Wednesday, April 3, 2013

Historic Day for Investigative Journalism with Release of Offshore Tax Haven Story

This was an historic day for investigative journalism.

In a simultaneous display of journalistic prowess, dozens of media organizations around the world released stories about how the rich and powerful hide their assets in offshore tax havens. The stories have already triggered major repercussions and imminent resignations, and they have opened a window into how tycoons and the ultra-wealthy dodge their national tax authorities.

The stories stem from a massive leak of financial documents that contain names and details of more than 122,000 offshore companies or trusts, and about 13,000 agents.

The documents were on a computer hard drive that arrived by mail to Gerard Ryle, director of the International Consortium of Investigative Journalists. It contained more than 260 gigabytes, and special software was used to try to sort and make sense of the data. Then, media organizations around the world were contacted to partner with the ICIJ in analyzing the data and teasing out stories of interest in their respective countries.

The ICIJ has conducted multinational investigations in the past, but this is the first time it has co-ordinated a project on such a massive scale. Partners included the BBC, the Guardian, Le Monde, The Washington Post and Asahi Shimbun. It worked with 86 investigative journalists from 46 countries.

Here is what the ICIJ says on its website:

"The files identify the individuals behind the covert companies and private trusts based in the British Virgin Islands, the Cook Islands, Singapore and other offshore havens. They include American doctors and dentists and middle-class Greek villagers as well as Russia corporate executives, Eastern European and Indonesian billionaires, Wall Street fraudsters, international arms dealers and families and associates of long-time dictators.

Among the key findings:
  • Government officials and their families and associates in Azerbaijan, Russia, Canada, Pakistan, the Philippines, Thailand, Mongolia and other countries have embraced the use of covert companies and bank accounts.
  • The mega-rich use complex offshore structures to own mansions, yachts, art masterpieces and other assets, gaining tax advantages and anonymity not available to average people.
  • Many of the world’s top’s banks – including UBS, Clariden and Deutsche Bank – have aggressively worked to provide their customers with secrecy-cloaked companies in the British Virgin Islands and other offshore hideaways.
  • A well-paid industry of accountants, middlemen and other operatives has helped offshore patrons shroud their identities and business interests, providing shelter in many cases to money laundering or other misconduct.
  • Ponzi schemers and other large-scale fraudsters routinely use offshore havens to pull off their shell games and move their ill-gotten gains."
The CBC was the ICIJ's Canadian partner, and stories began rolling out today with questions about Saskatchewan lawyer Tony Merchant and his wife, Liberal Senator Pana Merchant. The CBC reported that the prominent class action lawyer "moved nearly $2 million to secretive financial havens while he was locked in battle with the Canada Revenue Agency over his taxes." CBC's coverage includes a number of interactive web features and maps that demonstrate the extent of the practice in Canada.

Comparisons will inevitably be drawn to Wikileaks, but the ICIJ rollout so far appears to have gone smoothly and with great impact. It is certain to encourage other leakers and whistleblowers to share information in the future.

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