The so-called Pandora Papers constitute the largest ever cache of leaked data to expose offshore tax haven secrecy involving world leaders, monarchs, oligarchs and tycoons.
The Guardian newspaper has identified around 600 individuals who used secretive offshore companies to keep their British property purchases confidential. Many of the properties are located in the most exclusive London postcodes: Mayfair, Knightsbridge, Kensington and Belgravia.
The papers offer a tantalising glimpse into the occult world of offshore finance, illuminating the financial secrets of some of the world’s wealthiest people. The files were leaked to the International Consortium of Investigative Journalists (ICIJ), which gave access to the BBC and other media outlets around the world. The ICIJ is not identifying the source of the leaked information.
The trove consists of 11.9m files, totalling 2.94 terabytes of information, leaked from 14 offshore service providers. The latter provide corporate services to companies or individuals wishing to conduct business offshore. Their clients typically seek to establish trusts or companies discreetly in lightly regulated tax havens such as the British Virgin Islands (BVI), Panama, the Cook Islands and the US state of South Dakota.
Companies registered offshore are able to hold assets including property, aircraft, yachts and investments in stocks and shares. Holding such assets in an offshore company enables the person to whom they belong, the ‘beneficial owner’, to conceal their identity from public view. In addition to secrecy, people move money and assets offshore for tax and regulatory reasons.
Although UK-based property buyers are legally required to be identified by means of the Land Registry and Companies House, a loophole allows those wealthy enough to hire lawyers, accountants and corporate providers to create offshore companies to hide their ownership from, say, HM Revenue and Customs (HMRC) or law enforcement agencies.
Lady Green owns 47 BVI companies
The papers show that a wide range of often politically active people have made use of offshore entities to acquire UK property. On the one hand, the King of Jordan, whose assets in Belgravia are part of an international luxury property empire worth more than $100m, claimed security concerns for holding the properties anonymously and said no public funds were used to buy them.
On the other hand are the multimillionaire ruling family of Azerbaijan and their associates, who have been accused repeatedly of corruption, including by the European parliament.
Tina Green, wife of the British retail tycoon Sir Philip Green, bought a £15m luxury maisonette near the Dorchester Hotel in Mayfair via an offshore company. According to the files, Lady Green, a tax-resident of Monaco, was enlarging her property empire in April 2016 as staff at her husband’s former department store BHS, which collapsed the same month, were pleading with him to rescue its ailing pension fund.
Lawyers for Lady Green said her offshore corporate companies were legal, wholly unconnected with her husband’s affairs and had no link to BHS.
The papers also reveal Lady Green to be the beneficial owner of 47 BVI companies and that she held an anonymous stake in a real estate partnership that acquired commercial property in west London in 2011, which was sold four years later for a profit of £37.5m. Although not illegal activity, she was not known publicly to be one of the investors prior to the Pandora leaks.
Govt slow to deal with ‘dirty money’
The case draws attention to the key argument made by the Government for a compulsory public register of overseas and offshore property investors, which would help create a level playing field in the market by ensuring that buyers and sellers have access to the same information.
Despite various promises by former PM David Cameron and his successors to wage war against ‘dirty money’ in the UK property market, concerns about the effects of inaction are growing. A Home Office and Treasury report in December said criminals were increasingly laundering illicit funds and that purchases made by offshore entities pose the ‘greatest level of risk’, due to the difficulty in establishing the ultimate beneficial owners (UBOs).
The report noted that ‘corrupt foreign elites continue to be attracted to the UK property market, especially in London, to disguise the proceeds of their corruption’.