On Nov. 4, the International Consortium of Investigative Journalists leaked 13.4 million documents pertaining to how the elite conduct business, evade taxes and hide their wealth. These documents–named the Paradise Papers for the ‘tax paradises’ in which the ultra-rich keep their money–contain details from the offshore law firm Appleby and reveal how they advised on a whole slew of previously undisclosed foreign investments and off-shore banking. While nothing in the papers is particularly illegal, the revelations are embarrassing for a number of high profile people around the world.
Tax havens are not illegal. Basically, you set up a company in a ‘tax paradise’ country and as your wealth increases there, you don’t have to pay taxes on it in your home country (or sometimes at all). Tax havens include Switzerland, Bermuda, Belize, the Bahamas, Panama, Hong Kong and a number of other small island countries. While this practice isn’t illegal, it doesn’t sit well with those of us who aren’t making millions of dollars off foreign business investments. It means that while we work our butts off to make a living and pay the government, the wealthy are cheating the them–and us, by extension–out of millions in taxes.
There are more than 3,000 Canadians named in the Paradise Papers, including some very familiar ones. Three former Prime Ministers, in fact. Paul Martin‘s former shipping company, Canada Steamship Lines (now owned by his sons) is one of Appleby’s ‘biggest clients’ the papers say. Brian Mulroney served on the board of the investment company Said Holdings which brokered the biggest arms deal in British history. Jean Chretien is listed as being the recipient of 100,000 stock options from Madagascar Oil for consulting for the company. Chretien admits to the consulting, but denies even hearing about stock options for it.
The current PM isn’t off the hook either. Justin Trudeau‘s top fundraiser and close family friend Stephen Bronfman is listed in the papers along with former Liberal senator Leo Kolber for moving millions of dollars to a trust in the Cayman Islands. Not exactly a good look for the Liberal party that keeps talking about working for the middle class.
It is estimated that $250 billion is invested offshore by Canadians, meaning that around $6 billion in Canadian taxes are lost to tax havens every year.
Yeah, the queen. The papers show that Queen Elizabeth‘s estate portfolio held millions of dollars in several foreign investments in the Cayman Islands and Bermuda. The queen’s estate says she was not aware of the holdings. Labour party leader Jeremy Corbyn has called for her to apologize and recognize what offshore investments of wealthy public figures ‘does to our society.’
The Russia Investigation
Did you think we could look at shady tax dealings and not talk about the Russia investigation surrounding the Trump administration? Nope! Most notably, the papers include the information that U.S. Secretary of Commerce Wilbur Ross invested in a business that deals with Russian oligarchs who were sanctioned by the United States as well as Vladimir Putin‘s son-in-law. There is a question of legality in this case because doing business with these sanctioned oligarchs would be illegal, but further investigation is necessary to determine if Ross did business with them directly. The Putin connection in suspicious too.
Other notable names
Other high-profile people named in the papers include Madonna, Bono, U.S. Secretary of State Rex Tillerson, Turkey’s prime minister, Queen Noor of Jordan, a former mayor of Barcelona and a former president of Japan.