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Who’s named in the Paradise Papers? A list and a primer on why it matters

EXPLAINER

Who's named in the Paradise Papers? A list and a primer on why it matters

A massive cache of leaked documents is shedding new light on what the world's wealthiest people can do with their offshore money, legally and otherwise. Here's what you need to know about who's in the documents and how it ties back to Canada

What are the Paradise Papers?

The Paradise Papers are a treasure trove of some 13.4 million leaked records from a Bermudan law firm, revealing how the world's wealthy people stash their money in offshore accounts and avoid paying taxes. They consist primarily of client records of offshore law firm Appleby, as well as some records from offshore corporate services firms Estera and Asiaciti Trust.

The documents were obtained by German newspaper Suddeutsche Zeitung and the International Consortium of Investigative Journalists, including CBC/Radio Canada and the Toronto Star, which published details on Sunday. The media outlets did not disclose how they acquired the documents. Associated Press, Reuters and The Globe and Mail have not independently confirmed the journalists' findings.

Offshore accounts are used by wealthy individuals and corporations around the world to reduce their tax burden. Tax avoidance measures involving offshore trusts are legal provided that the trust is genuinely managed offshore and that Canadian taxes are paid on any Canadian contributions. But the anonymity provided to account holders has also led to associations with tax evasion, money laundering and organized crime.

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Who's named in them?

Liberal Party fundraisers

Stephen Bronfman, heir to the Seagram fortune, is a close friend of Prime Minister Justin Trudeau, who tapped him in 2013 to fill the role of revenue chair – effectively, chief fundraiser – for the federal Liberals. According to the Toronto Star and CBC/Radio Canada's reports, the Paradise records suggest Mr. Bronfman and his family's Montreal-based investment company, Claridge Inc., were linked to an offshore trust in the Cayman Islands that may have used questionable means to avoid paying millions in taxes.

Mr. Bronfman issued a statement saying he's never funded nor used offshore trusts, and that all his Canadian trusts have paid all federal taxes on their income:

Stephen Bronfman is a proud Canadian and has always fully complied with all legal requirements, including with respect to taxes. Stephen Bronfman has never funded nor used offshore trusts. His Canadian trusts have paid all taxes on all their income to the Canadian Government.

The offshore trust also involved former chief Liberal fundraiser and senator Leo Kolber and his son, Jonathan Kolber. Mr. Bronfman's statement said that a loan to the Kolber Trust was a one-time thing that was paid back five months later.

William Brock, a lawyer for Mr. Bronfman and Jonathan Kolber, denied any impropriety, telling the CBC that his clients "have always acted properly and ethically, including fully complying with all applicable laws." Any suggestion of "false documentation, fraud, 'disguised' conduct, tax evasion or similar conduct is false," Mr. Brock added.

Asked about Mr. Bronfman's statement on Wednesday, Mr. Trudeau said on a visit to Vietnam that he was satisfied with Mr. Bronfman's explanation:

In regards to the specific case you mentioned, we have received assurances that all rules were followed, indeed the same assurances made in the public statement released by the family, and we are satisfied with those assurances.

The Queen

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Citing the Appleby documents, Britain's Guardian newspaper said millions of pounds from Queen Elizabeth II's private estate, the Duchy of Lancaster, had been invested in a Cayman Islands fund as part of an offshore portfolio never before disclosed.

The British monarch (who is also Canada's monarch) pays taxes on the income generated by her holdings in the Duchy of Lancaster. But the Guardian's report says the duchy had used offshore private equity funds designed to shield investors in the United Kingdom from having to pay U.S. tax on their holdings.

A spokeswoman for the Duchy of Lancaster defended their investment practices:

We operate a number of investments and a few of these are with overseas funds. All of our investments are fully audited and legitimate.

Prince Charles

The Queen's eldest son and heir has also come under scrutiny in the Paradise investigation. In 2007, the prince campaigned to overhaul climate-change agreements while the Duchy of Cornwall held shares in a Bermuda company that would have benefited from the changes he was proposing, the BBC reported Tuesday. The prince's campaigning began weeks after Sustainable Forestry Management Ltd. – a company trading in carbon credits that the duchy had recently invested in – sent lobbying documents to his office, the BBC reported. The changes the prince was seeking to the Kyoto Protocol and European Union regulations were never implemented.

A Clarence House spokesman told the BBC that the prince's activism on climate change goes back decades, and that he has "certainly never chosen to speak out on a topic simply because of a company that it [the Duchy of Cornwall] may have invested in."

