‘Paradise Papers’ embarrass US trade chief, Queen Elizabeth, and counting

US Secretary of Commerce Wilbur Ross speaks during an event in Hong Kong, China, 26 September 2017. [Jerome Favre/EPA/EFE]

The International Consortium of Investigative Journalists on Sunday (5 November) released The Paradise Papers, a global investigation that reveals the offshore activities of some of the world’s most powerful people and companies.

ICIJ and 95 media partners explored 13.4 million leaked files from a combination of leaked files of offshore law firms and the company registries in some of the world’s most secretive countries.

The files were obtained by the German newspaper Süddeutsche Zeitung, and shared with ICIJ.

The ICIJ published the “Panama Papers” last year, leaked documents from Panama law firm Mossack Fonseca that chronicled a shadowy world of offshore holdings and hidden wealth.

OLAF investigates EU leaders in Panama Papers scandal

The European Anti-Fraud Office (OLAF) is investigating several European politicians and high-ranking civil servants for tax evasion, using information leaked in the Panama Papers scandal. EURACTIV’s partner La Tribune reports.

The Paradise Papers documents include nearly 7 million loan agreements, financial statements, emails, trust deeds and other paperwork over nearly 50 years from inside Appleby, a prestigious offshore law firm with offices in Bermuda and beyond.

The Paradise Papers reveal offshore interests and activities of more than 120 politicians and world leaders, including Queen Elizabeth II whose private estate indirectly invested in a rent-to-own loan company accused of predatory tactics.

At least 13 allies, major donors and Cabinet members of US President Donald Trump appear, including Commerce Secretary Wilbur Ross’s interests in a shipping company that makes millions from an energy firm whose owners include Russian President Vladimir Putin’s son-in-law and a sanctioned Russian tycoon.

US Commerce chief Ross kept holdings in Russian-tied firm

Partnerships used by Ross, a billionaire investor helping to shape Trump’s trade policy, have a 31% stake in Navigator Holdings, which the New York Times said earns millions of dollars a year transporting gas for Russian petrochemical firm Sibur.

Gennady Timchenko, a Russian oligarch and Putin associate subject to US sanctions, and Putin’s son-in-law, Kirill Shamalov, are Sibur stakeholders, said the Times, which based its report on files from Appleby, a prominent offshore law firm.

Reuters was unable to independently confirm the findings. In an emailed statement, a Department of Commerce spokesman said Ross “was not involved in Navigator’s decision to engage in business with Sibur…has never met the Sibur shareholders referenced in this story and, until now, did not know of their relationship.”

He added that Sibur had not been under sanctions when Navigator began its relationship with the publicly-traded firm and still was not.

According to the Times, Sibur said in a statement that any negotiations with Navigator over the years were carried out by its executives, not its major shareholders, and that “no meetings were held with Mr. Ross.”

Neither Navigator nor Appleby were immediately available for comment Sunday evening. Reuters could not immediately reach Timchenko and Shamalov for comment.

Scrutiny of Trump administration officials’ possible ties to Russia has intensified as a result of probes into alleged Russian interference in the 2016 US election.

In its report, the Times said Ross had kept the investment in Navigator, which increased its business dealings with Sibur even as Western nations sought to punish Russia’s energy sector over Putin’s incursions into Ukraine.

Navigator was mentioned in Ross’s 57-page public financial disclosure report filed in December, before he officially joined the Trump administration. The Times said the latest batch of documents provided more insight into his financial holdings.

“The Secretary recuses himself from matters focused on transoceanic shipping vessels,” the Commerce Department spokesman’s statement said, adding that Ross works closely with officials to ensure the “highest ethical standards.”

Queen’s taxes

Citing the Appleby documents, Britain’s Guardian newspaper said millions of pounds from Queen Elizabeth’s private estate, the Duchy of Lancaster, had been invested in a Cayman Islands fund as part of an offshore portfolio never before disclosed.

Reuters could not independently confirm the Guardian report.

The newspaper said the Duchy had used offshore private equity funds designed to shield investors in the United Kingdom from having to pay US tax on their holdings.

