The leak of 13.4 million files shows the extent of tax avoidance by the ultra-rich in offshore schemes
A bombshell data leak, dubbed as the Paradise Papers, has revealed how some of the world’s wealthiest people and businesses use ethically-questionable means to hide their fortunes. Here, we break down everything you need to know about the Paradise Papers, so far.
What are the Paradise Papers?
A data leak of some 13.4 million files. The majority of documents (6.8 million) come from a corporate services provider and law firm that operated under the name Appleby, until last year when it changed to Estera. Within the Paradise Papers, there are also details from 19 corporate registries upheld by governments in secret jurisdictions: Antigua and Barbuda, Aruba, the Bahamas, Barbados, Bermuda, the Cayman Islands, the Cook Islands, Dominica, Grenada, Labuan, Lebanon, Malta, the Marshall Islands, St Kitts and Nevis, St Lucia, St Vincent, Samoa, Trinidad and Tobago, and Vanuatu.
How were they obtained?
The files were leaked to German newspaper Süddeutsche Zeitung, which also obtained the explosive Panama Papers 18 months ago. Süddeutsche Zeitung shared the material with the International Consortium of Investigative Journalists, and now 96 media partners - including The New York Times, The Guardian and BBC’s Panorama - and 381 journalists from 67 countries are trawling through its contents to expose the systems that allow the super-rich to hold on to their cash and avoid high taxation.
What do the papers reveal?
The offshore financial matters of politicians, celebrities and high-earning individuals and businesses. Although legal if run ‘properly’, the Paradise Papers suggest many investments have been run through loopholes around regulation and the law. They highlight the complexity and moral ambivalence of offshore financing. Through a mix of trusts, foundations and companies, the vast wealth of people and businesses can effectively be hidden from the taxman. The Paradise Papers also shed light on the questionable legal firms, financial institutions and accountants working within the sector.
Queen of England
Key revelations so far:
The Queen of England’s private estate invested in a Cayman Islands fund, and some of her private money was given to a retailer accused of exploiting poor families and workers.
Apple set up a new secretive structure allowing the tech company to continue avoiding billions of dollars in tax by using the Channel Island of Jersey.
Donald Trump’s cabinet members, donors and advisers had numerous offshore dealings, including payments from a firm co-owned by Vladimir Putin’s son-in-law to the shipping group of the US commerce secretary, Wilbur Ross.
Hundreds of millions of dollars in Facebook and Twitter’s investments can be traced back to Russian financial institutions.
Formula One ace Lewis Hamilton avoided taxes on a £16.5 million jet through an Isle of Man scheme.
U2 star Bono partly owns a Lithuanian shopping mall under investigation for possible tax evasion.
Canadian prime minister Justin Trudeau’s top financial adviser moved funds offshore to a Cayman Islands trust.
Ousted White House chief strategist Steve Bannon's slanderous book about Hilary Clinton, Clinton Cash, was funded using offshore money.
A previously undisclosed $450 million trust has protected the wealth of former deputy chairman of the UK Conservative Party, Lord Ashcroft.
Three stars of the hit BBC sitcom Mrs Brown's Boys diverted more than £2 million into an offshore tax avoidance scheme.
Questions have been raised over who controls Everton FC and whether Premier League rules have been broken, since the papers suggest two Russian billionaires used offshore webs to buy the football club.
Why does it matter?
Once again, 18 months after the Panama Papers leak, a spotlight is on tax avoidance by the ultra-rich. It’s important to note that offshore schemes are entirely legal as it stands. But they are under increasing scrutiny from the public and state institutions. The Paradise Papers illuminate the lengths individuals and corporations will go to to keep their cash instead of contributing to social welfare and the state. In the UK, Labour Party leader and socialist Jeremy Corbyn said there was ‘one rule for the rich and another for the rest’. Controversy over financial loopholes have been plaguing politicians and high net-worth figures across the world since the Panama Papers, and this latest leak has brought a tsunami of criticism to those implicated.
What is a tax haven?
Tax haven is a simplified term for a very complicated and elaborate web of financial centres around the world. It is, essentially, a financial jurisdiction outside the regulations of a particular nation used by companies and individuals to lower their taxes on profits and assets. They are often found on small islands, but not always. Ireland and Switzerland, for example, have similar tax-reducing systems.