Data leak exposes offshore financial secrets A world wide problem

This will be a long ongoing story. Reporters have a couple of million document to sift through. This is just a tiny sample of what has been found so far.

Added an update for April 5th at the bottom.

April 4 2013

They sought the utmost secrecy in offshore tax havens. But now some of the world’s wealthiest citizens are having their undisclosed financial records laid bare.

An unprecedented leak of documents is revealing the closely guarded investment information of more than 100,000 people around the world, including hundreds of Canadians.

In what is believed to be one of the largest ever leaks of financial data, the Washington, D.C.-based International Consortium of Investigative Journalists has received nearly 30 years of data entries, emails and other confidential details from 10 offshore havens around the world.

CBC News has partnered with the ICIJ over the last seven months to gain exclusive Canadian access to the information. Thirty-seven media outlets in 35 other countries are also involved.

“This secret world has finally been revealed,” said lawyer and international tax expert Art Cockfield, a professor at Queen’s University in Kingston, Ont.

“I find it absolutely fascinating to get a look at this data dump. I think this is the very first time where people like myself, and maybe even government officials, have had access to this information.”

The files contain information on over 120,000 offshore entities — including shell corporations and legal structures known as trusts — involving people in over 170 countries. The leak amounts to 260 gigabytes of data, or 162 times larger than the U.S. State Department cables published by WikiLeaks in 2010.

“What we found as we started digging in the records is a pretty extensive collection of dodgy characters: Wall Street fraudsters, Ponzi schemers, figures connected to organized crime, to arms dealing, money launderers,” said Michael Hudson, a senior editor at the ICIJ, who worked with a team for months to sort through the information.

“We just found a lot of folks involved in questionable or outright illegal activities.”

There was also plenty of information related to legal offshore dealings. Offshore investments aren’t illicit as long as they are not used to evade taxes or launder money.

As reported by CBC News yesterday, the files show that a Canadian senator and her husband, one of the country’s most prominent class-action lawyers, were beneficiaries of a confidential offshore account in the Cook Islands that was used to make investments via Bermuda.

The leaked data also contains revelations about:

  • Elite Russian scammers who stole $230 million from the country’s treasury in a deadly heist that sparked a diplomatic row with the U.S.
  • The fraudster hit with the second-biggest fine in history from Ontario’s stock-market regulator.
  • Top German, French and Swiss banks that set up thousands of secretive companies in offshore havens for such clients as Thai and Pakistani politicians.

In many cases, the leaked documents expose insider details of how agents would incorporate companies in Caribbean and South Pacific micro-states on behalf of wealthy clients, then assign front people called “nominees” to serve, on paper, as directors and shareholders for the corporations — disguising the companies’ true owners.

Often the companies were set up through intermediary law and accounting firms, as well, adding a further layer of anonymity for investors.

“These people have no idea whatsoever about the activities of the companies that they are apparently responsible for. Now, this is a complete travesty,” said John Christensen, director of the Tax Justice Network, an international coalition that campaigns against offshore finance.

“But it is actually crucial to this process of not revealing who the real person is behind the company.”

Sometimes these methods were used by figures with known links to organized crime, arms dealers and ex-mercenaries. In other instances, documents reveal tax dodgers funnelling money offshore, beyond the eyes and arms of their nation’s treasury.

Canadians at top

Many of the leaked records consist of emails between employees and customers of specialty firms that set up and administer tens of thousands of offshore companies.

One of those firms — Commonwealth Trust Ltd., based in the British Virgin Islands in the Caribbean — was founded and, until 2009, run by a Toronto native, Tom Ward. The company’s senior ranks included a number of other Canadians. It mainly sets up corporations in the BVI for the wealthy, charging around $2,000 a year per account for its services.

Another agency, Portcullis TrustNet, has offices on tropical islands around the globe, including in the Cook Islands near New Zealand, as well as the BVI, the Caymans, Mauritius, Samoa, Singapore and Hong Kong. A former senior manager at the company is a Canadian lawyer.

Not all the firms’ leaked emails are strictly business. There’s also hundreds of intra-office missives about cricket, after-work drinking plans and the latest internet memes.

“I am getting some very funny looks as I sit here crying with laughter at that one,” a TrustNet employee messages a co-worker after watching a YouTube video that was sent around.

Another colleague describes a recent Monday evening trip to the bar in an email to her mom: “What started out as being just one drink ended up being 3 double bourbons and hello?! Can I just get drunk?! Haha.”

Up to $32 trillion stashed offshore

Offshore tax havens have existed for at least 100 years. While there’s no firm definition, the International Monetary Fund says most of what it officially calls “offshore financial centres” are distinguished by:

  • A banking sector that primarily serves non-residents.
  • Low to no taxation on foreign firms and people.
  • Tight financial secrecy.

