06 Nov 2017
A new financial document breach dubbed the Paradise Papers has revealed how the super-rich move their money around the world and shelter their wealth in secretive tax havens.
The Queen’s private estate, U2 frontman Bono and close aides of Donald Trump are just a few of the names exposed by this latest large-scale data leak.
What are the Paradise Papers?
The Paradise Papers is the name given to the latest large-scale data hack involving the leak of 13.4 million files, which show the complex financial dealings of the super-rich and major global corporations all over the world.
Many of these files – about 6.8 million – are linked with an international offshore legal service provider called Appleby, which operates in 10 offices the world advising companies, financial institutions and the wealthy.
The name Paradise Papers was chosen because all of the locations involved in the dealings are so-called tax havens – or “tax paradises”.
How did the data leak happen?
Appleby confirmed it had been the subject of a hack last month, but the breach is thought to have occurred long before it was made public. Details from the hack come from 13.4 million files taken from two offshore service providers and the company registries of 19 tax havens.
The data was then passed to Süddeutsche Zeitung, the German newspaper which also received data from last year’s Panama Papers leak. The material was shared with the US-based International Consortium of Investigative Journalists, which coordinated the collaboration with almost 100 other media organisations in 67 countries.
It is thought the investigation had been coordinated for at least a year. The original source of the leak has not been disclosed.
What do the Paradise Papers reveal?
It’s important to emphasise the data leak has not revealed any illegal activity. However, it gives an insight into secretive tax havens and the companies and individuals who use them to shelter wealth. It has also exposed the international environments in which tax abuses can thrive as well as the complex ways the rich can legally protect their fortunes.
Is it the biggest ever data leak?
This is the fifth major leak of financial papers over the last four years and while it isn’t the largest – the Panama Papers consisted of 2.6TB of data compared with the Paradise Papers’ 1.4TB – the information this leak has exposed is thought to be more controversial because of the number of high profile names involved.
Who is exposed in the Paradise Papers?
The Queen’s private estate is just one of the names contained within the data but a wide range of powerful and ultra-wealthy individuals have been exposed for secretly investing vast amounts of cash in offshore tax havens. The list includes politicians, multinationals, celebrities and high-net-worth individuals.
Many of the stories focus on how complex structures of trusts, foundations and shell companies are used to shelter wealth from tax officials or hide their dealings behind a veil of secrecy.
The allegations include:
- Millions of pounds from the Queen’s private estate had been invested in a Cayman Island fund – and some of her money was also linked to a retail company accused of exploiting the poor and the vulnerable. There is no suggestion that any of this was done illegally or that the Queen knew what her money was being used for.
- U2 frontman Bono – real name Paul Hewson – used a company based in Malta to pay for a share in a Lithuanian shopping centre.
- Cabinet members, advisers and donors of US President Donald Trump involved in extensive offshore dealings, including the US commerce secretary Wilbur Ross allegedly doing business with Vladimir Putin’s son-in-law through a shipping venture in Russia.
- A previously unknown $450 million offshore trust protecting the wealth of Conservative Party donor Lord Ashcroft.
- Documents showed multinational corporation Glencore diverted millions of dollars through Bermuda and other tax havens, and exposed a secret loan used to help secure lucrative mining rights in the Democratic Republic of the Congo.
- Facebook and Twitter received hundreds of millions of dollars in investments that can be traced back to Russian state institutions.
- Tax refunds in the billions by the Isle of man and Malta to the owners of private jets and luxury yachts.
- Complex offshore operations used by two Russian billionaires to buy stakes in Arsenal and Everton football clubs.
More revelations are expected as the data breach develops.
How has Appleby responded?
The company, which describes itself as an offshore law firm that advises clients on legitimate and lawful ways to conduct their business, said it does not tolerate illegal behaviour.
In a statement, it added: “We take any allegation of wrongdoing, implicit or otherwise, extremely seriously.
“Appleby operates in highly regulated jurisdictions and – like all professional organisations in our regions – we are subject to frequent regulatory checks and we are committed to achieving the high standards set by our regulators.
“Appleby has thoroughly and vigorously investigated the allegations and we are satisfied that there is no evidence of any wrongdoing, either on the part of ourselves or our clients.
“We refute any allegations that may suggest otherwise and we would be happy to cooperate fully with any legitimate and authorised investigation of the allegations by the appropriate and relevant authorities.”
Count this content towards your CPD minutes, by signing up to our CPD WalletFREE CPD Wallet