electronic
naif
The Status Quo
is NOT
Acceptable.
The work of International Consortium of Investigative Journalists has shown the extent of tax avoidance and cheating occurring on a global scale. An industry supports the wealthy and laws allow it. This is done on both a Corporate and Individual level. Both the Paradise and the Panama Papers document the tactics and how pervasive these stratagies are.
Figures taken from a Credit Suisse research paper Global Wealth Report 2013 show that the bottom half of the world's population owns less than the richest 85 people in the world. This is not by accident.
The Paradise Papers, internal documents of the Bermuda law firm Appleby, show how dishonesty is being promoted and how corruption is being institutionalized.
The 13.4m files show that what are supposed to be windows of disclosure into the finances of high officials are easily covered with blinds made by piecing together business laws from multiple jurisdictions. As the super-rich increasingly hold the reins of governments in the US and other countries, the rules to make sure they act with integrity and in the public interest fail.
Appleby clients get away with their misconduct because rules governing finance and cash movements have not caught up with the realities of the modern financial systems.
The nearly 13.4m Appleby files show systematic undermining of not just tax regimes, but of ethical conduct by public officials. And that is where the real harm lies, in chipping away at one of the pillars of liberty and self-governance: integrity and the expectation that elected and appointed officials will act solely in the public interest, never against it.
Appleby’s attitude toward integrity in foreign jurisdictions is hinted at in a PowerPoint presentation about anti-money laundering. One slide says: “Some of the crap we accept is amazing, totally amazing.”
That it does not violate the law in a country where Appleby has offices to facilitate tax cheating by citizens of another country is a solid legal defense. It is not, however, an ethical defense.
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At least 31,000 of the individual and corporate clients included in Appleby’s records are U.S. citizens or have U.S. addresses, more than from any other country. Appleby also counted clients from the United Kingdom, China and Canada among its biggest sources of business.
Nearly 7 million records from Appleby and affiliates cover the period from 1950 to 2016 and include emails, billion-dollar loan agreements and bank statements involving at least 25,000 entities connected to people in 180 countries. Appleby is a member of the “Offshore Magic Circle,” an informal clique of the planet’s leading offshore law practices. The firm was founded Bermuda and has offices in Hong Kong, Shanghai, the British Virgin Islands, the Cayman Islands and other offshore centers.
The files reveal a company that has provided services to risky clients from Iran, Russia and Libya, failed government audits that identified gaps in anti-money-laundering procedures.
Wilbur Ross, Donald Trump’s commerce secretary, is revealed in the Paradise Papers to be involved with 50 Cayman Islands companies and partnerships administered by Appleby.
The files reveal how big corporations cut their taxes by creating offshore shell companies to hold intangible assets such as the design of Nike’s “Swoosh” logo and the creative rights to silicone breast implants.
The files reveal Apple Inc. shopped around Europe and the Caribbean for a new island tax shelter after a U.S. Senate inquiry found that the tech giant had avoided tens of billions of dollars in taxes by shifting profits into Irish subsidiaries.
In one email exchange, Apple’s lawyers asked Appleby to confirm that a possible move to one of six offshore tax havens would allow an Irish subsidiary to “conduct management activities . . . without being subject to taxation in these jurisdictions.”
The Guardian was part of the investigative group reporting on the Paradise Papers.
David Cay Johnston writes on economics and tax issues
In legal correspondence, Appleby demanded from the Guardian and the BBC the disclosure of any of the 6m Appleby documents that informed their reporting.
The company also sought damages for the disclosure of what it said were confidential legal documents obtained in a digital hack.
The Guardian said last year it would defend the claim because to not do so could have profound consequences that would deter British media organisations from undertaking serious, investigative journalism in the public interest.
An agreement between the parties was reached after it became clear the vast majority of the documents were no longer owned by Appleby and were not legally privileged.
A joint statement said: “Without compromising their journalistic integrity or ability to continue to do public interest journalism, the Guardian and the BBC have assisted Appleby by explaining which of the company’s documents may have been used to underpin their journalism. This will allow Appleby to initiate meaningful discussions with its clients, colleagues and regulators.”
A spokesman for the Guardian said: “The Guardian’s reporting from the Paradise Papers is investigative journalism that has raised important issues in the public interest.”
The BBC said: “We welcome this settlement which preserves our ability to carry out investigative journalism in the public interest.”
Michael O’Connell, the group managing partner of Appleby, said it had started the legal action to understand which of its confidential and privileged documents had been taken.
“From the outset we wanted to be able to explain to our clients and colleagues what information of theirs had been stolen. That was our duty. As a result of this legal action we are well on our way to achieving our objectives.”