Offshore

Panama Papers 2.0? Offshore Law Firm Facing Potential Scandal Pleads Innocence

Josh O'Neill, Assistant Editor, 25 October 2017

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The news comes less than 18 months after millions of leaked files from the world's fourth-largest offshore law firm shone a light on how the ultra-rich exploited tax regimes to guard their wealth, sending shockwaves through the offshore sector.

Appleby has defended itself against claims of malpractice from investigative journalists who are reportedly set to make public computer records held by the offshore law firm tied to some of the world’s wealthiest people.

The firm said it had received enquiries from the International Consortium of Investigative Journalists (ICIJ) – the network that helped break the Panama Papers scandal – and “a number of media organisations” stemming from documents involving “allegations made against our business and the business conducted by some of our clients”. (See an article on the legacy of the Panama leaks, here and here.)

Ahead of the documents’ publication, which is understood to be imminent, Appleby said it had “thoroughly and vigorously investigated the allegations” and found no evidence of wrongdoing in-house or among its clients. 

“We refute any allegations which may suggest otherwise and we would be happy to cooperate fully with any legitimate and authorised investigation of the allegations by the appropriate and relevant authorities,” Appleby said yesterday in a statement on its website. 

Appleby, based in Bermuda but with offices in multiple offshore jurisdictions, went on to say it had reviewed its cyber-security and data arrangements in light of a “data security incident” last year, which led to “some of our data being compromised”. There is a chance that the documents journalists are referring to were obtained on the back of this breach, and Appleby has said it is “disappointed that the media may choose to use information which could have emanated from material obtained illegally”.

Depending on the scale of the leak and the gravity of the documents’ contents, the industry could witness something akin to last year’s Panama Papers saga, when more than 11 million leaked files from Mossack Fonseca, the offshore law firm, shone a bright light on how the ultra-rich exploited offshore tax regimes to guard their wealth. The saga also raised controversy, once again, about the proper boundaries between legitimate privacy and illicit secrecy, at a time when governments are demanding dlsclosure of beneficial ownership of trusts, companies and other structures. (A conference was held this week by this publication asking whether respect for legitimate privacy is under threat, and what to do about it.)

Appleby said journalists’ allegations were “unfounded and based on a lack of understanding of the legitimate and lawful structures used in the offshore sector”.

But the ICIJ acknowledged the legitimacy of the offshore sector in a statement on its website.

“There are legitimate uses for offshore companies and trusts. We do not intend to suggest or imply that any people, companies or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly,” the organisation, which is headquartered in Washington DC, said. 

According to Appleby's website, it advises global public and private companies, financial institutions and high net worth individuals.

A profile on Chambers and Partners says its clients include financial institutions, FTSE 100 and Fortune 500 companies.

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