John Christensen was a government economist living on the beautiful island of Jersey, off England’s southern coast, in a “hillside villa with views of France.” But that lifestyle ended after he spoke out on a fraudulent currency trading scheme involving a UBS subsidiary in Jersey, according to Bloomberg.
Christensen had a head of dark hair when he helped to expose the Jersey currency scheme, which resulted in UBS’s Jersey unit and accounting firm Touche Ross & Co. — now Deloitte — paying almost $40 million to settle lawsuits. Regular bike rides keep Christensen as trim as two decades ago, but his hair has turned pearl white.
He said: “I was set. We had a pretty good lifestyle and plenty of friends.”
Rudy Giuliani, a lawyer for President Donald Trump, said Monday that WikiLeaks publisher Julian Assange had not done “anything wrong” and should not go to jail for disseminating stolen information just as major media does.
“Let’s take the Pentagon Papers,” Giuliani told Fox News. “The Pentagon Papers were stolen property, weren’t they? It was in The New York Times and The Washington Post. Nobody went to jail at The New York Times and The Washington Post.”
Giuliani said there were “revelations during the Bush administration” such as Abu Ghraib. “All of that is stolen property taken from the government, it’s against the law. But once it gets to a media publication, they can publish it,” Giuliani said, “for the purpose of informing people.”
“You can’t put Assange in a different position,” he said. “He was a guy who communicated.”
Giuliani said, “We may not like what [Assange] communicates, but he was a media facility. He was putting that information out,” he said. “Every newspaper and station grabbed it, and published it.”
The U.S. government has admitted that it has indicted Assange for publishing classified information, but it is battling in court to keep the details of the indictment secret. As a lawyer and close advisor to Trump, Giuliani could have influence on the president’s and the Justice Department’s thinking on Assange.
Giuliani also said there was no coordination between the Trump campaign and WikiLeaks. “I was with Donald Trump day in and day out during the last four months of the campaign,” he said. “He was as surprised as I was about the WikiLeaks disclosures. Sometimes surprised to the extent of ‘Oh my god, did they really say that?’ We were wondering if it was true. They [the Clinton campaign] never denied it.”
Giuliani said: “The thing that really got Hillary is not so much that it was revealed, but they were true. They actually had people as bad as that and she really was cheating on the debates. She really was getting from Donna Brazile the questions before hand. She really did completely screw Bernie Sanders.”
“Every bit of that was true,” he went on. “Just like the Pentagon Papers put a different view on Vietnam, this put a different view on Hillary Clinton.”
Giuliani said, “It was not right to hack. People who did it should go to jail, but no press person or person disseminating that for the purpose of informing did anything wrong.”
Assange has been holed up as a refugee in the Ecuador embassy in London for the past six years fearing that if he were to leave British authorities would arrest him and extradite him to the U.S. for prosecution.
You can watch the entire Fox News interview with Giuliani here:
Joe Lauria is editor-in-chief of Consortium News and a former correspondent for The Wall Street Journal, Boston Globe, Sunday Times of London and numerous other newspapers. He can be reached firstname.lastname@example.org and followed on Twitter @unjoe .
Operation Car Wash began in March 2014 at a petrol and car wash complex in Brasilia, Brazil’s capital, and it was initially thought to be routine.
The Federal Police team had the location under surveillance believing that it was the centre of a money -laundering operation run by Alberto Youseff, a former convicted criminal known as the “doleiro de doleiros” – the money launderer of money launderers.
When it was discovered in one of Youssef’s intercepted emails that he was paying for a Land Rover for an executive of Petrobras, Brazil’s national oil company, it immediately raised suspicions.
The executive turned out to be Paulo Roberto Costa, the man in charge of refining and supply. Costa became the main target in the first phase of the Car Wash investigation and was arrested.
Deltan Dallagnol, the lead Federal Prosecutor for the case, says that investigators uncovered “evidence of money laundering” totalling some 26 million Brazilian reals ($8m). Criminal charges were brought against Costa, who negotiated a plea bargain with authorities.
