Apple’s tax avoidance strategy which shifted profits from one fiscal haven to another. The financial links of a top Trump administration official to Vladimir Putin’s inner circle. And Queen Elizabeth II’s investments in tax havens.
A trove of documents in the “Paradise Papers” released by the US-based International Consortium of Investigative Journalists (ICIJ) sheds light on secretive offshore deals which could prove deeply embarrassing, if not illegal.
The documents also suggest that Canadian Prime Minister Justin Trudeau’s top fundraiser and senior advisor Stephen Bronfman, heir to the Seagram fortune, moved some $60 million (52 million euros) to offshore tax havens with ex-senator Leo Kolber.
According to documents cited by the New York Times and BBC, the offshore legal services firm Appleby helped the iPhone maker shift tens of billions of dollars from Ireland to the Channel Islands when it appeared to face a tougher stand on taxes by Dublin.
The report said Apple transferred funds to the small island of Jersey, which typically does not tax corporate income and is largely exempt from European Union tax regulations.
Apple did not immediately respond to an AFP query on the report but told the New York Times it follows the law in each country where it operates.
At a 2013 congressional hearing, Apple chief Tim Cook denied the use of “gimmicks” to avoid taxes. The company is now facing an EU demand for some $14.5 billion in taxes based on a ruling that its tax structure in Ireland amounted to illegal state aid.
– Trump official’s Russia ties –
Separately, the documents showed the Russian connection of US Commerce Secretary Wilbur Ross through a complex web of offshore investments.
They revealed Ross’s 31 percent stake in Navigator Holdings partnership with Russian energy giant Sibur, which is partially owned by Putin’s son-in-law Kirill Shamalov and Gennady Timchenko, the Russian president’s friend and business partner who is subject to US sanctions.
The cabinet member’s ties to Russian entities raise questions over potential conflicts of interest, and whether they undermine Washington’s sanctions on Moscow.
The US imposed sanctions on Russian entities and individuals over the annexation of Crimea and the crisis in Ukraine.
Ross’s private equity firm has been the biggest shareholder in Navigator, and although his personal share of the firm’s stake was reduced when he took office in February, the commerce chief’s investment is still valued at $2 million to $10 million, according to official filings.
The billionaire investor told Bloomberg on Monday he was not intending to hold onto his stake: “I’ve been actually selling it anyway but that isn’t because of this.”
Ross denied any involvement in setting up the Sibur deal, which he told the BBC was arranged before he joined the board of Navigator Holdings.
“There’s nothing whatsoever improper,” Ross added.
– Queen revelations –
On Monday, Russian politicians played down the leaks, saying the deals mentioned were legal and not politically motivated.
In a statement reported by Russian news agencies, Sibur voiced its “amazement at the politically charged interpretation in some media of ordinary commercial activity.”
The revelations about Bronfman could spell trouble for Trudeau, who was elected two years ago promising to reduce economic inequality and tax avoidance.
In the case of Queen Elizabeth’s private estate, critics may question whether it is appropriate for the British head of state to invest in offshore tax havens.
Theresa May’s spokesman said the British prime minister “wants people to pay the tax that they owe,” while cautioning that holding offshore investments was not an automatic sign of wrongdoing.
“We have been clear that avoidance and evasion is never acceptable,” he said, ahead of the British parliament discussing the Paradise Papers on Monday.
– Controversial businesses –
The documents also showed around £10 million ($13 million, 11 million euros) of the queen’s private money was placed in funds held in the Cayman Islands and Bermuda, as first reported in Britain by the BBC and the Guardian newspaper.
They reported the funds reinvested the money in an array of businesses, including controversial rent-to-buy retailer BrightHouse, which has been accused of exploiting the poor.
A spokeswoman for the Duchy of Lancaster, which provides the monarch with an income and handles her investments, said: “All of our investments are fully audited and legitimate.”
The spokeswoman added that one of the fund investments represents only 0.3 percent of the total value of the Duchy.
The Paradise Papers contain 13.4 million documents mainly from Appleby, an offshore law firm with offices in Bermuda and beyond.
The findings were described as a “scandal” by European Economics Affairs Commissioner Pierre Moscovici.
“In light of these shocking revelations, I call on member states to rapidly adopt a European tax haven blacklist, as well as other dissuasive measures,” he said in Brussels.
The files were first obtained by the German newspaper Suddeutsche Zeitung, and shared with the ICIJ and partner media outlets.