November 5, 2017
“Offshore Firm of the Year” Not Alone in Abusing and Profiting from Weaknesses in Corporate Tax Reporting Requirements and Company Ownership Transparency Rules
GFI Calls on Governments to Collect and Publish Beneficial Ownership Information for Accounts to Limit Future Abuses like those in the Paradise and Panama Papers Leaks
WASHINGTON, DC—Leaked documents from Bermuda-based global offshore law firm Appleby—“Paradise Papers”—revealed today by the International Consortium of Investigative Journalists (ICIJ) bring to light again the global shadow financial system for the rich and powerful of the world, noted Global Financial Integrity (GFI), a Washington, DC-based research and advisory organization.
“Appleby has shown on paper that it is aware of its requirements to conduct thorough and honest customer due diligence with potential and existing clients, but the leaked files seem to show that it’s rarely putting this into practice. Law firms and other Designated Non-Financial Businesses and Professions cannot continue to be left to police themselves—jurisdictions need to require and publish public beneficial ownership information,” said GFI Legal Counsel & Director of Government Affairs Heather Lowe.
“Doing legitimate business in offshore secrecy jurisdictions like Bermuda is not illegal, but the Paradise Papers investigation is yet another example of how individuals and businesses—thanks to offshore law firms like Appleby and Estera—are systematically abusing the secrecy they provide” said GFI President Raymond Baker. “Allegations regarding Appleby’s relationship with Glencore demonstrates this insidious relationship perfectly, from purportedly helping handle Glencore’s moves in Congo with Katanga Mine and Dan Gertler, to maintaining a ‘Glencore Room’ to help shore up the company’s claim of a Bermuda office for tax purposes. Multinational companies ought to be required to publicly report their number of employees and facilities plus their revenue on a country-by-country basis to help reveal such tax abuses.”
GFI research estimates that opacity in the global financial system, thanks to tax haven secrecy, anonymous companies, trade-based money laundering, and lax financial crime enforcement, churns illicit financial flows (IFFs) in and out of developing countries worth at least 14.1 to 24.0 percent of developing country trade, on average per year, based on measurable sources of IFFs. This global shadow financial system bleeds the world’s poorest economies and propels crime, corruption, and tax evasion.
“The Addis Ababa Action Agenda and the new Sustainable Development Goals (SDGs) have solidified this link between illicit financial flows (IFFs) and development, and Goal 16 in the SDGs calls on countries to reduce their illicit financial flows,” noted Managing Director Tom Cardamone. “The SDGs will not succeed while the Appleby’s of the world and their clients conspire to engage in corruption and tax abuses, taking money and resources away from public budgets.”
To schedule an interview with Mr. Baker, Mr. Cardamone, or Ms. Lowe, contact Christine Clough at firstname.lastname@example.org / +1 202 293 0740. On-camera spokespersons are available in English in Washington, DC and in Vienna, Austria.
Notes to Editors:
- Click here to access the full public content for the Paradise Papers investigation.
- Click here to access data on illicit financial flows for all developing countries, 2005-2014 [Excel data file].
- Click here to read GFI’s statement on the introduction of incorporation transparency bills in the US House and Senate earlier this year.
- Click here to learn more about beneficial ownership transparency and anonymous companies.
- Click here to learn more about country-by-country reporting (CBCR) from the Financial Transparency Coalition, of which GFI is a member.
- Click here to find more information on Base Erosion and Profit Shifting and country-by-country reporting requirements from the OECD.
Global Financial Integrity
+1 202 293 0740 ext. 231 (office)
+1 202 510 1548 (mobile)