“That allowed for an exponential expansion of the investigation,” Dallagnol says. “It was the big bang of the Car Wash Operation.”
Never before did Brazil export corruption like it did in the Car Wash case.
Costa admitted that the Land Rover was just one of many bribes he received to issue contracts to construction companies, and told law enforcement officials participating in a task force set up to pursue the case that the bribing scheme was much larger than anything they imagined.
Corruption in the supply division he oversaw, Costa said, “was the tip of the iceberg”.
Bruno Brandao, the head of Transparency International in Brazil, says, “Never before did Brazil export corruption like it did in the Car Wash case.”
He adds that the problem of corruption in Brazil is systemic, and that in the Car Wash scandal, “the mechanism of corruption was traditional – overcharging of contracts and the setup of company cartels. What is new is the scale, the amounts of money and number of people involved – officials and companies. The dimensions of this case are what makes it extraordinary.”
Federal police inspector Felipe Hayashi, who heads the Financial Crimes Unit of the Car Wash taskforce, says the investigation “reached people of the highest rank and level of responsibility. That’s something that has never happened before.”
Investigators learned that there was a cartel of companies that dealt with Petrobras. According to a secret agreement that existed for more than 10 years, the cartel would nominate one of its members to be awarded each Petrobras contract – for refineries, oil rigs, and other multimillion-dollar projects.
“We secured documents that laid out the operation of the cartel in terms of championship rules for different sports,” says Dallagnol. “There were 16 championship players and their objective was to ‘maximise’ prizes in national and international markets alike. Obviously, these companies would never openly admit cartel arrangements in a clear way, so they tried to disguise them as championship rules for different sports.”
The cartel rules resulted in steep overpayments for the work done. Petrobras executives were bribed to go along, and the cost of the bribe built into the contract. In fact, the scheme stretched far beyond Petrobras to contracts for stadiums for the 2014 World Cup, the 2016 Rio Olympics and other major infrastructure projects throughout the country.
Brazil’s Car Wash scandal turned into the largest corruption case in Latin America’s history, involving some of the region’s most prominent public figures. [Getty Images]
The Odebrecht bribery machine
On June 19, 2015, the taskforce moved against the cartel players.
“It was time to take a step which had never been taken before in history; when big businessmen were finally reached, people who had been considered princes of enterprises in Brazil,” says Dallagnol.
Twelve top-level executives were arrested, among them Marcelo Odebrecht, CEO of the company that bears his name. Odebrecht is the largest construction company in Latin America. Its bribing operation typified that of cartel members and was the most extensive in the region.
Marcel Odebrecht was held without bail, and less than a year after his detention he was sentenced to 19 years in prison for corruption, money laundering and criminal association.
For decades and decades, in Brazil, you had to apply grease for everything. If a citizen wanted to obtain an ID, he certainly would have to pay something to a public agent to expedite the process.
Sergio Foguel, member of the Odebrecht Board of Directors
We headed to Salvador in northeast Brazil to get the Odebrecht Company’s response to the scandal.
The business was founded in 1944 by Marcelo Odebrecht’s grandfather, and the city is still its headquarters. Sergio Foguel, a long-time member of the Odebrecht Board of Directors, agreed to talk to us.
Despite the conviction of its CEO, the company still operates in more than 20 countries around the world and had revenues of about $26bn last year.
“There is no excuse to justify those acts of misconduct,” Foguel says. “But for decades and decades, in Brazil, you had to apply grease for everything. If a citizen wanted to obtain an ID, he certainly would have to pay something to a public agent to expedite the process”.
Our reporter, Gustavo Gorriti, wanted to know why the company had consistently denied any wrongdoing for months and months during the investigation.
“Despite all our strength as a company, we carried out acts within our organisation that today would be completely inadmissible,” Foguel says. “There was a collective blindness. Initially, corruption was tolerated and later, it expanded in an incredible way.”
