Almost 2,000 British middlemen helped to create a network of offshore companies and move billions of pounds secretly around the world, according to the Panama papers.
Lawyers, accountants, banks and company formation agents based in Britain were involved in setting up 32,000 of the 200,000 offshore companies incorporated by Mossack Fonseca, the Panamanian law firm.
Britain provided the second-highest number of “enablers” to Mossack Fonseca clients, beaten only by Hong Kong, according to the International Consortium of Investigative Journalists.
“London is the epicentre of so much of the sleaze that happens in the world,” said Nicholas Shaxson, a tax expert.
A Times analysis of land registry data separately shows that thousands of offshore companies that owned British properties over a 16-year period gave UK addresses at major City law firms including Clifford Chance, Farrer & Co and Withers.
The findings cast a spotlight on advisers based in Britain who set up, administer or provide services to offshore companies. Owning property offshore is not illegal but can offer tax advantages. The practice also makes it more difficult to establish the owner because only the company’s name appears on publicly available documents.
A report last year by Transparency International said that British property had become a “safe haven for corrupt capital stolen from around the world”. It found that property worth £180 million had been placed under criminal investigation since 2004, with offshore vehicles used in more than three quarters of cases. There is no suggestion that any firms named by The Times acted illegally.
One London-based firm, Michael Conn Goldsobel, acts as solicitor for Wallace Properties Ltd, a Mauritian company that recorded interests in more than 2,000 UK properties. Howard Goldsobel, a partner, said that the company was UK tax resident and was liable to and paid “substantial UK corporation tax on its profits”.
Stephenson Harwood, an international firm headquartered in London, is linked through its address to 1,241 properties owned by 622 offshore companies, according to the data. These include hundreds of companies created to purchase one apartment block in Dolphin Square, central London. Overall, 655 offshore companies used the addresses of the top 20 UK law firms, the data found.
These include Eversheds, the London law firm whose address was used by two companies belonging to Khalifa bin Zayed Al Nahyan, president of the United Arab Emirates, who holds a £1.2 billion property portfolio through Mossack Fonseca. Eversheds declined to comment.
Clifford Chance is linked to 108 properties in the land registry data while Charles Russell Speechlys, which has represented Arkady Rotenberg, the Russian oligarch, is connected to hundreds of properties.
The majority of the offshore companies in the land registry database, which covers offshore purchases between 1999 and 2015, did not provide British addresses, meaning that the number of domestic law firms involved is likely to be much higher.
In a new report published today, Transparency International UK called for punitive sanctions against “professional enablers” who facilitated money laundering. The document said: “In the UK these enablers are typically lawyers, accountants and company-formation agents known as trust and company service providers. Money laundering is also facilitated by the availability of high-end investment and spending opportunities, which range from property to private education.”
Robert Palmer of the campaign group Global Witness, said that Mossack Fonseca was a “glorified paper-pusher” behind whom lay an array of banks and law firms organising the movement and concealment of money.
He added: “London is probably the global money-laundering capital — you have huge sums swirling through London property and an army of ‘pinstripe professionals’ who enable that.”
Farrer & Co said that the firm carried out due diligence before acting for clients, including “complying with the requirements of the Law Society and anti-money laundering rules” as well as additional checks.
Charles Russell Speechlys said that its work could involve “advising clients on how best to manage their personal capital and assets and plan for the future”. The firm said that it ensured that its advice “adheres strictly to legal requirements at all times”.
Withers said that it carried out detailed anti-money laundering checks on all clients. “Proper compliance with these obligations performs an important role in preventing money laundering and criminality in London’s property market,” a spokesman added.
Clifford Chance and Stephenson Harwood declined to comment.
The Law Society said that it provided training and advice on anti-money laundering which was approved by the Treasury and that it did not believe that there was widespread malpractice in the legal profession.
) registered with offshore companies (BVI, Costa Rica, the Isle of Man, and Guernsey). There must be a reason to go to these lengths, but is it just secrecy or nefarious? Who knows.
