More than 18 months after the Panama Papers revealed the widespread use of a tax haven by high-profile individuals and corporations, the latest leak shines the spotlight on, among others, key aides to Donald Trump and Canada Prime Minister Justin Trudeau, Conservative Party donor Lord Ashcroft, football club Everton FC and even The Queen’s private estate.
The leak, labelled the Paradise Papers, comes from Bermuda-based legal services firm Appleby, which helps clients manage tax affairs in countries with low or zero taxation.
More than 100 media organisations have been investigating the papers, which were obtained by German newspaper Süddeutsche Zeitung. The probe has been overseen by the International Consortium of Investigative Journalists, which also led the Panama Papers operation.
- Around £10m of the Queen’s money has been invested offshore by the Duchy of Lancaster, which handles investments for her estate. It includes investments in rent-to-buy retailer BrightHouse, which has received criticism for its practices towards lower-income customers, and the collapsed off-licence chain Threshers
- Trump's commerce secretary Wilbur Ross owns a stake in a firm dealing with Russians who are subject to US sanctions
- Ashcroft may have ignored rules around his offshore investments
- The ownership of Everton FC has been thrown into doubt with revelations relating to the offshore dealings of billionaire football investors Farhad Moshiri and Alisher Usmanov
- U2 singer Bono used a Malta-based company to invest in a Lithuanian shopping centre.
The Paradise Papers undoubtedly represent a huge reputational challenge, but how should the accused parties respond? Who will be damaged most, and what do the revelations tell us about the nature of investigative journalism in the present age?
PRWeek asks the experts:
Papers fuel anti-Big Business sentiment
Gavin Devine, CEO, Newgate Communications
"It feels to me like the Paradise Papers are just like the Panama Papers previously: they will cause short-term embarrassment for a number of individuals and might lead to real problems for a few. But their direct impact will be diluted because there is almost too much information, and because the story doesn't really differentiate between what's illegal, what is legal but maybe immoral, and what's just standard practice.
"But the indirect impact of this leak will be significant. It yet again fuels the feeling that ‘Big Business’ is bad, and doesn't play by the same rules as everyone else. Delegates to the CBI conference today ought to spend time thinking about how they counter that narrative and make the positive case for the investment, job creation and innovation that private enterprise brings."
A great day for the 'dinosaur' media
Mark Borkowski, founder, Borkowski.do
"Point one - it’s been a very good day for the analogue media universe. The Paradise Papers has the look of WikiLeaks - the global networks, the raided hard drives, the info dumps. But the utopia of independent citizen journalism that was seemingly heralded by Assange never really materialised.
"The Paradise Papers - following on from last year’s Panama- shows yet again that the only body equipped to dive deep and hit hard is that lumbering old dinosaur, the mainstream media. True, it has evolved somewhat since the likes of Harry Evans’ five-man (and one woman) team in a back room of The Sunday Times. Paradise shows how the digital entanglements and global reach of exposing how the rich hide their loot demands elaborate networks like International Consortium of Investigative Journalists (ICIJ).
"Ironically, it is the relative decline of investigative teams in national papers like the Guardian that have swelled the ranks of the ICIJ and similar agencies that train and champion the media sleuths who were behind today’s revelations.
"Point two - increasingly, it seems the rich have a dilemma. When does the reputational damage incurred by being hauled across the coals for using tax havens outweigh he financial benefits? Haven’t we all found ourselves siphoning wealth through a Maltese bank to buy a Lithuanian shopping mall?
"But when it happens to Bono we’ve got a problem - all his worthy campaigning now risks being made history. With investigative journalism in buoyant health and the thundering echo chamber of Twitter proclaiming guilt without any of the hassle of formal process, it’s never been harder to be rich and famous.
"It may be time that reputation be thought of less in abstract terms and more in something numerical that can be tangibly offset against the downsides of keeping your money in a country where you actually live."
Government big shots at greatest risk
Nik Govier, co-founder, Unity
"Another day, another tax scandal. And a spotlight once more on corporations and individuals who spend millions protecting millions, skirting around the law to keep their hoards safe.