A plea bargain by Odebrecht employees in the Lava Jato (Car Wash) corruption scandal led to testimony ensnaring nine ministers in President Michel Temer’s cabinet under investigation [Mario Tama/Getty]
‘Plug and play. It was serial corruption’
According to authorities, Odebrecht had a division of “Structured Operations” that ran an intricate off-the-books accounting system and a bank to bribe not only company executives, but also politicians.
This started to become clear when Marcelo Odebrecht began talking in hopes of reducing his 19-year sentence.
In testimony to prosecutors captured on audiotape, Odebrecht admitted that his company bribed politicians from all the major Brazilian parties in exchange for appointing Petrobras executives at the public company. Dozens of congressmen, senators and ministers have so far been implicated in the scandal.
Odebrecht’s testimony dealt a body blow to the Workers’ Party of former President Luiz Inacio Lula da Silva, and his successor Dilma Rousseff.
Amid a deep political crisis, Dilma Rousseff was impeached in August 2016. Two weeks later, Lula was formally charged with corruption in connection with the Car Wash scandal.
While Brazil’s elites were being held to account, investigators were also making steady progress on the international front with the help of the US Department of Justice. The country is one of the world’s main destinies for financial transactions.
“This provides the United States jurisdiction over a good deal of money laundering crimes that happen around the world,” Dallagnol says. “The US acted in a very efficient way, identifying accounts kept in their country to launder money and delivering documents very quickly.
In December 2016, Odebrecht pleaded guilty to American charges that it provided almost $800m in bribes for more than 100 projects in 12 countries. It agreed to pay a $3.5bn fine and disclose details of its corrupt activities in Latin America and Africa.
According to Brandao, “Odebrecht, at least in the 12 countries it operated, had the same system, the same mechanism – plug and play. It was serial corruption.”
From Brazil to Panama: Fake companies and big deals
Odebrecht’s guilty plea in the US set off investigations throughout Latin America. Key to those efforts was deciphering how the money flowed from the company to corrupt officials through countries like Panama that specialise in offshore banking.
Rolando Rodriguez, who heads the investigative unit of the Panamanian newspaper La Prensa, says that “From Panama, money went out to officials from Brazil, officials from Peru and other parts of the world.”
Panama’s police investigators uncovered a Panamanian company tied to Odebrecht called Contructora Internacional del Sur.
“It was a fake company that received money from Odebrecht and sent it out to accounts in different countries, especially Switzerland,” Rodriquez says. “So, the laundering structure was set up using companies, most of them from Panama, as well as bank accounts, most of them from abroad.”
Many of the shell companies used by members of the Brazilian construction cartel to dispense bribes were set up by Mossack Fonseca, the law firm at the centre of the Panama Papers leak, which exposed the financial dealings of some of the most powerful and wealthy people in the world.
“Mossack Fonseca is one of the oldest firms that work on setting up shell corporations,” Rodriguez says. “So, by arriving here in Panama you resolve the problem of having to travel to 10 different countries to get 100 corporations.”
Panama was not only a good transit point for corrupt payments. It was also a place to land large construction projects at inflated prices. With projects of some $9bn, Odebrecht is the most important construction company in Panama. Between 2010 and 2014, according to the US Department of Justice, Odebrecht paid tens of millions of dollars in bribes to secure public works contracts. One of the most profitable was building the Coast Highway.
I do harm to a country for $2 or $3bn. I agree to pay $300m, $500m or a billion and, after some time, I walk away free. What a business.
Jose Antonio Dominguez, legislator
“Panama ended up paying a great deal for a project that should have cost much less,” says Jose Antonio Dominguez, a legislator with the country’s governing Panamenista party who has been questioning the pricing of the project for years. “That project, without any change, suddenly was awarded for $189.5m instead of $133.5m. Why that $60m difference? For what?”
In July 2017, Odebrecht reached an agreement with the Panama authorities to pay $220m in fines and provide information about public corruption to settle bribery charges in the country.
