The release of the Paradise papers, a cache of over 16.8 million documents detailing companies and individuals who have avoided tax, has rocked the world.
The bulk of the data, which was obtained by German newspaper Süddeutsche Zeitung, has come from a trove of confidential records including emails, bank applications, court papers and other files from the huge offshore law firm, Appleby’s.
The documents were shared with the International Consortium of Investigative Journalists (ICIJ) and other media organisations and represent the inner workings of Appleby from the 1950s until 2016. The files also include documents from the firm’s corporate services division, which became independent in 2016 under the name Estera.
So who is Appleby’s?
Founded in Bermuda in 1898, Appleby’s is a prestigious, award-winning offshore law firm that rakes in revenues of $100 million per year annually.
The majority of its work takes place in North America and the firm has worked for residents of all 50 US states, and has offices across the world and states on its website ‘has offices in the key offshore jurisdictions of Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, the Isle of Man, Jersey, Mauritius, and the Seychelles, as well as a presence in the international financial centres of Hong Kong and Shanghai’ and the firm employs around 470 people globally.
A global institution, the firm is part of what is informally known to insiders as the ‘Offshore Magic Circle,’ a group of the world’s biggest offshore law firms.
Although not a tax adviser, the firm is a leader in the global business of setting up and managing offshore shell companies and bank accounts for clients who want to avoid taxes or cloak their finances in secrecy. They also help clients to establish trusts and advise corporations, as well as work on divorce settlements, draft wills and litigate for workplace accidents.
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Some of the firm’s clients include three of the big four accountancy firms, KPMG, EY and PricewaterhouseCoopers, as well as Uber, Apple, Nike and Glencore. In 2014, its top 20 clients included Citigroup, Bank of America, HSBC, Credit Suisse and Wells Fargo.
Internal Appleby records provide details of clients who entered the system unnoticed, including those suspected of corruption and between 2005 and 2015, more than a dozen internal and regulatory examinations of Appleby’s offices found flaws.
Appleby’s Cayman Islands office had more than 600 clients on its books whose records were labelled “non-compliant”, according to the ICIJ, meaning that there were no current IDs, contact information or other particulars needed to ensure the firm was not setting up shell companies for criminals or corrupt politicians.
In a 44-page training document that the then-director of compliance, Robert Woods, appears to have created in 2011, under a slide titled “Terrorist Financing Offences,” the notes read: “We have a current case where we are sitting on about 400K that is definitely tainted and it is not easy to deal with.”
In another case, Woods’ notes indicated, Appleby set up a trust for a client to buy property in London and accepted money on his behalf “without question.” Appleby later learned, the presentation acknowledged, that the trust was owned by a former Pakistani official who had been charged with embezzling public money and had “infiltrated allegedly corrupt funds into our business.”
“Some of the crap we accept is amazing totally amazing,” a notes said beneath a slide that listed the information Appleby employees needed to know about its clients.