And this year, the law firm Kobre & Kim has been doing some equivalent private eyeing in the financial sphere, laying subpoenas on banks believed to have done business with Mr Millard – and stipulating that they keep the existence of the subpoenas quiet from their client, so as to prevent him moving his money around.
Kobre & Kim's cover was blown earlier this year after whatJPMorgan Chase says was a clerical error, but now court cases in the US and, soon, abroad will put public pressure on Mr Millard to turn over his assets. As Michael Kim, a partner at Kobre & Kim, has noted, people don't give up $100m without a fight.
Mr Millard was one of a generation of technology entrepreneurs to emerge from IBM, the computer giant, and after ventures in selling software and then hardware it was as a reseller of other people's computers that he really hit the big time. ComputerLand was founded in 1976 and a decade later it had more than 800 outlets around the world, including in the UK, a market it had entered in 1982.
For its founder, the company was the source of a lavish lifestyle and a platform for public good works. The private jets and the antique-stuffed mansion in California were par for the course among the new tech elite, of course, but spending millions of dollars of the company's money on a programme to end world hunger did raise eyebrows. After that, and a long, bitter legal dispute over a supposedly unpaid loan collateralised by ComputerLand shares, Mr Millard eventually lost control of the company, and by 1986 he had retired, hurt, to Saipan. He said at the time it was as far west as he could go on American soil, the better to be close to the surging, emerging markets of Asia; few doubted the generous tax breaks were a lure, too.
In Saipan, Mr Millard and his wife Patricia made their extravagant nest, a clifftop castle, complete with turrets and a perimeter wall that the locals nicknamed the Great Wall of China. While in Saipan, the family sold its interest in ComputerLand to private equity for about $200m.
Mr Millard's friends say he always paid what was due under the CNMI tax code, but the furious Governor of the Pacific island chain, Benigno Fitial, says the businessman never paid what he owed on the proceeds of that sale.
"The reduced tax rate available in the Commonwealth is designed to facilitate investment; not avoidance of liability that occurs prior to establishing residency," Mr Fitial said yesterday. "The Millards should have paid the initial $36m in income tax liability when they realised the gain on their stock sale; instead they chose to ignore the tax authority of the Commonwealth.
"Now the Commonwealth intends to enforce the tax delinquency assessment that was established in 1991 against all of the property of any nature belonging to Mr and Mrs Millard. Information has been obtained that the Millards are currently residing in the Cayman Islands and we have requested the assistance of the Cayman Island government in enforcement of our tax claim."
And you can expect Governor Fitial to be dogged. His commonwealth has been hard hit by the global recession, which has hurt manufacturing and tourism and shrunk the local economy. And the sheer size of Mr Millard's purported debt – thanks to that old compound interest – makes it too big to write off. It is bigger than the whole of the CNMI Government's projected 2012 budget of $102m.
A Pacific paradise
* Zoom out far enough from the Commonwealth of the Northern Mariana Islands so that the nearest large land mass comes into view and these Pacific pinpricks will be almost invisible. Three-quarters of the way from Hawaii to the Philippines, the 15 islands of the Commonwealth, including the largest, Saipan, make up a tropical paradise of white beaches and crystal-blue waters. The islands have been closely tied to the US since 1944 when they were fought over in the war with Japan. Though partly self-governing, they come under the protection of the US and have thrived thanks to subsidies and tax breaks allowed them by their masters half a world away in Washington. American businessmen lured by the low taxes there have made large homes in Saipan, and the economy has been sustained until recently by tourism from Japan and by a garment manufacturing sector, though both have fallen away in recent years, the latter at least probably never to return. As a result, the authorities in CNMI are stepping up their efforts to collect back taxes, and boast that $50m has been recovered in the past 24 months from claims that had previously laid dormant for years.Reuse content