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

Sunday Independent (Ireland) - - ANALYSIS -

‘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.”

‘The new trove of files in­cludes bank state­ments and emails’

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

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