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The Paradise Papers: 7 things to know about the latest global corruption scandal

by / 0 Comments / 10/11/2017

On November 6, yet another massive data leak revealed how the rich engage in tax evasion schemes and maintain secret links with questionable financial deals around the world. With Panama Papers and Wikileaks setting the precedent, this is the second largest data leak of financial and legal documents.

 

1.What is it all about?

13.4m files spanning from 1950 to 2016 exposing how politicians, celebrities and multinationals secretly sheltered their wealth away from tax controls.

2.Why ‘Paradise’?

Because of the paradise-like profiles of the majority of the jurisdictions whose financial affairs are being exposed. Tax havens in the Caribbean and Pacific Islands including Bermuda, where Appleby is based.

3.What do they include?

6.8m documents relate to Estera and Appleby, a law firm that helps clients to set up and register companies and trusts in overseas jurisdictions with low or zero tax rates. Six million documents include details from 19 tax havens, mostly in the Caribbean.The rest comes from Asiaciti Trust, a Singapore-based international trust. These are all offshore service providers.

4. Offshore, Tax havens?

An offshore service provider is a company based outside the country where it carries out its activities. Setting up such a company is not illegal per se.

Tax havens are jurisdictions where personal and business taxes are likely to be very low, or even non-existent. These countries often attract individuals and companies who are seeking to pay less tax than they would elsewhere.

5. How were the documents obtained?

The material was obtained by German newspaper Süddeutsche Zeitung, which also exposed the Panama Papers 18 months ago and will not comment on its sources. Investigation has been carried out by The International Consortium of Investigative Journalists (ICIJ), who also investigated the Panama Papers, along with nearly 100 media partners, including the Guardian and BBC.

6. What are the key findings?

  • The offshore financial activities of more than 120 political figures and world leaders, including: Queen Elizabeth’s investments in Cayman Islands, Donald Trump’s cabinet members, advisors and donors, and Justin Trudeau’s chief fundraiser.
  • The tax manoeuvring of nearly 100 multinational corporations, including Apple and Nike.
  • Tax haven shopping sprees by multinational companies in Africa and Asia that use shell companies in Mauritius and Singapore to reduce taxes
  • Alliances between secretive companies and Glencore, the world’s largest commodity trader, to facilitate negotiations in the Democratic Republic of the Congo for valuable mineral resources by securing mining rights.
  • Details of how the biggest names in entertainment used tax-avoidance structures to protect their wealth

7. Why should we care?

  • We are all part of the system. When taxes are being avoided, it is the public services the majority of people rely on that are affected.
  • Tax havens contribute to inequality worldwide. An estimate amount of $10 trillion is held in these offshore operations. This massive amount is concentrated not in the hands of the rich, but the mega-rich.
  • Offshore wealth plays a leading part in inflating London property prices. As of now 39,917 properties in London are owned by offshore companies. They encourage and prioritise the construction of luxury properties over affordable housing for ordinary people, creating social conflict over unaffordable prices.
  • Other than lack of fairness and inequality, offshore operations are extremely secretive thus enabling the wealthy to hide their dealings and break the law.

Political Scientist, Msc candidate at King’s College London Department of International Development.