A spokesman for Buckingham Palace declined to comment.

A spokeswoman 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.”

The spokeswoman also said the Queen voluntarily pays tax on any income received from the Duchy.

Citing the documents, Guardian also reported that international trading firm Glencore had “secretly loaned tens of millions of dollars” to Israeli businessman Dan Gertler, after enlisting him to secure a mining deal in the Democratic Republic of Congo.

The British newspaper said Gertler had denied any wrongdoing. Reuters was not immediately able to contact him.

Glencore said in a statement sent to Reuters on Sunday, but dated Oct. 27 and addressed to the ICIJ, that it had made a loan to a company affiliated to Gertler in 2009 on commercial terms and that it was fully repaid.

“In February 2009, Glencore Finance (Bermuda) Ltd made a loan to Lora Enterprises Limited (Lora), an entity affiliated with Mr Gertler,” the company said.

“The loan to Lora was made on commercial terms negotiated at arm’s length,” it said. “The loan was fully repaid by Lora in 2010.”

Oxfam called on the EU and its member states to agree on strong measures against tax dodging, and it applauded the work of the International Consortium of Investigative Journalists, which published the so-called Paradise Papers.

Oxfam’s EU policy advisor on inequality and taxation Aurore Chardonnet stated:

“Tax dodging fuels poverty and inequality. When the super-rich and corporations Apple, Nike and Glencore dodge taxes it is ordinary people, and especially the poorest, who pay the price.

“EU governments talk tough on fighting tax evasion and tax avoidance, but so far haven't taken real action. Many EU countries, including Europe’s financial powerhouse Germany, refuse to support crucial tax transparency measures like requiring companies to disclose publicly where they generate their profits, and where they pay their taxes.

“The irony is, EU countries are currently negotiating a future EU blacklist for tax havens, but those talks themselves completely lack transparency. Undue political pressure on the negotiations means the EU risks ending up with an empty blacklist.

“Without efficient EU rules, people will continue only finding out about tax dodging when there's another scandal such as the Paradise Papers – in other words, when it's already too late.

“Corporate tax dodging alone costs poor countries at least $100 billion every year - enough money to provide an education for the 124 million children who aren’t in school and fund healthcare that could prevent the deaths of at least six million children every year.”

Molly Scott Cato, a British Green MEP and member of the European Parliament’s Panama Papers committee:

"These leaks offer another disturbing glimpse into the murky world of offshore finance, used by wealthy individuals and big business for tax evasion and tax avoidance.

"Once again, the UK and its offshore territories are at the heart of things. This makes it all the more outrageous that the UK is among the countries blocking progress on the future EU blacklist. If the UK is to have a positive future trading relationship with the EU, it is going to have to clean up its act when it comes to tax. Regulating the legal limbo of its overseas territories is likely to be a key demand and the UK government should use the powers at its disposal to end their tax secrecy.

"The report of the Panama Papers inquiry has already come up with concrete policy proposals that could help to prevent the activity revealed in the Paradise Papers. That another major leak has emerged before we have even completed our work on the last one shows the scale of the problem we face. The European Parliament needs a permanent inquiry committee, along the lines of those already seen in the US Congress, to enable the parliament to react quickly to future reports of tax avoidance, evasion and money laundering."

The Member of German Parliament and former Vice-Chair of the European Parliament’s Panama Papers Inquiry Committee, Fabio De Masi (DIE LINKE., formerly GUE/NGL) commented:

"International corporations, the super-rich, the powerful and criminals push taxes down to near zero. The mostly legal business models shed light on the failure of international tax policy and need swift response. Financial flows to tax havens have to be penalized via source taxation at EU member state level. We need a public registry of the true beneficial owners of letterbox companies and trusts as well as the revocation of business licenses for banks, lawyers and accountancy firms helping serious tax crimes. Europe needs selective capital controls and a coordinated wealth levy for the super-rich to fund public investment.

De Masi concluded:  "The European Parliament should push for greater investigative competences such as a right to summon witnesses under oath as in the US-Senate and establish a permanent subcommittee on corporate taxation.“

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