Buying and selling U.S. dollars decades ago was much easier for banks if the trades were done offshore, for instance. And if you lived where a corrupt or predatory government might seize your assets, then moving your wealth offshore could protect it.
But the secrecy surrounding the offshore industry has become increasingly unpalatable for world leaders like Justin Trudeau and U.S. President Barack Obama, who have called for more transparency.
“We knew that tax avoidance has been a long challenge,” Trudeau told reporters Wednesday, criticizing how some people can “hop” between favourable jurisdictions to avoid taxes. Obama also lamented the offshore industry, saying that “global tax avoidance generally is a huge problem,” Tuesday, adding: “The problem is that a lot of this stuff is legal, not illegal.”
The Panama Papers reveal the names of many well-known individuals who have had offshore dealings through companies provided by Mossack Fonseca, the law firm at the centre of the leak.
There is nothing to suggest that any of those named here sheltered, or sought to shelter, money or assets offshore to avoid tax or for any unlawful purpose.
But in the current political climate, it raises legitimate questions about why they have done so, what benefit they were hoping for, and whether they will continue to use such arrangements.
Simon Cowell
The music tycoon is the sole shareholder of the British Virgin Islands (BVI) companies Southstreet Ltd. and Eaststreet Ltd. Both were set up in 2007 as Cowell was planning to purchase two plots of land in Barbados, where he holidays most years.
The land is part of a major development that had attracted other celebrities. Other plots in the development were reportedly snapped up by the composer Andrew Lloyd Webber and former Formula One team boss Eddie Jordan. Buyers reportedly paid between $11 million and $20 million (U.S.) for plots, with Cowell paying more because he bought two.
Neither Lloyd-Webber nor Jordan appears in the Mossack Fonseca data and there is no suggestion that they have offshore holdings.
The building project has been mired in financial disputes, with construction falling far behind schedule. Neither of Cowell’s companies was ever used, and both are now dormant.
Cowell’s spokesman said: “The companies were set up, not by my client, but by accountants acting for him as a common means for an overseas investor to purchase property in Barbados. My client, however, preferred to purchase them transparently in his own name. Therefore, the companies were never used for anything at all. I can also confirm on behalf of my client that he has not used any offshore companies for any purpose whatsoever.”
Under Barbadian law, companies incorporated outside Barbados must be registered as an “external company” before they can own real estate on the Caribbean island. One of the companies, Southstreet, was registered in Barbados in March 2007, shortly after the British Virgin Islands company was established.
Using an offshore company to own land in Barbados can avoid a 1 per cent tax on the purchase and a property transfer tax of about 2.5 per cent when the land is sold. There is no suggestion that Cowell sought or did benefit from this.
According to the Sunday Times Rich List, Cowell is worth about $600 million. The talent show boss says he pays tax all over the world: “Whenever I got knocked for what I do, I always say, ‘Well, I do pay my taxes, and it helps, and I’m quite proud of that, here and all over the world.’ ”
Stanley Kubrick
American film director Stanley Kubrick famously spent the last decades of his life as a semi-recluse in a grand 18th-century English country manor.
After Kubrick died in 1999, the ownership of the property passed to three companies registered in the British Virgin Islands and controlled by his daughters, a move that could have saved the family hundreds of thousands of dollars in inheritance tax. The papers do not reveal if this occurred.
The filmmaker bought the 18-bedroom Childwickbury Manor in 1978 and lived in it for the rest of his life. He used it as a base to work on films including The Shining, Eyes Wide Shut and Full Metal Jacket. He is buried on its grounds.
The house is now owned by Anya K Holdings Ltd., Vivian K Holdings Ltd. and Katharina K Holdings Ltd. The companies’ names refer to his daughters Anya, who died in 2009, Vivian, and his stepdaughter Katharina.
The companies’ shares, in turn, are held by trusts on behalf of Kubrick’s children and grandchildren.