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Jean Chrétien

The Appleby documents suggest Madagasgar Oil Ltd. awarded the former Liberal prime minister 100,000 stock options as a consulting fee in 2010, the Toronto Star reported. Mr. Chrétien said Monday that Madagascar Oil was a client of Heenan Blaikie, a now-defunct Canadian law firm where he used to work. Mr. Chrétien said he did some work for Madagascar Oil but all fees were billed by and paid to the firm itself. In a statement, he denied having received the options:

I never received any share options and I never had a bank account outside Canada. Any news report that suggests I have or ever had or was associated in any way with any offshore account is false.

Paul Martin

Before entering politics, Mr. Martin was the multimillionaire head of a shipping empire, Canada Steamship Lines. He kept his stake in the company at arm's length when he was a cabinet minister before selling it entirely to his three sons in 2003, when he was the front-runner for the Liberal leadership, which he won to become Mr. Chrétien's successor as prime minister. Reports from the Paradise Papers allege CSL registered a company in Bermuda in 1991, and that it was active while Mr. Martin was in government. CSL also apparently registered at least 12 more Bermudan entities after his sons took over. ICIJ quoted a Martin spokesperson as saying he "has not been involved in CSL in over a quarter century and is not in a position to comment on its operations."

Brian Mulroney

From 2004 to 2009, the documents list the former Progressive Conservative prime minister on the board of a Bermuda-based company controlled by Wafic Said, a Syrian-Saudi businessman who is one of Britain's wealthiest men. Mr. Said helped broker an oil-for-arms deal between Britain and Saudi Arabia that, in 2010, resulted in criminal bribery fines against a British manufacturer, BAE Systems. The Toronto Star cited Mr. Mulroney's lawyer as saying he was "proud" to have served on the board. Mr. Said, for his part, said Mr. Mulroney made a "very valuable contribution" to the company. Mr. Said also said he was proud of his role in the arms deal, which created "many tens of thousands of well-paid and highly skilled jobs in the United Kingdom."

Trump's point man on trade

Reports on the Paradise Papers allege that U.S. Commerce Secretary Wilbur Ross kept investments in a shipping firm with significant business ties to Russian President Vladimir Putin's inner circle. The allegations are significant because of the heightened scrutiny of administration officials over their possible ties to Russia, which allegedly interfered in the 2016 U.S. election.

Partnerships used by Mr. Ross, a billionaire investor helping to shape U.S. President Donald Trump's trade policy, have a 31-per-cent stake in Navigator Holdings, which The New York Times said earns millions of dollars a year transporting gas for Russian petrochemical firm Sibur. The firm's stakeholders include Gennady Timchenko, a Russian oligarch and Putin associate subject to U.S. sanctions, and Putin's son-in-law, Kirill Shamalov, the Times reported.

Mr. Ross, in an interview on CNBC on Monday, said he had disclosed his holdings in Navigator and that there was nothing improper about the company's ties with Sibur. Navigator was mentioned in Mr. Ross's 57-page public financial disclosure report filed in December, before he officially joined the Trump administration.

According to the Times, Sibur said in a statement that any negotiations with Navigator over the years were carried out by its executives, not its major shareholders, and that "no meetings were held with Mr Ross."

Bono

The Guardian newspaper reported that U2 frontman Bono was an investor in Nude Estates, a company in low-tax Malta, and that he used the company to buy part of a shopping centre in Lithuania in 2007.

Bono's spokeswoman told the paper that the rocker, whose real name is Paul Hewson, was a "passive minority investor in Nude Estates Malta Ltd., a company that was legally registered in Malta until it was voluntarily wound up in 2015."

Tax officials in Lithuania said Monday they've started to investigate papers and documents belonging to UAB Nude Estates 2, a Lithuanian-registered company owned by Nude Estates Malta Ltd. and listed as the mall's owner.

The Irish band, well known for its poverty-fighting efforts, has faced past criticism over its tax arrangements. U2 was heavily criticized in 2006 for moving its corporate base from Ireland to the Netherlands, where royalties on music incur virtually no tax.


The Panama-based law firm Mossack Fonseca was the centre of controversy over 2015’s ‘Panama Papers’ revelations.

Paradise vs. Panama: What's different?

This is the second time in recent years that a massive leak of data about offshore tax havens has sent shockwaves around the world. In 2015 there were the Panama Papers, a cache of 11.5 million documents from the Panamanian law firm Mossack Fonseca. Like the Paradise papers, they were leaked to Germany's Suddeutsche Zeitung newspaper and pored over by the International Consortium of Investigative Journalists. This time, they had fewer data to sift through: 1.4 terabytes, compared with 2.6 for Panama.

