Data Leak Shakes Notion of Secret Offshore Havens and, Possibly, Nerves
They are a large and diverse group that includes a Spanish heiress; the daughter of the former Philippine dictator Ferdinand Marcos; and Denise Rich, the former wife of the disgraced trader Marc Rich, who was pardoned by President Bill Clinton. But, according to a trove of secret financial information released Thursday, all have money and share a desire to hide it.
And, it seems safe to say, they — and thousands of others in Europe and far beyond, in places like Mongolia — are suddenly very anxious after the leak of 2.5 million files detailing the offshore bank accounts and shell companies of wealthy individuals and tax-averse companies.
"There will be people all over the world today who are now scared witless," said Richard Murphy, research director for Tax Justice Network, a British-based organization that has long campaigned to end the secrecy that surrounds assets held in offshore havens. The leaked files include the names of 4,000 Americans, celebrities, as well as more mundane doctors and dentists.
It is not the first time leaks have dented a thick carapace of confidentiality that usually protects the identities of those who stash money in the British Virgin Islands, the Cayman Islands, Liechtenstein and other havens. Nor, in most cases, is keeping money in such places illegal.
But the enormous size of the data dump obtained by the International Consortium of Investigative Journalists, a Washington-based group that, along with affiliated news media organizations, announced its coup on Thursday, has punched a big hole in the secrecy that surrounds what the Tax Justice Network estimates are assets worth at least $21 trillion held in offshore havens.
"This could be a game-changer," said Mr. Murphy, the author of a book about offshore tax shelters. "Secrecy is the key product these places sell. Whether you are a criminal laundering money or just someone trying to evade or avoid taxes, secrecy is the one thing you want."
Once this is gone, he added, "it creates an enormous fear factor" and has a "massive deterrent effect."
And lifting the curtain on the identities of those who keep their money offshore is likely to cause particular anger in austerity-blighted Europe, where governments have been telling people to tighten their belts but have mostly turned a blind eye to wealthier citizens who skirt taxes with help from so-called offshore financial centers.
The leaked records, mainly from the British Virgin Islands, the Cook Islands and Singapore, 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. Not all of those named necessarily have secret bank accounts, and in some cases only conducted business through companies they control that are registered offshore.
The embarrassment caused by Thursday's revelations has been particularly acute in France, where the Socialist president, Franois Hollande, who wants to impose a 75 percent tax on millionaires, has been struggling to contain a political firestorm touched off this week by a former budget minister's admission — after months of denials — that he had secret foreign bank accounts.
The scandal looked set to widen on Thursday as senior members of the government were forced to confront allegations that Mr. Hollande and others may have been aware that the budget minister, Jrme Cahuzac, who resigned on March 19, was lying but failed to act.
Adding to the president's trouble, the name of a close friend and treasurer of his 2012 election campaign, Jean-Jacques Augier, appeared in connection with the files released Thursday by the International Consortium of Investigative Journalists. Mr. Augier, according to the newspaper Le Monde, was identified as an investor in offshore businesses in the Cayman Islands, another well-known tax haven.
Mr. Augier, a friend of Mr. Hollande's, denied to Le Monde and Agence France-Presse that he had done anything illegal or improper. He said he had invested in funds that invested in China, and that he had no personal bank account in the Cayman Islands or any direct personal investment there. He conceded only that "maybe I lacked a bit of caution."
Others identified included Maria Imelda Marcos Manotoc, a provincial governor and eldest daughter of the former Philippine president; Olga Shuvalova, the wife of Russia's deputy prime minister, Igor Shuvalov; Gunter Sachs, a German playboy and photographer who committed suicide in May 2011 at age 78; and Baroness Carmen Thyssen-Bornemisza, Spain's wealthiest art collector and the widow of a Thyssen steel company billionaire. The president of Azerbaijan, Ilham Aliyev, and his wife, Mehriban, were featured in the documents as having set up an offshore company in the British Virgin Islands, while their two daughters appeared in connection with three other offshore outfits.
The consortium did not specify how it got the information or where it came from. On its Web site, the group said "the leaked files provide facts and figures — cash transfers, incorporation dates, links between companies and individuals — that illustrate how offshore financial secrecy has spread aggressively around the globe, allowing the wealthy and the well connected to dodge taxes and fueling corruption and economic woes in rich and poor nations alike."
In Germany, now gearing up for national elections in September and a country with both a strong sense of social justice and a long history of tax evaders sneaking money into nearby Switzerland, politicians expressed concern, even outrage, over the disclosures. Of particular concern were indications that big banks in Germany and elsewhere are deeply involved in moving money beyond the reach of tax authorities.
"We should introduce tougher penalties for those financial institutions that are ideal for tax fraud or take part in it," Peer Steinbrck, the Social Democratic Party's candidate for chancellor, was quoted as saying in the daily newspaper Sddeutsche Zeitung.
The issue of tax avoidance has become a highly charged issue across much of Europe, particularly in richer northern countries that are increasingly fed up with demands for bailout money from heavily indebted countries like Greece. A key demand of a recent bailout deal announced for Cyprus was that the nation drastically shrink its role as a financial center and, many in Germany suspect, a haven for money laundering.
Robert Palmer, a policy adviser for Global Witness, a London research group that focuses on corruption, said the naming of offshore account holders could have powerful political reverberations across Europe because "it shows that if you are wealthy and well connected you play by different rules."
He said the information released so far did not shed any new light on how offshore finance works but was still significant because it identified people who used hidden shelters.
"This is very unusual because it is so difficult to get any information out of these places," he said. "It adds to the picture of how easy it is to move money around and will build up the anger of people who are being asked to make cuts but see that there are people out there who benefit hugely from the system."
The disclosure of offshore financial information is also a potential embarrassment for Prime Minister David Cameron of Britain, in that much of the data released so far related to the British Virgin Islands, a British-ruled territory in the Caribbean.
Mr. Cameron had earlier spoken about the importance of tax and financial transparency and pledged to make it a priority issue at a meeting of the leaders of the Group of 8 advanced industrial nations in Northern Ireland in June.
The British Caribbean territory, however, is notoriously secretive and, Mr. Palmer said, one of the most egregious offenders in enabling wealthy people to hide their money to avoid taxes.
In a statement issued Thursday, Global Witness called on Mr. Cameron and fellow Group of 8 leaders to "crack down on anonymous company ownership."
—By The New York Times' Andrew Higgins. Steven Erlanger contributed reporting from Paris, and Chris Cottrell from Berlin.