The extraordinary range of people using offshore tax evasion hideaways

Records represent the biggest stockpile of inside information about the offshore system ever obtained by a media organisation

• Gerard Ryle
• The Guardian, Thursday 4 April 2013

The British Virgin Islands, the world's leading offshore haven. Photograph: Lars Ruecker/Getty Images/Flickr RF

The secret records obtained by ICIJ lay bare an extraordinary range of people using offshore hideaways.

They include US dentists and middle-class Greek villagers as well as families of despots, Wall Street swindlers, eastern European and Indonesian billionaires, Russian executives, international arms dealers and a company alleged to be a front for Iran's nuclear-development programme.

The leaks illustrate how offshore financial secrecy has aggressively spread around the globe. The records detail offshore holdings in more than 170 territories; this represents the biggest stockpile of inside information about the offshore system ever obtained by a media organisation.

To analyse it, ICIJ collaborated with reporters from the Guardian and the BBC in the UK, Le Monde in France, Süddeutsche Zeitung and Norddeutscher Rundfunk in Germany, The Washington Post, the Canadian Broadcasting Corporation (CBC) and 31 other international media partners.

Eighty-six journalists from 46 countries used both hi-tech data crunching and traditional reporting to sift through emails and account ledgers covering nearly 30 years.

"I've never seen anything like this. This secret world has finally been revealed," said Arthur Cockfield, a law professor at Queen's University in Canada, during an interview with CBC.

Offshore's defenders say that most users are legitimate. Offshore centres, they say, allow people to diversify investments, create international ventures and do business in entrepreneur-friendly zones without red tape.

"Everything is much more geared toward business," David Marchant, publisher of OffshoreAlert, an online journal, said. "If you're dishonest, you can take advantage of that in a bad way. But if you're honest you can take advantage of that in a good way"

The vast tide of offshore money can disrupt economies. Greece's fiscal disaster was exacerbated by offshore tax cheating and in the Cyprus crisis, local banks' assets were inflated by waves of cash from Russia.

ICIJ's 15-month investigation found that, alongside perfectly legal transactions, the secrecy and lax oversight offered by the offshore world appears to allow fraud, tax-dodging and political corruption to thrive.

Anti-corruption campaigners argue that offshore secrecy forces citizens to pay higher taxes to make up for vanishing revenues, while anonymity makes it difficult to track the flow of money. A study by James S Henry, former chief economist at McKinsey & Company, estimates that wealthy individuals have $21-$32tn tucked away in offshore havens – roughly equivalent to the size of the US and Japanese economies combined. The offshore world is growing, said Henry, who is a board member of the Tax Justice Network, an advocacy group critical of offshore havens.

Much of ICIJ's analysis focused on the work of two major offshore incorporation firms, Portcullis TrustNet and Commonwealth Trust Limited (CTL). Trustnet was founded by Mike Mitchell, a New Zealand lawyer who worked as the Cook Islands' solicitor general in the early 1980s, built up offshore business in Hong Kong, and sold out in 2004 to Singapore lawyer David Chong, as Singapore became a favoured financial hideaway for clients from Asia.

Canadian businessman Tom Ward and Texan Scott Wilson set up CTL in 1994 in the British Virgin Islands. They specialised in attracting Russian and east European money. Regulators found that CTL repeatedly violated the islands' anti-money-laundering laws between 2003 and 2008 by failing to check out its clients. "This particular firm had systemic money-laundering issues," a BVI financial services commission official said last year.

Ward said CTL's vetting procedures had been consistent with local standards, but that no amount of screening could ensure that firms won't be "duped by dishonest clients".

In relation to the second firm, Trustnet, ICIJ identified 30 of their US clients accused in lawsuits or criminal cases of fraud, money laundering or other serious financial misconduct. TrustNet declined to answer our questions.

In the 1990s, the Organisation for Economic Cooperation and Development began pressuring offshore centres to reduce secrecy, but the effort ebbed in the 2000s as the Bush administration withdrew support, according to Robert Goulder, former editor-in-chief of Tax Notes International. A second "great crusade", Goulder writes, began when US authorities took on UBS, forcing the Swiss bank to pay $780m in 2009 to settle allegations that it had helped Americans dodge taxes. David Cameron has now vowed to use his leadership of the G8 to help crack down on tax evasion.

