Stephen: It was only matter of time before the extensively-researched reports by the International Consortium of Investigative Journalists which aired last month, about billion dollar tax havens being used by the world’s super-rich, rightly became the subject of proper investigation by the relevant global authorities. The first steps are now underway… Watch this spread globally; as will its implications.
Authorities Announce Tax Haven Investigation
By The International Consortium of Investigative Journalists – May 9, 2013
Tax authorities in the U.S., Britain, and Australia today announced they are working with a gigantic cache of leaked data that may be the beginnings of one of the largest tax investigations in history.
The secret records are believed to include those obtained by the International Consortium of Investigative Journalists that lay bare the individuals behind covert companies and private trusts in the British Virgin Islands, the Cook Islands, Singapore and other offshore hideaways.
The hoard of documents obtained by ICIJ represents the biggest stockpile of inside information about the offshore system ever gathered by a media organization.
The U.S. Internal Revenue Service said in a statement the three nations “have each acquired a substantial amount of data revealing extensive use of such entities organized in a number of jurisdictions including Singapore, the British Virgin Islands, Cayman Islands and the Cook Islands.”
It said the data “contains both the identities of the individual owners of these entities, as well as the advisors who assisted in establishing the entity structure.”
The statement said early analysis had uncovered information that may be relevant to tax administrations of other jurisdictions that they would be willing to share, at the request of other countries.
“This is part of a wider effort by the IRS and other tax administrations to pursue international tax evasion,” said IRS acting commissioner Steven T. Miller.
“Our cooperative work with the United Kingdom and Australia reflects a bigger goal of leaving no safe haven for people trying to illegally evade taxes.”
British tax authorities claim they have even more data than that unearthed by ICIJ.
The total size of the ICIJ files, measured in gigabytes, is more than 160 times larger than the leak of U.S. State Department documents by Wikileaks in 2010.
A statement from the British tax office puts the size of the data obtained by the three tax authorities at 400 gigabytes, compared to the 260 gigabytes gathered by the ICIJ.
“The 400 gigabytes of data is still being analyzed but early results show the use of companies and trusts in a number of territories around the world including Singapore, the British Virgin Islands, the Cayman Islands and the Cook Islands,” the British tax office statement said.
“The data also exposes information that may be shared with other tax administrations as part of the global fight against tax evasion.”
Last month, the ICIJ and 37 media partners began reporting on more than 2.5 million files that include the names of thousands of American, Australian and British citizens as well as families and associates of long-time despots, Wall Street swindlers, Eastern European and Indonesian billionaires, Russian corporate executives, international arms dealers and a sham-director-fronted company that the European Union has labeled as a cog in Iran’s nuclear-development program.
The files leaked to ICIJ 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.
The records detail the offshore holdings of people and companies in more than 170 countries and territories.
The ICIJ publication sparked government inquiries, resignations and a new sense of urgency from European leaders to fight tax evasion. A few days after the articles ran, Europe’s five biggest economic powers — Britain, France, Germany, Italy and Spain — announced they would begin regularly exchanging banking and tax information as a way of identifying tax dodgers and other financial wrongdoers.
The stories we released in April are the first installment in an ongoing series. More ICIJ reports will be published throughout the year as we continue the investigation with our partners.
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 in Cyprus is one example of how the offshore system can impact an entire country’s financial stability.
The ICIJ worked with 86 investigative journalists from 46 countries and used data mining software and old fashioned shoe leather reporting to unveil the previously hidden but thriving world of fraud, tax dodging and political corruption.
To analyze the documents initially, ICIJ collaborated with journalists from The Guardian and the BBC in the U.K., Le Monde in France, Süddeutsche Zeitung and Norddeutscher Rundfunk in Germany, The Washington Post, the Canadian Broadcasting Corporation (CBC) and 31 other media partners around the world.
Among the countries included in the data are: Argentina, Armenia, Australia, Azerbaijan, Belgium, Brazil, Bulgaria, Canada, Chile, Colombia, Costa Rica, Croatia, Denmark, Finland, France, Georgia, Germany, Greece, India, Ireland, Italy, Japan, Kosovo, Latvia, Malaysia, Mexico, Moldova, Netherlands, New Zealand, Nigeria, Norway, Pakistan, Paraguay, Philippines, Romania, Russia, Serbia, Singapore, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Thailand, Ukraine, United Kingdom, United States, and Venezuela.
And here’s the story about the UK tax investigation from the London Guardian:
HMRC has warned alleged tax evaders they may face ‘criminal prosecution or significant penalties’ Photograph: Michael Kemp/Alamy
100 of UK’s Richest People Concealing Billions in Offshore Tax Havens
Global investigation gets under way as HM Revenue and Customs acts on leaked data
By Rupert Neate and James Ball, The Guardian – May 9, 2013
More than 100 of Britain’s richest people have been caught hiding billions of pounds in secretive offshore havens, sparking an unprecedented global tax evasion investigation.
