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The Paradise Papers


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Thought this might deserve it's own topic.

A massive investigation by the Guardian and other papers and news sites about tax evasion and off shore holding companies where tons of big companies and rich and famous people have used the loopholes and "creative" tax planning to avoid paying taxes.

Some of the names on the list are pretty extraordinary, among them Bono and Trump's secretary of Commerce Wilbur Ross.


What are the Paradise Papers?

The name refers to a leak of 13.4m files. Most of the documents – 6.8m – relate to a law firm and corporate services provider that operated together in 10 jurisdictions under the name Appleby. Last year, the “fiduciary” arm of the business was the subject of a management buyout and it is now called Estera.

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 What are the Paradise Papers? – video

There are also details from 19 corporate registries maintained by governments in secrecy jurisdictions – Antigua and Barbuda, Aruba, the Bahamas, Barbados, Bermuda, the Cayman Islands, the Cook Islands, Dominica, Grenada, Labuan, Lebanon, Malta, the Marshall Islands, St Kitts and Nevis, St Lucia, St Vincent, Samoa, Trinidad and Tobago, and Vanuatu.

The papers cover the period from 1950 to 2016.

How many media organisations have been looking at the data?

The Guardian is one of 96 media partners in the project. A total of 381 journalists from 67 countries have been analysing the material.

Who got the documents – and how?

The leaks were obtained by the German newspaper Süddeutsche Zeitung, which also received the Panama Papers last year. Süddeutsche Zeitung shared the material with the International Consortium of Investigative Journalists, a US-based organisation that coordinated the global collaboration. Süddeutsche Zeitung has not, and will not, discuss issues around sourcing.

Do the Paradise Papers focus on companies or individuals?

Both. They are united by one thing – money. Some of the world’s biggest multinationals feature in the leak, including Apple, Nike and Facebook, as well as some of the richest people in the world, from the Queen to Bono, and from the stars of British sitcoms to the stars who grace Hollywood Boulevard.

What do the documents show?

The files show the offshore empire is bigger and more complicated than most people thought. And even companies such as Appleby, which prides itself on being a standard bearer in the field, have fallen foul of the regulators that try to police the industry.

The files set out the myriad ways in which companies and individuals can avoid tax using artificial structures. These schemes are legal if run correctly. But many appear not to be. And politicians around the world are beginning to ask whether they should be banned. Are they fair? Are they moral?

A fundamental question posed by the Paradise Papers is: has tax avoidance in all its guises gone too far?

What does Appleby say?

The firm has denied any wrongdoing, either by itself or by any of its clients. But it has conceded that it is not infallible and has tried to learn from its mistakes. The company has agreed to take part in any formal inquiries that come out of the disclosures. Estera has declined to comment.


Edited by sne
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"What do the documents show?

The files show the offshore empire is bigger and more complicated than most people thought. And even companies such as Appleby, which prides itself on being a standard bearer in the field, have fallen foul of the regulators that try to police the industry."

Where do the files show that, exactly?

I think that when you drill down, the files will show nine tenths of chuff all, really.  The managing partner of Appleby in the IOM is a good friend of ours, and to my knowledge, Appleby on the IOM at least have never fallen foul of the FSA (the regulator) over there.

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3 hours ago, Risso said:

"What do the documents show?

The files show the offshore empire is bigger and more complicated than most people thought. And even companies such as Appleby, which prides itself on being a standard bearer in the field, have fallen foul of the regulators that try to police the industry."

Where do the files show that, exactly?

I think that when you drill down, the files will show nine tenths of chuff all, really.  The managing partner of Appleby in the IOM is a good friend of ours, and to my knowledge, Appleby on the IOM at least have never fallen foul of the FSA (the regulator) over there.



When Robert Woods, an ex-cop from Liverpool took a job in early 2006 as a compliance manager for Appleby, the global offshore law firm, he joined an organisation that had problems.

Appleby’s Cayman Islands office, where he worked, for example, had more than 600 clients on its books whose records were labeled “non-compliant” - meaning that the offshore firm had no current IDs, contact information or other details that helped the firm make sure it wasn’t setting up shell companies and other structures for criminals or corrupt politicians.