“I do harm to a country for $2 or $3bn. I agree to pay $300m, $500m or a billion and, after some time, I walk away free. What a business,” says Dominguez.
A vast web of political and corporate corruption in Peru
Tensions over the way Odebrecht conducted its business are growing throughout Latin America. The latest flashpoint is Peru, where the country’s ruling establishment is reeling from its connections to the company.
Attorney Walter Alban served as the public ombudsman in Peru from 2000 to 2005 during the presidency of Alejandro Toledo, now accused of receiving bribes from Odebrecht.
“It’s been demonstrated that there were transfers through offshore companies and close friends of the former president,” he says.
Odebrecht wanted the lion’s share of a multibillion-dollar highway project connecting the Peruvian coast to Brazil and they got it. Toledo has been charged with accepting a $20m bribe to steer them the business.
Jorge Barata, the head of Odebrecht in Peru, confessed in 2016 that he struck the deal in a meeting at a Copa Cabana hotel in Brazil that Toledo attended. Peruvian prosecutors are trying to extradite Toledo from the US to face bribery charges, which he denies.
Alban says Odebrecht didn’t just pay off individual politicians. The company promoted its interests by gaining influence over the political system itself.
“The scheme Odebrecht had was not only related to bribes to get contracts,” Alban says. “There was also this practice of promoting candidates and financing political parties, and not just one but all that might have a chance of winning.”
In a videotaped confession to prosecutors obtained by Peruvian investigative journalism organisation IDL-Reporteros, Barata admitted to giving $3m to the Nationalist Party to help finance the 2011 presidential campaign of Ollanta Humala. Humala won and served as president from 2011 to 2016.
Corruption is not an issue of right or left, or ideology. But of a confluence of interests.
Walter Alban, lawyer
Barata also claimed his company supported the left-wing Humala not only to promote Odebrecht´s interests in Peru, but to curry favour with Lula’s Workers’ Party in Brazil. “The Workers Party had an interest that all South American presidents share the same political and economic line as the Workers Party. Humala had those characteristics,” Barata says.
According to Alban, Odebrecht had strong links with ex-president Lula’s party in Brazil. It is described as a “geopolitical strategy” he says, indicating that “corruption is not an issue of right or left, or ideology. But of a confluence of interests.”
Both Humala and his wife, Nadine Heredia who was general secretary of the Nationalist Party, are now in prison awaiting trial.
Keiko Fujimori and her Popular Force party are also under investigation for taking money from Odebrecht to fund her 2011 presidential bid. Fujimori says the accusation is false but Marcelo Odebrecht has testified that his company helped finance her campaign.
On February 28, Barata met Peruvian prosecutors and confirmed that the company gave money to support Fujimori in the presidential race – $1.2m.
“There aren’t political parties any more” says Alban, “There are groups that define themselves as political, but strictly speaking, they are supported in all cases by illegal funds”.
Demonstrators protest for the impeachment of President Dilma Rousseff and also against corruption being investigated involving resource diversion and money laundering in Petrobras scandal of corruption on March 16, 2016, in Sao Paulo, Brazil [Victor Moriyama/Getty]
A new attitude towards corruption in Latin America
Last December, the Car Wash scandal arrived at the doorstep of Peru’s current president, Pedro Pablo Kuczynski. Peru’s congress launched impeachment proceedings against him, alleging his companies received almost $800,000 from Odebrecht while he was serving as a public official.
Kuzcinsky vehemently denies all wrongdoing and narrowly avoided impeachment but prosecutors continue their investigations. In his February meeting with prosecutors, Barata said Odebrecht also contributed to Kuzcinsky’s 2011 presidential campaign.
Peru’s Attorney General Pablo Sanchez is overseeing the investigation of Peru’s high-level officials for dealings with Odebrecht. “We are talking about corruption and a series of very complex crimes that involve several different governments, not just one but at least three,” he says.
