Over the past week, we have been confronted with a steady stream of revelations from the Paradise Papers, which refers to a trove of 13.4 million files taken mostly from the offshore law firm, Appleby. The documents were obtained by Süddeutsche Zeitung, a German newspaper.
Appleby is a market leader in the offshore legal service provider business, with locations in Bermuda, the British Virgin Islands, the Cayman Islands, Isle of Man, Jersey, Guernsey, Mauritius, and Seychelles as well as Hong Kong and Shanghai. It’s a member of the “Offshore Magic Circle,” which is a global network of lawyers, consultants and other execs that advise companies in tax havens.
Since the Paradise Papers have made their way around journalism venues, Appleby made a statement criticising the media outlets for using information that may have “…emanated from material obtained illegally and that this may result in exposing innocent parties to data protection breaches.”
However, as evidenced by the Paradise Papers, we have been able to see that Appleby has a history of dubious clients. Among them, many are corrupt politicians, internationally sanctioned businessmen, and convicted tax evaders. Some examples of these include a suspected member of the Chinese mafia, a man who was extradited to Mexico for fraud, and a client with ties to financial gains from criminal activity – who was later murdered.
Money typically moves through tax havens in various countries mainly for the purpose of hiding the true wealth of the assets, to launder it, or otherwise evade taxes. People who do this are typically involved in large businesses or are wealthy individuals.
The first day of the disclosures revealed some big names, and among them were some 120 US politicians including Mr. Trump’s Commerce Secretary Wilbur Ross.
Ross has a stake in a shipping form that has millions of dollars in revenue from a company whose key owners include Putin’s son in law and a Russian oligarch that has been sanctioned by the US Treasury Department.
The firm is called Navigator Holdings, and it draws in millions of dollars transporting gas for one of its top clients – Sibur, which is a Russian energy giant. Although Ross sold off a number of other holdings, he retained an investment in Navigator, which continued to conduct business with Sibur even in the wake of the of the unrest in Ukraine.
Others reported in the papers include Stephen Bronfman – friend and advisor of Justin Trudeau, Queen Noor of Jordan, Uganda Foreign Minister Sam Kutesa, Brazil Foreign Minister Campos Meirelles and a Russian billionaire investor named Yuri Milner. The details on Milner additionally reveal large stakes in Facebook and Twitter, both of which have come under fire recently for airing US political ads created by Russians.
Another big firm to come under scrutiny is Apple. The Paradise Papers have shed light on the company’s search for a new place to bank after more than twenty years of benefiting from the artificially low taxes in Ireland. For years Apple funneled most of its overseas profits through Ireland, where arrangements with the Irish government permit the company to pay an artificially low rate of tax.
While in some cases, investing offshore is not expressly illegal, it is secretive in nature and can be twisted to suit nefarious purposes. It is difficult to obtain a clear picture of what someone is doing with their money when they are using five or six different offshore havens, especially because law enforcement does not have an easy time crossing borders.
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