Five years later, Woods had moved up in the firm, taking over as its director of compliance. But things hadn’t improved much - at least according to a PowerPoint presentation he appears to have put together sometime near the end of 2011.

The 44-page training slideshow, which featured images from the HBO mafia drama The Sopranos, recalled lowlights of Appleby’s recent history. Under a slide titled “Terrorist Financing Offences,” the notes read: “We have a current case where we are sitting on about 400K that is definitely tainted and it is not easy to deal with.”

In another case, Woods’ notes indicated, Appleby set up a trust for a client to buy property in London and accepted money on his behalf “without question.”

Appleby later learned, the presentation acknowledged, that the trust was owned by a former Pakistani official who had been charged with embezzling public money and had “infiltrated allegedly corrupt funds into our business.”

“Some of the crap we accept is amazing totally amazing,” the presentation’s notes said beneath a slide listing the information Appleby employees needed to know about its clients...

Appleby’s internal files show, however, that that even when offshore law firms invest large amounts of money and effort to stay reputable, the secrecy and the lure of financial gain at the heart of the shadow economy make it difficult for offshore operatives to avoid doing business with criminals, corrupt politicians and other questionable clients.

“MONEY LAUNDERING IS A DIRTY CRIME,” screamed the notes to Woods’ 2011 PowerPoint presentation, appearing in all caps for emphasis. “THERE IS USUALLY ALWAYS A VICTIM AT THE BOTTOM OF THE PILE AND A RICH PERSON AT THE TOP.”

Woods, who is still Appleby’s director of compliance, declined to comment when ICIJ asked him whether, in his view, the firm had improved its client-screening practices since 2011.

The presentation is one of at least four PowerPoint offerings drafted by Appleby’s compliance team between 2007 and 2015 that raised questions about how well the firm checked out its clients. It is unclear whether these presentations were ultimately made before Appleby employees. But in each of them, speaker’s notes at the bottom of each slide provide unguarded comments from insiders about Appleby’s compliance fumbles...

On June 29th, 1993, with memories of US combat in Kuwait still fresh, a House of Representatives subcommittee convened to discuss Iraq’s nuclear weapons program. Iraq had breached an agreement to allow United Nations inspectors to examine the country’s stockpile and international concerns were high.

“Iraq continues to flaunt its military power, massacring its own citizens in the North, and Iraqi Shiites in the South,” Democratic Congressman Tom Lantos of California said in opening remarks just after 10am that day.

Lantos read into the record a report from his subcommittee staff. Among its findings was that Crescent Petroleum, a major private oil company, was being investigated by U.S. authorities to determine whether it was a “front company” for Iraqi President Saddam Hussein. Crescent was perhaps not manufacturing weapons itself, the report stated, but “it was certainly linked to the principal Iraqi organization that was.” Crescent, then as now, denied wrongdoing.

The June 29th hearing was broadcast live in the US But it doesn’t appear to have been noticed by Appleby’s office in Bermuda.

Crescent Petroleum, owned by Abdul Hameed Dhia Jafar, had been an Appleby client since 1984. For nearly 20 years, Appleby’s relationship with Crescent proceeded smoothly, according to the law firm’s files. It was only when Crescent Petroleum sought legal help from Appleby to restructure the company in 2013 that the firm appeared to notice his background for the first time - including the fact that his brother was the head of Iraq’s nuclear weapons program under Saddam Hussein.

“We have had this relationship for some time now,” one Appleby lawyer wrote. “How can we not have known this earlier?”

While rules and regulations vary, in many of Appleby’s busiest offices, great chunks of its work are governed by rules that require offshore providers like it to obtain and keep accurate records on who uses its services, for what purposes and where the money comes from.

Another client who appeared to fall through the cracks was Ayre Laniado, director and co-owner of Omega Diamonds, a Belgian company operating on the Antwerp diamond exchange. In May 2013, Belgian news media reported Omega Diamonds had agreed to pay about $200 million to settle allegations by prosecutors and tax authorities that the company had illegally traded African diamonds. Omega did not admit liability and the case did not involve Laniado personally. Months later, Appleby accepted two payments from Laniado worth $5,000 into the law firm’s bank account on behalf of an offshore trust.

Later, when Laniado wanted to create a new trust, an Appleby employee noted news reports about his company’s legal problems but cleared the law firm to do business with him.

