A new look at the secret hoards of the ultra-rich

Remember the Panama Papers?  That was a massive leak of documents from a Panama-based law firm called Mossack Fonsecka, revealing how the world’s richest and most powerful people hid billions of collars in investments from tax collectors and the public.

Now there is another big leak—called the Paradise Papers—from century-old Bermuda-based law firm called Appleby and its Singapore affiliate.

Like the Panama Papers, the anonymous leaker sent documents to a German newspaper called Süeddeutsche Zeitung, which teamed up with the International Consortium of Investigative Journalists, the Organized Crime and Corruption Reporting Project and some of the world’s other top newspapers, and spent a year going through 13.4 million files.

Some of the highlights of what was found:

  • Queen Elizabeth II’s investment manager, the Duchy of Lancaster, invested millions of pounds in a Cayman Islands fund, whose investments included Bright House, a rent-to-own UK furniture company that charged interest rates of up to 99%
  • Secretary of Commerce Wilbur Ross, who divested himself of ownership in 80 companies to avoid conflicts of interest, kept interests in nine offshore companies.  Four of them invested in a shipping company called Navigator Holdings, which did business with a Russian energy and chemical company called Sibur, whose key owners include Vladimir Putin’s son-in-law and a Russian oligarch under U.S. sanctions.
  • Stephen Bronfman, a key fund-raiser for Canadian Prime Minister Justin Trudeau, teamed up with key Liberal Party figures to evade Canadian, U.S. and Isreali taxes.

Major companies shown to do business through tax havens are Apple, Nike, Uber Barclay’s Bank, Goldman Sachs, BNP Paribas and Glencore, the world’s largest commodity trader.

None of this is, in itself, illegal.  But hidden offshore investments provide a way for criminals to launder money and for individuals, companies and governments to evade economic sanctions by the U.S. and other governments.

As several people have remarked, the worst scandals are not how the law is broken, but what can be done that is perfectly legal.

For what it’s worth, I don’t think any of this is evidence that the Russian government or Russian interests manipulated the 2016 elections in favor of Donald Trump,

Tax havens hide a huge portion of the world’s wealth from taxation and regulation.  This is a big problem for democracy.

Source: Tax Justice Network.

It is interesting that Appleby and its Estera affiliate in Singapore have so many of their branches in present or former British colonies—the Isle of Man, Jersey and Guernsey, the Cayman Islands, the British Virgin Islands, Hong Kong and Shanghai

Max Shaxton, in Treasure Islands (which I haven’t read), argued that there is the equivalent of a new British empire, linked to the City of London financial district, whose aim is to maintain British financial supremacy by offering financial secrecy.

The Tax Justice Network estimates that corporate use of tax havens costs governments as much as $500 billion a year, and individual use of tax havens costs up to $200 billion.

The Panama Papers leak showed, among other things, that hundreds of millions of dollars in secret assets were held by friends of Vladimir Putin, including an obscure cello player.  Few Americans were implicated by this leak.  Some people speculated that the CIA was behind the Panama Papers leak.

In contrast, the Paradise Papers leak reveals a lot of information embarrassing to Americans, Britons and Canadians.  Does that imply that the Russian FSB  could have been behind this leak?  If so, I think the public benefits from this form of cold war.

We the public should be grateful to the brave Julian Assange, even though he played no direct role here.   Assange is the one who showed the world how to leak and disseminate secret information without being traced.   Without such knowledge, we the public have no power.


Paradise Papers: Everything you need to know about the leak by the British Broadcasting Corporation.  [Added 11/14/2017]

Paradise Papers leak reveals secrets of world’s elite’s hidden wealth by Juliette Garside for The Guardian.

Offshore tax havens: How do they work? What can be done about them? by Ben Chu for The Independent.

Paradise Papers Exposes Donald Trump-Russia Links and Piggy Banks of the World’s Wealthiest 1 Percent by the International Consortium of Investigative Journalists.

Donald Trump’s Commerce Secretary Wilbur Ross and His Russian Business Ties by the International Consortium of Investigative Journalists.

Commerce Secretary’s Offshore Ties to Putin ‘Cronies’ by Mike McIntyre, Sasha Chavkin and Martha M. Hamilton for The New York Times.

Apple secretly moved parts of empire to Jersey after row over tax affairs by Nick Hopkins and Simon Bowers for The Guardian.  [Added 10/7/2017]

Revealed: Queen’s Private Estate invested millions of pounds offshore by Hilary Osborne for The Guardian.

Revealed: Justin Trudeau’s close adviser helped move huge sums offshore by Ed Pilkington for The Guardian.

Paradise Papers: the UK minister in charge of anti-money laundering named in documents by Camila Hodgson for Business Insider.

Appleby’s room of secrets reveals Glencore’s mysteries by the International Consortium of Investigative Journalists.

Kremlin-Owned Firms Linked to Major Investments in Twitter and Facebook by the International Consortium of Investigative Journalists.

Russia funded Facebook and Twitter investments through Kushner associates by Jon Swaine and Luke Harding for The Guardian.

Appleby the ‘Offshore Magic Circle’ law firm and its record of compliance failures by the International Consortium of Investigative Journalists.

Why we are shining a light on the world of tax havens again by Nick Hopkins for The Guardian.

Four things the Paradise Papers tell us about global business and political elites by Ronen Palan for The Conversation.  [Added 11/8/2017]

Paradise and Panama Paper revelations pale next to what happens in Delaware by Tim Fernholz for Quartz.



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2 Responses to “A new look at the secret hoards of the ultra-rich”

  1. Vincent Says:

    Hordes? Or hoards?


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