The world’s biggest corporations, government heads and global figures in politics, entertainment and sports who have hidden their wealth in secretive tax havens are being revealed this week in a major new investigation into the world’s offshore empires.
What are the so-called Paradise Papers?
The leak is a trove of 13.4 million files taken mostly from the offshore law firm, Appleby.
The files were leaked to Suddeutsche Zeitung, the same German newspaper that took hold of the Panama Papers in April, 2016.
About 100 different media outlets worldwide are poring over the details.
“There’s a new global industry that caters to money that moves around the world,” Drew Sullivan, a journalist with the International Consortium of Investigative Journalists (ICIJ), said. “This money moves through tax havens and it’s moved to evade taxes to hide assets, to steal money.
“It’s used by organised crime; it’s used by large businesses.”
The Paradise Papers is a set of 13.4 million electronic documents relating to offshore investment, leaked to the public on 5 November 2017. The documents originate from the offshore law firm Appleby, the corporate services providers Estera and Asiaciti Trust, and business registries in 19 tax jurisdictions. They contain the names of more than 120,000 people and companies. Among those whose financial affairs are mentioned are Queen Elizabeth II, President of Colombia Juan Manuel Santos, and U.S. Secretary of Commerce Wilbur Ross. According to the Boston Consulting Group, the amount of money involved is around $10 trillion.
What has been discovered so far?
Day one of the disclosures, Sunday, revealed that some big names are involved – among them 120 politicians.
Donald Trump’s Commerce Secretary Wilbur Ross has been named.
“[He] has a stake in a shipping firm that receives millions of dollars a year in revenue from a company whose key owners include Russian President Vladimir Putin’s son-in-law and a Russian tycoon sanctioned by the US Treasury Department as a member of Putin’s inner circle,” said a report in the ICIJ, which received the leak from the German newspaper.
On Monday, Ross told CNBC that it was “totally wrong” he did not disclose the links.
Stephen Bronfman, Canadian Prime Minister Justin Trudeau’s friend and adviser, is reported to have used offshore havens to avoid tax at home.
“The disclosures are likely to generate political heat for the Canadian premier, who swept to power in October 2015 partly on his promise to tackle economic inequality and take on tax avoidance,” reported Britain’s Guardian newspaper, which was among the media organisations which received the leak.
The Duchy of Lancaster, the private estate of the UK’s monarch, is also allegedly involved. The estate of Elizabeth II invested millions of dollars in medical and consumer loan companies, the files show.
While the estate’s finance officer said in a statement that the “Duchy was aware” the fund was run offshore, the ICIJ said that it has “never disclosed details of its investments”.
There is no suggestion the queen’s estate acted illegally.
Queen Noor of Jordan; Uganda Foreign Minister Sam Kutesa; Brazil Foreign Minister Campos Meirelles and Yuri Milner, a Russian billionaire investor with large stakes in Facebook and Twitter are also named.
The Indian Express reported on Monday that the leak “reveals trails of India’s corporates”.
“India ranks 19th in terms of the number of names. In all, there are 714 Indians in the tally,” said the newspaper, which received details of the leak.
Aside from the companies, the newspaper said Bollywood star Amitabh Bachchan and the wife of actor Sanjay Dutt were involved.
Bachchan was a shareholder in a Bermuda-based digital media company, which is now closed.
The law firm Appleby insists there is no evidence of wrongdoing.
Why should anyone care?
While, in the majority of cases, putting your money offshore and outside of your country’s financial regulations is legal, many argue hiding from the tax man is unfair. Critics say governments have been slow to deal with it.
The amount of money involved is huge. Boston Consulting Group estimates $10 trillion are held in these offshore financial centers.
Most of us know them as tax havens, but few of us actually use them. That’s because around half of that $10 trillion sum is concentrated not in the rich, but in the mega-rich. Think 0.001 percent of households.
But it is more than inequality and a lack of fairness. The offshore financial system is incredibly secretive – enabling the wealthy and powerful to hide their dealings and break the law.
The details come from a leak of 13.4m files that expose the global environments in which tax abuses can thrive – and the complex and seemingly artificial ways the wealthiest corporations can legally protect their wealth.
The material, which has come from two offshore service providers and the company registries of 19 tax havens, was obtained by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists with partners including the Guardian, the BBC and the New York Times.
The project has been called the Paradise Papers. It reveals:
Millions of pounds from the Queen’s private estate has been invested in a Cayman Islands fund – and some of her money went to a retailer accused of exploiting poor families and vulnerable people.
The tax-avoiding Cayman Islands trust managed by the Canadian prime minister Justin Trudeau’s chief moneyman.
A previously unknown $450m offshore trust that has sheltered the wealth of Lord Ashcroft.
Aggressive tax avoidance by multinational corporations, including Nike and Apple.
How some of the biggest names in the film and TV industries protect their wealth with an array of offshore schemes.
The billions in tax refunds by the Isle of Man and Malta to the owners of private jets and luxury yachts.
The secret loan and alliance used by the London-listed multinational Glencorein its efforts to secure lucrative mining rights in the Democratic Republic of the Congo.
The complex offshore webs used by two billionaires to buy stakes in Arsenal and Everton football clubs.
The disclosures will put pressure on world leaders, including Trump and the British prime minister, Theresa May, who have both pledged to curb aggressive tax avoidance schemes.
The publication of this investigation, for which more than 380 journalists have spent a year combing through data that stretches back 70 years, comes at a time of growing global income inequality.
Meanwhile, multinational companies are shifting a growing share of profits offshore – €600bn in the last year alone – the leading economist Gabriel Zucman will reveal in a study to be published later this week.
“Tax havens are one of the key engines of the rise in global inequality,” he said. “As inequality rises, offshore tax evasion is becoming an elite sport.”
At the center of the leak is Appleby, a law firm with outposts in Bermuda, the Cayman Islands, the British Virgin Islands, the Isle of Man, Jersey and Guernsey. In contrast to Mossack Fonseca, the discredited firm at the centre of last year’s Panama Papers investigation, Appleby prides itself on being a leading member of the “magic circle” of top-ranking offshore service providers.
It acted for the establishment offshore, providing the structures that helped to legally reduce their tax bills.
Appleby says it has investigated all the allegations, and found “there is no evidence of any wrongdoing, either on the part of ourselves or our clients”, adding: “We are a law firm which advises clients on legitimate and lawful ways to conduct their business. We do not tolerate illegal behavior.”
This is a developing story
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