Sarah Ferguson, Duchess of York
The documents reveal a degree of chaos around the Duchess of York’s finances. Letters between Mossack Fonseca and Sarah Ferguson’s solicitors show her advisers trying to make sense of the complex arrangements around Essar Company Inc., which was set up in the British Virgin Islands in May 2000.
The company was managed through a trust services company in Geneva. In September 2001, the duchess’s solicitors wrote to Mossack Fonseca, trying to establish how the company had been structured.
Her solicitors said Essar held “certain of her interests,” adding: “We have been instructed by her relatively recently and are trying to ascertain who the directors of the company are and who the beneficial owners of the company are.”
“We appreciate that this is not information you will disclose to us without prior authority but could you please let us know urgently what authority you need to enable you to disclose this information to us,” they requested.
The Geneva and British Virgin Islands divisions of Mossack Fonseca then had to grant each other permission to disclose the names of Essar’s directors to the duchess’s solicitors.
At the time, Essar owned trademarks for Little Red, a series of children’s books written by Ferguson. By the end of September, the BVI branch told her solicitors that the company directors were two individuals operating out of Mossack Fonseca’s Panama office.
A spokesman for the duchess said: “Essar Company Inc. was formed by the partners who were to develop the business opportunities with the duchess. Had any of the intellectual property generated income or gains or other profits, it would have been disclosed by the duchess as part of her normal tax filings.” The spokesman said the duchess always disclosed all sources of income in her tax returns.
Since her 1996 divorce from Prince Andrew, the second son of Queen Elizabeth II, Ferguson has made up to $3.7 million a year from a variety of roles, including as an ambassador for Weight Watchers. In 2009, she lost more than $5.9 million in the collapse of Hartmoor, her lifestyle and wellness company.
Nick Faldo
The English golfer was the sole shareholder of a British Virgin Islands company called Blenhim Road Ltd., which was set up in 1995, two years after the six-time major tournament winner turned professional.
The company was shut down in 2009, at about the time his playing career was starting to wind down. Faldo declined to comment.
Bobby Fischer
The American chess grandmaster was granted power of attorney over a company called Kettering Consultants Inc. in October 2007. It gave him the ability to control the Panama-based company, which was managed by Landsbanki Luxembourg SA.
Fischer was considered by many to be the greatest chess player of all time. In 1972, he won the World Chess Championship against then Soviet champion Boris Spassky in a Cold War clash in Reykjavik. However, during a hiatus in his chess career, Fischer became more and more reclusive. Increasingly paranoid, he made a series of anti-Semitic statements.
In 1992, he played a $5-million rematch against Spassky in the former Yugoslavia. At the time, Yugoslavia was subject to sanctions, and Americans were barred from doing any business in the country. The U.S. government warned Fischer that he could face a $250,000 fine and 10 years in prison. At a press conference in the run-up to the rematch, Fischer defiantly announced that he had not paid any taxes since 1976. He was indicted and never returned to the U.S.
He died a citizen of Iceland in 2008, three months after being given power of attorney over Kettering Consultants. The company was “owned” by four bearer shareholders, an arrangement that would grant control of the company to whoever held the physical shares. The company was shut down in 2012.
Heather Mills
The former wife of ex-Beatle Paul McCartney was a shareholder of Water 4 Investment Ltd., which was originally set up in the British Virgin Islands to create health foods. However, Mills said the investment ended in a long legal battle, losing her a seven-figure sum. The company intended to develop technology to extract the fatty acids usually found in fish oil from algae. Mills owned 100 shares in the company; the other 898 were owned by another investor. Mills said she had invested a large sum in the company, but the investment had failed.
“I can say hand on heart I am a straight taxpayer and you will never find anything on me if you investigate thoroughly,” she said in an emailed statement. A spokesman said: “Heather invested £1 million in a company which intended to utilize algae (rather than fish) to harvest Omega 3 oils, thus preserving the marine ecosystem.”
In 2008, Mills was awarded $47.5 million in her divorce from the former Beatle.
Original Article
Source: thestar.com/
Author: Holly Watt David Pegg Juliette Garside Helena Bengtsson
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