The release of 13.4 million files, dubbed the “Paradise Papers“, relating to investors making use of offshore companies and overseas tax havens has opened a potential can of worms for Donald Trump. We now know that at least a dozen of Donald Trump’s administrative advisers, cabinet members or major donors have been mentioned in the “hacked” files. Firstly, we need to make clear that while the use of offshore companies and tax havens is not looked on favourably by governments around the world, it is not illegal. Whether it is immoral is another argument but from a legal point of view these investors and advisers are doing nothing wrong.
Link between Twitter, Facebook and the Russian government
We now know that a major investor with links to the Russian government has significant interests in Twitter and Facebook both of which were accused of peddling “fake news” during the US presidential election. This is something which will surprise many in the investment markets and perfectly illustrates how overseas tax havens can be used to effectively “hide” the true identity of investors.
Donald Trump and the Russian government
Amid some of the details unearthed by the “Paradise Papers” was the fact that Donald Trump’s Commerce Secretary Wilbur Ross has a stake in a shipping company which does business with a gas production firm part owned by Vladimir Putin’s son-in-law. To be fair to Wilbur Ross, a billionaire former private equity investor, he has many investments around the world and to pick and choose those with connections with Russia is being a little selective to say the least. However, unfortunately for Donald Trump it does bring the focus back to his alleged Russian connections.
Business people and politics
What is becoming more and more evident is that those with significant business interests do not get an easy time of it when they switch their attention to politics. You could argue this is a little bizarre because surely those with business experience should make the best politicians? After all, many people describe politicians across the globe as failed business people.
The initial flurry of names and details from the Paradise Papers are making headlines right across the globe and unfortunately for people like Donald Trump and his associates there is probably a lot more to come. This hacked information is now in the public domain, journalists and politicians are going through it with a fine tooth comb and we can expect yet more attention grabbing headlines.
Closing down the tax havens
It is difficult to understand why there are still so many tax havens across the globe when governments, at least in public, appear determined to close them down. The UK government has arrangements in place with an array of historic tax havens to share data and ensure that all tax liabilities are being met. The US government is likely to have similar arrangements in place but there are accusations that politicians around the globe are protecting “their own”.
Is it really a case of the rich looking after the rich or is it more difficult from a legal standpoint to close down these tax loopholes? Whatever the truth the “Paradise Papers” are making unwelcoming reading for many investors!