Appleby leak not seen as next Panama Papers

A massive investigation into documents leaked from the multinational law firm Appleby has once again positioned an international microscope over the confidential workings of offshore finance, but the repercussions in the Virgin Islands and abroad are not expected to be as serious as the fallout from last year’s Panama Papers.

Dubbed the “Paradise Papers,” the reporting project unveiled Sunday will doubtlessly increase public scrutiny of an industry that is responsible for 60 percent of government revenue in the VI.

Fanning populist ire towards a system that opponents say enriches the wealthy at the expense of the poor, politicians from across the globe have already criticised offshore finance’s methods and the affluent clientele who utlise them.

However, Appleby and other offshore defenders have insisted that the leaks show no evidence of wrongdoing, and they strongly criticised journalists for reporting on what they described as stolen documents.

The debate echoes the responses to previous offshore investigations, though the Paradise Papers’ actual impact on the VI’s financial services industry remains to be seen.

Neil Smith, the executive director of government’s Office of International Business (Regulations), did not express alarm.

“I am not particularly concerned about the issue, but do expect that although the BVI is not central to this event that the size of the BVI [company] registry and the vast amount of BVI companies out that [the investigation] will probably result in a BVI [company] being mentioned somewhere,” Mr. Smith wrote in an e-mail to the Beacon.

The Ministry of Finance official stressed that the territory’s financial industry will continue to follow international regulations.

“The BVI maintains a strong regulatory ethos, and is always willing accept assistance and to assist in ensuring that BVI companies are utilised within the confines of the law, while ensuring that the rights and safeguards of its clients are upheld,” wrote Mr. Smith, a former financial secretary.

Officials from Appleby’s office in the VI could not immediately be reached for comment.

ICIJ leak

The German newspaper Süddeutsche Zeitung obtained 13.4 million documents — including e-mails, client records, bank applications, and court papers — and partnered with the Washington DC-based International Consortium of Investigative Journalists and more than 90 other media outlets from around the world to explore the files.

Those documents linked some notable names and companies to the offshore world, including Queen Elizabeth II, United States Commerce Secretary Wilbur Ross, Nike, Apple and Uber.

The files also suggest that Appleby didn’t always conduct proper compliance procedures, according to the ICIJ.

“Between 2005 and 2015, more than a dozen internal and regulatory examinations of Appleby’s offices in the Isle of Man, the Cayman Islands, the British Virgin Islands, Bermuda and London found flaws that could have involved Appleby in litigation and had financial and reputation implications,” an ICIJ article stated, though it stopped short of alleging that the firm had broken any laws.

After the release on Sunday, Appleby was quick to hit back.

“The journalists do not allege, nor could they, that Appleby has done anything unlawful,” the company stated on its website. “There is no wrongdoing. It is a patchwork quilt of unrelated allegations with a clear political agenda and movement against offshore.”

Going forward

After the ICIJ released its previous offshore project, the Panama Papers, in April 2016, VI company incorporation numbers — considered a bellwether metric for the territory’s financial services industry — took a dip that worried many stakeholders here.

But some industry professionals have shrugged that off by pointing to a longer-term downward trend that began before the Panama Papers’ publication.

Unlike that investigation, early ICIJ releases suggest that the VI won’t be such a central player in the Paradise Papers data.

The documents also have been painted as much less damaging than the Panama Papers, which led to criminal probes around the globe.

Pascal Saint-Amans, of the Paris-based Organisation for Economic Co-operation and Development, told the Financial Times that the Appleby documents are “quite different from the Panama Papers.”

Mr. Saint-Amans, who directs the OECD’s Centre for Tax Policy and Administration, added that the leaked documents appear to show transactions that were “mostly, if not totally, legal,” the newspaper reported, paraphrasing him.

See full coverage in the Nov. 9, 2017 edition.

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