When asked why the corruption connected to the Car Wash case went so far in Peru, he says: “Our country is not prepared to face cases of this nature or prevent crime,” Sanchez says. “Our country has trusted too much in the behaviour of state officials and the politicians in our country. So in that way, we haven’t advanced at all, or just very little. What we do now, proper investigations, proper convictions, will help prevent this from happening again in the future.”
Car Wash in Brazil today is no longer just an investigation, nor a process. Lavo Jato today in Brazil is an attitude, an expectation that impunity will start to fade away.
Bruno Brandao, head of Transparency International
Every week seems to bring new developments around the world in connection with the Car Wash scandal.
Governments from Ecuador to Angola are dealing with the repercussions of the case. Meanwhile, back in Brazil, the Supreme Court is considering former President Lula’s appeal of a 12-year sentence he received for corruption. His plans to run for president this October are in danger of being derailed.
“Car Wash in Brazil today is no longer just an investigation, nor a process. Lava Jato today in Brazil is an attitude, an expectation that impunity will start to fade away,” Brandao says.
Alban agrees that a new attitude towards corruption is arising in Latin America. “Democratic societies in which we can say that the problem of corruption is at least controlled,” are those in which the public watches over how public resources are spent and demands “that public authorities be held to account. Because of the Car Wash case that is something that I believe is beginning to happen.”
While the people with luxury yachts are anxious to hang on to their wealth, capitalist economic growth is founded on the efforts of the less wealthy to improve their lot. (Yannis Behrakis/Reuters)
Capitalism makes poor people rich, but only when it’s working at its best.
In last week’s release of the Paradise Papers, CBC Investigates helped remind us of an alternative objective of capitalism echoed in Washington’s quest for tax breaks for the wealthiest.
That is the pressure to make sure rich people are able to hang on to their advantageous positions.
The historic argument over exactly how much tax each person should contribute is as much political as it is economic.
Taxation is theft (or is it property?)
The polarized politics might be characterized by contrasting the assertion by 18th-century anarchist Pierre-Joseph Proudhon that “property is theft” with the modern anarcho-capitalist insistence that “taxation is theft.”
Adam Smith, the father of modern capitalism, had a pragmatic take on taxes. He argued they were essential to a well-run state and so everyone should be required to contribute.
It was Scottish economist Adam Smith, often called the father of modern capitalism, who declared people should be taxed according to their ability to pay. (David Moir/Reuters)
Among his four basic requirements for a good tax system — which included the stipulation they should not be arbitrary and that they should be convenient to collect and to pay — was that they should be “proportionate to incomes or abilities to pay.”
It was Smith, not Karl Marx, who gave us the principle that rich people should pay more tax.
Someone has to pay
As previously pointed out during the 2016 release of the Panama Papers, someone has to pay for the roads and ports, corporate subsidies and bailouts that keep the Canadian economy ticking.
Every penny that the well-off fail to pay falls onto the shoulders of poorer wage earners who have no way of escaping the clutches of the Canada Revenue Agency.
In a world where the rich have disproportionate clout in the corridors of power, it is no surprise that the richest 1 per cent are expected to benefit the most from the U.S. tax changes proposed last week.
That may not be good for the global economy.
There are good reasons to think that the world is returning to an era where what John Maynard Keynes called “the functionless investor” is once again superseding the active capitalist that makes economies dynamic.
If you believe in the power of capitalism to make the world a better place, it is hard to fault people like Steve Jobs and his financial backers who took risks to create an entire new industry.
From Russia with nothing
In Canada there are many examples, including the Bronfman family that came to Canada from Russia with nothing and made themselves and Canada rich. Frank Stronach, founder of car parts giant Magna International, could tell a similar story.
But since those days, Canada and the world have experienced what Bank of Canada deputy governor Sylvain Leduc recently called “declining dynamism.”
It is certainly hard to see the social contribution of passive investors who hold onto the wealth and power created by their dynamic forebears by using that power to convince governments to let them pay less in taxes.
As we are told repeatedly by advocates for people and businesses that keep billions of dollars in low-tax offshore funds, they really aren’t breaking the rules.
