THE LEAK OF 11.5 million tax documents yesterday has put the topic of offshore banking back on the news agenda.
The records, from Panama-based law firm Mossack Fonseca, have revealed the hidden offshore dealings in the assets of around 140 political figures.
One finance expert told TheJournal.ie this leak may be “just the tip of the iceberg” when it comes to offshore financial activities and said the world’s wealthiest people need to start asking themselves: “When is enough enough?”
A number of Irish connections have also been uncovered by The Irish Times, which is a member of the International Consortium of Investigative Journalists (ICIJ). This organisation shared the records after they were obtained by German daily Sueddeutsche Zeitung.
We know now that some 322 companies, 36 clients and 17 beneficiaries have recorded links with Ireland.
The Drumcondra connection:
There are two companies, registered at addresses in Dublin’s Drumcondra, mentioned in the leaked files of the Panama-based law firm.
The first is Pegasus Trust, described by the Irish Times as “one of the busier Irish clients” of Mossack Fonseca.
The business offers services in relation to offshore locations and almost a third of the companies with Irish links in the leaked documents had been represented at one time by the firm.
The second Irish firm, with a different Drumcondra address, is called Intertrade Projects Consultants Ltd.
This company has acted as a sales agent for aerospace and defence conglomerates in the Philippines, India and elsewhere.
The Flannery connection:
Separately, it was revealed a £250,000 deposit in the name of a British Virgin Islands (BVI) company was used to support former Fine Gael strategist Frank Flannery’s purchase of a house in London.
Leaked documents include two letters:
- One, which sets out the terms of the proposed loan, but does not mention the BVI company.
- A second of the same date which states that the bank will rely on a third party security interest agreement ”to be provided by the trustees/directors of an offshore company domiciled in Jersey”.
Flannery told The Irish Times that he has never heard of the BVI company and was not aware of the existence of the security agreement in relation to his loan. He also said he had no recollection of the second letter.
What’s the significance of this leak?
Trinity College Professor of Finance Brian Lucey told TheJournal.ie that in the first instance, the leaked documents show that “very wealthy and well-connected people have been engaging in extremely complicated ways of making it difficult to find out who owns what”.
“This is only one company [Mossack Fonseca] in one country, though it’s a very large company and a very large country in terms of the global opaque business. You would want to wonder if this is the tip of the iceberg or if this is the iceberg – what more is there to see?”
Oxfam’s chief executive Jim Clarkin, speaking to RTÉ’s Morning Ireland earlier, also pointed out that there are “ordinary human beings in society that are impacted by this”.
Every single year, $150 billion of tax is lost in tax dodging across the world.
“There’s no doubt that this is morally wrong and it is robbing society of essential tax to pay for the services we need,” he said.
Speaking about Ireland’s current homelessness crisis, he said the “most vulnerable people in society”, who are depending on public services, are currently unable to access them, despite the vast wealth in the world.
What do the Irish connections mean?
In a global sense, they mean very little. Essentially, all countries are connected to this activity in some way.
“Thousands of Irish people over decades have been involved in setting up these companies, working with setting up blind offshore trusts and so on,” Lucey explained.
It beggars belief that at some stage, no one thought: “I wonder why these people are jumping through all these hoops”.
Though he said Ireland is not “particularly unequal”, it is, through its involvement in offshore activities, contributing to and facilitating the vast inequalities that exist across the world.
“We have to start thinking about the morality of what we do in and around the global financial system. While it might be perfectly legal, it might also be wrong and immoral,” he said.