Thread by @phdskat

What has the last decade of tax haven leaks revealed about Russian offshore wealth?

A comprehensive 🧵:

Before we begin, it must be said that Russian elites are not alone in hiding wealth offshore. Offshore wealth is a prevalent, global phenomenon, estimated in the magnitude of 10% of global GDP - per @annette_als @gabriel_zucman and N. Johannesen:

sciencedirect.com/science/articl…

But Russian offshore wealth does have particular features - in scale and nature.

For one, Russian elites hide significant larger proportions of their wealth offshore than large Western states.

sciencedirect.com/science/articl…

Russians also "go offshore" in distinct ways: They use Cyprus and the British Virgin Islands heavily to structure investments (more on that later). Famously Russian money flows into London property at massive scales - an acute problem now:

bbc.com/news/uk-politi…

But that's just the tip of the iceberg. The last decade has seen an explosion of "tax haven leaks" - waves of documents from whistleblowers and hacks showing the hitherto unknown features and proportions of Russian (and other) offshore wealth.

Let's see what they have revealed:

In 2013, the #OffshoreLeaks revealed widespread use of British Virgin Island shell companies to conceal investments among Russian elites close to Putin incl. directors of Gazprom and Oboronprom, the Russian defence company.

icij.org/investigations…

Famously, these leaks showed a BVI-based firm had set up shell companies linked to the alleged murder of Sergei Magnitsky, a whistleblower exposing corruption by Russian government officials.

icij.org/investigations…

The prevalence of the British Virgin Islands here is not random. As research by e.g. @javiergb_com, @fichtner_jan and co. has shown, Russian offshore investments typically flow through Cyprus and the BVI.

nature.com/articles/s4159…

In 2015, the #SwissLeaks spotlighted a large tax evasion scheme supported by HSBC in Switzerland, whose clients included 740 Russians holding more €1.8bn in the bank.

icij.org/investigations…

These clients included Vladimir Antonov, a Russian millionaire later convicted of fraud and embezzlement.

icij.org/investigations…

In 2016, the #PanamaPapers revealed an unprecedented scale of secretive offshore entities created by Mossack Fonseca, a corporate service provider in Panama.

icij.org/investigations…

The #PanamaPapers showed how offshore shell companies are used to dodge financial sanctions: Mossack Fonseca set up opaque structures for 30 sanctioned entities at the time, including Yuri Kovalchuk, Putin's "personal banker" and head of Bank Rossiya

theguardian.com/news/2016/apr/…

The records also showed secretive offshore structures via Switzerland helped funnel $1bn from state-controlled banks to fund yachts, ski resorts and weddings for Putin's inner circle.

theguardian.com/news/2016/apr/…

The leaks also showed how Putin's close friend, Sergei Roldugin - a cellist - also happened to own major stakes in large Russian firms. The leaks showed he "moved $2 billion through a web of offshore entities."

economist.com/international/…

Putin, by way, said Roldugin had merely used his money on "acquiring musical instruments from abroad and bringing them to Russia."

theguardian.com/news/2016/apr/…

There were many more stories of cronyism, private enrichment aided by secretive offshore companies.

"In almost every instance, the result is the same: money and power moves in the direction of the network, to companies and people allied to Putin."

icij.org/investigations…

This is not inconsequential - these secretive offshore funds are used for a variety of more or less nefarious purposes, including funding Russian-friendly political parties in Europe, as @EBHarrington notes

https://twitter.com/EBHarrington/status/1496947098444517380

euobserver.com/foreign/137631

Then came the #ParadisePapers in 2017, which documented client affairs of Appleby, a respected offshore legal service provider.

The leaks showed ties between US Secretary of Commerce Wilbur Ross and sanctioned Russian oligarchs.

icij.org/investigations…

The leaks also revealed massive Russian state investments in Facebook and Twitter, including via the state-owned VTB Bank (recently sanctioned again) and Alisher Usmanov:

icij.org/investigations…

The Paradise Papers also revealed Appleby helped Arkady Rotenberg, Russian billionaire and Putin friend, skirt US and EU sanctions by buying private jets through offshore companies.

sueddeutsche.de/projekte/artik…

The 2017 #PandoraPapers again centered Russian offshore wealth, including the secretive purchase of lavish Monaco property for Svetlana Krivonogikh, Putin's alleged lover, once more aided by opaque BVI offshore company:

theguardian.com/news/2021/oct/…

Moores Rowland, a BVI-linked advisory firm, was found using offshore companies and trust structures to conceal Russian elites' ownership of yachts and property, while allowing those same Putin allies to remain in control of their assets.

washingtonpost.com/world/interact…

Like earlier leaks, the documents also showed direct links to Western political parties, including a total of £1.8m donated to the UK Conservative party by the wife of a former Russian minister

bbc.com/news/uk-politi…

The question now is whether the world wants to keep relying on waves of leaks to provide transparency around offshore wealth and oligarch assets?

Yesterday's joint transatlantic statement provides optimism:

https://twitter.com/phdskat/status/1497814011823468545?s=20&t=rcj1JCbhvDjFghOPk6i5dw

Prior crises have fostered radical new political ideas, including significant global tax transparency measures, which make it more difficult to hide wealth in tax havens.

Whether this crisis offers a springboard for political change, remains to be seen.

tandfonline.com/doi/full/10.10…

*2021 Pandora Papers!
Not 2017. Brain fart there.