Heads of state, multinational businesses, politicians, and celebrities have moved trillions of dollars through off-shore tax havens, hiding their money and investing it without any sort of regulation, according to an explosive new series of leaks dubbed the Paradise Papers.
The 13.4 million documents were first obtained by German newspaper Süddeutsche Zeitung and made public this weekend by the International Consortium of Investigative Journalists, a network of more than 380 journalists, who have been putting the pieces of this massive data leak together.
Most of the documents focus on the Bermuda-based law firm Appleby, which also has offices throughout the Caribbean, in Hong Kong, Shanghai, and in tax haven islands off the coast of Britain. The firm appears to have been more discerning in their client base then law firm Mossack Fonseca, which was at the center of last year’s Panama Papers leak. However, buried within the spreadsheets are details that show the increasingly imaginative ways global elites are hiding from paying taxes. Here’s a rundown of some of the major revelations so far:
Commerce secretary Wilbur Ross has ties to substantial offshore dealings with Putin cronies
The Paradise Papers have exposed how Trump’s associates and cabinet members have ties to tax havens and questionable business activities. The documents show that Wilbur Ross, Trump’s commerce secretary, holds a stake in the shipping firm Navigator Holdings. One of Navigator’s most important clients is the Russian energy firm Sibur, for which it transports natural gas. Sibur is partly owned by Kirill Shamalov, whose wife, Katerina Tikhonova, is Vladimir Putin’s daughter. This essentially means that Ross, who is already worth an estimated $2 billion, stands to benefit from the flow of cash that is enriching Putin’s private circle, including Shamalov, who became a shareholder in the same bank that has enriched Putin and his cronies. Ross is now under fire for giving Congress the impression that he no longer has ties with Navigator.
The Paradise Papers also mention White House economic adviser Gary D. Cohn, who was associated with 22 Bermuda entities while at Goldman Sachs. Secretary of State Rex Tillerson is also under scrutiny for his role in a Bermuda-based venture with the government of Yemen. Steve Mnuchin, banking watchdog Randal Quarles, and Russian ambassador Jon Hunstman are all also named.
Justin Trudeau’s chief fundraiser managed a tax-avoidance scheme in the Cayman Islands
Steven Bronfman is a childhood friend of Justin Trudeau’s who served as the chief fundraiser for the liberal party. In 2015, he was instrumental in helping Trudeau become the Canadian prime minister — on a platform that included a promise to tax the rich and to take tax avoidance and evasion seriously. Now, however, Bronfman has been linked to a complex network of cash flows from his family’s Montreal-based fortune to the Cayman Islands-based trust of Leo Kobler, a stalwart of the Liberal Party and longtime friend to the Bronfman family. Documents revealed by the ICIJ show that Bronfman’s investment firm moved millions of dollars to the Kobler’s trust over a quarter of a century, potentially helping him avoid taxes in Canada, Israel, and the United States.
The Queen’s private estate invested $13 million in offshore funds
While British taxpayers forked out nearly half-a-billion dollars to help refurbish Buckingham Palace, the Queen’s private money was stashed away offshore — and invested in a retailer which has been accused of exploiting vulnerable families. The Duchy of Lancaster, which helps provide the Queen with an income, held $13 million worth of funds in British overseas territories where they pay no corporation tax. There, $7.5 million was invested in a fund called Dover Street VI Cayman Fund LP, which in turn bought a stake in an investment known as “Project Bertie.” As a result, a small amount of the Queen’s money ended up invested in BrightHouse, which has been accused of ‘irresponsible’ lending, and the convenience store chain Threshers, which went bankrupt owing the British government around $23 million in tax.
U2 frontman Bono invested in Lithuanian shopping center via tax haven Malta
In one of the more bizarre revelations, the Paradise Papers showed that U2 frontman and self-styled humanitarian Bono invested in a small Lithuanian shopping mall via a Maltese company named Nude Estates. The $6 million dollar mall opened in 2007, and in 2012 the investment was transferred to a company based in the British Channel Islands called Nude Estate 1. In Malta there is only a 5 percent tax paid on profits earned by companies, while in the Channel Islands there is no tax. A spokesman told the Guardian that Bono was a “passive, minority investor.”
The ICIJ stresses that there are legitimate legal reasons to invest money in offshore entities, and that harboring money there is not akin to being found guilty of tax avoidance. However, the extent to which the global elite manages to use increasingly imaginative loopholes to avoid paying their fair share of taxes increases the sense that there’s a special set of rules for the world’s elite.
“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,” wealth manager Brooke Harrington told the ICIJ. “[These people] live the dream [of] the benefits of society without being subject to any of its constraints.”