Britain faced fresh demands to end financial secrecy in its network of overseas territories after a new leak of millions of documents highlighted their use by major corporations and high-profile individuals to protect their wealth.
A leak of 13.4 million files dubbed the “Paradise Papers” has revealed potentially embarrassing business links between Donald Trump’s commerce secretary, Wilbur Ross, and Russian president Vladimir Putin’s family, and demonstrated that the overseas investment portfolio of Queen Elizabeth II operated through a tax haven.
The leak prompted a series of denials of wrongdoing by key players named in the papers. It also sparked accusations by campaigners that similar revelations 18 months ago had failed to lead to an overhaul of the global financial system.
Those leaks – dubbed the Panama Papers - led to the downfall of the prime ministers of Pakistan and Iceland but major changes to the international tax system foundered on disputes between nations.
A consortium of journalists working on the new leak, which includes reporters from the New York Times and the BBC, has promised days of revelations that will feature companies including Twitter, Facebook, Nike and Apple who have allegedly exploited global tax rules.
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The latest revelations, based on leaks from two offshore service providers, will make uncomfortable reading for many including the queen, Mr Ross and a senior adviser to Canada’s prime minister Justin Trudeau. Mr Ross on Monday described as “totally incorrect” claims that he had misled the US Congress after the leak exposed details of his interests in a company doing business with a Russian firm controlled by members of Mr Putin's inner circle.
The UK’s opposition leader, Jeremy Corbyn, suggested Queen Elizabeth should apologise if her estate had invested offshore to avoid tax. About £10 million (Dh48m) from the queen's private fund was paid into funds in the Cayman Islands and Bermuda between 2004 and 2005, according to reports.
A small part of the money was traced to a lender which has previously been criticised for exploiting poor customers. A spokesman for the estate said: "We operate a number of investments and a few of these are with overseas funds. All of our investments are fully audited and legitimate."
R K Sinha, one of India's richest members of parliament, was among several of the country's politicians named in the papers. He established two offshore companies in Malta and the British Virgin Islands, according to the Indian Express newspaper. He told reporters on Monday that he had taken a vow of silence for a week and could not comment.
Prime Minister Theresa May was urged to hold a public inquiry into tax evasion and the offshore industry after it emerged that the top five jurisdictions for hidden deals were all tax havens with links to Britain, according to one campaign group.
“There's already work that's been done to ensure that we see greater transparency in our dependencies and Britain’s overseas territories and we continue to work with them,” she told a London business conference. “We want people to pay the tax that is due.”
Mrs May’s predecessor, David Cameron, had pushed for the network of 17 territories – that include financial centres such as the Cayman Islands, the British Virgin Islands and Bermuda – to have public ownership registers to crack down on the anonymous use of shell companies.
But the UK government backtracked on that demand after the former colonial territories promised to share information with law enforcement but refused to make registers open to the public.
It claimed that the commitments of UK-linked tax havens put them “well ahead” of competitors such as Delaware in the United States.
More than 80 MPs had pushed for the UK to legislate to enforce public registers for overseas territories by 2020, but the attempt had to be abandoned after Mrs May called early elections.
“It’s clear again that the British network of overseas territories are hugely at play here,” said Simon Kirkland, a political adviser for development charity Christian Aid. “We have a large stake in the game and if the prime minister chooses to act that would do a huge amount of good.”
Germany welcomed the release of the documents for shedding light on the opaque world of tax planning. Its finance minister said it wanted to see the documents along with the police.
The company at the centre of the revelations, Bermuda-based offshore law firm Appleby, said it had found no evidence of wrongdoing in any of the published reports.