'Paradise Papers' Show Secret Wealth of Officials, Famous People

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Many famous people and a top United States official are among those on a list of people shown to have money in foreign banks to avoid taxes.

The financial documents have been called the “Paradise Papers.” They are mainly from the legal company Appleby in Bermuda. Millions of documents were leaked to Germany’s Sueddeutsche Zeitung newspaper on November 5. The newspaper shared them with the International Consortium of Investigative Journalists.

The documents give financial details of many famous people, officials and leaders. The information includes how much money these people have secretly kept in offshore¹ accounts.

Appleby advises wealthy people on international financial transactions. These deals can help people avoid paying some taxes in their home countries that are tied to their investments.

Appleby says it has investigated all the accusations² and found “there is no evidence of any wrongdoing, either on the part of ourselves or our clients.”

Commerce secretary’s business ties are questioned

The documents show that U.S. Commerce Secretary Wilbur Ross has business connections with Russian business executive Kirill Shamalov.

Shamalov is executive and part-owner of the Russian energy company Sibur. He also is the son-in-law of Russian President Vladimir Putin.

The 79-year-old Ross is a former businessman and a billionaire. He has an investment in partnerships³ valued between $2 million and $10 million in the shipping⁴ company, Navigator Holdings.

Navigator Holdings earns millions of dollars a year transporting natural gas for Sibur. The documents also say Sibur is co-owned by Gennady Timchenko. He is a Russian billionaire who was tied to a large state-run company before the fall of the Soviet⁵ Union.

Timchenko is subject to U.S. sanctions because of Russia's 2 014 occupation of Ukraine's Crimean Peninsula. The occupation was followed by conflict between pro-Russian separatists and government forces in Ukraine.

Ross sold many financial investments when he joined the administration of U.S. President Donald Trump⁶ earlier this year. Ross sold them to avoid a conflict of interest.

However, Ross kept his Navigator investment. He put it into a series of partnerships in the Cayman Islands, an offshore tax haven⁷. Much of Ross’s estimated $2 billion in wealth is in the Cayman Islands the documents say.

Ross did not disclose the Russian business link when the U.S. Senate confirmed him as commerce secretary. The link was discovered this weekend after the Appleby documents were leaked.

A Commerce Department spokesman said Ross has removed himself as secretary from matters related to trans-oceanic shipping.

The report of Ross' financial connection to Russia comes as a special prosecutor⁸, Robert Mueller, and three congressional groups carry out separate investigations⁹. They are investigating efforts by Russia to interfere¹⁰ in the 2016 U.S. presidential election.

The U.S. intelligence community says that Russian President Vladimir Putin led an effort to harm U.S. democracy and help Trump win the election.

The release of tax-related documents also comes as the U.S. Congress considers new tax laws.

The far reaches of the “Paradise Papers”

The documents show financial information about individuals outside the US.

The Associated Press reports that the papers show Britain’s Queen Elizabeth II has invested about $13 million of her private money in tax havens¹¹ in the Cayman Islands and Bermuda.

Duchy of Lancaster, which oversees¹² her finances, confirmed these activities but said that all their investments are legal.

The papers also say the musician Bono, of the rock band U2, used a company based in Malta to buy part of a shopping mall in Vilnius, Lithuania.

Bono’s spokeswoman confirmed to The Guardian¹³ newspaper that the musician invested in the Maltese company Nude¹⁴ Estates Ltd. The company sold its assets in 2015.

Putting pressure on the world leaders

The new disclosures may put pressure on world leaders.

The European Union will discuss plans for a tax haven “blacklist” Reuters news agency reported.

E.U. countries had been trying to reach an agreement on tax havens by the end of 2017. European officials are seeking to deal with the problem of tax avoidance that received attention after the release of the “Panama Papers.”

The so-called “Panama Papers” were millions of financial documents leaked last year. The documents gave information of tax-avoidance activities of many famous people and officials.

The European Commission wants to make a list of tax free or low-tax countries including those that do not cooperate with the EU.

The EU hopes the threat of being on a blacklist would discourage individuals and companies from putting their money in those countries or territories.

Currently, Reuters reports that the proposed EU blacklist would apply only to non-EU countries. Low-tax countries such as Luxembourg, Malta and Ireland would not be included.

I’m Phil Dierking.

Words in This Story

blacklist - n. a list of people, organizations, etc., that are disapproved¹⁵ of or that are to be punished or avoided?

clients - n. a person who pays a professional person or organization for services?

disclose - v. to make something known to the public?

discourage - v. to make someone less determined¹⁶, hopeful, or confident?

offshore - adj. located in a foreign country?

transactions - n. business deal?

tax haven - n. a country or independent area where taxes are levied¹⁷ at a low rate.?

sanction - n. an action that is taken or an order that is given to force a country to obey international laws by limiting or stopping trade with that country, by not allowing economic aid for that country, etc.