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Vast Hidden Wealth Revealed in Leaked Records Leak of Data on Offshore Account Holders Likely to Spread Fear and Anger
(about 2 hours later)
An enormous leak of confidential financial records has revealed the identities of thousands of wealthy depositors — including European officials and corporate executives, Asian dictators and their children, and even American doctors and dentists — who have stashed immense amounts of money in offshore tax havens. BRUSSELS — They are a large and diverse group that includes a Spanish heiress; the daughter of the former Philippine dictator Ferdinand Marcos; and Denise Rich, the former wife of the disgraced trader Marc Rich, who was pardoned by President Bill Clinton. But, according to a trove of secret financial information released Thursday, all have money and share a desire to hide it.
The leak of records, mainly from the British Virgin Islands, the Cook Islands and Singapore, covers 2.5 million files that disclose proprietary information about more than 120,000 offshore companies and trusts and nearly 130,000 individuals and agents, including the wealthiest people in more than 170 countries. And, it seems safe to say, they — and thousands of others in Europe and far beyond, in places like Mongolia — are suddenly very anxious after the leak of 2.5 million files detailing the offshore bank accounts and shell companies of wealthy individuals and tax-averse companies.
The International Consortium of Investigative Journalists, a network of reporters that obtained the secret records, collaborated with The Guardian, Asahi Shimbun, Le Monde, The Washington Post and more than 40 other news organizations to untangle and report their contents. “There will be people all over the world today who are now scared witless,” said Richard Murphy, research director for Tax Justice Network, a British-based organization that has long campaigned to end the secrecy that surrounds assets held in offshore havens. The leaked files include the names of 4,000 Americans, celebrities as well as more mundane doctors and dentists.
The consortium, founded in 1997 by the Center for Public Integrity, a Washington-based nonprofit investigative journalism organization, said Thursday on its Web site that the multipart investigation “lifts the curtain on the offshore system and provides a transparent look into the secret world of tax havens and the individuals and companies that use and benefit from them.” It is not the first time leaks have dented a thick carapace of confidentiality that usually protects the identities of those who stash funds in the British Virgin Islands, the Cayman Islands, Liechtenstein and other havens. Nor, in most cases, is keeping money in such places illegal.
The project, titled “Secrecy for Sale,” appeared to have the potential to create political shock waves, particularly in Europe, where an economic malaise caused by the euro zone debt crisis has created enormous popular resentment toward austerity policies and widened the gap between rich and poor. The project said some of the world’s top banks in Europe, including UBS and Deutsche Bank, had “aggressively worked to provide their customers with secrecy-cloaked companies in the British Virgin Islands and other offshore hideaways.” But the enormous size of the data dump obtained by the International Consortium of Investigative Journalists, a Washington-based group that, along with affiliated news media organizations, announced its coup on Thursday, has punched a big hole in the secrecy that surrounds what the Tax Justice Network estimates are assets worth at least $21 trillion held in offshore havens. “This could be a game-changer,” said Mr. Murphy, the author of a book about offshore tax shelters. “Secrecy is the key product these places sell. Whether you are a criminal laundering money or just someone trying to evade or avoid taxes, secrecy is the one thing you want.” Once this is gone, he added, “it creates an enormous fear factor” and has a “massive deterrent effect.”
It said the files “illustrate how offshore financial secrecy has spread aggressively around the globe, allowing the wealthy to avoid taxes, fueling corruption and economic woes in rich and poor nations.” The current banking crisis threatening Cyprus, it said, “is one example of how the offshore system can impact an entire country’s financial stability.” And lifting the curtain on the identities of those who keep their money offshore is likely to cause particular anger in austerity-blighted Europe, where governments have been telling people to tighten their belts but have mostly turned a blind eye to wealthier citizens who skirt taxes with help from so-called offshore financial centers.
While confidential bank accounts and tax havens are not illegal, the collaboration’s pullback of a curtain on the vast amounts of wealth involved had the potential to create acute embarrassments and political reverberations in many countries, if for no other reason than for revealing in detail the sums of money. The Guardian’s report on the collaboration quoted a former chief economist for the McKinsey consulting group as saying wealthy individuals may have as much as $32 trillion in undisclosed wealth stashed in overseas havens. The leaked records, mainly from the British Virgin Islands, the Cook Islands and Singapore, disclose proprietary information about more than 120,000 offshore companies and trusts and nearly 130,000 individuals and agents, including the wealthiest people in more than 170 countries. Not all of those named necessarily have secret bank accounts, and in some cases only conducted business through companies they control that are registered offshore.
