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An immense new leak of financial documents has revealed how the ultra-rich, including the private patrimony of Queen Elizabeth II, secretly invest vast amounts of money in offshore financial centers, the so-called “tax havens”.
The secretary of commerce of Donald Trump appears as a shareholder of a firm that does business with Russians sanctioned by the United States.
The leak, dubbed the Paradise Papers , contains 13.4 million documents, mostly from one of the leading offshore finance firms .
The program of BBC Panorama is part of a group of almost 100 media outlets that is investigating the documents.
As happened with the Panama Papers last year, the leaked documents were obtained by the German newspaper Süddeutsche Zeitung , which contacted the International Consortium of Investigative Journalists (ICIJ, for its acronym in English), to supervise the investigation .
The disclosures this Sunday are only a small part of a week of publications that will expose the fiscal and financial arrangements of hundreds of the people and companies mentioned in the documents, some with strong connections to the United Kingdom.
Many of the stories focus on how politicians, multinationals, celebrities and wealthy individuals use complex structures such as trusts, foundations and ghost companies to protect their money from tax officials or hide their business behind a veil of secrecy.
The vast majority of those involved in the transactions deny having committed any illegality.
Among the stories published this Sunday are also:
- A key adviser to the prime minister of Canada has been linked to offshoreschemes that may have cost the country millions of dollars in taxes, threatening to embarrass Justin Trudeau , who has campaigned for the closure of tax havens.
- Lord Ashcroft , a former deputy director and a major donor to the British Conservative Party, may have ignored the rules on the management of his offshore investments . Other newspapers suggest that he retained the status of “non-domiciled” when he belonged to the House of Lords, despite reports indicating he had become a permanent resident in the United Kingdom for tax purposes.
- How doubts were raised about the financing of a major shareholder of the English football team Everton FC .
It is possible that other associated media cover different stories that affect their regions.
How is Queen Elizabeth II involved?
The Paradise Papers show that approximately £ 10 million (US $ 13 million) of the Queen’s private money was invested in tax havens.
The money was invested in funds in the Cayman Islands and Bermuda by the Duchy of Lancaster , which provides an income to the monarch and manages private equity investments of £ 500 million (more than US $ 650 million).
There is nothing illegal in the investments and no suggestion that the Queen is evading taxes, but questions can be raised as to why the monarch is investing in offshore funds .
There were small investments in the “rent to rent” business BrightHouse, which has been accused of exploiting the poorest, and the chain of sale of alcoholic beverages Treshers, which then went bankrupt owing £ 17.5 million (about US $ 23 million) in taxes and causing the loss of almost 6,000 jobs.
The Duchy said he was not involved in the decisions made by the funds and there is nothing to indicate that the Queen had any knowledge of the specific investments made in her name.
In the past, the Duchy has said that it gives “continuous consideration to any of its acts or omissions that could negatively affect the reputation” of the monarch, which is said to continue with “quite interesting” the operations of its assets.
Shame on Trump and Ross?
Wilbur Ross helped Donald Trump avoid bankruptcy in the 1990s and was rewarded with the position of Secretary of Commerce in the Donald Trump government.
The documents reveal that Ross retained interests in a company that annually earns millions of dollars transporting oil and gas for a Russian company that counts among its investors the alleged son-in-law of Vladimir Putin and two men subject to sanctions by the United States.
The signaling will raise questions about the Russian connection of the Donald Trump team . His presidency has been marked by allegations that the Russians colluded to affect the outcome of last year’s US elections.
The president has described the allegations of “false news”.
Where does the leak come from?
Most of the information comes from a company called Appleby , a firm based in Bermuda and located at the pinnacle of the offshore industry , which provides legal services to clients interested in establishing in extraterritorial jurisdictions with low or no tax rates.
His documents, and others coming mostly from corporate records in Caribbean jurisdictions, were obtained by the Süddeutsche Zeitung . The newspaper has not revealed its source.
The members of the consortium that participate in the investigation maintain that it is of public interest because the leaks of the offshore world have often exposed illegalities,
In response to the leaks, Appleby responded that she was ” satisfied that there was no evidence of any illegality “ either from her or her clients.
He added: “We do not tolerate illegal behavior.”
What exactly is ‘ offshore ‘ finance ?
Offshore financing is basically about channeling money, assets or profits to a place outside the regulations of the country to which companies and individuals to benefit from lower taxes.
These jurisdictions are commonly known as tax havens and in the industry as offshore financial centers (OFC). They are usually small islands, stable, discrete and reliable, but this is not always the case, and the rigor of their controls to avoid illegalities can vary.
The United Kingdom is a major player in the sector, partly because many of its overseas territories and Crown dependencies are OFC, but also because many of the lawyers, accountants and bankers working in the offshore industry are in the City, in London .
It is also about the megarricos. Brooke Harrington, author of “borderless Capital: wealth managers and one percent”, says finance offshore is not for only 1% to 0 , 001% of the population .
Assets in the order of US $ 500,000 simply would not cover the expenses necessary to participate in these schemes, he says.
What impact do they have on us and why should we care?
First, it’s a lot of money. The Boston Consulting Group says that US $ 10 billion is stored in offshore centers. This is roughly equivalent to the combined gross domestic product of the United Kingdom, France and Japan. And that may be a conservative estimate.
Offshore critics protest above all about secrecy – which opens the door to illegality – and inequality. They also affirm that the government actions to combat it have been slow and ineffective.
Brooke Harrington, for example, points out that if the rich evade taxes, the poor pay the bill : “There is a minimum amount that governments need to function and recover what they lose because of the rich and corporations taking it away from us,” he says. .
Meg Hillier, Labor MP and chairman of the Public Accounts Committee of the British Parliament, told Panorama: “We need to know what happens offshore : if offshore were not secret then some of this simply would not happen … We need transparency and that the sun shine on this. ”
What is the defense of the ‘ offshore ‘ ?
The offshore financial centers argue that if they did not exist there would be no limits to the taxes that governments could charge . They also claim that they are not sitting on piles of cash but act as agents that pump money around the globe.
Bob Richards, who was Bermuda’s finance minister when Panorama interviewed him for this report, said that it was not up to him to collect taxes from other nations and that it was up to these countries to fix their problems.
Both he and Howard Quayle, the chief minister of the Isle of Man, who was also interviewed by Panorama and whose dependence on the British crown plays an important role in the leak, denied that his jurisdiction could even be considered a tax haven for being well regulated and comply with international financial transparency rules.
The same Appleby has said in the past that the OFC “protect the people victimized by crime, corruption or persecution by protecting them from venal governments.”