A large cache of secret documents reveals that tens of thousands of people, including government officials from around the world, are using offshore companies and trusts to avoid taxes.
The documents were unearthed by a group known as the International Consortium of Investigative Journalists, who used sophisticated software to analyze a computer hard drive packed with corporate data, personal information and emails. The information came to light when ICIJ director Gerard Ryle investigated a financial scandal in Australia involving offshore tax havens and corporate fraud.
The investigation found that government officials and their families and associates in more than 170 countries and territories, including Azerbaijan, Russia, Canada, Pakistan, the Philippines, Thailand, Mongolia and the U.S., have embraced the use of covert companies and bank accounts as a way to avoid taxes. Among those named are the Prime Minister of Georgia, Bidzina Ivanishvili, who set up a company in the British Virgin Islands, and the former campaign treasurer for French President Francois Hollande, Jean-Jacques Augier, who used a company in the Cayman Islands to invest in a Chinese company in 2005.
By using complex offshore structures, the taxpayers described in the articles are able to own mansions, yachts, art masterpieces and other assets, gaining tax advantages and anonymity not available to average taxpayers. However, doctors, dentists and middle-class taxpayers were also found to be taking advantage of the offshore entities.
Major banks—including UBS, Clariden and Deutsche Bank—have worked to provide customers with entities in the British Virgin Islands and other offshore havens to help them hide assets, according to the group.
“A well-paid industry of accountants, middlemen and other operatives has helped offshore patrons shroud their identities and business interests, providing shelter in many cases to money laundering or other misconduct,” said the ICIJ. “Ponzi schemers and other large-scale fraudsters routinely use offshore havens to pull off their shell games and move their ill-gotten gains.”
For more information, visit www.icij.org/offshore.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access