UK

Massive dump of files claims politicians, businessmen and celebs hid money through legal loopholes

When he first stood for the Labour leadership, Tony Blair earnestly told voters: ‘For those who can employ the right accountants, the tax system is a haven of scams, perks, City deals and profits.’

A quarter of a century, and many tens of millions of pounds in personal wealth later, our cash-soaked former prime minister has managed to prove himself spectacularly right.

It emerged this weekend that Blair and his wife, Cherie, secretly benefited from a highly-controversial tax loophole in 2017, when they purchased a four-storey office block in London‘s Marylebone for the princely sum of £6.45 million.

The vendor was the family of Bahrain’s former tourism minister, one Zayed bin Rashid al-Zayani. The Blairs purchased the holding company based in the tax haven of the British Virgin Islands which included the property.

So rather than simply buying the building, like you or I might, the Blairs decided to incorporate a UK company named Harcourt Ventures, which then acquired the foreign firm and shut it down.

The upshot of this process? The couple managed quite legally to acquire this prime London real estate (it now houses Cherie’s law firm Omnia) without having to pay a stamp duty bill of £312,000.

It’s a step up from the days when they used the help of a friend to facilitate the purchase of a couple of cheap flats in Bristol. But then, the Blairs have come a long way since.

And while we can’t assume that they pro-actively sought to avoid paying their due (a spokesman insists the Blairs had ‘nothing to do with’ the way the sale was structured), the whole thing does highlight how today’s global elite can sidestep the sort of taxes commonly faced by ordinary folk.

We owe this insight into Tony and Cherie’s financial gymnastics to the Pandora Papers, a collection of 12 million hitherto secret documents that began to be catapulted into the public domain on Sunday night. The leaked files appear to be sourced from 14 financial service providers who operate across the world’s most notorious ‘sunny places for shady people’, from Panama to Singapore and Belize to Switzerland.

The Colombian musician Shakira (pictured), who is currently in dispute with the Spanish tax authorities, is revealed to have set up a number of entities in the British Virgin Islands. However her lawyers have insisted they were properly declared and were to used to avoid taxes [File photo]

It emerged this weekend that Tony Blair (left) and his wife, Cherie (right), secretly benefited from a highly-controversial tax loophole in 2017, when they purchased a four-storey office block in London's Marylebone for the princely sum of £6.45 million

It emerged this weekend that Tony Blair (left) and his wife, Cherie (right), secretly benefited from a highly-controversial tax loophole in 2017, when they purchased a four-storey office block in London’s Marylebone for the princely sum of £6.45 million

The Blair's managed quite legally to acquire this prime London real estate (pictured), which now houses Cherie's law firm Omnia, without having to pay a stamp duty bill of £312,000

The Blair’s managed quite legally to acquire this prime London real estate (pictured), which now houses Cherie’s law firm Omnia, without having to pay a stamp duty bill of £312,000

The papers do not necessarily show illegal activity. Indeed, many of the deals they lay bare were perfectly benign.

But they do demonstrate how the super-rich can accrue wealth and carry out transactions in ways that are almost impossible for Governments, the media and law enforcement agencies to detect.

Take, for example, Svetlana Krivonogikh, a glamorous 46-year-old former cleaner from St Petersburg who is reported to be the mother of Russian President Vladimir Putin’s 18-year-old love child, Elizaveta.

According to a tranche of documents contained in the leak, in 2003 — shortly after giving birth — she secretly acquired a fourth-floor flat in the Monte Carlo Star, an apartment block beneath the city’s famous casino. It boasts two parking spaces and access to the complex’s luxury pool and spa.

Krivonogikh controls the property via two Panamanian shell companies which, in turn, control a third firm in Tortola, in the Virgin Islands.

The secret ownership structure was created by Moores Rowland, a Monacan tax firm run by one Eamonn McGregor, a Merseyside-born former accountant who trained at the UK retail giant Littlewoods and today represents a host of associates of Putin.

His other clients, according to the papers, include Gennady Timchenko, a tycoon who has been subject to U.S. sanctions since 2018, and Petr Kolbin, a former butcher and childhood friend of Putin who has acquired a fortune estimated at $500 million.

The Pandora Papers also suggest that Mrs Krivonogikh owns a yacht, a Swiss bank account, properties in Moscow and St Petersburg, and a majority share in a ski resort where one of the Russian premier’s other daughters recently married.

Asked how she might have acquired such riches, the Kremlin yesterday deflected the question, denouncing ‘largely unsubstantiated claims’, and insisting that having reviewed the documents ‘we didn’t see anything on hidden wealth in Putin’s inner circle’.

Russia wasn’t the only country whose leaders were facing awkward questions yesterday, either. For the papers detail the secret wealth of a total of 35 world leaders, past and present, along with roughly 330 public officials.

