After Panama Papers, new ‘Paradise Papers’ leak reveals secrets of the world elite's hidden wealth
After Panama Papers, new ‘Paradise Papers’ leak reveals
secrets of the world elite's hidden wealth
The findings have emerged as part of the Paradise Papers
released by the US-based International Consortium of Investigative Journalists
(ICIJ), which was behind the 2015 Panama Papers
PUBLISHED: Monday, 06 November, 2017, 8:47am UPDATED:
Monday, 06 November, 2017, 10:39pm
US Commerce Secretary Wilbur Ross has business ties to a
shipping firm linked to Vladimir Putin’s inner circle, according to a vast leak
of financial documents that also revealed Britain’s Queen Elizabeth’s
investments in tax havens.
And it revealed that Canadian Prime Minister Justin
Trudeau’s top fundraiser and senior adviser Stephen Bronfman, heir to the
Seagram fortune, moved some US$60 million to offshore tax havens with
ex-senator Leo Kolber.
The details come from a leak of 13.4 million 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 findings have emerged as part of the Paradise Papers
released by the US-based International Consortium of Investigative Journalists
(ICIJ), which was behind the Panama Papers made public last year.
There is no suggestion that Ross, Bronfman or the queen’s
private estate acted illegally.
But Ross’s ties to Russian entities raise questions over
potential conflicts of interest, and whether they undermine Washington’s
sanctions on Moscow.
A spokesman for British Prime Minister Theresa May said
the UK’s tax authority wants to see the leaked documents.
“It is important to point out that holding investments
offshore is not an automatic sign of wrongdoing, but HMRC (Her Majesty’s
Revenue and Customs) has requested to see the papers urgently so it can look
into any allegations,” he told reporters.
The leaked documents reveal:
UK Queen
Around £10 million (US$13 million) of the queen’s private
money was placed in funds held in the Cayman Islands and Bermuda, according to
the leaked papers.
They reported the funds reinvested the money in an array
of businesses, including controversial rent-to-buy retailer, BrightHouse, which
has been accused of exploiting the poor, and a chain of alcohol stores which
later went bankrupt.
The investments, which were entirely legal, were made
through the Duchy of Lancaster, which provides the monarch with an income and
handles investments of her vast estate and remain current, the media outlets
said.
There is no suggestion that the queen’s private estate
acted illegally or failed to pay any taxes due.
But the leaks may raise questions over whether it is
appropriate for the British head of state to invest in offshore tax havens.
Chris Adcock, the chief finance officer of the estate
defended the investments, telling the BBC: “The Duchy has only invested in
highly regarded private equity funds following a strong recommendation from our
investment consultants.”
US commerce chief
Extensive offshore dealings by Donald Trump’s cabinet
members, advisers and donors, including substantial payments from a firm co-owned
by Vladimir Putin’s son-in-law to the shipping group of the US commerce
secretary, Wilbur Ross.
Ross, a billionaire investor, holds a 31 per cent stake
in Navigator Holdings through a complex web of offshore investments.
The 79-year-old reduced his stake when he took public
office, according to public filings.
Navigator Holdings runs a lucrative partnership with
Russian energy giant Sibur, which is partially owned by Putin’s son-in-law
Kirill Shamalov and Gennady Timchenko, the Russian president’s friend and
business partner who is subject to US sanctions.
The US imposed sanctions on Russian entities and
individuals following its annexation of Crimea and aggression in Ukraine.
Ross’s private equity firm has been the biggest
shareholder in Navigator.
His personal share of the firm’s stake was reduced when
he took office in February, but the commerce chief’s investment is still valued
at between US$2 million to US$10 million, according to his security filings and
government ethics disclosure.
The New York Times reported that Ross’s stake in
Navigator has been held by companies in the Cayman Islands. His wealth,
estimated to exceed US$2 billion, is said to be tied to similar arrangements in
various tax havens like the Cayman Islands.
“Secretary Ross was not involved with Navigator’s
decision to engage in business with Sibur, a publicly traded company, which was
not under sanction at the time and is not currently,” said James Rockas, a
Commerce Department spokesman.
“Moreover, Secretary Ross has never met the Sibur
shareholders referenced in this story and, until now, did not know of their
relationship.”
Russia downplayed the leaks. The head of the foreign
affairs committee of the Russian senate, Konstantin Kosachev, called them
“stirring emotions and muddled wording”, speaking to RIA Novosti state news
agency.
“When it is boiled down, what is described here is
standard and legal commercial activity,” Kosachev said, insisting the US deals
were being “presented as practically a plot against the foundations of Western
democracy”.
Celebrities
Politicians aren’t the only famous faces named in the
leaked Paradise Papers – Bono, Madonna and actress Keira Knightley all pop up,
too.
Bono – who is listed by his real name, Paul Hewson- was
revealed to have been a part owner of a shopping centre in the small town of
Utena, Lithuania, after investing with a company based in Malta.
The U2 frontman had a stake in Nude Estates, a Maltese
company which bought the Ausra mall just after it opened in 2007.
Because the island nation – located between the south of
Italy and the North African coast – is a low-tax jurisdiction, the tax paid on
any profits earned by foreign investors is reduced to 5 per cent.
The mall was transferred in 2012 to a company based in
Guernsey, England, with a similar name: Nude Estates I.
“Bono was a passive, minority investor in Nude Estates
Malta Ltd., a company that was legally registered in Malta until it was
voluntarily wound up in 2015. Malta is a well-established holding company
jurisdiction within the EU,” a spokesperson for the singer said.
Meanwhile, the ICIJ also claimed the documents reveal
that pop star Madonna has A share in a medical supplies company, while actress
Keira Knightley has invested in a Jersey-based real estate firm.
Pressure on leaders
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 – €US$600 billion 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 centre 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 said 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
behaviour.”
The Guardian, Agence France-Presse, Tribune News Service,
The Washington Post
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