But despite the new efforts, offshore remains a "zone of impunity", says Jack Blum, a specialist lawyer and former US Senate investigator: "There's been some progress, but there's a bloody long way to go."

Gerard Ryle is director of the ICIJ, a Washington-based independent network of reporters. See icij.org
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 How many UK companies are run from overseas havens?

More than 175,000 UK companies have been controlled from countries linked by campaigners to offshore secrecy – but where has the most?

Tortola, the capital of the British Virgin Islands, sometimes referred to as the offshore capital of the world. 17,000 UK companies have been controlled from the BVI. Photograph: Neil Rabinowitz/Neil Rabinowitz/CORBIS

Among the latest revelations from the Guardian's Offshore Secrets series is a sense of how many of the three million companies registered at Companies House are controlled from offshore territories.

A first sense of the scale of such offshore control of British businesses is given in the Guardian's new story today:

More than 175,000 UK-registered companies have used directors giving addresses in offshore jurisdictions, the Guardian has established. This raises fresh concerns about the scale of Britain's involvement in offshore secrecy arrangements.

Data obtained from the corporate information service Duedil reveals 177,020 companies have listed directors in jurisdictions such as the Channel Islands, British Virgin Islands, Cyprus, Dubai and the Seychelles.

More than 60,000 of those companies are listed as currently active on Companies House, the official register of UK businesses.

Having directors in offshore jurisdictions does not indicate a company is doing anything illegal, or that a director is necessarily a sham. British expats who retain directorships of their business would feature in this data, as do "personal services companies" based in the Isle of Man, which help self-employed people incorporate themselves as a limited company.

What's also telling, however, is breakdown of which territories have the most directors of UK companies, posted below.

The scale of company ownership in some of these territories is huge: in the British Virgin Islands there are three UK companies for every four citizens. In the Isle of Man there is a UK company registration for every two people.

In Sark the situation is still more stark: counting now defunct companies, there are 24 UK companies registered on the island for every person there.

Below, using data gathered for the Guardian by DueDil, we've listed the number of companies registered in 13 different territories.

We've split the list in two different ways: companies listed as 'active' on Companies House (the official UK register) versus 'inactive', and also split between directorships which are still current and ones which have been resigned.

If you've got any comments or thoughts on these activities, leave a comment on our main news story today, or (if you'd prefer to comment confidentially), email me at james.ball@guardian.co.uk.

UK companies with offshore directors

Territory	Active companies	Inactive companies	Current directorships	Former directorships
Isle of Man	22366	24795	13757	33973
Guernsey	12024	11588	6799	17079
Cyprus	7609	18836	4082	22484
Jersey	8685	10818	3108	16560
Dubai	4937	6164	2611	8573
BVI	5329	12630	1943	16169
Seychelles	2693	4322	1773	5258
St Kitts and Nevis	1700	4460	832	5343
Mauritius	715	980	445	1260
Cayman Islands	558	414	330	644
Sark	1851	12923	209	14632
Vanuatu	136	246	92	292
Turks and Caicos	55	186	27	214
Total	68658	108362	36008	142481

With this tax dodger list the Revenue shames only itself

By singling out barbers and pipe fitters, HMRC shows it takes care of the little people, while Amazon looks after itself

• 
• • Marina Hyde
  • The Guardian, Friday 22 February 2013 19.30 GMT

'Public enemy No 1 is a Liverpool hairdresser… Or rather, in the interests of accuracy, he is only one master criminal on a list of nine coveted scalps.' Illustration by Matthew Richardson

Pondering one of the more delicious ironies of 20th century American justice, people always say wryly that they could only pin tax evasion on Al Capone. Pondering HM Revenue and Custom's 21st century name-and-shame list, they will say that they could only pin tax evasion on hairdressers.