George Osborne, the chancellor, warned the alleged tax evaders, and a further 200 accountants and advisers accused of helping them cheat the taxman: “The message is simple: if you evade tax, we’re coming after you.”
HM Revenue & Customs warned those involved, who were named in offshore data first offered to the authorities by a whistleblower in 2009, that they will face “criminal prosecution or significant penalties” if they do not voluntarily disclose their tax irregularities, as the UK steps up its efforts to clamp down on avoidance ahead of the G8 summit in June.
The 400-gigabyte cache of data leaked to the authorities is understood to be the same information seen by the Guardian in its Offshore Secrets series in November 2012 and March this year. It reveals complicated financial structures using companies and trusts stretching from Singapore and the British Virgin Islands to the Cayman Islands and the Cook Islands.
The Treasury is working in collaboration with American and Australian tax authorities in the biggest ever cross-border tax evasion investigation, and warned that the alleged evaders may be publicly named and shamed if they fail to come clean and explain their tax affairs.
Osborne described the data as “another weapon in HMRC’s arsenal” in the fight against global tax evasion. HMRC added it “reveals extensive use of complex offshore structures to conceal assets by wealthy individuals and companies”.
The Revenue said it was continuing to analyse the material, the equivalent of more than 200 lorry-loads of printed A4 sheets, but it has already “identified over 100 people who benefit from these structures”. A number of those “had already been identified and are under investigation for offshore tax evasion”.
It urged those who use offshore tax structures to urgently review their taxation arrangements to ensure they comply with the law, and encouraged those that don’t to ensure “early disclosure of tax irregularities. Failure to do so may result in a criminal prosecution or significant financial penalties and the possibility of their identities being published,” HMRC warned.
It is also investigating more than 200 UK accountants, lawyers and other professional advisers named in the data as advising the wealthy on setting up the elaborate offshore tax arrangements. HMRC declined to name any of the individuals, advisers or companies it is investigating.
An HMRC source said it was first offered a “taster” of the cache in 2009, but received the bulk in late 2010. A spokesman declined to state if it paid a reward to the whistleblower.
The Guardian, BBC Panorama and the International Consortium of Investigative Journalists (ICIJ) have been releasing details of UK citizens and companies acting as offshore middlemen.
Gerard Ryle, director of the ICIJ, said he expected the collaboration between taxmen in the UK, US and Australia to lead to “the largest tax investigation in history”.
He added: “We know from the data we obtained there are names of people from more than 170 countries. Some are prominent citizens – politicians, celebrities, businessmen, the elite of some societies.
“To have three major tax agencies collaborating – with the possibility of many more doing the same – is potentially a major blow to the secrecy of offshore jurisdictions.”
Among those identified by ICIJ data in the joint investigation was James Turner of York-based company formation agents Turner Little, who told undercover reporters how to set up a foundation in Belize: “It doesn’t link back to you, it doesn’t link back to your family. So it gives you complete confidentiality.”
A representative of Atlas Corporate Services, another company run by Britons but operating from Mauritius, explained to reporters how to avoid tax on a hypothetical £6m sitting in a Swiss bank account. He suggested, “off the record”, that they use an offshore entity in Panama. “If there’s a tax issue … they won’t disclose any information on that foundation under Panamanian law,” he said.
Another middleman, Russell Lebe of Readymade Companies Worldwide, advising a reporter posing as an Indian businessman, assured his client that “If we were approached by the Indian tax authority … and they’re doing tax evasion, we wouldn’t give a monkey’s.”
The Guardian, in its investigation, identified 28 individuals with ties to the UK acting as “sham” directors for more than 21,000 companies across the world, keeping the true owners of the companies off official paperwork and thus making them invisible to authorities.
However, there is no suggestion that any of the individuals identified in the Guardian/ICIJ investigation are among those being examined by HMRC.
Jenny Granger, HMRC’s director general for enforcement and compliance, cautioned that not all the individuals using offshore accounts were seeking to evade tax. “There is nothing illegal about an international structure, especially in a globally integrated economy and these arrangements may be perfectly legitimate and may have already been declared to HMRC,” she said. “However, they may involve tax evasion, avoidance or other serious offences by taxpayers. What has got to stop is using offshore structures to illegally hide assets and income.”
David Cameron has pledged to make tackling the “staggering” levels of tax evasion a key priority of the UK’s presidency of the G8 this year. The EU will hold a summit on tax evasion on 22 May. It will be followed by a G8 summit under British chairmanship in June.