Yesterday, literally thousands of financial secrets regarding offshore accounts of the super wealthy were leaked. The “largest journalism collaboration in history” involved nearly 100 reporters sifting through 2,5 million documents which detailed the identities and activities of 120 000 offshore companies. Most of the offshore accounts are based in the Cayman Islands and the British Virgin Islands.

The project sheds light on the lengths that the wealthy will go to to avoid taxes, including running Ponzi-style schemes and participating in systemic corruption of national banking systems. The project was put together by the Internationla Center for Investigative Journalists, with the aim of “exposing hidden dealings of politicians, con artisits, and the mega-rich in more than 170 countries.”

Here are but a few of the culprits who were caught out:

• Imee Marcos, Filipino politician may have hidden $5 billion (R45 billion) which her father embezzled from the state when he was president of the Philippines.
• Tony Merchant, Canadian class action lawyer and the husband of a senator transferred almost $2 million to offshore accounts during a dispute with the Canadian Revenue Service for taxes.
• Brigitte Bardot’s Geramn ex-husband, Gunter Sachs had an extensive network of offshore trusts in Panama, Luxembourg, the British Virgin Islands and the Cook Islands. Then he committed suicide.
• Spanish art collector, Carmen Thyssen-Bornemisza used a company in the Cook Islands to buy an original Van Gogh inlcuding some other masterpieces through Sotheby’s and Christie’s.
• The wife of Deputy Prime Minister of Russia, Igor Shuvalov avoided taxes by hiding cash in offshore accounts, despite Russia already enjoying extremely low tax rates.
• Thailand is a country teaming with tycoons that have offshore accounts, including current Senator and ex-wife of former prime minister Thaksin Shinawatre and several other big rollers of whom are listed on Forbes wealthiest list.
• Azerbaikani corporate mogul, Hassan Gozal has ties to the country’s president Ilham Aliyev through offshore accounts.

The documents also provided details of an offshore company that provided South African military helicopters in 1997 to Pascal Lissouba, former president of the DRC. The helicopters were delivered just prior to civil war in the DRC.

According to the International Consortium of Investigative Journalists (ICIJ) some major international banks have “aggressivley worked to provide their customers” with offshore accounts, including banks such as UBS, Clariden and Deutsche Bank.

Some of the 4,000 individuals identified in the documents affiliated with offshore accounts is American Grammy nominated socialite, Denise Rich. Rich helped secure the presidential pardon of her ex-husband, Mark Rich. Mark Rich was indicted on charges of tax evasion and illegal trading with Iran. In April 2006, Rich had $144 million (R1,3 billion) hidden in a trust in the Cook Islands, and in 2011 she gave up her American citizenship for an Austrian citizenship.

We spoke to Michael Furter, Director at Consequence Private Wealth in Newlands to ask about the options that are available for the wealthy in South Africa. He said:

Transferring assets to an offshore trust can be advantageous but it is a complex area and advice is required to ensure an individual or family understand what is involved in the various jurisdictions. The Channel Islands remain a traditional favourite for South Africans although we have noted an increasing interest in Mauritius too.

South African exchange control has relaxed considerably in recent years – individuals can now move up to R5 million a year and R1 million of that without tax clearance certificates. Our clients are increasingly keen to use this allowance to take advantage of offshore investment opportunities and generally diversify their wealth. Investment technology has improved to the extent that one can quite easily control underlying investment options on offshore platforms from South Africa.

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[Source: Gawker, The Daily Beast]