“Offshore trusts are not illegal,” said Ian Lee, former banker and now professor at Carleton University’s Sprott School of Business.
Of course that raises the question of why the Government of Canada — as the representative of Canadian voters with a median income of about $30,000 — would create a set of laws that allows rich passive investors to avoid billions in taxes.
There is a consensus in mainstream economics that whether Proudhon was right or wrong, property ownership makes economies stronger. As even self-declared Communist countries such as China and Vietnam discovered, switching from collective farms to private small-holders caused a boom in agricultural production.
However, the breaking up of huge estates controlled by a passive landowning class has shown similar economic benefits.
When it comes to money, there is increasing evidence that the funding of capital projects from what Keynes called “the savings of the rich out of their superfluity,” is no longer as important as it once was. Certainly there is no shortage of cash to drive up the price of the world’s safest assets.
Places like the South America and the Persian Gulf, where the rich control almost all the resources, are not models of democratic or economic health. The strongest economies are not built on selling or getting tax breaks on a few yachts and private jets. They are those with active dynamic populations where everyone can participate.
If governments want to build strong capitalist economies, rather than using their laws to help keep the wealthy rich, the evidence is that legislators must let the already rich look after themselves, and turn their attention instead to making laws that help hard-working aspiring capitalists become rich for the first time.
The so-called Paradise Papers may sound familiar – leaked documents from a law firm that specialises in offshore services reveal how the global elite avoids paying taxes. Even the name has the same ring to it as last year’s Panama Papers expose. But the Paradise Papers are different, reflecting the complexity of the global offshore tax system.
Panama is generally considered among tax haven experts as one of the least reformed corners of the offshore world. International rules regarding tax evasion and avoidance are intended to help national governments to pursue their own offenders, but the Panama Papers revealed that the country was being used primarily by the business and political elites of countries like Russia, China and many more in Latin America and Asia; countries where the governments are closely linked to business and which are less likely to use tools provided by new international rules to pursue offenders. Hence, relatively few Americans or Europeans were caught in the Panama story. And Mossack Fonseca, the law firm at the centre of the leak has since been discredited.
The Paradise Papers reveal the goings on of the elites of the offshore world – this time in the supposedly highly-regulated havens of the Cayman Islands, Bermuda, Singapore and the like. All places that received a fairly clean bill of health during the OECD peer review process only a few years ago. The law firm at the centre of this new leak, Appleby, insists there is “no evidence of wrongdoing” in any of the revelations.
Nonetheless, the Paradise Papers will tell us a lot about the activities of business and political elites of well-regulated countries like the US and UK – implicating big multinationals such as Nike and Apple, and individuals including the British Queen.
1. Tax avoidance is a booming industry
Clearly, jurisdictions such as the Caymans Islands and Bermuda that levy no income tax, capital gains tax, VAT, sales, wealth or corporate tax, still attract a great deal of businesses. Why, for instance, has the Duchy of Lancaster, the Queen’s private portfolio, invested in two offshore funds, in Cayman and Bermuda? After all, the Queen pays tax only voluntarily.
A more charitable interpretation is that any big investor who is seeking to diversify their portfolio would inevitably end up using offshore funds. The papers show that about £10m (US$13m) of the Queen’s private money was invested offshore – a very small percentage of her wealth. There is nothing illegal about this but the ethics of it have been questioned.
Practically, the entire wealth investment industry – the industry that invests for the rich and the wealthy of our world – operates through the offshore world. And the reason why is simple. Each fund or transaction, or aeroplane or yacht, or whatever that one cares to register in the Caymans or Bermuda, is not subject to tax. And it’s hidden from public view.
2. Secrecy prevails through trusts
Despite a spate of new regulations, the Paradise Papers show that anyone who wishes to conceal their affairs from competitors, allies, governments or the public can still do so with great ease. And they can do so through the facilities of a “trust”, an archaic Anglo-Saxon instrument that serves as a foolproof shield from scrutiny.