Among them is the ruler of Jordan, a country that receives more than £100 million in aid from UK taxpayers every year.

The Kremlin yesterday denounced the documents' 'largely unsubstantiated claims', and insisted that having reviewed the documents 'we didn't see anything on hidden wealth in Putin's inner circle'. Pictured: Russian President Vladimir Putin [File photo]

The Kremlin yesterday denounced the documents’ ‘largely unsubstantiated claims’, and insisted that having reviewed the documents ‘we didn’t see anything on hidden wealth in Putin’s inner circle’. Pictured: Russian President Vladimir Putin [File photo]

Svetlana Krivonogikh (pictured), a glamorous 46-year-old former cleaner from St Petersburg who is reported to be the mother of Russian President Vladimir Putin's 18-year-old love child, Elizaveta secretly acquired a fourth-floor flat in the Monte Carlo Star, an apartment block beneath the city's famous casino, the documents claim

Svetlana Krivonogikh (pictured), a glamorous 46-year-old former cleaner from St Petersburg who is reported to be the mother of Russian President Vladimir Putin’s 18-year-old love child, Elizaveta secretly acquired a fourth-floor flat in the Monte Carlo Star, an apartment block beneath the city’s famous casino, the documents claim

The property boasts two parking spaces and access to the complex's luxury pool and spa

The property boasts two parking spaces and access to the complex’s luxury pool and spa

According to a different tranche of leaked documents, its monarch King Abdullah — spouse of the glamorous Queen Rania — has used some three dozen shell companies to secretly acquire 14 homes worth at least £70 million in some of the most sought-after locations in both the U.S. and UK.

The most expensive were picked up in a spending spree that followed the Arab Spring, in which a host of Middle Eastern leaders were deposed or forced into exile.

They include a palatial clifftop home in Malibu, the LA suburb that is home to everyone from Bob Dylan and Lady Gaga to Leonardo DiCaprio and Brad Pitt. It cost roughly £25 million and boasts seven bedrooms, nine bathrooms, plus a gym, spa and infinity pool. For an extra £30 million he acquired two neighbouring properties.

Abdullah also has three homes in Washington DC, three more near Buckingham Palace in London, plus a house in Ascot and two houses in Kensington.

The kingdom of Jordan insisted that his property deals were ‘neither unusual nor improper’ and said they were carried out via secret shell companies ‘out of security and privacy concerns’.

Also piling into the London real estate market has been the family of Azerbaijan’s reigning despot, Ilham Aliyev. His family and inner circle — who have been in power for generations, presiding over endemic corruption and a host of human rights abuses — have acquired some £400 million worth of property, the papers reveal

Among the 17 buildings is a Mayfair office block that was bought for the president’s 11-year-old son Heydar in 2009. A second nearby block, controlled by the dictator’s family via the Virgin Islands, was purchased for £35.5 million around the same time and later sold to the Queen’s Crown Estate in 2018. The Crown Estate, which manages around £15 billion in assets, says it’s investigating.

Then there’s the Czech premier Andrej Babis, who around a decade ago (when he was in business rather than politics) used a chain of three offshore firms to buy a grand chateau and neighbouring villa — complete with a private cinema, swimming pool, billiard room and wine cellar — in the hills above Cannes for around £13 million.

Despite later winning power on an anti-corruption ticket, he failed to declare ownership of the properties.

Babis has denied wrongdoing, as has Kenya’s president Uhuru Kenyatta — another noted anti-corruption campaigner — whose family members have been revealed to secretly own 11 offshore companies containing £25 million worth of assets, along with the president of Ukraine Volodymyr Zelensky, who was shown to have moved his stake in a secret offshore company just before winning the 2019 election. Elsewhere, perhaps the most colourful figures whose financial affairs are said to be detailed in the leaked documents are celebrities.

It emerged yesterday that the musicians Elton John and Ringo Starr are the subjects of some files, as is the cricketer Sachin Tendulkar, and the supermodel Claudia Schiffer.

The nature of the various offshore arrangements they may have entered into remains unclear — the consortium of news outlets that has obtained the Pandora Papers may or may not release details in coming days — and there is no suggestion that any have broken the law or sought to avoid paying taxes.

Mohamed Amersi (pictured left with Prince Charles) is a Tory donor who was revealed to have been working as a consultant for a Swedish telecoms firm called Telia in 2010, helping to advise on a deal that saw it arrange to pay £162 million to a secretive offshore company in order to secure a lucrative contract in Uzbekistan

Mohamed Amersi (pictured left with Prince Charles) is a Tory donor who was revealed to have been working as a consultant for a Swedish telecoms firm called Telia in 2010, helping to advise on a deal that saw it arrange to pay £162 million to a secretive offshore company in order to secure a lucrative contract in Uzbekistan

Amersi (pictured left with Theresa May in 2019) was caught up in a cash-for-access row in August after claiming that the party chairman, Ben Elliot ¿ whose aunt is the Duchess of Cornwall ¿ had arranged an audience for him with Prince Charles

Amersi (pictured left with Theresa May in 2019) was caught up in a cash-for-access row in August after claiming that the party chairman, Ben Elliot — whose aunt is the Duchess of Cornwall — had arranged an audience for him with Prince Charles

The Colombian musician Shakira, who is currently in dispute with the Spanish tax authorities, is revealed to have set up a number of entities in the British Virgin Islands. However her lawyers have insisted they were properly declared and were to used to avoid taxes.

