THE biggest data leak in history that revealed details of how the rich hide their wealth from the taxman through a Panamanian law firm is just “the tip of the iceberg”, according to the SNP’s Treasury spokesperson.
And Roger Mullin told The National the UK had to take the lead when it came to “tax evasion and avoidance”, following the leak from the firm Mossack Fonseca.
He said: “The Prime Minister came to office with a promise to crack down on tax evasion and the aggressive avoidance of tax, but so far we have had precious little in the way of concrete action.”
“The millions of documents leaked from Mossack Fonseca revealing details of how the rich hide their wealth from the taxman is undoubtedly one of the largest data breaches ever – but given that Mossack Fonseca is the world’s fourth largest provider of offshore services, this leak is just the tip of the iceberg when it comes to rooting out tax evasion and avoidance.”
More than 11 million documents dating back over 40 years were leaked to German newspaper Suddeutsche Zeitung and then to the International Consortium of Investigative Journalists (ICIJ) which shared them with 107 media organisations.
The data included emails, financial spreadsheets, passports and corporate records revealing the secret owners of bank accounts and companies in 21 offshore jurisdictions, including Nevada, Hong Kong and the British Virgin Islands.
The ICIJ had a team of journalists working for more than a year in 25 languages in almost 80 countries to unravel the 2.6 terabytes of data, which reveal the offshore holdings of 140 politicians and public officials around the world – including 12 current and former world leaders. Among them are the prime ministers of Iceland and Pakistan, the president of Ukraine, and the king of Saudi Arabia.
David Cameron’s father Ian was said to be among those included – along with six peers, three ex-Tory MPs and political party donors.
Downing Street said it was a “private matter” whether the Cameron family still had funds in offshore investments and insisted the PM was in the vanguard of ongoing efforts to increase the transparency of tax arrangements.
However, opposition parties accused Cameron of failing to follow through with promises to force reform in UK crown dependencies and overseas territories that act as tax havens. They called for a full independent investigation.
HM Revenue and Customs has now approached the ICIJ for access to the data and said it would “act on it swiftly and appropriately” if there was any wrongdoing.
It is not illegal to use offshore companies, but the disclosures have intensified calls for international reform of the way tax havens are able to operate amid claims of large-scale money laundering.
Cameron has been a vocal advocate of reform, and legislation forcing British companies to disclose who owns and benefits from their activities comes into force in June.
He faces pressure to secure progress at an international summit on tackling corruption which he will chair in London next month, and where the use of offshore tax havens to escape scrutiny will be high on the agenda.
Asked if he was prepared to legislate if there was continued inaction, the PM’s official spokeswoman said: “He rules nothing out. The work with them continues.”
Stewart Hosie, SNP deputy leader, said: “David Cameron must act now to crack down on tax evasion and aggressive tax avoidance – as he has previously promised to do – starting with immediate transparency of company beneficiaries… Currently, true ownership of companies registered in British Overseas Territories is shrouded in secrecy due to the use of nominated directors and shareholders making it impossible for tax authorities to find out who really owns and benefits from the company.
“This has to stop and the Tories are running out of excuses as to why they have not done more to stop this dubious practice.”
Ian Cameron’s use of the firm to help shield investments from UK tax as he built up a significant legacy – part of which was inherited by the Prime Minister – had been previously disclosed but further adds to the pressure on Cameron.
There is no suggestion that this avoidance arrangement or others exposed by the leak were anything but entirely legal or that Mr Cameron’s family did not pay the UK tax due on any repatriated assets.
Mossack Fonseca said it had operated “beyond reproach” for 40 years and had never been charged with criminal wrong-doing.
The ICIJ named Tory peer Baroness Sharples and former Tory minister Michael Mates as being included within the leaked documents.
Comment: Transparency on who owns companies would be a start to this complex issue
by Roger Mullin, SNP Treasury spokesperson
I FIRST became aware of concerns about multinationals paying their fair share of UK taxes back in the early 1970s, when I briefly worked for the multinational IBM. Tax evasion and avoidance has not been going on for just one or two years; governments have not been able to resolve this issue satisfactorily for decades, which emphasises its complexity. The issue has been around for a long time, regardless of whether this country had a Labour or Tory Government and regardless of which parties formed governments in many other countries.
Back in the 1970s though, it was never envisaged that huge multinational corporations could quickly arise as a result of operating in the world of the internet. The tax system, which has parts dating from as far back as the 1920s or thereabouts, is unable to deal with some of the types of international corporations that there are today.
There are also wide ethical questions that arise from the use of tax havens and the issue is not simply about how international corporations try to evade UK tax. There are considerable concerns for countries in the developing world. Some 30 per cent of Africa’s wealth is held offshore and research by the International Monetary Fund (IMF) found that developing countries lose about $200 billion a year to tax avoidance – which is more than they receive in all forms of foreign aid.
The SNP has long called for action to crack down on tax evasion and aggressive tax avoidance – and the UK Government can start by immediately requiring companies registered in British Overseas Territories, such as the Cayman Islands and the British Virgin Islands, to be completely transparent about who owns and is benefiting from that company.
The wealthiest in society should pay their fair share and should not be able to avoid paying tax on huge parts of their earnings, whilst those on middle and low incomes work hard to pay their taxes in full.
At the moment, the identity of an individual that owns a company can be shrouded in secrecy due to the use of nominated directors and shareholders, making it impossible for tax authorities to determine who is really benefiting from that company.
When David Cameron hosts his anti-corruption summit in May, all eyes will be on him to outline the steps he will take to ensure that the UK is at the forefront of international efforts to counter the tax avoidance practices of the many, and not just the few.
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here