Paradise Papers reaction: ‘That was then, this is now’

Financial service industry officials involved in the industry’s offshore and cross-border sector reacted on Monday with resigned acceptance to the latest leak of stolen data from an offshore law firm, but many also demanded that more acknowledgement be made by the industry’s critics of recent changes.

Such changes – including the OECD’s Common Reporting Standard, which is introducing automatic information exchange across national borders beginning within months – they argue, have already resulting in billions of US dollars’ worth of undeclared wealth being brought out of hiding, often through pre-CRS tax amnesty schemes.

Among those calling on Monday for greater recognition of the changes that have been brought to bear on the cross border financial services industry was José Ángel Gurría, secretary general of the Paris-based Organisation for Economic Co-operation and Development, who said the practices detailed in the latest trove of leaked offshore investment documents have been dying out.

Whether you’re talking about the Panama Papers or the Paradise Papers, you’re talking about “a legacy that is fast disappearing”, Gurría was quoted as telling a London audience attending a Confederation of British Industry conference.

“This could not be repeated anymore, because of the joint work that you, your governments and the OECD have done in the last few years,” he added.

Gurría’s comments came the day after the US-based International Consortium of Investigative Journalists rolled out its “Paradise Papers” trove of documents, which as reported, was stolen this time from the Bermuda outpost of the Appleby law firm.

In April 2016, the ICIJ was behind a similar leak of stolen investment information, from the Panamanian law firm Mossack Fonseca.

According to the BBC, the 11 million Paradise Papers documents were passed by an as-yet-unidentified source to Germany’s Süddeutsche Zeitung newspaper, which then shared them with the ICIJ, and which, in turn, passed them to some 107 media organisations, including the BBC’s Panorama TV show and the UK’s Guardian newspaper, in 78 countries around the world.

World was ‘very different place’

Miles Dean, founding partner of  London-based Milestone International Tax, expressed some disbelief that the “illegal” theft of the documents from Appleby was receiving less attention than the stolen documents’ contents, some of which date back as far as 1950.

“Some of the documents relate to matters 75 years ago, when the world was a very different place,” Dean said.

“Recent developments have made a significant impact on the use of tax havens, namely the common reporting standard (CRS) and FATCA. Both FATCA and CRS are automatic exchange of information protocols that mean privacy is no longer what it used to be.

“Just because an individual makes an investment that is based offshore does not mean that they have done anything wrong – if they fail to disclose it (and the return they make) on their tax return, then that’s tax evasion.

“But to make the quantum leap and suggest that everyone from the Queen to Bono is dodging tax because some of their investments are made via Bermuda, Cayman or Malta is stupidity on a grand scale.”

As for Lord Ashcroft, Dean went on, referring to the Tory party donor who features prominently in the Paradise Papers for his handling of a particular Bermuda-domiciled trust in which he was said to have deposited “hundreds of millions of dollars” in 2000, “if he is non-UK domiciled, then he will benefit from the remittance basis of taxation.

“The fact that he took steps to mitigate his UK liability legally is a matter for him and his conscience, not the media.”

Dean said comments on Monday made by shadow chancellor John McDonnell, about possible remedies for the perceived problem of offshore tax abuse by wealthy Britons, were  “wide of the mark”, since imposing a withholding tax on dividends would “not stop tax abuse it would simply make the UK less competitive as a jurisdiction for large multinationals, at a time when we need to be more competitive than ever”.

Appleby: ‘Clear political agenda’

The law firm at the centre of the latest offshore tax evasion storm, Appleby, steered journalists on Monday  to an 1,800-word-plus statement on its website, which among other points, noted that the journalists covering the story “do not allege, nor could they, that Appleby has done anything unlawful. There is no wrong-doing.

“It is a patchwork quilt of unrelated allegations with a clear political agenda and movement against offshore.”

“We wish to reiterate that our firm was not the subject of a leak but of a serious criminal act,” the statement continues.

“This was an illegal computer hack. Our systems were accessed by an intruder who deployed the tactics of a professional hacker, and covered his/her tracks to the extent that a forensic investigation by a leading international cyber and threats team concluded that there was no definitive evidence that any data had left our systems.

“This was not the work of anybody who works at Appleby.”

To view the Appleby statement in full, click here. 

preloader
Close Window
View the Magazine





You need to fill all required fields!