Appleby created the new trust for him in April 2014.

Woods, Appleby’s compliance director, was upset when he found out three months later. “This is a trust structure and the allegations are extremely serious and relate to blood diamonds,” Woods wrote to a colleague in July 2014. “Why was this not brought to my attention before the conflict check was cleared??”

Despite Woods’ concerns, Appleby kept Laniado as client.

Woods agreed that while Laniado was “high risk (due to involvement in the diamond industry), we have enough mitigating factors and information to be comfortable with the business; in fact it should be a good piece of business all around.”

But he lectured his colleagues that the episode represented a “failure of our processes.” He warned that the firm’s business units, such as Appleby Trust (Cayman) Limited, shouldn’t let the quest for short-term profits overshadow the need to follow rules that required Appleby to assess the risks Laniado posed and to know who he was and what he wanted to do offshore.

“What’s done is done, but going forward, whilst being commercial, please let us try to ensure that we don’t get carried away with fee earning potential,” Woods wrote. “The law firm must be cognisant of the fact that whilst they may be ‘raking in the fees’, the Trust company carries the significant risk in administering the subsequent structure. The Trust Co. must be aware that at the end of the day, if it all goes wrong, they will be left holding the ‘steaming turd’! (It is Friday and Holding the Bag did not sound strong enough!)”

Appleby was still acting as trustee for the Laniado’s trust as of early 2016, the firm’s internal records show.

Woods and Appleby did not respond to specific requests for comment.

Laniado did not reply to ICIJ’s repeated requests for comment. Laniado has previously stated that he has never had any involvement with blood diamonds...

Appleby knew the risks. Slap-bang in the center of PowerPoint slide prepared for a 2012 training session in Bermuda was a gray headstone bearing the name “Arthur Andersen,” a reference to the audit firm convicted for having destroyed documents relating to an investigation into the collapse of the energy giant Enron.

If the firm didn’t improve how it monitored clients, the presentation suggested, its employees could suffer the fate others caught up in high-profile financial scandals: David Duncan, the former Andersen auditor who pleaded guilty to obstruction of justice, and hedge fund manager Raj Rajaratnam, who was pictured in handcuffs as FBI agents led him away during his arraignment for a multimillion dollar securities fraud.

“We are exposed,” the slide show continued. “This is not the best we can do.”

Between 2005 and 2015, more than a dozen internal and regulatory examinations of Appleby’s offices in the Isle of Man, the Cayman Islands, the British Virgin Islands, Bermuda and London found flaws that could have involved Appleby in litigation and caused “serious financial and reputation consequences.”

A 2005 review by a regulatory agency, the Bermuda Monetary Authority, required Appleby’s trust company to improve 21 deficiencies in its performance and to obtain fresh, accurate records of its clients’ passports, addresses and the source of their wealth. Later, despite improvements, Appleby’s head of compliance then, Ian Patrick, wrote, “I still believe that a huge effort will be required before we can be considered to be an offshore leader from a compliance perspective.”

The following year, an internal audit by Patrick at the British Virgin Islands office looked at 45 client files and found that only one of them met Appleby’s standards. Of the five Appleby offices reviewed around that time, Patrick reported that only the Hong Kong office kept its documents “in good order.”

An internal audit of the Cayman Islands’ trust office in 2008 found the risk of breaking laws and Appleby’s own protocols to be “high” in more than half of all the metrics under review. The audit noted a risk of fraudulent activities and said Appleby “may not be complying” with the law.

A 2012 review by regulators in the British Virgin Islands found holes in Appleby’s procedures for dealing with high-risk politicians and associates. An internal 2015 spot-check of the Isle of Man office revealed other problems, including one offshore company, co-owned by a Palestinian official, for which Appleby’s had no detailed information about an $11.2 million loan.

When the Bermuda Monetary Authority audited an Appleby subsidiary in October 2014, it found “key or highly significant” weaknesses in nine areas. Nearly half - 46 percent - of the files reviewed by the agency lacked information on the origin of the money Appleby managed for its clients. There was “no evidence” that Appleby identified money laundering and terrorism financing risks, the agency said, and the firm had not adopted the recommendations from previous audits.

