'Paradise Papers' reveal tax shelters for companies, politicians, royalty

From Wikinews, the free news source you can write!
Jump to: navigation, search

Tuesday, November 7, 2017

Professor NAME of Calgary University of CHECK Public Policy today published an editorial reacting to the "Paradise Papers," a group of roughly 13.4 million financial and other records released to the public on Sunday, November 5. [AND WHY THAT'S IMPORTANT]

In findings made available to the public on Sunday, a group of 381 journalists released the "Paradise Papers," a collection of about 13.4 million records in 1.5 terabytes of data going back to 1950, detailing how law firms and other agencies helped wealthy individuals and companies move assets to places like Shanghai, Trinidad, Hong Kong, Lebanon, Bermuda, and the Cayman Islands, to avoid taxes, regulation or both. Clients cited in the Paradise Papers include companies like Facebook, Twitter, and Apple, Inc., and individual people such as members of both major United States political parties, three former Canadian prime ministers, and Queen Elizabeth II of the United Kingdom.

The Paradise Papers include emails, loan agreements and other records affecting people in 180 countries. More than half of the records—6.8 million in all—are from the law firm Appleby, part of which is now known as Estera. The largest number of individual entities—people and corporations—from the Appleby portion of the Paradise Papers are located in the United States, at 31,000, but there were also over 3,000 from Canada.

The documents were originally acquired by the German newspaper Süddeutsche Zeitung, who shared them with the International Consortium of Investigative Journalists (ICIJ). The ICIJ coordinated journalists in 67 countries in investigating the documents.

Most of the techniques used by Appleby and other firms are legal, and some can be illegal depending on how they are executed. The revelation of the papers has raised questions about ethics. Süddeutsche Zeitung concluded wealthy individuals were using these tax shelters to avoid regulations, sanctions, taxes and social responsibility. The ICIJ stated, "There are legitimate uses for offshore companies and trusts. We do not intend to suggest or imply that any people, companies or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly."

Brooke Harrington of the Copenhagen Business School says tax shelters exacerbate inequality. "There is this small group of people who are not equally subject to the laws as the rest of us, and that's on purpose," she said. "When the rich get richer, the poor get poorer, because individual wealthy people are not paying their fair share of taxes." She went on to call the situation "French Revolution levels of inequality and injustice."

Appleby issued a statement in response to the documents' release: "The journalists do not allege, nor could they, that Appleby has done anything unlawful. There is no wrongdoing. It is a patchwork quilt of unrelated allegations with a clear political agenda and movement against offshore." Instead, they referred to the leak itself as "a serious criminal act. This was an illegal computer hack."

Wilbur Ross, who serves as Secretary of Commerce under U.S. President Donald Trump, was found to own part of a shipping company that had dealings with a Russian energy firm partially owned by Vladimir Putin's son in law, to the tune of US$68 million.

According to the BBC, Queen Elizabeth II held about 10 million (US$13 million) offshore, though the ICIJ reported she "voluntarily pays tax on income received."

Facebook and Twitter both received hundreds of millions of U.S. dollars in the form of investments through two Russian organizations that are, according to Reveal, "known as vehicles for the Kremlin's politically sensitive dealings." National Public Radio mentions this may have implications for the investigation of Russian involvement in last year's U.S. presidential election, which remains ongoing.

The papers also tell how the technology company Apple, Inc. moved from Ireland to the island of Jersey after a shift in regulatory policy. According to The New York Times, "Apple has accumulated more than US$128 billion in profits offshore, and probably much more, that is untaxed by the United States and hardly touched by any other country. Nearly all of that was generated over the past decade."

The Paradise Papers also detail some of the techniques that firms would use to move their clients' assets. For example, firms create shell companies—companies with no employees—located in the Cayman Islands or other tax-favorable jurisdictions, and award them ownership of assets that do not take up physical space.