On November 5, the German newspaper Suddeutsche Zeitung published a report on the large-scale leak of financial documents which deal with the world’s richest and most influential people’s investments in tax-free offshore jurisdictions. The documents have been dubbed the Paradise Papers, because the scandal involves offshore firms registered on islands such as Bermuda, Cayman, or Malta.
According to the DW, this information was obtained by the International Consortium of Investigative Journalists (ICIJ). The BBC notes that the journalists have obtained access to 13.4 million documents, which mention over 120 politicians from almost 50 countries around the world, as well as businesspeople, high-ranking officials, athletes, and companies. Most disclosures came from Appleby, a law firm registered in Bermuda.
The Paradise Papers mention the following influential figures: Stephen Bronfman, who is a key adviser to Prime Minister of Canada Justin Trudeau, former deputy chairman of the UK Conservative Party Lord Ashcroft, US President Donald Trump’s advisers and associates, former German Chancellor Gerhard Schroder, as well as companies such as Apple, Nike, Bayer, and Siemens.
In a surprising and high-profile development, the ICIJ listed the Queen of the United Kingdom Elizabeth II among the figures involved in the Paradise Papers affair. About 10 million pounds of the monarch’s private wealth has been invested in offshore jurisdictions of the Cayman Islands and Bermuda. However, these funds are managed not by the Queen herself, but by the Duchy of Lancaster, which provides the Queen with an income. “There is nothing illegal in the investments and no suggestion that the Queen is avoiding tax, but questions may be asked about whether the monarch should be investing offshore,” the BBC article says.
The Paradise Papers contain some information on Ukraine as well. Radio Svoboda notes that according to the documents, lawyers from the Ukrainian firm Avellum, representing the interests of Petro Poroshenko, wrote to lawyers from Appleby in June 2014. According to the journalists, the Roshen Corporation tried to reduce its tax liabilities in this way.
In addition, the papers mention Anton Pryhodskyi, a former associate of former president Viktor Yanukovych. “According to a TUC financial statement filed in 2015, as of December 31, 2014, the company’s assets were valued at about 6.6 million dollars and consisted of a vessel under construction. It also reported a loss of about 25,100 dollars, which allowed it to pay no income taxes for 2014,” the ICIJ website says. Valerii Voshchevskyi, a former vice prime minister of Ukraine, is among other Ukrainian names on the list.
According to the media, the information released on November 5 is only a small fraction of the data obtained by the journalists, and new exposures will keep appearing for a week.
Most leading UK media outlets carried reports on the Queen’s offshore investments on November 6.
The Daily Mail’s front-page was headlined as follows: “Paradise Papers: Queen Dragged into 10 Million Pound Offshore Tax Row.”
The Daily Telegraph published an article entitled “Paradise Papers: Tax Haven Secrets of the Super-Rich Exposed,” which states that disclosure of information “will increase the pressure on the government to combat legal tax evasion schemes.”
The Mirror’s column states that the Queen now confronts difficult questions. Additionally, the publication assumes that Elizabeth really did not know where her money was being invested, but now in response to the disclosure she should “hire fresh courtiers for sound advice.”
The Guardian explains that the offshore industry began to grow in the 1970s, and has since developed into a “sprawling kingdom for the rich.” The publication says that most people do not understand how “tax havens” work, but they do not have to because they do not have enough money to consider using offshore jurisdictions. The media outlet believes that the only relevant question is “Is this fair?”
The Day asked an expert to comment on this new leak of information on offshore investments and, in particular, how the Paradise Papers will affect the image of the British Queen.
“CITIZENS EXPECT THE HEAD OF STATE TO MAINTAIN THE HIGHEST STANDARDS OF RESPONSIBILITY”
Bohdan TSIUPYN, London-based Ukrainian journalist:
“When it comes to the Queen being mentioned, this attracts a lot of serious attention in the UK, because everything that is connected with the head of state interests people.
“First of all, it should be noted that London-based experts note, when commenting on the issue which is now at an early stage, that nothing unlawful has occurred and no violations of laws have been recorded. Also, there is no question of violating tax laws. In addition, it is noted that Elizabeth II did not make these decisions herself, as this was done by a company that manages the royal household’s finances instead.
“But it is important that, in the case of taxes, the public’s attention will be quite close, as the Queen and the royal household itself receive money from the British government. In fact, British taxpayers allocate serious money (some hundreds of millions of pounds a year) to finance the activities of the Queen and her household. With regard to taxes, finances, activities of people who own serious wealth (and, as is known, the royal family is definitely not poor, and the Queen is considered one of the richest women in the world), the question of social and government responsibility arises. British citizens expect the head of state to maintain the highest standards of responsibility, including social responsibility.
“When it comes to tax payments, a person who has a lot of money and is in the position of head of state, obviously, should pay very serious attention to the tax payment issue. Therefore, simply dismissing this negative attention directed at the Queen and the royal household will be very difficult and effectively impossible. I think that it makes sense to wait and see how the situation will develop further, but now the Queen as head of state and the activities of the royal household will be scrutinized exactly from the perspective of their responsibility to society.”
In your opinion, what this trend of increasingly frequent and large-scale leaks of such high-profile information is about? What is the reason for it and what does it mean?
“The public, especially after the financial crisis of 2008, is growing more concerned about the role of big money in national economies and the international economy as a whole. The secretiveness and recklessness of some financial institutions and bodies, and in particular how they treated huge sums of money, and very often not their own, but the money of people who kept their savings on deposits, was revealed. That is, when people saw that the financial situation could be such a serious threat to their countries and the world economy, then the growing attention started to be paid to the secretive, confusing nature of this sphere.
“Nowadays, these repeated information leaks show that one of the biggest offshore problems is their secretiveness. This is not a violation of the laws, these structures operate within the laws of these countries or territories. But given that through these God-forsaken territories, huge amounts of money can be funneled and major transactions conducted, which few people know about but which can threaten everyone, it is obvious that they are getting more attention now.
“Taxes are the foundation of country and society. If people, big companies do not pay taxes, then there is no money to pay pensions, fund education, healthcare, etc.
“The question arises as to what taxes are: are they something anyone should avoid paying or something that people should be proud of paying. Many people believe that paying taxes is a great social responsibility.
“I remember a conversation at one of Davos economic forums with Petro Poroshenko, when he was not yet president. I asked him what he considered to be more important: engaging in charity work or paying taxes. Then he told me that in his opinion, paying taxes was much more important than giving money to charity. After all, through charity work, people publicize their goodwill gestures, but if an entrepreneur and their company openly pay taxes without hiding money in offshore jurisdictions, then they make a very important contribution to their country. Paying taxes and the ability of the state to collect taxes are one of the most important factors in the survival of the country and its development.”