“These omissions have heightened the Authority’s concern about the firm’s regulatory compliance and control environment,” the agency said. In October 2015, an Appleby director disclosed in a confidential document to government regulators in the BVI that the Bermuda office had “settled” a fine imposed by Bermuda regulators after it conceded it had failed to follow up on many of the agency’s recommendations for fixing the weaknesses in its anti-money laundering net. Appleby’s internal records show that the firm set aside $500,000 for the fine, but its existence and size have never been publicly disclosed. There was “no public censure,” the director wrote, adding that Bermuda’s regulators “agreed to keep the matter entirely private.”

A spokesman for the Bermuda Monetary Authority told ICIJ it would not confirm or deny enforcement decisions. In 2016, the spokesman said, the BMA changed its policy and now publishes details of fines and other sanctions online...

Lawyers for Cannon and other investors alleged that Appleby helped transfer hundreds of millions of dollars back and forth in a “circular flow of funds” that netted Furtak and his family $20 million. Cannon’s lawyers asserted that “a monkey covering his eyes and ears may not have foreseen” the risks to the Canadian investors but that Appleby had no such excuse. In 2010, a judge found that there was a good case that Appleby had harmed people in Canada “by knowingly using” the money from Furtak’s trust and allowing that money to advance the fraud. Justice Strathy wrote that Appleby “simply did what Furtak” wanted it to do despite its obligations to know where money came from and how it was used.

Furtak was a long-standing Appleby client. Appleby had lent Furtak $2.6 million to buy property on a verdant peninsula in Costa Rica and administered at least three offshore trusts for him along with a 34-meter Jamaican -flagged yacht named Takapuna worth at least $5 million.

The class action against Furtak was settled at an early stage and Furtak denied wrongdoing. The tax program was designed in compliance with the law and Furtak continues to believe in its propriety, his lawyers told ICIJ.

The court case against Appleby rumbled on longer than the case against Furtak. In 2013, Appleby’s external lawyers told the firm’s board of directors that the firm’s role in the affair had been “fairly limited, but relatively significant.”

“There is some concern,” the confidential board minutes noted, that the Bermuda office “appears to have affected the various transfers in what has been described as an unquestioning manner.” The lawyers warned that Appleby could be found liable of enriching itself at the investors’ expense.

In the courtroom, Appleby defended its behavior and promised to take any judgment against it to the highest court it could. Privately, Appleby had feared a penalty as high as $28.5 million, documents show.

At one stage, an Appleby employee said that one strategy was “to wait this out in the hope that the plaintiffs could run out of gas.”

Cannon didn’t give up, and Appleby settled the case in May 2017 for $12.7 million without admitting wrongdoing.

The cost may be more than financial.

Behind the scenes, some at Appleby worried that it would take “a really long time” for the firm to absorb the financial and reputational impacts of the case.

Any employee with a copy of the PowerPoint presentations prepared years before by Appleby’s compliance team may have found it a good time to look back at this warning: “Every new investigation that reveals an offshore trustee as a puppet on strings controlled by a criminal” will be another “nail in the industry’s coffin.”


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3 hours ago, chrisp65 said:

To be fair to the queen, she can't be expected to know where every last little £10 Million has been squirreled away.


She had these concerns drawn to her attention, but was powerless to act, apparently.


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4 minutes ago, villa89 said:

Indeed. Gibraltar,  Monaco, Cayman islands, liechtenstein etc. all have the tax policies that they have for a reason.  

Indeed. We actually threatened the EU to of add ourselves to that list.

According to the Premier of Bermuda, they have very old established and well regulated tax laws, and totally aren't a tax haven. I'm sure the number of insurance companies and so on based on the island are there because of its stringent tax regime and weather, and not because they're saving money that way.

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For my sins I had the telly on in the background before, the odious The Wright Stuff was on. It did raise an interesting point though.

No shock that Lord Ashcroft was mentioned but remember when he was part of the govt, his investments were meant to be in a blind trust in which he had no control, apparently the Paradise Papers prove that this was far from the truth and thus did Lord Tory Paymaster break the law.

Bet no ones got the balls to arrest him though

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59 minutes ago, ender4 said:

Why are the called Paradise papers?

Who leaked these papers?

Because they contain information about money invested in places like Bermuda, Cayman Islands etc

Appleby, a tax-avoidance lawyer company, was hacked.

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