Massive leak pulls back the curtain on offshore tax havens

The Paradise Papers is even bigger than last year’s Panama Papers leak, and exposes the offshore activity of some of the world’s biggest corporations and wealthiest people.

 

We have entered the age of the big leak. What you are about to read may or may not interest some of our readers but I felt it could be of interest to all because how tax havens rob every country, including the United States of revenue that will enhance each economies and how government provide vital resources (quality roads, bridges, health care, civil protection methods) that is needed for the populace. Some of the largest violators come from the United States.

Article came from the Toronto Star News:

A year-and-a-half after the largest ever leak of information to journalists — the Panama Papers — a new leak containing even more documents is being made public today.

Dubbed the Paradise Papers, the cache of 13.4 million records — almost two million more documents than the Panama Papers — includes files from two major offshore law firms and 19 corporate registries from traditional tax havens.

The leak was obtained by German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists and a network of 382 journalists in 67 countries, including the Toronto Star and CBC/Radio-Canada.

The files expose a worldwide shadow economy worth trillions of dollars that owes its existence to the secrecy provided by tax havens.

Among the revelations:

• Hidden details about how two generations of Trudeau fundraisers, Leo Kolber and Stephen Bronfman, are linked together in a Cayman Islands trust fund that kept $60 million (U.S.)beyond the reach of tax authorities in three countries. Through a lawyer, Kolber and Bronfman said they always acted “properly and ethically, including fully complying with all applicable laws.”
• Financial ties between Russian President Vladimir Putin’s family and one of U.S. President Donald Trump’s closest advisers, Secretary of Commerce Wilbur Ross. Ross has a stake in a shipping company that received more than $68 million (U.S.) from a Russian energy company co-owned by Putin’s son-in-law. Ross’s spokesperson did not contest this relationship.

• Queen Elizabeth’s indirect investment in a scandalized rent-to-own furniture and appliances company in Britain charging up to 99.9 per cent interest. A representative of the Queen said she was not aware of the investment.
• Hollywood royalty Keira Knightley’s investment in an Jersey-based real estate firm, pop superstar Madonna’s shares in a medical supply company and Bono’s investment in a Lithuanian shopping mall. Knightley’s lawyer said she paid all taxes due. Madonna did not respond to requests for comment. A representative of Bono confirmed the singer was a “passive, minority investor.”
• Corporate behemoths — including Apple, Nike, Uber and Tesla — that use complex offshore strategies to reduce their tax bills by billions of dollars. Apple said “we follow the laws.” Nike said it “fully complies with tax regulations.” Uber declined to comment. Telsa said: “We are fully compliant with the law.”

The 1.4 terabytes of detailed corporate records, including emails, memos, spreadsheets, correspondence and meeting minutes come from the hard drives of the some of the most prestigious firms in the secretive offshore world: Singapore-based Asiaciti Trust, Appleby, a law firm founded in Bermuda, and corporate services provider Estera, which operated as part of Appleby until last year.

Canadians are disproportionately represented in Appleby’s client list — there are 3,300 individuals and companies in all — outnumbered only by those from the U.S., U.K. and China. Among the prominent Canadians that appear in the documents are former Canadian prime ministers Brian Mulroney, Jean Chrétien and Paul Martin.

Mulroney sat on the board of Said Holdings, a Bermuda company controlled by Syrian-Saudi businessman Wafic Said. Said was a key intermediary in a British-Saudi oil-for-arms deal that led to a $400 million (U.S.) criminal fine for bribery in 2010 against British airplane manufacturer BAE. Mulroney’s lawyer said he is “proud” to have served on the board, and considers Said “a good friend.” Said said he is “proud of the role I played” in the arms deal.

Chrétien lobbied for an East African oil venture, which lists him as having received 100,000 options, the leaked records show. Chrétien confirmed he consulted for Madagascar Oil in 2007 but says he never received options.

Martin’s former shipping empire, Canada Steamship Lines, is one of Appleby’s “biggest clients,” according to a document in the leak. A written response from the company says that it complies with all “laws, rules and regulations of each jurisdiction in which they operate.”

Appleby’s reputation is as sterling as its client-base which includes some of the world’s wealthiest corporations and largest personal fortunes along with 127 politicians worldwide. Appleby was awarded offshore law firm of the year in 2010 and corporate law firm of the year in 2015. But internal documents reveal that it hasn’t always succeeded in keeping out questionable clients.

“Some of the crap we accept is amazing totally amazing,” state presentation notes prepared by Appleby’s director of compliance in 2011. “We have a current case where we are sitting on about 400K that is definitely tainted and it is not easy to deal with.”

“MONEY LAUNDERING IS A DIRTY CRIME,” screamed notes accompanying the same PowerPoint presentation. “THERE IS USUALLY ALWAYS A VICTIM AT THE BOTTOM OF THE PILE AND A RICH PERSON AT THE TOP.”

Much like the Panamanian law firm at the centre of the Panama Papers, Appleby’s files reveal how the corporate structures it sells facilitate offshore activities that keep billions of tax income beyond the reach of governments around the world.

This offshore industry has contributed to making “the poor poorer” and is “deepening wealth inequality,” said Brooke Harrington, a certified wealth manager and Copenhagen Business School professor who is the author of “Capital without Borders: Wealth Managers and the One Percent.”

“There is this small group of people who are not equally subject to the laws as the rest of us, and that’s on purpose,” Harrington said. These people “live the dream” of enjoying “the benefits of society without being subject to any of its constraints.”

Appleby did not reply to a detailed list of questions sent by the International Consortium of Investigative Journalists but released an online statement stating it had investigated the ICIJ’s questions and is “satisfied that there is no evidence of any wrongdoing.”

In the statement, Appleby said it does not tolerate illegal behaviour and provides advice to clients “on legitimate and lawful ways to conduct their business.”

“It is true that we are not infallible,” the statement said. “Where we find that mistakes have happened, we act quickly to put things right.”

Asiaciti did not respond to requests for comment.

For eight months, journalists on six continents have quietly pored through the documents, shared insights, conducted hundreds of interviews, approached those whose records were leaked in search of their comment and prepared hundreds of stories that will begin being published and broadcast today.

The Toronto Star’s coverage will roll out over the next week in co-ordination with our partners at CBC/Radio-Canada with whom we worked closely, sharing findings, interviews and analysis.