There have been fresh revelations of large multinationals and wealthy individuals holding substantial sums offshore as part of complex financial arrangements, with the release of the so-called ‘Paradise Papers’ detailing the overseas tax planning of hi tech and commodity companies, the Queen, members of the Trump administration and others
A hacking attack on law firm Appleby, which has which has offices in Bermuda, the Isle of Man and a number of tax havens, has resulted in the publication of some 13.4m files.
The data comes from Appleby, and another corporate services provider called Estera, that operated under the Appleby name until becoming independent in 2016, as well as from 19 corporate registries.
Nearly 7m records from Appleby and affiliates cover the period from 1950 to 2016 and include emails, billion-dollar loan agreements and bank statements involving at least 25,000 entities connected to people in 180 countries.
The leaks were obtained by German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists (ICIJ), which also broke the news of the ‘Panama Papers’ in 2015.
According to the ICIJ’s report, the files reveal that the most US profitable company, Apple, shopped around Europe and the Caribbean for a new island tax shelter after a US Senate inquiry found that the tech giant had avoided billions of dollars in taxes by shifting profits into Irish subsidiaries.
In one email exchange, Apple’s lawyers asked Appleby to confirm that a possible move to one of six offshore tax havens would allow an Irish subsidiary to ‘conduct management activities . . . without being subject to taxation in these jurisdictions.’
Apple declined to comment on details of the corporate reorganisation but told ICIJ that it explained the new arrangements to government authorities and that the changes did not reduce its tax payments.
ICIJ says the files also reveal how big corporations sought to cut their taxes by creating offshore shell companies to hold intangible assets such as the design of Nike’s ‘Swoosh’ logo and the creative rights to silicone breast implants.
They also show Queen Elizabeth II has invested millions of dollars in medical and consumer loan companies. ICIJ says that while the Queen’s private estate, the Duchy of Lancaster, provides some details of its investments in UK property, such as commercial buildings scattered across southern England, it has never disclosed details of its offshore investments.
The consortium reports Chris Addock, chief finance officer of the Duchy of Lancaster, as stating: ‘Yes, the Duchy was aware that the Jubilee Absolute Return Fund was run offshore.’
Sir Alan Reid, as keeper of the Privy Purse is the Queen’s accountant, and a member of the Duchy of Lancaster’s council. In a former life, he was head of tax at KPMG.
ICIJ says the records show that as of 2007, the queen’s private estate invested in a Cayman Islands fund that in turn invested in a private equity company that controlled BrightHouse, the rent-to-own firm which has been criticised by consumer watchdogs and MPs for selling household goods to low income borrowers on payment plans with interest rates as high as 99.9%.
A spokesman for the Duchy of Lancaster said: ‘We operate a number of investments and a few of these are with overseas funds. All of our investments are fully audited and legitimate.’
While there is no suggestion of any wrongdoing, but it is the first time that the Queen's offshore investments have been revealed.
Appleby said in a statement: ‘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 which 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.
‘Having researched the ICIJ’s allegations we believe they are unfounded and based on a lack of understanding of the legitimate and lawful structures used in the offshore sector.’
David Burt, the Premier of Bermuda, said: ‘We maintain high vigilance on any and all criminal activities, including cyber, as well as requiring leading standards on tax and transparency of all who do business here. We will not tolerate non-compliance in any of these areas, and are reviewing this incident and related matters, and will take any further action as required.’
ICIJ’s Paradise Papers information is here.
Report by Pat Sweet