We have learned, for instance, that Wilbur Ross, the US secretary of commerce, had commercial links to Vladimir Putin’s family, which operated through a system of linked trusts located in various offshore jurisdictions. I do not think that even the Mueller inquiry in the US into the Trump administration’s links with Russia could have pierced the veil of secrecy offered by offshore trusts.
But the leaked documents from law firm Appleby reveal that any complex business deals that would involve concealment and subterfuge would work their way through trusts. It is high time we do something about these trusts.
3. Highly complex tools are used
The Paradise Papers show how complex financial innovations such as the use of derivatives and financial swaps arrangements, can be used for tax avoidance. This is an area of avoidance that is normally not well understood and scantily studied.
New research colleagues and I are conducting, however, has found that cross-currency interest rate swaps are used pervasively in tax minimisation mechanisms. It is difficult to detect and involves a parent and subsidiary companies swapping a loan in one currency to another. This swaps the risks and the interest rate of the original currency for the subsidiary’s – a legitimate risk minimisation instrument. At the same time, this facilitates moving funds offshore to low tax jurisdictions.
4. The law needs to change
Many professional service firms operate through offshore jurisdictions. They all claim to be highly professional, following not only the letter, but also the spirit of the law.
But if these firms are not directly liable for the activities of their clients, the offshore world will continue to thrive. These firms take advantage of regulatory loopholes to arbitrate between different rules and jurisdictions in order to minimise taxation. The question is for how long such practices are going to be considered legitimate.
The Paradise Papers reveal how little the world really knows about the level of tax avoidance that takes place. UK citizens, for instance, can legally invest in offshore funds and set up companies in those havens. But they must reveal these holdings to the tax man. We do not know whether those named in the papers did, and we do not know whether the tax authorities will do something about those who did not. We only know that a lot is going through offshore. The Paradise Papers show that, despite promises of the opposite, opacity is still pervasive in the offshore world.
A large cache of leaked documents has revealed that more than £10 million of the Queen’s private wealth has been invested offshore and in a UK company accused of preying on Britain’s poorest people.
Details of the investments were leaked as part of the Paradise Papers on Sunday, a trove of more than 13 million documents from the world’s leading offshore law firms released through the International Consortium for Investigative Journalists (ICIJ), of which the BBC is a part.
More than 120,000 people and companies have been identified during the leak, including Queen Elizabeth II.
A spokesperson for the Duchy of Lancaster told the BBC: “We operate a number of investments and a few of these are with overseas funds. All of our investments are fully audited and legitimate. The Queen voluntarily pays tax on any income she receives from the Duchy.”
The Queen invested in Brighthouse, a company responsible for the misery of thousands of people on low incomes. #ParadisePapers
10:57 AM – 5 Nov 2017
According to the leaked documents, the Duchy of Lancaster invested $7.5 million of the Queen’s private income and financial portfolio in Dover Street VI Cayman Fund LP in 2005.
Files from offshore law firm Appleby reveal that the fund made investments in pharmaceutical and high-tech companies, including a company that developed fingerprint technology for mobile phones.
The Queen’s estate received about $360,000 from its investment.
The papers also revealed that the Dover Street fund bought a small interest in something called ‘Project Bertie,’ which involved the takeover of rent-to-buy company BrightHouse, a company slammed by consumer watchdogs for selling household items on payment plans with annual interest rates as high as 99.99 percent.
#ParadisePapers sending ripples all over the world. Queen investing in Bright House WTF?! Govts worldwide have encouraged tax evasion. The rich get richer. Makes me so angry when everyone else is paying taxes. All that money hidden away could have made world better place
10:55 PM – 5 Nov 2017
Dover Street VI Cayman Fund LP also purchased a 75 percent stake in First Quench Retailing Ltd, which included the off-licence chain Threshers that went into administration in 2009.
Chris Adcock, chief finance officer for the Duchy, told the Guardian it had been unaware of the indirect holding in BrightHouse.
“Investors commit to a fund for a given period and are not party to its ongoing investment decisions,” he said.