If you have spent the past few months – or indeed decades – frothing with righteous indignation at the refusal of various major corporations profiting in the UK to pay so much as 37p in tax, let alone their fair share, you will be encouraged to learn that public enemy No 1 is a Liverpool hairdresser whom the Revenue eventually fined 17 grand for deliberate default. Or rather, in the interests of accuracy, he is only one master criminal on a list of nine coveted scalps. Others include a pipe fitter who settled with them for £10,986 and a Nottinghamshire knitwear firm that was eventually fined £86,765.54. The big kahuna is a wine firm from Mobberley in Cheshire. I'd quite like to see their thrilling stories told in a modern  version of The Untouchables. As the Eliot Ness of the piece, the taxman ought to be played by a clean-cut do-gooder – Ryan Gosling perhaps – with Robert De Niro returning to take the role of the Fife grocer.

As so often in this septic isle, it's the pettiness of it all that's the tragedy. If these are the names, then the shame must be the Revenue's. Yet they seem to have trumpeted this exciting new direction in their tax-hunting activities with similar fanfare to that which must have attended the nailing of Capone. Ladies and gentleman … We got him.

Needless to say, this isn't a defence of the named and shamed, who are no doubt dreadful little chisellers. I'm afraid I'm one of those ineffably dreary sorts who doesn't pay cash in hand, gladly operates as well as submits to PAYE, and really can't be doing with tax avoiders at all. Blah, blah, blah. But for all my easy-won goody goody-ness, I pretty much need to know that every last megacorp doing business in our land has paid every last penny they owe before we start boasting about having nailed Cool Cutz, or Headmasterz, or whatever hair-based pun adorns this chap's salon lintel.

Predictably, this isn't the line HMRC's Treasury overlords have gone with, as Treasury minister David Gauke once again suggested that tax avoiders have nowhere to hide. (Except in plain sight, as some of Britain's most successful companies.)

Are you convinced by Mr Gauke? I can't help feeling that as a former corporate tax lawyer, married to a corporate tax lawyer, and a chap who used taxpayers' money for stamp duty on his second home move, he is somewhat miscast as the Simon Wiesenthal of hunting down tax avoiders.

I suppose he thinks getting on the airwaves to big up the HMRC list counts as Being Seen To Be Doing Something, as do his underlings in the Revenue themselves. Yet, as a piece of political theatre, this outing feels marginally less successful than Sooty and Sweep's production of One for the Road. There has been a huge and exhilarating outpouring of anger over tax avoidance over the past year, as the issue has moved closer to the centre of the stage than it has been in decades. To say that HMRC publishing a list of nine small businesses squanders that goodwill feels something of an understatement.

What is the intended message, if we may flatter the stunt in that way? That if HMRC look after the little people then the big people will look after themselves? You can't deny it's working. The big people seem to be looking after themselves very well indeed, and though this stunningly misdirected exercise stops just shy of congratulating the major multinationals who avoid tax, the indication of where the Revenue's focus lies effectively does just that.

If I were a mischievous billionaire I would stage a piece of political theatre myself. I would find out whichever hotshot tax lawyers act for Starbucks or Google, and hire them at vast expense to defend the likes of the pipe-fitter and the grocer. They'd end up getting a £300,000 rebate, which would make the point about the real problem more eloquently than Gauke and his cabinet seniors ever could. Certainly more than they'd ever care to, on this evidence.

As for the Revenue, it takes a special sort of flat-footedness to snatch defeat from the jaws of moral victory – but ultimately we must remember the calibre of the organisation with which we are dealing here. I merely pass on to you the tale of one self-employed friend, who was relentlessly pursued over a mystery cheque of around £2,750 that she had written and could not – a long time after the event – explain. She couldn't find the stub, the bank had somehow lost the details, and the investigating Revenue official was under the impression that she had written it as some kind of tax dodge. What kind was unclear, but he wanted to know what she was hiding. After two or three years of this, he brought his investigation to a graceless close. It had emerged that the cheque in question had in fact been paid to one HMRC, in settlement of income tax. Which should give the likes of Amazon a flavour of the worthiness of their foe.