By those terms, there are up to 80 tax havens in the world, including such countries as Panama, Liechtenstein and Switzerland but also tiny island territories like Jersey, Malaysia’s Labuan, the Isle of Man and the Turks and Caicos.

Publishing decision

CBC Editor Jennifer McGuire explains why CBC News isn’t publishing all 450 Canadian names.

Worldwide, the Tax Justice Network estimates that between $21 trillion and $32 trillion of private wealth is held offshore, out of reach of national treasuries (a more conservative estimate by the Boston Consulting Group puts the figure at $8 trillion). The international organization says that translates to up to $280 billion a year in lost taxes — twice what the world’s richest countries spend combined on foreign aid.

Canada’s share of that, assuming it’s the same as the country’s proportion of global GDP, would be about $7 billion, or a quarter of the federal government’s projected 2012 budget deficit.

Countries have discussed ways to stem the tax drain to offshore havens for years, but so far have been unable, or unwilling, to fully plug the leak.

In last month’s federal budget, Finance Minister Jim Flaherty promised to set up a system for tipsters to report offshore tax cheats. Informants would get 15 per cent of the recouped tax in cases where the Canada Revenue Agency recovers more than $100,000. The government estimates it could recover hundreds of million in revenue. But the Tories also cut $47 million a year from the budget of the Canada Revenue Agency. Source

This is a fun little Interactive toy to play with. It also has the names of many of the countries used as tax havens.

Do try it out and get educated on how the rich hide their money to avoid paying taxes like the rest of us.

BUYING SECRECY Interactive: How offshore havens attract the wealthy 

France‘s former budget minister admits lying about secret offshore account

Jérôme Cahuzac plunges Hollande’s government into crisis after shock confession to hiding €600,000 for more than 20 years Source

 PM of Georgia among owners of secret firms in British Virgin Islands among owners of secret firms in British Virgin Islands

His Offshore company: Bosherston Overseas Corp

Details: Ivanishvili, a billionaire businessman, became prime minister of Georgia in 2012. Listed from 2006-9 as director of the BVI company, administered via an agent in Panama, incorporated in 2006 and still active.

Source

More than 175,000 UK companies have offshore directors

Figures raise concern about scale of offshore secrecy arrangements by British businesses

There is more on this HERE

Azerbaijan President Ilham Aliyev and family

Offshore Companies: Arbor Investments; LaBelleza Holdings; Harvard Management; Rosamund International

Three BVI entities set up in 2008 in the names of the president’s daughters, Arzu and Leyla,. They list as a director wealthy local businessman, Hassan Gozal. His construction company has won major contracts in Azerbaijan. Another BVI entity set up in 2003, lists the president and his wife Mehriban as owners. More HERE

The extraordinary range of people using offshore hideaways

Records represent the biggest stockpile of inside information about the offshore system ever obtained by a media organisation More HERE

Apparently there has been about $32 Trillion stashed in off shore sites. Then used to launder money, tax evasion or other things by many. Not all are bad people but many are.

The International Consortium of Investigative Journalists

For the past 15 months, journalists from over 40 countries have worked together to shed light on financial secrecy jurisdictions. For much more information go HERE

April 5 2013 update

Canadian’s firm used in huge Russian tax scandal Caribbean agency helped set up offshore companies connected to $230M scam

It’s a tale with the cloak-and-dagger intrigue of a Hollywood thriller: a $230-million heist, corrupt Russian police and government officials, prison beatings, a dead lawyer, Kafkaesque trials and a diplomatic spat between international superpowers.

And now, for the first time, secret files obtained exclusively in Canada by CBC News reveal how a Canadian-run offshore company in the Caribbean enabled the transfer of some of that money into a labyrinth of shell corporations around the world in a scandal known as the Magnitsky affair. For more go HERE

 

Related

Many hid their money in Cyprus. Some must have had some inside information as apparently there has been about 175 billion Euro sent to other off shore banking havens in the Month of March. Obviously some one told them. Some reports claim the IMF warned a few of the wealthy people. Either way some how they knew enough to get their money out of the EU countries.

Cyprus Banks steal Depositors money

Many of the Rich hide their money in off shore countries and the poor foot the bill for taxes etc.

Personally the only place anyone from any country should be allowed to keep all their money is in the country, where they reside and no where else. There should not nor ever have been secret places to hide your money as a tax dodger.

 

Published in: on April 4, 2013 at 11:25 pm  Comments Off on Data leak exposes offshore financial secrets A world wide problem  
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