Pandora Papers: UK urged to tighten defences against ‘dirty money’ after offshore data leak

·3-min read
A leak of files revealed the financial dealings of some world leaders (Joe Giddens/PA) (PA)
A leak of files revealed the financial dealings of some world leaders (Joe Giddens/PA) (PA)

The Government is facing fresh calls to tighten Britain’s defences against “dirty money” after a leak of offshore data exposed the secret financial dealings of some of the world’s richest and most powerful people.

The cache of almost 12 million files – dubbed the Pandora Papers – is said to cover the activities of some 35 current or former world leaders, more than 300 public officials and 100 billionaires.

It details the work of offshore financial services companies in locations such as the British Virgin Islands, Belize and Switzerland among others.

The release is the product of a team of 600 reporters organised by the International Consortium of Investigated Journalists (ICIJ) in Washington, who sifted through the data over a period of months.

According to BBC Panorama, which conducted a joint investigation with the Guardian among the disclosures in the papers are details of the way prominent and wealthy people have been legally setting up companies to secretly buy property in the UK.

Following the release, the Crown Estate said that it was looking into the £67 million purchase of a London property from a company which, the Guardian said, acted as a “front” for family of Azerbaijan’s President Ilham Aliyev whose record has long been criticised by anti-corruption campaigners.

 (PA Archive)
(PA Archive)

A spokesman for the Crown Estate said: “Before our purchase of 56-60 Conduit Street, we conducted checks including those required by UK law.

“At the time we did not establish any reason why the transaction should not proceed. Given the potential concerns raised, we are looking into the matter.”

Meanwhile, former prime minister Tony Blair and his wife, Cherie, angrily denied any wrongdoing after the Guardian and Panorama said they were able to save more than £300,000 in stamp duty when they acquired a £6.45 million London property by buying the offshore company which owned it.

In a statement, a spokeswoman for the couple said they had bought the property in “a normal way through reputable agents” and should not have been “dragged into a story about ‘hidden’ secrets of prime ministers etc”.

“The vendor was an offshore company. The Blairs had nothing whatever to do with the original company nor those behind it. The vendor sold the company not the property – again a decision the Blairs had nothing to with,” the spokeswoman said.

 (PA Archive)
(PA Archive)

“Since the purchase was of a company no buyer would have had to pay UK stamp duty on that transaction. However, because the Blairs then repatriated the company and brought it onshore, they are liable for capital gains and other taxes on the resale of the property which will significantly exceed any stamp duty.

“For the record, the Blairs pay full tax on all their earnings. And have never used offshore schemes either to hide transactions or avoid tax.”

Duncan Hames, policy director at the campaign group Transparency International UK, said the disclosures should act as a “wake up call” for the Government to deliver on long-overdue measures to strengthen Britain’s defences against “dirty money”.

He said: “The UK must redouble its efforts in tackling illicit finance, bringing in long overdue transparency reforms to reveal who really owns property here as well as resourcing regulators and law enforcement to clamp down on rogue professionals and corrupt cash held in the UK.”

The Pandora Papers are the latest in a series of major leaks of financial data regarding the offshore world since 2013.

Individuals setting up and benefitting from offshore accounts is not illegal.

But the secrecy surrounding such accounts can help aid tax evasion, fraud and money laundering.

The Guardian said they highlighted the central co-ordinating role played by London, with the city home to wealth managers, law firms, company formation agents and accountants serving their “ultra-rich” clients

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