Leaked files from an offshore law firm have revealed the secret hidden wealth of some of the world’s richest and most powerful people.
Where has the leak come from?
Dubbed the Paradise Papers and believed to form the second-largest data leak in history, more than 13.4 million files from two offshore service providers and the company registries of 19 tax havens were revealed yesterday. The majority come from Appleby - a law firm with outposts in Bermuda, the Cayman Islands, the British Virgin Islands, the Isle of Man, Jersey and Guernsey - which is one of the world’s top offshore providers.
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As with last year’s Panama Papers, the files were obtained by the German newspaper Suddeutsche Zeitung, which brought in the International Consortium of Investigative Journalists. More than 380 journalists from at least 100 media partners around the world - including The Guardian, the BBC and The New York Times - have spent the last 12 months combing through data from the last 70 years.
What does the leak reveal?
It shows how some of the world’s biggest businesses, heads of state and figures in politics, entertainment and sport have sheltered their wealth in secretive offshore British tax havens for decades.
The investigation also reveals how high-net-worth individuals use complex trusts, foundations and shell companies to protect their cash from tax officials or hide their dealings behind a veil of secrecy, as well as “exposing the global environments in which tax abuses can thrive”, says The Guardian.
Who is implicated?
Among the most high-profile figures named in the leak are members of Donald Trump’s cabinet. Commerce Secretary Wilber Ross is revealed to have retained investments in a shipping firm he once owned that has “significant business ties to a Russian oligarch subject to American sanctions and President Putin’s son-in law”, says The New York Times.
The Times also published details of the Kremlin cash behind Russian billionaire investor Yuri Milner, who has invested significant amounts in Twitter and Facebook. Obscured by a maze of offshore shell companies, the Twitter investment was backed by VTB, a Russian state-controlled bank often used for politically strategic deals.
The revelations of how far the Kremlin has infiltrated Silicon Valley come at a sensitive time for Facebook and Twitter, which have faced accusations they were manipulated by Russia to help swing last year’s US presidential vote, as well as the Brexit referendum.
A key aide to Canadian Prime Minister Justin Trudeau has been linked to offshore schemes that may have cost the country millions of dollars in taxes. There is also the question of whether Lord Ashcroft, a former Tory party deputy chairman and donor, ignored rules around how his offshore investments were managed - and whether he retained his non-dom status while in the House of Lords, despite reports he had become a permanent UK tax resident.
The aggressive tax avoidance practices of leading multinationals such as Nike and Apple have also come to light. But perhaps the most explosive revelation concerns the Queen’s private estate, which has been found to have invested in a Cayman Islands fund, with some of her money going to a retailer accused of exploiting poor families and vulnerable people.
There is nothing illegal in the investments and no suggestion the Queen is not paying tax, “but questions may be asked about whether the monarch should be investing offshore”, says the BBC.
What could the fallout be?
The BBC says Sunday’s revelations are only the start of a week of disclosures that will expose the tax and financial affairs of some of the hundreds of people and companies named in the data, “some with strong UK connections”.
While the vast majority of transactions break no law, they remain politically embarrassing and will pile pressure on Donald Trump and Theresa May, both of whom have pledged to crack down on tax avoidance.
They also come at a time of growing global inequality and anger at financial elites following a decade of economic hardship in the wake of the financial crash. The Boston Consulting Group estimates $10tn is held offshore around the world, the equivalent of the combined GDP of the UK, Japan and France.
