Paradise Papers were not an inside job, says leaky offshore law firm
Appleby condemns 'criminal act' and 'politically driven' reporting
Revelations from the Paradise Papers, a leaked set of more than 13 million financial documents, have shed light on how the rich and famous channel funds through offshore tax havens.
Among early stories spawned from the leak and published over the weekend are allegations that Russia funded Facebook and Twitter investments through a business associate of Jared Kushner, President Donald Trump's son-in-law and senior White House adviser. Investments by two Russian state institutions were made via tech magnate Yuri Milner, who also holds a stake in a firm co-owned by Kushner, The Guardian reports.
It has also emerged that Donald Trump's commerce secretary, Wilbur Ross, had a stake in a shipping company firm transporting oil and gas for a firm whose shareholders include Vladimir Putin's son-in-law and two men subject to US sanctions, the BBC reports. Most of the coverage so far has focused on how £10m of the Queen's private money was invested offshore into funds in the Cayman Islands and Bermuda by the Duchy of Lancaster but many more revelations are likely to follow.
The leaked information largely came from a hack against offshore legal firm Appleby. Appleby only admitted it had suffered the breach – which actually happened last year – after the International Consortium of Investigative Journalists (ICIJ) began asking awkward questions based on leaked information, as previously reported.
Like last year's Panama Papers leak, the documents were first obtained by German newspaper Süddeutsche Zeitung, which enlisted the help of the ICIJ to help diversify and spread a workload no single media organisation could hope to manage. Süddeutsche Zeitung has not revealed the source of the leak.
In a statement, Appleby said the leaked information came from a criminal hack on its computer systems. Subsequent forensic examination has ruled out an insider, according to the law firm.
We wish to reiterate that our firm was not the subject of a leak but of a serious criminal act. This was an illegal computer hack. Our systems were accessed by an intruder who deployed the tactics of a professional hacker and covered his/her tracks to the extent that a forensic investigation by a leading international Cyber & Threats team concluded that there was no definitive evidence that any data had left our systems. This was not the work of anybody who works at Appleby.
Appleby criticised "politically driven" media coverage of the leak. "The journalists do not allege, nor could they, that Appleby has done anything unlawful. There is no wrongdoing. It is a patchwork quilt of unrelated allegations with a clear political agenda and movement against offshore," it said.
The breach raises security and data protection issues, said Thomas Fischer, global security advocate at Digital Guardian. "Putting aside the fact that the leaked financial details appear to include information about the murky world of offshore finance, for the victims, this leak could have life-altering or, at the very least, hugely distressing effects. Ultimately, the breach could trigger serious legal repercussions against Appleby.
"Data protection should be of the utmost importance in these businesses and yet we have seen a growing number of data breaches in law firms in recent times."
The vast majority of the transactions exposed involve no legal wrongdoing. The release of the information has nonetheless provoked a debate that UK politicians, among others, are keen to explore. Those on the political left, in particular, are keen to curb the use of offshore tax havens. As well as concerns about unfairness, tax havens could be used to cloak wrongdoing.
Meg Hillier MP, chairman of the House of Commons Public Accounts Committee, said: "The government talks tough about clamping down on aggressive tax avoidance but once again we see HM Revenue & Customs being out-manoeuvred. HMRC must investigate the very worrying allegations arising from this leak.
"These transactions are taking place behind a veil of secrecy and, whether they are legal or not, we all have a duty to contribute to public services through our taxes.
"Senior HMRC officials are coming before our Committee today [Monday] and we will be expecting frank answers on what it intends to do."
BBC Panorama and The Guardian are included in a list of more than 100 media organisations investigating the papers. More revelations are promised over the coming days – starting with Apple. ®