Here’s a guide to the major revelations in the Paradise Papers


November 5, 2017

Hundreds of journalists have begun publishing articles based on a massive document leak from companies that administer offshore accounts.

November 5, 2017

Hundreds of journalists have begun publishing articles based on a massive document leak from companies that administer offshore accounts.

The files, dubbed the Paradise Papers, reveal a vast financial network—beyond the reach of most governments—maintained by the world’s wealthiest people. They include commerce secretary Wilbur Ross, Queen Elizabeth of the UK, and a close advisor to Canadian prime minister Justin Trudeau. More big names are expected later this week.

Here is our guide to the major revelations thus far.

What are the Paradise Papers?

The 13.4 million documents come from Appleby, a law firm based in Bermuda that specializes in offshore accounts, and its spin-off company Estera. They were leaked to the German newspaper Sueddeutsche Zeitung, which shared the files with the International Consortium of Investigative Journalists (ICIJ) and news organizations around the world. The source of the Paradise Papers has not been revealed.

Appleby, the law firm at the center of the documents, bills itself as “one of the world’s largest providers of offshore legal services.” Offshore accounts aren’t usually illegal unto themselves, but they can be used to hide money from governments that would levy taxes on them.

Sueddeutsche Zeitung and ICIJ won a Pulitzer prize this year for their work on the Panama Papers, another stash of offshore files.

Kremlin connections to investments in Facebook and Twitter

Companies controlled by the Russian government quietly invested in several major Silicon Valley startups, including Facebook and Twitter, the Paradise Papers reveal.

The investments were funnelled through DST Global, the venture capital firm owned by Russian billionaire Yuri Milner. VTB Bank, which is owned by Russia, put $191 million toward Milner’s 5% stake in Twitter in 2013. Gazprom, also controlled by the Kremlin, partnered with an offshore company to finance his 8% stake in Facebook in 2012. Milner has since sold those holdings.

Milner told the New York Times the investments by Russian state-owned companies were purely “a commercial arrangement” and had no political connections. “It was a different time,” he told ICIJ. “It never even occurred to me back then that VTB Bank was not just another investor for us.” But the deals are likely to be seen in a different light after the Russian government used accounts on Facebook and Twitter to influence the 2016 US presidential election.

Wilbur Ross’s business ties to Putin’s inner circle

US commerce secretary Wilbur Ross maintains a stake in a shipping company that is closely linked to the family of Russian president Vladimir Putin.

According to the Paradise Papers, Ross owns between $2 million and $10 million in shipping company Navigator. The second-biggest client of Navigator is Russian gas company Sibur. Kirill Shamalov, who is Putin’s son-in-law, has been deputy chairman of Sibur’s board and until April owned more than a fifth of the company. (He has since reduced his ownership share.)

Gennady Timchenko, a close friend of Putin, is also a part-owner of Sibur. Timchenko has been banned from entering the US since 2014. Sibur’s main shareholder is Leonid Mikhelson, reportedly Russia’s richest man and CEO of gas company Novatek, which has twice been sanctioned by the US government.

Democratic senator Richard Blumenthal accused Ross of misleading Congress in his confirmation hearing, telling NBC that senators had got the impression he had divested all shares from Navigator and were also unaware of the company’s links with Russia.

Ross’s spokesperson told NBC that he recuses himself from issues related to transoceanic shipping and that he “has been generally supportive of the administration’s sanctions of Russian business entities.” He reportedly did not respond to the accusation of misleading Congress.

The queen’s offshore accounts

Queen Elizabeth II has investments in several offshore funds that are widely considered to be tax havens. Her estate made the disclosure after some of the offshore funds, in the Cayman Islands and Bermuda, turned up in the Paradise Papers.

The queen’s estate, known as the Duchy of Lancaster, said the investments were legal and did not provide her with any tax advantages. The Cayman Islands and Bermuda funds amount to £10 million ($13 million) of the estate’s £519 million ($679 million) in total assets. The duchy also disclosed that it “invests in a fund domiciled in Ireland,” but didn’t provide any details.

Through these offshore funds, the queen’s money was invested in some controversial companies, including BrightHouse, which leases home appliances and furniture to people who can’t afford to buy them outright. BrightHouse has been censured for exploiting its customers. The duchy said it wasn’t aware of the investment in BrightHouse or other companies.

Trudeau’s top adviser shifting money offshore

Canadian Prime Minister Justin Trudeau has made a point of bashing “people not paying their fair share of taxes.” In March, he promised to do a “better job of getting tax avoiders and tax frauders.”

Somewhat awkwardly, the Paradise Papers show that Stephen Bronfman, one of the men Trudeau owes his political career to, has stashed millions of dollars in the Cayman Islands. That may have helped him legally avoid taxes in Canada, the US, and Israel, the Guardian writes.

Bronfman is a childhood friend, close advisor, and chief fundraiser for Trudeau. He is an heir to the Seagram distillery fortune.

Who else?

There are questions over whether Russian-Uzbek oligarch Alisher Usmanov has broken English Premier League rules by owning shares in Everton soccer club as well as his declared stake in Arsenal.

  • Mining giant Glencore secretly loaned Israeli billionaire Daniel Gertler $45 million, after he was signed up to negotiate a controversial deal in the Democratic Republic of Congo.
  • U2 frontman Bono invested in a shopping center in Lithuania via a holding company in Malta, a low tax jurisdiction.
  • Wesley Clark, a retired US four star general and NATO’s former supreme commander in Europe, directed a gambling company with offshore subsidiaries.
  • Queen Noor of Jordan is the beneficiary of two trusts in Jersey, an offshore UK crown dependency, one of which reportedly holds her British estate.
  • Brazil’s finance minister, Henrique de Campos Meirelles, started a foundation in Bermuda “for charitable purposes.” He says it will support education charities after his death.
  • Ugandan foreign minister Sam Kutesa started a trust in the Seychelles to manage his wealth offshore.

Courtesy/Source: Quartz