Tuesday 16 January 2018

The Paradise Papers shine a light on secrets of 'the system'

Once again we glimpse the secretive ways the uber wealthy squirrel away billions without actually breaking the law, writes Mark O'Regan

IN THE SHADOWS: A view of Hamilton Harbour in Bermuda at dusk last week. Money from the Queen’s private fund is said to have been paid into an offshore fund on the British island territory. Picture: Getty
IN THE SHADOWS: A view of Hamilton Harbour in Bermuda at dusk last week. Money from the Queen’s private fund is said to have been paid into an offshore fund on the British island territory. Picture: Getty
Mark O'Regan

Mark O'Regan

'We don't pay taxes. Only the little people pay taxes." So said the American hotel tycoon Leona Helmsley - dubbed 'The Queen of Mean'.

When the Panama Papers were released in 2016, they thrust an unprecedented spotlight on the secret money hideaways of the rich and powerful.

Now, some 18 months later, the so-called Paradise Papers, totalling a mammoth 13.4m previously unseen documents, have once more brought the whole issue of cash stashed abroad under global scrutiny.

But this time round the drama features high-profile players operating much closer to home.

The revelations open a window into how Ireland's uber wealthy and powerful can squirrel away billions beyond the grasp of the Revenue, without breaking any laws.

And while tax avoidance schemes are not illegal, they have once again focused attention on the secretive overseas arrangements used by those in the financial fast lane to avoid the clutches of the taxman.

Bono, some cast members of Mrs Brown's Boys, the Queen of England, and Sir Anthony O'Reilly are among the high-profile names catalogued in the files.

Bono insists he will be "extremely distressed" if a business venture he was involved in was found to have fallen foul of any tax laws in Lithuania.

He was speaking after the papers showed he allegedly used a company based in Malta - a low tax jurisdiction - to pay for a share in a Lithuanian shopping centre.

The financial investigation revealed that the singer was an investor in the Maltese company, Nude Estates Ltd, which bought the Ausra shopping centre in the Lithuanian town of Utena in 2007.

After being named in the leaked documents, Bono released a statement claiming he was a "passive, minority investor in Lithuania".

He would be "distressed" if any financial activity that was "less than exemplary" had his name attached to it.

And with regard to the Paradise Papers, he said he welcomed financial probes of this kind.

The well-known activist has met various world leaders, campaigning on issues such as poverty in Africa, and is arguably the world's most famous celebrity humanitarian.

He is also a co-founder of One, a global campaign and advocacy organisation with more than seven million members, which focuses on fighting deprivation in Third World countries.

The Paradise Papers also show three actors with the hugely successful Mrs Brown's Boys comedy were paid through a sophisticated offshore financial structure.

This sheltered them from a possible income tax liability on income totalling hundreds of thousands of euro.

Fiona Delany, daughter of the show's creator, Brendan O'Carroll, who plays Maria Brown, and her husband, Martin, who plays Fr Trevor Brown, made use of the structure.

Paddy Houlihan, who plays Dermot Brown in the hit comedy was also paid through the scheme.

When details of the scheme became public, Houlihan said he had to Google tax avoidance to see what it meant.

Mrs Brown's Boys creator, Brendan O'Carroll, has denied that the three stars were involved in tax avoidance.

The comedian said they handled their incomes in a "completely legal" way.

The papers also reveal Irish tech entrepreneurs Jerry Kennelly and Ray Nolan availed of Isle of Man-based schemes to buy private aircraft.

Billionaire businessman Denis O'Brien also acquired an aircraft through this system.

They join Formula One world motoring champion, Lewis Hamilton, one of the world's wealthiest sports stars, in using the Isle of Man to purchase a luxury jet.

A spokesman said everything was "above board".

There's no suggestion any of the structures used to purchase an aircraft under this scheme was illegal.

Businessman Sir Anthony O'Reilly established a trust in Bermuda in 1998 for the benefit of his daughters, telling its administrators not to inform them of its existence.

Details of the Foundation Trust, which was earlier called the Daughters Trust, are also contained in the Paradise Papers, comprising documents leaked from the Appleby offshore law firm.

The trust was established by Sir Anthony in August 1998, using the services of Appleby's office in Bermuda.

The former chief executive of the Heinz Group in the United States, O'Reilly was the most successful Irish businessman of his generation.

He was, for a long period, the largest shareholder in Independent News & Media (INM), the company that owns this newspaper, before losing the position of largest shareholder to Denis O'Brien.

The leaked documents also show that AIB, Ireland's largest bank, continued to protect Irish customers who wanted to avoid paying tax, after it had been bailed out by the taxpayer to the tune of €7bn.

The files from the law firm Appleby show that the bank refused to allow the Revenue Commissioners access to data involving its offshore customers when responding to a court order in 2015.

Instead, the offshore operation sought to have the data moved from the bank's central server in the Republic to Jersey and the Isle of Man, to better protect client confidentiality.

A close adviser and friend of Canadian prime minister, Justin Trudeau was also involved in moving huge sums offshore.

The influential fundraiser and senior adviser to Trudeau, Stephen Bronfman, is being linked to offshore schemes that may have cost the Canadian tax authorities millions of dollars.

And the Paradise Papers show that even the Queen of England is in on the act.

The Duchy of Lancaster, her private estate, was found to have millions of pounds invested in offshore arrangements.

Around £10m from the Queen's private fund was paid into funds in the Cayman Islands and Bermuda, between 2004 and 2005, according to reports. A spokesman for the estate argued all investments were "fully audited and legitimate".

The Paradise Papers are documents leaked to the German newspaper, Suddeutsche Zeitung, which were in turn shared with the International Consortium of Investigative Journalists in Washington DC.

The vast tranche of documents reveal how a labyrinthine financial network links together the overlapping worlds of powerful political players, the super-rich and high-tech moguls.

Experts say "clever financial advisers" are constantly engineering new and creative bookkeeping channels so bewildering and complex that by the time a government catches up with them, they have "morphed into something unrecognisable".

Much of the new trove of files includes bank statements, emails and loan agreements from Appleby, a firm which helps clients set up in overseas jurisdictions with low or zero tax rates.

Appleby said there is "no evidence" that it had done anything wrong.

Meanwhile, representatives from major multinational firms, including Apple and Google, are to be asked to come before the Public Accounts Committee next year, to discuss corporation tax in Ireland in light of the Paradise Papers.

Citibank, JP Morgan, GSK, and Pfizer, would also be invited to "voluntarily appear" to discuss the matter, according to committee chairman Sean Fleming.

"We need to examine the interaction between the multinational sector and the Irish State in relation to corporation tax," he said.

Mr Fleming proposed that the committee writes to the companies involved, but it will be early next year before "they might be able to avail of the opportunity to come in".

He said these corporations had appeared before the British parliament and they should "show equal respect to the Irish national parliament".

The Revenue Commissioners are also due to appear before the committee shortly to examine issues surrounding Ireland's corporation tax receipts.

Mr Fleming said the committee will secure a senior tax consultant to advise members.

However, as this latest drama in high-stakes finance is played out by way of the Paradise Papers, it looks like little will change as to how the super wealthy handle their financial affairs.

The vast and secret web of international high finance seems to be beyond the power of any single government to control. As the American novelist Scott Fitzgerald put it: "The rich are different from you and me."

Sunday Independent

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