Tax havens: squeaky bum time for those with accounts in the British Virgin Islands

vivatifosi

2 million emails and other documents relating to offshore accounts in the British Virgin Islands have been leaked according to the Guardian.

The leak - in data terms - is 100 times larger than that of Wikileaks and the embassy cables. The Guardian and The International Consortium of Investigative Journalists, along with other news groups around the world are working on the data and revealing some of the information found.

Those named in the article include Scott Young, currently in jail in this country for concealing assets from his wife; Jean-Jacques Auger, Hollande's 2012 campaign co-treasurer; the President of Azerbaijan and the oldest daughter of Immelda and Ferdinand Marcos.

Ouch...

http://www.guardian.co.uk/uk/2013/apr/03/offshore-secrets-offshore-tax-haven

Ionkontrol

Sieze the assets and distribute them to third world.

antrobus

vivatifosi wrote: »

.. Jean-Jacques Augier, Hollande's 2012 campaign co-treasurer; ..

Double ouch for Hollande. Yet another of his troop mired in scandal.

kabayiri

We are frequently told in here and in DT that the storage of assets in these locations is completely valid and above board. This would suggest the majority of people have nothing to hide.

I would suggest these wealthy secretive individuals and corporations get themselves down to InfoSecurity Europe , a timely conference later this month, and head over to stands like Egress. It might cost them a bit of money but they might also avoid embarassment from journos.

Generali

kabayiri wrote: »

We are frequently told in here and in DT that the storage of assets in these locations is completely valid and above board. This would suggest the majority of people have nothing to hide.

I would suggest these wealthy secretive individuals and corporations get themselves down to InfoSecurity Europe , a timely conference later this month, and head over to stands like Egress. It might cost them a bit of money but they might also avoid embarassment from journos.

Lots of money there will be dodgy, lots won't.

There are plenty of legitimate reasons to hold money in places like the BVI for tax avoidance. People may not like it but it's perfectly legitimate. There are also reasons of tax evasion to hold money in places like that. This is illegitimate and if they get busted then I have no sympathy.

That they've been sold down the river by someone who is presumably an associate of some sort is too bad really: it's a bit like complaining that the bloke you robbed the bank with later grassed you up. It's unfortunate but you shouldn't have been in the bank with a shotgun if you wanted to avoid prison.

The hedge fund I worked for kept the funds in the Caymans, mostly because it was simpler and cheaper that way. As the management and safekeeping of the assets was done in London and Ireland there was no question of clients using us to evade tax. We even used to report client P&L direct to the taxman in some cases!

michaels

Slightly OT but journo's accessing stolen elctronic data in this country is not only a criminal offence but also no doubt someting that the Leevson enquiry code of conduct would also prohibit and yet in cases like this most would argue that it is a good thing. To me this supports the case for press freedom and transparency but the UK is moving sharply in the European direction of allowing those with the means to muzzle the press.

kabayiri

Generali wrote: »

...
The hedge fund I worked for kept the funds in the Caymans, mostly because it was simpler and cheaper that way. As the management and safekeeping of the assets was done in London and Ireland there was no question of clients using us to evade tax. We even used to report client P&L direct to the taxman in some cases!

Clearly, your company highlights an example of those with nothing to fear. I doubt the journos would be sniffing around this sort of firm. A couple of calls would reveal nothing to reward digging.

But we are talking about trillions of dollars under stealthy management here. The potential attractions for those in the drug trade, or maffeeeoso types, are obvious. Just how much dodgy money is held in tax havens is completely unknown.

That's worrying in itself.

Quite a few of us on here must know of small time crooks from their own community / home towns. I know I do. They love dealing in cash, because of it's difficulty to trace. Disguising your transactions - its the same thing.

grizzly1911

Generali wrote: »

The hedge fund I worked for kept the funds in the Caymans, mostly because it was simpler and cheaper that way. As the management and safekeeping of the assets was done in London and Ireland there was no question of clients using us to evade tax. We even used to report client P&L direct to the taxman in some cases!

How do the likes of the BVI/Cayman ensure there banking system is safe and that depositors aren't likely to get a haircut like Cyprus. Are they really just some form of vault/safe deposit facility who charge to keep it there?

How do the depositors make it work for them or are they simply reaping in so much wonga they don't care about things like inflation and exchange losses?

princeofpounds

Quite amusingly Guido Fawkes points out that the Guardian themselves (or at least part of their corporate structure) also has a BVI business for undisclosed purposes.

Having had a look through the names that are coming out, there is clearly plenty of dodgy money there.

Most amusingly, the Guardian article links some of the assets to Scot Young, he of the 'missing millions' divorce case.

http://www.dailymail.co.uk/femail/article-2265237/Scot-Young-Bankrupt-divorcee-jailed-hiding-millions-reveals-plans-ultimate-revenge.html

chewmylegoff

Generali wrote: »

Lots of money there will be dodgy, lots won't.

There are plenty of legitimate reasons to hold money in places like the BVI for tax avoidance. People may not like it but it's perfectly legitimate. There are also reasons of tax evasion to hold money in places like that. This is illegitimate and if they get busted then I have no sympathy.

That they've been sold down the river by someone who is presumably an associate of some sort is too bad really: it's a bit like complaining that the bloke you robbed the bank with later grassed you up. It's unfortunate but you shouldn't have been in the bank with a shotgun if you wanted to avoid prison.

The hedge fund I worked for kept the funds in the Caymans, mostly because it was simpler and cheaper that way. As the management and safekeeping of the assets was done in London and Ireland there was no question of clients using us to evade tax. We even used to report client P&L direct to the taxman in some cases!

Presumably though, although the money was initially paid by investors to an account in the caymans, controlled by your custodian, the money was pretty rapidly moved to an prime brokerage account in the uk and under the control of an fsa authorised bank. Most hedge funds don't have large standing balances in tax havens as far as I aware? The caymans structure is more about ensuring that (I) the funds profits are not subject to uk corporation tax; and (II) the fund manager's cayman entity can received the first cut of management and performance fees and then pay it as an offshore bonus to all the non-Dom hedge fund principles...

Generali

grizzly1911 wrote: »

How do the likes of the BVI/Cayman ensure there banking system is safe and that depositors aren't likely to get a haircut like Cyprus. Are they really just some form of vault/safe deposit facility who charge to keep it there?

How do the depositors make it work for them or are they simply reaping in so much wonga they don't care about things like inflation and exchange losses?

Simply, they don't. Places like the BVI can't offer real guarantees. That's why people use big international banks in these places. Only locals use the local banks.

The way our fund worked was that it was effectively (and over simplistically) split into 2 parts:

- The management company
- The fund

So the fund held the clients' assets on their behalf. The fund was a company that was based in the CI. Then, in turn, that CI company ha a bank account in London which looked after the fund's assets. There was no CI bank account.

If the London bank had gone pfft then our investors would have lost much of the money held in cash I would imagine however the shares and derivatives that made up the bulk of their assets were held in 'safekeeping' which is kinda like an electronic version of putting share certificates in a safe deposit box.

The management company then provided fund management services to the fund. That company was based and incorporated in London with a London bank account. That basically ran like any other business with working capital held in the bank, costs (office space, IT, wages, NI, PAYE, Corporation Tax) and revenues (the management fees that we charged the fund for managing investments).

The management company's bank did go bust but didn't lose any money because the British Government bailed it out. If the Government hasn't bailed it out then the clients' funds would have been fine but the management company would have been insolvent and unable to provide fund management services to the fund any more.