Apr 8, 2016

The Leaked Panama Papers -- What You Need to Know

via Western Spring

As we all know, a huge leak of more than eleven-million confidential documents from a Panamanian law firm, Mossack Fonseca has revealed how the rich and powerful use tax havens to hide their wealth. The documents allegedly show how Mossack Fonseca has helped clients launder money, dodge economic sanctions and avoid paying tax on their wealth.
Mossack Fonseca is the fourth largest offshore law firm in the world. The firm is Panamanian but runs a worldwide operation and its website boasts of a global network with 600 people working in 42 countries. It has franchises around the world, where separately owned affiliates sign up new customers and have exclusive rights to use its brand. Mossack Fonseca operates in tax havens including Switzerland, Cyprus and the British Virgin Islands, and in the British crown dependencies Guernsey, Jersey and the Isle of Man.

The documents are alleged to expose how Mossack Fonseca has offered financial services designed to help business clients hide their wealth, by registering assets in the names of bogus nominees, although these charges are denied by the law firm who claim they have operated beyond reproach for 40 years and never been accused or charged with any criminal wrong-doing.

In a statement, Mossack Fonseca have stated: “Your allegations that we provide structures supposedly designed to hide the identity of the real owners, are completely unsupported and false.

“We do not provide beneficiary services to deceive banks. It is difficult, not to say impossible, not to provide banks with the identity of final beneficiaries and the origin of funds.”

The leaked documents show 12 current or former heads of state and at least 60 people linked to current or former world leaders in the data. They include the Icelandic Prime Minister, Sigmundur David Gunnlaugson, who had an undeclared interest linked to his wife’s assets, they include Petro Poroshenko, president of Ukraine, and the files also reveal a suspected billion-dollar money laundering ring involving close associates of Russian President Vladimir Putin.

The data also allegedly contains details of secret offshore companies linked to the families and associates of Egypt’s former President, Hosni Mubarak, former Libyan leader Muammar Gaddafi and Syria’s President Bashar al-Assad.

Using offshore structures can be entirely legal as there are legitimate reasons for doing so. Business people and wealthy individuals in less politically stable countries typically put their assets offshore to defend them from “raids” by criminals, to get around hard currency restrictions, and to protect them from politically motivated punitive sanctions by tax and regulatory authorities under the direction of their political enemies.

Wealthy individuals in stable Western countries also use offshore funds, trusts and companies for ostensibly legitimate tax avoidance and estate planning reasons, however tax havens are also used by criminal organisations and terrorist organisations in order to hide their ill-gotten gains, and they are used by individuals who wish to hide their wealth simply in order to illegally evade legitimate taxation.

Panama Papers 3Tax havens are jurisdictions that offer a very low or zero-rated tax environments, thereby allowing funds invested to grow either completely or very nearly tax-free. They also frequently offer secrecy in that the authorities within such jurisdictions do not require organisations operating within their jurisdictions to share financial information about companies, trusts and wealthy individuals with external tax authorities. This secrecy enables the rich and the powerful to hide their wealth and the Tax Justice Network defines ‘secrecy jurisdictions’ as countries which “use secrecy to attract illicit and illegitimate or abusive financial flows”.

Much of the western media interest has focused on alleged links to close friends and associates of Vladimir Putin and arrangements created in association with Bank Rossiya, but at a time when NWO sanctions are being applied by Western powers to countries such as Syria and Russia, it is only to be expected that those countries and their leaders will employ subterfuge in order to circumvent such measures.

What is of greater interest to us here in Britain are the revelations concerning major donors to establishment political parties the revelations alleging that David Cameron’s late father, Ian Cameron, a wealthy stock broker, had interests that were in part at least administered by Mossack Fonseca.

Blairmore Holdings, an offshore investment fund run by Ian Cameron apparently avoided ever having to pay tax in Britain by allegedly hiring a small army of Bahamas residents to sign its paperwork. The fund is however believed to have been registered with HM Revenue and Customs since its inception and has filed detailed tax returns every year.

According to the Daily Mail, when Ian Cameron died in 2010 he left a UK estate valued at just £2.7m, although this is believed not to include the value of any offshore holdings he may have had which were outside the jurisdiction of HM Revenue and Customs. A copy of Ian Cameron’s Will and his Grant of probate were filed with the Royal Court in the tax haven of Jersey, a measure that would only be necessary if Ian Blair’s assets held in Jersey were worth more than £10,000. How much more than £10,000 they were worth cannot however be determined. The Grant of Probate names the late Mr Cameron’s wife Mary, his son Alex, and daughter Tania as executors, but significantly not his famous son, David.