“The naming project may be extremely damaging for confidence among the world’s wealthiest people, no longer certain that the size of their fortunes remains hidden from governments and from their neighbors,” The Guardian said in its account of the findings. The embarrassment caused by Thursday’s revelations has been particularly acute in France, where Socialist President François Hollande, who wants to impose a 75 percent tax on millionaires, has been struggling to contain a political firestorm touched off this week by a former budget minister’s admission — after months of denials — that he had secret foreign bank accounts.
Among some of the most prominent examples of individuals identified in the leaked records were Jean-Jacques Augier, the co-treasurer of the 2012 election campaign of President François Hollande of France and a director of a Cayman Islands-based business that had invested in China. That disclosure could further complicate the political troubles confronting Mr. Hollande, already hit in a financial scandal caused by the concealment of a Swiss bank account by his former budget minister. The scandal looked set to widen on Thursday as senior members of the government were forced to confront allegations that Mr. Hollande and others may have been aware that the budget minister, Jérôme Cahuzac, who resigned on March 19, was lying but failed to act.
Mr. Augier, a friend of Mr. Hollande’s, denied to Le Monde and Agence France-Presse that he had done anything illegal or improper. He said he had invested in funds that invested in China, and that he had no personal bank account in the Cayman Islands or any direct personal investment there. He conceded only that ‘'maybe I lacked a bit of caution.'’ Mr. Hollande, at a news conference in Morocco, denied any knowledge of his friend’s investments and said that if there were any illegality, it would be investigated. Adding to the president’s trouble, the name of a close friend and treasurer of his 2012 election campaign, Jean-Jacques Augier, appeared in connection with the files released Thursday by the International Consortium of Investigative Journalists. Mr. Augier, according to the newspaper Le Monde, was identified as an investor in offshore businesses in the Cayman Islands, another well-known tax haven.
Also identified in the leaked records was Olga Shuvalova, the wife of Russia’s deputy prime minister Igor Shuvalov. That disclosure could anger President Vladimir V. Putin of Russia, who has railed against the use of offshore wealth havens among Russia’s elite. Mr. Augier, a friend of Mr. Hollande, denied to Le Monde and Agence France-Presse that he had done anything illegal or improper. He said he had invested in funds that invested in China, and that he had no personal bank account in the Cayman Islands or any direct personal investment there. He conceded only that “maybe I lacked a bit of caution.”
Others identified included Maria Imelda Marcos Manotoc, a provincial governor and eldest daughter of former President Ferdinand E. Marcos, the notoriously corrupt dictator; Gunter Sachs, a legendary German playboy and photographer who committed suicide in May 2011 at age 78; Baroness Carmen Thyssen-Bornemisza, Spain’s wealthiest art collector and widow of a Thyssen steel company billionaire; Bidzina Ivanishvili, the prime minister of Georgia and that country’s richest man; Bayartsogt Sangajav, Mongolia’s former finance minister; the president of Azerbaijan, Ilham Aliyev, and his family; and Denise Rich of the United States, the songwriter and former wife of Marc Rich, the onetime fugitive oil trader, who was pardoned by President Bill Clinton on tax evasion charges. Others identified included Maria Imelda Marcos Manotoc, a provincial governor and eldest daughter of the former Philippine president; Olga Shuvalova, the wife of Russia’s deputy prime minister, Igor Shuvalov; Gunter Sachs, a German playboy and photographer who committed suicide in May 2011 at age 78; and Baroness Carmen Thyssen-Bornemisza, Spain’s wealthiest art collector and the widow of a Thyssen steel company billionaire. The president of Azerbaijan, Ilham Aliyev, and his wife, Mehriban, were featured in the documents as having set up an offshore company in the British Virgin Islands, while their two daughters appeared in connection with three other offshore outfits.
Steven Erlanger contributed reporting from Paris. The consortium did not specify how it got the information or where it came from. On its Web site, the group said “the leaked files provide facts and figures — cash transfers, incorporation dates, links between companies and individuals — that illustrate how offshore financial secrecy has spread aggressively around the globe, allowing the wealthy and the well connected to dodge taxes and fueling corruption and economic woes in rich and poor nations alike.”
Steven Erlanger contributed reporting from Paris, and Chris Cottrell from Berlin.