A cache of 2.5 million files obtained by the International Consortium of Investigative Journalists (ICIJ), a network of journalists in more than 60 countries, reveals the darkest secrets of more than 120,000 offshore companies and trusts. Exposed in the leak are details of covert dealings with politicians, international con-artists and dubious off-shore businesses in more than 170 countries and territories.
Some of those involved in the schemes may seem obvious: Russian oligarchs, American, and more pointedly, Wall Street fraudsters, relatives of Third World despots, various billionaires, arms dealers and a “sham-director-fronted company that the European Union has labeled as a cog in Iran’s nuclear-development program.” But the leaked files also reveal involvement by seemingly less-obvious sources like American doctors and middle-class Greek villagers. ICIJ explains:
The leaked files provide facts and figures — cash transfers, incorporation dates, links between companies and individuals — that illustrate how offshore financial secrecy has spread aggressively around the globe, allowing the wealthy and the well-connected to dodge taxes and fueling corruption and economic woes in rich and poor nations alike.
The hoard of documents represents the biggest stockpile of inside information about the offshore system ever obtained by a media organization. The total size of the files, measured in gigabytes, is more than 160 times larger than the leak of U.S. State Department documents by Wikileaks in 2010.
Among the nearly 4,000 Americans involved, the ICIG reports, is Grammy-nominated songstress Denise Rich, whose ex-husband “was at the center of an American pardon scandal that erupted as President Bill Clinton left office.” ICIJ reports:
A Congressional investigation found that Rich, who raised millions of dollars for Democratic politicians, played a key role in the campaign that persuaded Clinton to pardon her ex-spouse, Marc Rich, an oil trader who had been wanted in the U.S. on tax evasion and racketeering charges.
Records obtained by ICIJ show she had $144 million in April 2006 in a trust in the Cook Islands, a chain of coral atolls and volcanic outcroppings nearly 7,000 miles from her home at the time in Manhattan.
The trust’s holdings included a yacht called the Lady Joy, where Rich often entertained celebrities and raised money for charity.
Rich, who gave up her U.S. citizenship in 2011 and now maintains citizenship in Austria, did not reply to questions about her offshore trust.
Another prominent American who also gave up his citizenship is a member of the Mellon dynasty, James R. Mellon. Patriarch Thomas Mellon started such famed companies as Gulf Oil and Mellon Bank.
James R. Mellon, ironically an author of books about Abraham Lincoln and his forebear, Thomas Mellon, allegedly “used four companies in the BVI and Lichtenstein to trade securities and transfer tens of millions of dollars among offshore bank accounts he controlled,” according to ICIJ. The report indicates that Mellon “often used third parties’ names as directors and shareholders of his companies rather than his own, a legal tool that owners of offshore entities often use to preserve anonymity.”
Mellon did, however, respond to the ICIJ, stating that he did in fact used to own “a whole bunch” of offshore companies, but stated that he has since disposed of them all. According to ICIJ, Mellon also said that he was advised by his lawyer to establish the offshore firms for “tax advantage” but maintained that he has “never broken the tax law.”
Hinting at former presidential candidate Mitt Romney, Mellon said, “I just heard of a presidential candidate who had a lot of money in the Cayman Islands.”
“Not everyone who owns offshores is a crook.”
The extensive report can be viewed in its entirety here.