Tags: offshore | tax | haven | ICIJ

Unmasked: The Secret World of Offshore Tax Havens

Thursday, 04 Apr 2013 01:44 PM

By John Morgan

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Although the mega-rich and influential often use complex offshore havens to hide assets, own yachts and art masterpieces and avoid taxes — often with the help of some of the world’s biggest banks — lower-income individuals also use offshore accounts, a new study from the Washington, D.C.-based International Consortium of Investigative Journalists (ICIJ) reveals.

The ICIJ, in conjunction with a group of investigative journalists, cataloged a smorgasbord of shady dealings by the wealthy and others — including government officials — in an exhaustive 15-month investigation.

In all, 86 journalists from 46 nations used high-tech data to sift through millions of leaked documents going back decades.

Editor's Note:
Billionaires Dump Stocks. Prepare for the Unthinkable.

Caught up in the net of the tax shelters are American doctors and dentists, Wall Street swindlers, Russian executives, international arms dealers and families of despots, among others.

“We already knew how secret and inaccessible the offshore industry is, but we were surprised by now vast and far-reaching it is,” said Gerard Ryle, director of the ICIJ.

"We expected to find only the mega rich using [offshore accounts]," he told CNNMoney. "But in fact we found it was being used by a much broader section of society."

The exhaustive effort “sheds new light on the methods used to deceive fiscal authorities and hide money,” German magazine Spiegel stated.

According to CNNMoney, the hidden accounts included proceeds from Ponzi schemes and money drained from nations’ coffers, with the cross-border proceeds as high as $1.6 trillion annually.

“I’ve never seen anything like this. This secret world has finally been revealed,” Arthur Cockfield, a law professor at Queen’s University, told the Canadian Broadcasting Corporation.

The ICIJ said about 130,000 people were identified in the documents, many from unnamed sources believed to include banking industry informants.

The list included government officials and their families and associates in Azerbaijan, Russia, Canada, Pakistan, the Philippines, Thailand, Canada and Mongolia.

Well-known individuals named included composer Denise Rich, whose ex-husband Marc Rich, a hedge fund boss, was pardoned by then-President Bill Clinton after being prosecuted for tax evasion.

The names of at least 450 wealthy Canadians were identified, including that of high-profile class action lawyer Tony Merchant, according to the Financial Post.

Others included the late German society playboy Gunter Sachs, an ex-husband of actress Brigitte Bardot; Russian oligarch Mikhail Fridman; Imee Marcos, a provincial governor in the Philippines and the eldest daughter of former dictator Ferdinand Marcos; the daughters of Azerbaijani President Ilham Aliyev; and Spanish baroness Carmen Thyssen-Baornemisza, according to Spiegel.

ICIJ said it questioned the deputy speaker of Mongolia's parliament, Bayartsogt Sangajav, about records showing he has an offshore company and a secret Swiss bank account in which he had deposited over $1 million. "I shouldn't have opened that account," he told ICIJ reporters, Spiegel reported. "I probably should consider resigning from my position."

The ICIJ identified some of the world’s top’s banks – including UBS, Clariden and Deutsche Bank – as having aggressively worked to provide their customers with secrecy-cloaked companies in offshore hideaways.

The offshore havens cited included the British Virgin Islands, Cyprus, Cook Islands, Switzerland, Panama and Liechtenstein.

International partners in the ICIJ effort included The Washington Post, BBC, The Guardian, La Nacion, Radio Free Europe, Asahi Shimbun and a long list of others.

“Perhaps most surprising is that much of what we will be revealing over the next few months is perfectly legal,” the ICIJ said in a statement.

“The extreme secrecy offered by tax havens also facilitates the use of anonymous entities to commit crimes, evade taxes, hide assets from creditors and avoid regulations. This secrecy can ultimately undermine democracy by granting a certain class of individuals the ability to play by a different set of rules.”

Editor's Note: Billionaires Dump Stocks. Prepare for the Unthinkable.

© 2014 Moneynews. All rights reserved.

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