Paradise Papers Tax Avoidance Scandal
# I. What happened?
In October 2017, Appleby Global Group Services (Appleby), a Bermuda-based legal firm, admitted that the company’s computer systems had been hacked in various locations. The news sparked concern among many corporations and high-net-worth individuals who had allegedly used Appleby and its corporate services provider Estera Group to create offshore entities for tax avoidance purposes and illegal activities, such as money laundering. The hackers leaked the data to reporters working for the German daily, Süddeutsche Zeitung, which subsequently shared it with the International Consortium of Investigative Journalists (ICIJ).
On November 5, 2017, ICIJ released 6.8 million Appleby documents, which included loan agreements, financial statements, e-mails, trust deeds, and other paperwork spanning nearly 50 years. The leak was dubbed the Paradise Papers due to the idyllic locations of some of the tax havens used by the company.
The documents named well-known multinationals and high-profile individuals, who had used Appleby’s services to hide their wealth in shell companies located in tax havens around the world.
During November and December 2017, detailed scrutiny of the files revealed that Appleby had provided services for more than 120 politicians around the world, members of royal families, controversial clients from Iran, Iraq, Russia, and Libya, and “questionable” clients who were linked to corruption.
In January 2018, Appleby faced further problems when it was criticized by the NGO Global Witness for failing to conduct due diligence on FBME Bank, a Tanzaniabased bank that has been banned from the US financial system since 2017. Allegedly, Appleby acted as the register agent for FBME Bank’s nowdissolved holding company in the Cayman Islands between 2004 and 2015. In July 2014, the US Financial Crimes Enforcement Network accused FBME Bank of facilitating money laundering and international organized crime, as well as financing terrorism and the development of a chemical weapons program in Syria.