But the news organizations reporting the Paradise findings say that these documents reveal far more about the wealthy elite than Panama did. Whereas Mossack Fonseca was dismissed after the revelations as a lone bad actor, Appleby "prides itself on being a leading member of the 'magic circle' of top-ranking offshore service providers," the Guardian wrote. Paradise also names far more Canadian companies and individuals: Roughly 3,300, compared with only 625 with Panama, according to the CBC.

The Panama Papers helped topple governments in Iceland and Pakistan over their leaders' alleged offshore activities. In Canada it led to more scrutiny of tax evasion by investigators and the federal government. Here are some of the impacts the Panama Papers had in Canada.

RBC: The Royal Bank of Canada was the only financial institution in the country to be linked to the massive leak. The bank's CEO vowed to comb through four decades of files to find any proof of wrongdoing. While the institution accepted responsibility for monitoring the global financial industry, they said they'd been "dragged into" the controversy without any allegations of wrongdoing.

Audits: The Canadian Revenue Agency launched audits into 122 Canadians and opened dozens of criminal investigations for tax evasion following the Panama Papers, the Toronto Star reported earlier this year. Experts say the number of investigations in offshore havens was an increase from previous years thanks to the leaked documents.

Federal spending: The Canadian government pumped more than $400-million into the Canadian Revenue Agency to hunt down billions of missing tax dollars in the wake of the Panama Papers. A large part of those efforts were to look into offshore tax havens.


How Canada has responded to the Paradise Papers


Canada Revenue Agency

Evidently anticipating Sunday's release of the Paradise Papers, the CRA promised to do more should new details of questionable practices emerge.

In the event that further details come to light, CRA will not hesitate to investigate and take further action as warranted. The government of Canada will continue to work with the provinces and territories, as well as other tax administrations and all other partners, to ensure a tax system that works for Canadians. In addition, the CRA will continue to build on its capacity to detect and crack down on tax cheats and ensure that those who choose to break the law face the consequences and are held accountable for their actions.

In an apparent attempt to pre-empt the news reports, the CRA issued a statement last Friday, detailing the agency's efforts to crack down on tax evasion and tax avoidance, which intensified following the Panama Papers leak in April, 2016. The agency said it's invested $1-billion to tackle the problem and currently has more than 990 audits and more than 42 criminal investigations underway related to offshore tax havens. As a result of audits over the last two years, the CRA said it identified some $25-billion in unpaid taxes, interest and penalties. And last year, it levied more than $44-million in penalties on tax advisers who facilitated non-compliance with Canadian tax laws.


Federal government

In Question Period the day after the Paradise Papers stories broke, Prime Minister Justin Trudeau said the government would continue to crack down on tax evasion, but refused to comment on Mr. Bronfman's alleged activities:

We are fully committed to fighting tax evasion and tax avoidance. I will let individuals comment on their own situations. But in regards to the Paradise Papers, the CRA is reviewing links to Canadian entities and will take every appropriate action.

Liberal Party

In an e-mail, party spokesman Braden Caley played down Mr. Bronfman's Liberal connections:

Mr. Bronfman's role with the Liberal Party of Canada is as a volunteer, and has consisted strictly of assisting the board on matters related to building on the Liberal movement's strong grassroots fundraising support, not policy decisions.

Opposition

Conservative Party Leader Andrew Scheer has challenged the government in Question Period on the Paradise Papers reports, and questions why Mr. Trudeau said he was "satisfied" with Mr. Bronfman's version of events:

What kind of message does that send to the Canada Revenue Agency and the people that will be reviewing the file? What kind of message does that send to Canadians? I think what drives Canadians crazy is when they think there's one set of rules for everyone and a different set of rules for close friends of Liberal ministers or the Prime Minister.

NDP Leader Jagmeet Singh also called for more investigation:

The prime minister says that he is satisfied with the explanation provided by Mr. Bronfman. The reality is Canadians are not satisfied. Canadians expect a just and fair taxation system ... that ensures the wealthy, the well-connected, the powerful also contribute their fair share.

NDP, Tories slam Trudeau over Bronfman remarks


The Canadian Press, Reuters and Associated Press, with reports from Daniel Leblanc, Laura Stone and Evan Annett

Photos: The Canadian Press, Associated Press, AFP/Getty Images, The Globe and Mail


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