Julio Iglesias, the singer, was also named in the leaks.

He boasts at least 20 companies in the British Virgin Islands. Some were used to purchase a private plane, others control luxury homes in Miami including property on Indian Creek, an island popular with billionaires where homes go for up to £80 million.

On the domestic front, the leak of the Pandora Papers may yet cause serious political ructions, thanks to a string of Tory bigwigs whose colourful business affairs are being exposed to sunlight.

Among the more frivolous mentions is one referring to Jacob Rees-Mogg’s wife, Helena, who is named as the beneficiary of a holding company which manages ‘pictures and paintings’ worth around £3 million.

More seriously, there’s Lord Deighton, the Government PPE tsar at the height of the Covid pandemic, who is revealed to have invested in a series of start-up firms via funds managed in the British Virgin Islands by a finance firm called Dawn Capital.

His ownership of the investments, which included stakes in the highly-controversial payday loan firm Wonga, does not appear to have been correctly declared to parliamentary authorities. Deighton is yet to provide any explanation as to why.

Then there is Mohamed Amersi, the Tory donor who was caught up in a cash-for-access row in August after claiming that the party chairman, Ben Elliot — whose aunt is the Duchess of Cornwall — had arranged an audience for him with Prince Charles.

The documents claimed that Tory donor Lubov Chernukhin's  £100 million fortune is (quite legally) controlled via a network of 32 offshore companies and three trusts, which finance her day-to-day existence

The documents claimed that Tory donor Lubov Chernukhin’s  £100 million fortune is (quite legally) controlled via a network of 32 offshore companies and three trusts, which finance her day-to-day existence

He was revealed to have been working as a consultant for a Swedish telecoms firm called Telia in 2010, helping to advise on a deal that saw it arrange to pay £162 million to a secretive offshore company in order to secure a lucrative contract in Uzbekistan.

The payment was later found to have been a bribe to the pop star daughter of the former Soviet country’s then president, Islam Karimov, and Telia was fined £700 million by U.S. prosecutors.

Mr Amersi, who has given some £525,000 to the Tories since 2018, issued a statement last night denying wrongdoing. It said he had been ‘unaware’ the payment was a bribe and was ‘not responsible for the day-to-day negotiation’ of the transaction, in which he described his role as ‘limited’.

Another donor in the firing line is Viktor Fedotov, a Russian oil and gas magnate who has given the Conservatives £700,000 and made donations to 34 Tory MPs.

He is revealed to be the secret owner of VNIIST, a firm which has been accused of corruptly earning vast sums by defrauding Transneft, the Russian state-owned oil and gas company.

Documents obtained from the Pandora Papers by the BBC reveal a scheme to funnel profits from the Transneft deals through companies in the Netherlands, Luxembourg, Malta and the British Virgin Islands under the ownership of trusts belonging to Fedotov.

By 2007, they held around £80 million in assets, which the BBC claims may have paid for Aragon Hall near Hook, Hampshire, his country home in the UK, worth £7 million. In response, Mr Fedotov said yesterday that he ‘denies any allegation of wrongdoing’.

Be that as it may, opposition politicians and anti-corruption campaigners were last night calling for the Conservatives to return all donations from individuals named in the leaked documents.

They include the biggest female donor in the party’s recent history: Lubov Chernukhin, wife of a Russian businessman named Vladimir, who has since 2012 given the party more than £2 million, paying twice to play tennis with Boris Johnson and once to dine with Theresa May.

According to documents that emerged last night, her £100 million fortune is (quite legally) controlled via a network of 32 offshore companies and three trusts, which finance her day-to-day existence and have helped to buy, among other things, a £10 million country estate in Oxfordshire and a £30 million townhouse overlooking Regent’s Park.

At her country home, everything from the quad bikes to the beehives and even a chicken coop are owned and run by a shell company in the British Virgin Islands.

In London, money from the same tax haven was forwarded, via Singapore, to create a robot-cleaned underground swimming pool, a £100,000 CCTV system, and a vault with a bombproof metal door.

Like many a wealthy Russian, Ms Chernukhin appears to value security.

Today, along with thousands of other wealthy members of the global elite, she will doubtless be wishing that the global network of lawyers and accountants whose paperwork ended up being leaked had shared that particular obsession.    


Source link

Related Articles

Back to top button