Leaked records shed light on vast, hidden wealth

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Posted: Friday, April 5, 2013 12:00 am

An enormous leak of confidential financial records has revealed the identities of thousands of wealthy depositors — including European officials and corporate executives, Asian dictators and their children, and even American doctors and dentists — who have stashed immense amounts of money in offshore tax havens.

The leak of records, mainly from the British Virgin Islands, the Cook Islands and Singapore, covers 2.5 million files that disclose proprietary information about more than 120,000 offshore companies and trusts and nearly 130,000 individuals and agents, including the wealthiest people in more than 170 countries.

The International Consortium of Investigative Journalists, a network of reporters that obtained the secret records, collaborated with the Guardian, Asahi Shimbun, Le Monde, the Washington Post and more than 40 other news organizations to report their contents.

The consortium, founded in 1997 by the Center for Public Integrity, a Washington-based nonprofit investigative journalism organization, said Thursday on its website that the multipart investigation “lifts the curtain on the offshore system and provides a transparent look into the secret world of tax havens and the individuals and companies that use and benefit from them.”

The project, titled Secrecy for Sale, appeared to have the potential to create political shock waves, particularly in Europe, where an economic malaise caused by the eurozone debt crisis has created enormous popular resentment toward austerity policies and widened the gap between rich and poor. The project said some of the world’s top banks in Europe, including UBS and Deutsche Bank, had “aggressively worked to provide their customers with secrecy-cloaked companies in the British Virgin Islands and other offshore hideaways.”

It said the files “illustrate how offshore financial secrecy has spread aggressively around the globe, allowing the wealthy to avoid taxes, fueling corruption and economic woes in rich and poor nations.” The current banking crisis threatening Cyprus, it said, “is one example of how the offshore system can impact an entire country’s financial stability.”

While confidential bank accounts and tax havens are not illegal, the collaboration’s pullback of a curtain on the vast amounts of wealth involved had the potential to create acute embarrassments and political reverberations in many countries, if for no other reason than for revealing in detail the sums of money. The Guardian’s report on the collaboration quoted a former chief economist for the McKinsey consulting group as saying that wealthy individuals may have as much as $32 trillion in undisclosed wealth stashed in overseas havens.

“The naming project may be extremely damaging for confidence among the world’s wealthiest people, no longer certain that the size of their fortunes remains hidden from governments and from their neighbors,” The Guardian said.

Among the most prominent people identified in the leaked records were Jean-Jacques Augier, the co-treasurer of the 2012 election campaign of President Francois Hollande of France and a director of a Cayman Islands-based business that had invested in China. That disclosure could further complicate the political troubles confronting Hollande, who has already been hit in a financial scandal caused by the concealment of a Swiss bank account by his former budget minister.

Augier, a friend of Hollande’s, told Le Monde and Agence France-Presse that he had not done anything illegal or improper. He said he had invested in funds that invested in China and had no personal bank account in the Cayman Islands or any direct personal investment there.

Also identified in the leaked records was Olga Shuvalova, the wife of Russia’s deputy prime minister, Igor Shuvalov. President Vladimir Putin of Russia has railed against the use of offshore wealth havens among Russia’s elite.

Others included Maria Imelda Marcos Manotoc, a provincial governor and daughter of former President Ferdinand Marcos, the notoriously corrupt dictator; Gunter Sachs, a legendary German playboy and photographer who killed himself in 2011 at age 78; Baroness Carmen Thyssen-Bornemisza, Spain’s wealthiest art collector and widow of a Thyssen steel company billionaire; Bidzina Ivanishvili, the prime minister of Georgia and that country’s richest man; the president of Azerbaijan, Ilham Aliyev; and Denise Rich of the United States, the songwriter and former wife of Marc Rich, the onetime fugitive oil trader, who was pardoned by President Bill Clinton on tax evasion charges.

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