Appleby, a hundred-year old law firm, who has had clients ranging from Queen Elizabeth II to Illovo Sugar has come under fire after a data leak spanning from the 1950s to 2016 led to global embarrassment.
The Paradise Papers, numbering 13.4-million leaked documents from Appleby’s offices in Mauritius, have revealed how the rich evaded millions of dollars in tax and kept questionable business decisions under wraps.
South African Tax-evaders
AmaBhungane reported on Monday morning that Appleby had advertised how it was “advising Standard Bank of South Africa Limited on a $70-million facility for the purpose of refinancing Zambia Sugar Plc, a subsidiary of Illovo Sugar Limited”.
Illovo Sugar’s refinancing of $70-million from Standard Bank reportedly enabled the company to evade Zambian tax laws by paying only 0.5% tax when the country taxes corporates at a rate of 35%. It is estimated that Illovo deprived Zambia of around $3-million in taxes, reported amaBhungane.
Glencore, touted as the world’s biggest commodity trader, was Appleby’s biggest client. Its South-African born chief executive Ivan Glasenberg is now under pressure as the leaks have revealed how a $45-million loan to Israeli businessperson Dan Gertler came with the understanding that Gertier would obtain approval with prominent officials in the Democratic Republic of Congo.
In a Guardian investigation, Glencore’s Australian business was shown to be involved in $25 billion cross-currency swap in 2013 to “hedge currency volatility”.
In another incident in 2013, Bloomberg reported that Glencore’s majority shares in SwissMarine raised eyebrows when it suggested an inappropriate relationship with SwissMarine’s second largest shareholder, Greek shipowner Victor Restis, who was sitting in jail awaiting trial for fraud and embezzlement charges.
Investec and Shanduka are also mentioned in the Paradise Papers. Shanduka was founded by Deputy President Cyril Ramaphosa and he held a share in the company until 2014.
Although it is not illegal for South African companies to keep money offshore, David Lewis, director of Corruption Watch told amaBhungane that companies will abuse this privilege “using it for transfer pricing, evading taxes and hiding transactions behind secrecy provisions”.
Global Tax Evaders
Canadian Prime Minister Justin Trudeau’s top fundraiser and senior advisor Stephen Bronfman, heir to the Seagram fortune, moved some $60-million to offshore tax havens with ex-senator Leo Kolber. The revelations have undermined Trudeau’s 2012 election campaign where he promised to reduce economic inequality and tax avoidance.
Queen Elizabeth II’s private money to the tune of £10 million was also placed in tax havens where the money was reinvested into an array of businesses, including controversial rent-to-buy retailer BrightHouse and a chain of alcohol stores. The former was accused of exploiting the poor and the latter went bankrupt.
The spokeswoman for the Duchy of Lancaster has denied any irregularity and illegality in the Queen’s finances saying the overseas investments represent only 0.3 percent of the total value of the Duchy.
Billionaire investor and US Commerce Secretary Wilbur Ross has a 31% stake in Navigator Holdings, a shipping firm linked to Vladimir Putin’s inner circle.
Despite reducing his stakes in Navigator Holdings when he took office, Ross’s private equity firm has remained the biggest shareholder with between $2-million and $10-million invested.
The 13.4-million files were first obtained by the German newspaper Suddeutsche Zeitung, and shared with the International Consortium of Investigative Journalists which includes the Guardian, the BBC and the New York Times.
Appleby has been flooded with calls for comment, but the firm is only releasing a press statement that it is “an offshore law firm who advises clients on legitimate and lawful ways to conduct their business”. In the same statement, Appleby wrote that it did not “tolerate illegal behaviour”. – Agence France-Presse