“We are not aware of any tax advantages to the Duchy in investing in offshore funds.
The fact that the United Kingdom is on par with the United States as one of the most corrupt countries in the world is hardly a secret, even though the governments of these two nations have been launched various public relations campaigns in a bid to persuade their citizens that they are in no way involved in such crimes.
Over the past couple of decades, London’s accountants and lawyers have helped launder billions of dollars of stolen money through the British Virgin Islands, among other British overseas territories the British property market -. like the New York property market – has long functioned like an old-fashioned Swiss bank, providing safe real estate investments for owners who wish their identities and their sources of income to be hidden.
In rich Western states, like the UK and US, governments often lend a helping hand to various criminal organizations that seek ways to launder money stolen from budgets and aid programs of various countries. In order to prevent the officials of those robbed states from accessing those funds, Western authorities often create large commercial entities that serve the sole purpose of hiding this money. In a number of US states like Delaware, New Mexico, Nevada and Wyoming, along with the British Virgin Islands, a territory that is inhabited by 28,000 people, anonymous investors can register a countless number of companies, without being subjected to any form of screening by local authorities.
As it is stated by prominent journalist Roberto Saviano, who has dedicated over a decade of his life to the investigation of the criminal activities of the Italian Mafia, 90 per cent of the owners of capital in London have their headquarters offshore. Jersey and the Cayman’s serve as gateways through which criminal capital in Europe and the UK flows. The journalist would note that a total of 57 billion pounds (74 billion euros) is being laundered in the United Kingdom, which makes the City of London and Wall Street the two largest centers for money laundering in the world, where drug cartels are able to transform their criminally acquired cash into legal money.
London – is an international financial center that services millions of transactions with a total worth of hundreds of billions of pounds every year, while offering the most sophisticated financial services on Earth. But, at the same time, the British capital is the center of the global offshore system.
In 2015, the National Crime Agency published an influential report that would state that criminals would launder hundreds of billions of dollars using UK banks and their branches.” It was also reported that the amount of money laundered constitutes a direct threat to the economy and the reputation of the United Kingdom.
Mind you, that the release of the so-called Panama Papers has directly affected British PM David Cameron since they revealed that his father was running a large offshore investment fund. Yet another interesting revelation was made by Transparency UK which released a report in March 2015 that would state that London’s real estate market is being used to conceal illegal income and launder money obtained through bribes. It would note that 36,342 properties covering 2.2 square miles (5.7 square kilometres) of London – an area twice the size of London’s financial district – are owned by shell companies, while 75 per cent of UK properties currently being investigated because of corruption are registered in secret safe havens. The British division of Transparency International has even launched a special website ukunmaskthecorrupt.org, where anyone can trace such properties through an interactive map of London.
This further confirms the fact that corruption and financial crimes have deep roots in the UK, and all sorts of criminals across the world are perfectly aware of the fact that they can find a financial safe heaven in London.
Against this background one can only be amazed by the blatant hypocrisy that the leader of the ruling Conservative Party has demonstrated. Last May, David Cameron organized an international meeting in London, with representatives of dozens of countries sending their representatives. The meeting was labeled an Anti-corruption Summit, which provoked a wave of bitter criticism and ridicule in the British Parliament. In particular, opposition party members directly demanded the Prime Minister close all commercial entities that have been created for the purpose of money laundering in the UK and its overseas territories.
So while UK authorities, like their colleagues across the Atlantic, are declaring their determination to fight corruption, in reality they keep providing criminals of all kinds the ideal safe haven for laundering their money in London and New-York.
Recently, a total of 300 prominent economists have signed a joint statement that demanded that David Cameron and the leaders of other wealthy and influential states actually start a genuine fight against corruption. . Jorge Sachs, who put his signature upon the statement, would declare bluntly that the world needs to put an end to the critical role that Britain plays at the center of this ongoing corruption.
Martin Berger is a freelance journalist and geopolitical analyst, exclusively for the online magazine “New Eastern Outlook.”
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