Guide to the Paradise Papers

A lot of it is legal, but that’s exactly the problem. It’s not that they’re breaking the laws, it’s that the laws are so poorly designed that they allow people, if they’ve got enough lawyers and enough accountants, to wiggle out of responsibilities that ordinary citizens are having to abide by. Here in the United States, there are loopholes that only wealthy individuals and powerful corporations have access to. They have access to offshore accounts, and they are gaming the system. Middle-class families are not in the same position to do this. In fact, a lot of these loopholes come at the expense of middle-class families, because that lost revenue has to be made up somewhere.

– President Barack Obama, April 5, 2016


Secrecy allows ostensibly respectable people and companies to profit from behavior that would be scandalous if made public. Activities do not have to be illegal to be reprehensible. This truism is a handy prism through which to view the latest leak investigation by the International Consortium of Investigative Journalists.

Much of the leak comes from the files of Bermuda-based Appleby Global. The multinational law firm has offices in tax havens across the world from the Cayman Islands to the Seychelles. The firm amassed a huge American clientele. The almost seven million records reviewed by journalists contain at least 31,000 individuals and corporate clients who are U.S. citizens or have U.S. addresses.

Appleby began protesting weeks ago – when it preemptively revealed the leak – that it broke no laws. The data covers decades of the firm’s work in the secrecy world, during which requirements for client review and government reporting have changed dramatically. It appears that the firm was cognizant of those changes and tried to keep up. As Obama said, the scandal is in how much is legal.

Appleby’s clients, nonetheless, had plenty to hide.

U.S. Commerce Secretary Wilbur Ross, for example, seems to have done a poor job of disclosing his extensive financial dealings as required by disclosure laws – a remarkably consistent failing of Trump administration officials. If Ross had come clean, it would have been noteworthy that he remains in business with a shipping company that reaps huge profits from its dealings with Putin-connected relatives and oligarchs.

Not surprisingly, a slew of folks in Trump’s orbit from Sheldon Adelson to Rex Tillerson are found in the Appleby files.

In 2011, an American-based Russian tech mogul appears to have been a pass-through for the Russian-state financial institution VTB Banks to invest $191 million in Twitter. Gazprom, the Russian government-controlled energy firm, indirectly held a big stake in Facebook through the secrecy world. These revelations take on added significance given how Russia then used both companies to try and influence the American presidential election.

Apple CEO Tim Cook knows that hiding corporate profits from the taxman is publicly toxic. It’s antithetical to Apple’s hip brand and it doesn’t mesh with the progressive-persona Cook peddles to eager anchors on the national news. It also contradicts his testimony before Congress, where he has insisted his company does not employ the secrecy world to escape the taxman. Not exactly true, it turns out. When Irish tax shelters closed, Apple actively went looking to park cash in other tax havens, landing in Jersey.

The global sports brand Nike is another Appleby client. The firm helped Nike escape billions of dollars in taxes on its famous “Swoosh” trademark. These maneuvers robbed much needed tax revenue from American communities where Nike apparel is popular but earned the company’s CEO millions of dollars in bonuses.

The Queen of England had money invested in Brighthouse, a firm that sold rent-to-own household goods to impoverished Britons in exchange for payment plans with interest rates as high as 99.9 percent. A painful truth for Her Majesty as she sips tea from fine bone china in her ornate palace: some of the vast wealth she enjoys comes off the backs of her subjects who can least afford to pay it.

In Canada, Prime Minister Trudeau’s close friend and adviser Stephen Bronfman along with Liberal party bigwig Leo Kolber secreted millions of dollars in Cayman trusts which likely saved them a bundle on taxes. Such behavior is not particularly surprising from the global wealthy. However, that information would have been highly relevant when Bronfman and Kolber lobbied against legislative proposals to tax income from offshore trusts. It might have also cast Trudeau’s promise to crackdown on the secrecy world in front of the U.N. General Assembly in a different light.

This newest leak investigation should increase attention on how multinational corporations feed corruption in the developing world. A poster child for such behavior is Glencore Plc, a massive mining and agriculture conglomerate. It has left a trail of dangerous working conditions, contaminated air and soil and struggling communities from Australia to Argentina. Glencore was such a big Appleby client, it had its own room at the law firm. The company’s highly suspect efforts to win mining contracts, particularly in the Democratic Republic of the Congo (DRC), were aided and abetted by the secrecy world.

This line from ICIJ’s story on Glencore is a fitting epitaph to Paradise Papers:

“Despite living in the DRC’s richest mineral region, 60 to 70 percent of the inhabitants of the region that is home to Glencore’s operations are reported to live in poverty.”

#secrecyworld, #panamapapers, #paradisepapers


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