An enormous new leak of tax-haven financial records — rivalling the Panama Papers in size and scope — is laying bare some of the financial secrets of the world's elite, from the Queen to Prime Minister Justin Trudeau's chief fundraiser to U.S. President Donald Trump's commerce secretary, along with more than 120 politicians across the globe.

The 13.4 million records in what is being dubbed the Paradise Papers come largely from Appleby, one of the biggest offshore law firms on the planet, which was founded in Bermuda and has branches in tax havens around the world.

The records expose the assets and sometimes murky dealings of a host of characters, as well as the ways corporate giants like Apple, Nike and Uber avoid taxes legally through increasingly creative bookkeeping.  

The leak was obtained by German newspaper Sueddeutsche Zeitung and shared with the International Consortium of Investigative Journalists and a network of more than 380 journalists in 67 countries, including CBC/Radio-Canada and the Toronto Star in Canada.  

The leaked Appleby files contain the names of more than 3,000 Canadians and Canadian entities, including hundreds of companies, wealthy individuals, lawyers, accountants, and people who inherited money stashed in their family's offshore accounts in Bermuda or the Cayman Islands.

After the news of the leak broke Sunday, John Power, a spokesperson for the minister of national revenue, said "the CRA is reviewing links to Canadian entities and will take appropriate action."

Paradise Papers-logo

In fact, Canada ranks as one of Appleby's biggest sources of clients revealed in the documents, behind the United States, the U.K. and China.

This vast offshore industry makes "the poor poorer" and is "deepening wealth inequality," said Brooke Harrington, a wealth manager and Copenhagen Business School professor who is the author of Capital Without Borders: Wealth Managers and the One Percent.

"There is this small group of people who are not equally subject to the laws as the rest of us, and that's on purpose," Harrington said.

Martin, Mulroney, Chrétien

Former prime ministers Paul Martin and Brian Mulroney

Former prime ministers Paul Martin, left, and Brian Mulroney appear in the Paradise Papers in relation to companies that had dealings offshore. (Canadian Press)

In addition to the Queen, three former Canadian prime ministers have connections to the offshore world that show up in the Paradise Papers::

  • Paul Martin's former shipping empire Canada Steamship Lines — now run by his sons — is one of Appleby's "biggest clients," according to a document in the leak. Martin offered no comment and CSL said it complies with all laws and regulations wherever it operates.  
  • Brian Mulroney was on the board of Said Holdings, run by Syrian-born billionaire Wafic Said, who helped broker the biggest arms deal in British history. Through a lawyer, Mulroney said he considers Said "a good friend" and is "proud" to have served the company.
  • Jean Chrétien lobbied for an East African oil venture called Madagascar Oil. A register of the company's investors lists him as the recipient of 100,000 stock options, but Chrétien told CBC/Radio-Canada he never got, or even heard of, any such options. He confirmed he did briefly do some consulting for the company, and his law firm at the time, Heenan Blaikie, was paid for his work.

One of the webs of offshore accounts and companies in the Paradise Papers leads to Trump's commerce secretary, private equity tycoon Wilbur Ross, who has a stake in a shipping company that has received more than $68 million US in revenue since 2014 from a Russian energy company co-owned by the son-in-law of Russian President Vladimir Putin.

The revelation comes against a backdrop of growing concerns about the links between Russia and people close to Trump.

A spokesman for Ross said that the commerce secretary never met Putin's son-in-law or the Russian energy company's other owners, and that Ross recuses himself from matters that relate to international shipping and "has been generally supportive of the administration's sanctions" of Russian entities.

Paradise Papers: The scope

In all, the offshore ties of more than a dozen Trump advisers, cabinet members and major donors appear in the leaked data.

About half the 13.4 million Paradise Papers files come from Appleby and Bermuda-based corporate services provider Estera, which split off from Appleby late last year. The records span everything from correspondence with clients and financial statements to internal company memos, emails and database entries.

The rest of the leaked records are from another offshore services firm called Asiaciti Trust based in Singapore, as well as 19 corporate registries maintained by governments in other tax-haven jurisdictions.  

In addition to disclosures about heads of state and corporations, the files reveal details about the financial lives of the rich and famous.

Russian billionaires

While having an offshore account or company is often legal, the built-in anonymity of tax havens tends also to attract money launderers, drug and arms traffickers, tax evaders and others engaged in questionable conduct, the leaked records show.

Russian oligarch Arkady Rotenberg

Russian billionaire Arkady Rotenberg and his brother used offshore corporations to buy jets a year before they were hit with U.S. and Canadian sanctions for their ties to Russian President Vladimir Putin. (Sergei Karpukhin/Reuters)

Appleby, for example, is one link in a chain of offshore actors who helped Russian oligarchs and government officials to purchase jets, yachts and other luxury items. Arkady and Boris Rotenberg, two Russian billionaires and childhood friends of President Vladimir Putin, were able to buy jets worth more than $20 million US in 2013.

U.S. and Canadian authorities imposed sanctions on the Rotenbergs in 2014 for their material support of Putin-backed companies and projects. Appleby cut its ties with the brothers but, in one case, received approval from the government of the Isle of Man nearly two years after sanctions were imposed to disburse fees to keep one of the brothers' companies on the business registry there.

Most common countries in the Appleby data leak

CBC used a slightly different methodology than ICIJ and found more than 100 additional Canadian entities in the data. (CBC)

The Rotenbergs did not reply to requests for comment.

PowerPoint presentations prepared internally by an Appleby employee and other documents cite examples of other controversial or disreputable characters who made their way onto the law firm's client list, including a corrupt Pakistani official, two children of the infamous Indonesian dictator Suharto and an alleged "blood diamond" dealer.

In some cases, Appleby quickly reported its suspicions about clients' activities to authorities, as required by law. In other cases, questionable clients raised no eyebrows for years.

'No evidence of any wrongdoing'

Appleby did not reply to a detailed list of questions sent by the International Consortium of Investigative Journalists but released an online statement stating it had investigated the ICIJ's questions.

"We believe they are unfounded and based on a lack of understanding of the legitimate and lawful structures used in the offshore sector," the statement said.  "There is no evidence of any wrongdoing."

Appleby said it does not tolerate illegal behaviour and provides advice to clients "on legitimate and lawful ways to conduct their business."

"It is true that we are not infallible," the statement said. "Where we find that mistakes have happened, we act quickly to put things right."

Asiaciti did not respond to requests for comment.

Marwah Rizqy, a professor of tax law at the University of Sherbrooke in Quebec, said leaks like the Paradise Papers and last year's Panama Papers are vital to understanding how tax havens affect Canada.

"The 21st century will be noted for the fight against tax evasion, the fight against tax havens," Rizqy said. "They're a cancer that can be cured by political will."

With files from CBC's Zach Dubinsky, Julian Sher, Valérie Ouellet, Dave Seglins, Rachel Houlihan, Harvey Cashore and Chelsea Gomez and Radio-Canada's Frédéric Zalac, Gino Harel, Luc Tremblay and Yanic Lapointe.


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