More than two thirds of the companies named in a massive new offshore data leak analysed by the International Consortium of Investigative Journalists were incorporated through the Virgin Islands, the ICIJ stated when rolling out its extensive coverage of the leak over the weekend.
The “Pandora Papers” — consisting of 11.9 million confidential files that name hundreds of high-level politicians, business leaders and other famous figures — hit the media on Sunday afternoon, resulting in headlines across the globe.
For the Virgin Islands, the leak is the latest and largest in a series of similar leaks involving the jurisdiction in recent years, and it is expected to amplify global calls for more transparency and speedier implementation of the public company register the VI government has promised to establish in 2023.
“It seems clear here that one of the aims of some of the ICIJ journalists right now is heavily aligned with the aims of transparency campaigners generally, like Oxfam, Global Witness and The Guardian newspaper,” VI asset-recovery lawyer Martin Kenney told the
Beacon. “And that aim is to encourage regulators and policymakers in places like the UK to compel smaller territories like ours to have, as soon as possible, open [beneficial ownership] registers.”
Media coverage
The news coverage resulting from the leak — which was a collaboration among more than 600 journalists around the world — ranged widely, but VI companies were often front and centre.
In one of the more prominent stories, the ICIJ alleged that the King of Jordan used VI structures to secretly buy millions of dollars’ worth of properties in central London. Another story alleged that the president of Azerbaijan and his associates used VI companies in a way that shielded his property transactions from public view, at one point registering a building in the United Kingdom to his then-11-year-old son.
Other UK property transactions also loomed large in the reporting as well, with the BBC alleging that more than 1,500 UK properties were bought by clients using offshore firms.
Some of the buyers, according to the BBC, have been accused of corruption.
The leak also exposed information about companies linked to other famous people, most of whom are not accused of any wrongdoing, including former UK Prime Minister Tony Blair, German supermodel Claudia Schiffer, and Colombian pop singer Shakira.
The files name several jurisdictions across the globe, including Switzerland, the Cayman Islands, the Bahamas, and South Dakota in the United States. But out of the 14 financial services firms whose files formed the basis of the leaks, the two most prominent — Trident Trust
Group and Alemán, Cordero, Galindo & Lee — have offices in the VI.
The source of the leak has not been identified, and the legal implications for the firms whose data was compromised is not yet clear. The VI passed a Data Protection Act this year, but has yet to name a regulator.
The VI government, meanwhile, has remained mum on the leak, and the Financial Services Commission and the Premier’s Office did not immediately respond to requests for comment. BVI Finance CEO Elise Donovan, however, told the Beacon, “We remain confident not only of the high-quality services that BVI firms provide, but also of the strength and efficacy of the BVI’s regulations. Together, these play a vital role in helping organisations to operate efficiently, generating growth and jobs around the world.”
For the VI, the leak is the latest in a string of blows to the territory’s financial services industry, which brings in more than half of government revenue each year. The ICIJ’s 2016 Panama Papers leak, for instance, included millions of documents about offshore companies set up by Panamanian law firm Mossack Fonseca, which was later forced to close its offices here and abroad.
However, this week’s investigation involved more than three times as many public figures as the Panama Papers, according to the ICIJ. The
organisation said its analysis identified 956 companies linked to 336 politicians, as well many other companies linked to hundreds of other
public figures.
“The findings by ICIJ and its media partners spotlight how deeply secretive finance has infiltrated global politics — and offer insights into why governments and global organisations have made little headway in ending offshore financial abuses,” the organisation wrote on its website.
However, the ICIJ also said it’s not possible to know how much of the world’s $1.3 trillion in wealth it says is held offshore is linked to tax evasion or other crimes. Owning an offshore company is not a
crime, the organisation noted, and those named in the leak who responded to the ICIJ’s requests for comment denied any wrongdoing.
Though the ICIJ did not hint at the source of the leak, Mr. Kenney said the Pandora Papers differ from previous leaks in the number of firms affected. In the previous leaks, data typically came from just one firm at a time. This time, the leak includes data linked to 14 firms.
“We’re being told it happened concurrently,” he said. “There were a lot of resources poured into this by someone. Now, the only person[s] with
those resources to infiltrate into 14 systems are large, wellfunded government intelligence agencies like the [US National Security Agency]. Or other foreign governments agencies, or one or more high-net-worth individuals with a lot of resources have a political
agenda.”