"But, in a world where the divisions between rich and poor have never been greater, the safety of what’s not strictly illegal can’t protect reputations and the disgust felt by citizens will have ramifications. We’ve already seen public figures hiding in toilets - so we’re seeing a loss of dignity - but there are greater losses to be felt.
"As always, those that get in front of this are likely to come out best. But who’s going to feel the most pain globally? I predict those in the higher echelons of government. Set against the sex scandals in Westminster and the ongoing chaos of the US administration, we’re sick of the underhand behaviours of those we’re meant to look up to.
"Will there be a backlash on the brands? Probably not enough to make them change their behaviour. We keep buying from Starbucks even though they’ve been associated with not paying their dues for years.
"The sad truth is that all of those revealed can’t possibly have believed that their secrets would remain safe forever – not in a world where investigative journalists are risking their lives for the truth (as we’ve seen in Malta). It’s all part of a calculated risk that they’re ultimately willing to take because protecting cold, hard cash comes first."
Admit mistakes and make amends
Warren Johnson, founder and CEO, W
"There's no getting away from the fact that the climate has changed decisively since the financial crisis, and that both the media and public demand fundamentally higher standards from public figures – especially when it comes to their tax affairs.
"And while it's unrealistic to expect everyone to get their house in order overnight, the most effective strategy for those who have been exposed in this latest leak is to put their hands up, acknowledge the new reality, and say very clearly that they intend to put things right.
"In the case of businesspeople like Rex Tillerson, a promise of future good conduct ought to be forthcoming, although whether that will happen is moot, to say the least. So far as The Queen is concerned, however, given that the Palace's defence is that she was unaware of these offshore activities, payment in lieu of taxation should be made to the Treasury as soon as possible. After all, when your own name is on the state tax collection agency (HMRC), being seen to have benefited from tax avoidance is just not tenable. The Palace had to work hard to rebuild Her Majesty's reputation after the death of Diana; they would be wrong to treat this any less seriously.
"In the data age, public figures should always operate on the assumption that every item of dirty laundry will end up being aired in public one day – whether that's their sex lives or tax affairs. And they should be in no doubt that there are still enough investigative journalists left to hold them to account, given half a chance."
City of London must stand up for British offshore centres
Tony Langham, CEO, Lansons
"The world has a problem with terrorist financing and money laundering, but the #ParadisePapers doesn’t seem to have uncovered any evidence of that at all. Instead, the initial media coverage has focused on the moral issue of using legal tax planning to avoid tax.
"The network of British Crown Dependencies and Overseas Territories are an important part of the success of the City of London and its lawyers, accountants and fund managers. They stand to lose most from this and will need to work hard to ensure that Britain doesn’t act to disadvantage them, particularly in competition with the EU.
"Individuals caught up in this will only care about their reputation. They are very likely to use the Jimmy Carr, Harry Redknapp defence, that (a) they’ve done nothing wrong and (b) they weren't aware of the tax planning their advisers were undertaking.
"The ICIJ and associated thefts, hacks, whistleblowers are now in the forefront of the journalistic fightback against modern corporate power and influence. The only problem is that they have to focus on the area illuminated by each data set. This one seems to only highlight British territories. We should all ask if there was a reason this data was released to a German newspaper. Who did that? And why?"
Clear lessons here
Charles Lewington, founder, Hanover Communications
"There is no 'one size fits all' approach to responding to accusations thrown up by the Paradise Papers other than to stress at every point that offshore funds are not illegal.
"On the BBC 10pm News last night, I thought the Palace were a bit leaden-footed. There should be standard ‘lines to take’ for all The Queen’s investments – including why the Duchy of Lancaster held £10m offshore. I am a Commissioner with oversight of a £45m charitable fund for a major public institution and we regularly discuss the reputational impact of the portfolio. So no excuse here.
"Michael Ashcroft would have been better off turning to the Panorama camera and saying: 'If you have any detailed questions, you are free to call my office rather than stalking me like Michael Moore.' Though hindsight is a wonderful thing.
"There is a clear lesson that all businesses can take from this. You should think hard about where your investors’ money is coming from. Yorkshire Water recently reviewed its use of offshore holding companies, reviewing the Jersey registration of its holding company and closing down three subsidiary companies in the Cayman Islands."