Neither David Cameron nor Number 10 have disclosed whether David’s mother Mary continues to benefit from Blairmore Holdings, or any other offshore fund, and David has so far avoided addressing another aspect of the question put to him on Tuesday, namely whether he or his family ever benefited from his father’s offshore fund in the past. The reason for this omission is fairly obvious. Cameron enjoyed a privileged upbringing and an expensive education and, like many people, continued to receive money from his parents after leaving school. He received £300,000 from his father in his will; and it would be remarkable if there was no additional financial support provided while his father was alive.

David Cameron has responded to the revelations concerning his father by making a carefully worded statement, as follows:

“In terms of my own financial affairs, I own no shares, I have a salary as prime minister, and I have some savings which I get some interest from, and I have a house, which we used to live in, which we now let out while we’re living in Downing Street, and that’s all I have. I have no shares, no offshore trusts, no offshore funds, nothing like that, and to that is I think a very clear description.

“The second thing I’m responsible for is of course our tax system and for international tax policy, and I would say that no government, no prime minister has done more to make sure we crack down on tax evasion, on aggressive tax avoidance, on aggressive tax planning, both here in the UK and internationally. So we have recovered billions of pounds in our country by changing tax regulations and rules in budget, after budget, billions of pounds, but we’ve also led the world in making sure we have, which we’ll have in June, an open register of beneficial ownership, so everyone can see who owns what in Britain”

In a subsequent press release from Number 10 yesterday, came the statement that: “There are no offshore funds/trusts which the prime minister, Mrs Cameron or their children will benefit from in future.”

Panama Papers 2In the statements Cameron has made regarding his financial position, the information he has provided indicates very modest and simple financial circumstances, which would be unusual for a man of his standing and his financially privileged background. Indeed, so modest and simple that considerable suspicion has been aroused in many quarters that he has not been completely frank and honest.

A man in Mr Cameron’s position should know full-well that his statement that he “… has no shares, no offshore trusts, no offshore funds …”, and the subsequent statement by Number 10 that “There are no offshore funds/trusts which the prime minister, Mrs Cameron or their children will benefit from in future”, albeit technically correct, are not sufficiently explicit and do not go far enough to eliminate the possibility that he may yet prove to be a potential beneficiary of a secret offshore discretionary family trust set up by his father. The ownership and control of trust assets is a complex and for most people confusing matter.

Technically trust assets are legally owned by the trustees of any given trust, albeit that the trustees are required to hold those assets for the sole benefit of the beneficiaries concerned.

Where trust assets are held in trust for the benefit of named individual beneficiaries, those beneficiaries are regarded as having ‘an interest in possession’ and will legally be regarded as having ‘beneficial ownership’.

Discretionary trusts however, merely specify ‘classes’ of potential beneficiaries, who initially are not named or designated, and with regard to such trusts, the potential beneficiaries do not have ‘an interest in possession’ and therefore technically do not have ‘beneficial ownership’ of trust assets, even though at a later date they may indeed benefit from those assets.

If an individual proved to be among a ‘class’ of beneficiaries under a secret offshore trust, and that class could be: ‘the children of a now deceased wealthy donor’ for example, he could be a potential beneficiary of that trust, and potentially benefit at some future date from the assets of that trust, even though he would not have ‘an interest in possession’ and would therefore not in any strictly legal sense enjoy ‘beneficial ownership’.

Now, I am not suggesting that a secret family trust has been established or that Mr Cameron or any of his immediate family are the beneficiaries of such a trust, I am merely explaining why the statements so far issued by Mr Cameron and spokespeople at Number 10 are not yet specific enough or comprehensive enough for the public to have complete confidence in them.

Many people may argue that as long as any secret trusts effected in tax havens have been established legally, by exploiting loop-holes in the law, it would be wrong for the exposure of such trusts to bring down opprobrium upon the beneficiaries. However, as David Cameron has already stated, “… I’m responsible for … our tax system and for international tax policy …” and therefore if it was established that Conservative politicians were complicit in deliberately framing legislation in such a way that convenient loop-holes would remain available for fellow Conservatives, their friends and their party’s donors to exploit and illicitly benefit from, this would constitute a wholly unacceptable abuse of power and the public would have every right to expect heads to roll.

This morning there are fresh allegations that when EU rules and regulations were being reviewed in 2013, and there was the prospect that all offshore jurisdictions would be required to provide transparency regarding the assets held within their financial services centres, David Cameron intervened to limit this requirement to offshore companies and thereby allowed offshore trusts to continue to enjoy confidentiality regarding the names and other details of beneficiaries. It is therefore incumbent upon David Cameron and the Conservatives to act swiftly and decisively in closing the loopholes that have been exposed by the leaked Panama Papers and to create greater transparency regarding their own financial affairs and the financial affairs of government ministers, MPs and their party donors.

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