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Billionaires, Olympian and porn king among Canadians named in massive new leak exposing offshore accounts and secret tax havens of the global elite


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Billionaires, Olympian and porn king among Canadians named in massive new leak exposing offshore accounts and secret tax havens of the global elite

A massive new leak of offshore financial records has exposed thousands of secretive shell companies used by the global elite — including world leaders, CEOs and criminals — to move trillions of dollars into tax havens with impunity.

Nearly 12 million documents leaked to the Washington D.C.-based International Consortium of Investigative Journalists (ICIJ) were shared with more than 600 reporters in 117 countries, including journalists at the Toronto Star and CBC in Canada.

It marks the biggest journalistic collaboration in history and pulls back the curtain on the shadowy world of offshore tax havens where secret assets, covert deals and hidden fortunes siphon off hundreds of billions of dollars in government tax revenue that could otherwise be spent for the public good.

Among the global cast of prominent businesspeople, celebrities, fugitives, judges and tax officials unmasked in the leak are hundreds of Canadians, including the co-founder of one of the world’s largest porn companies, a billionaire fashion mogul, the country’s second richest man and a former figure skating world champion.

The secret documents expose offshore dealings of 35 former and current world leaders, including the King of Jordan, the presidents of Ukraine and Kenya and former British Prime Minister Tony Blair, along with more than 330 politicians and public figures and more than 130 billionaires.

The leak also reveals Canada’s status as an international laggard when it comes to investigating and prosecuting those who exploit offshore secrecy to pay bribes, evade taxes and launder the proceeds of crime.

The Canada Revenue Agency has calculated that as much as $3 billion in tax revenue is lost annually to offshore accounts held by wealthy Canadians. Add to that as much as $11.4 billion in tax lost to corporations’ use of offshore subsidiaries, and tax havens cost Canadians almost $15 billion each year.

“That’s more than enough to have free tuition at all the universities and colleges across Canada. It’s more than enough for a national childcare program,” said Toby Sanger, executive director of Canadians for Tax Fairness.

Globally, at least $11.3 trillion (U.S.) is held offshore, according to a 2020 study by the Paris-based Organization for Economic Cooperation and Development (OECD).

The leak — dubbed the Pandora Papers — builds on the 2016 Panama Papers investigation, which shocked the world with leaked details of how corrupt politicians can steal from their people, sophisticated criminals can stash their ill-gotten gains and wealthy businesspeople, with highly paid help, can find legal ways to avoid paying a penny in tax.

Establishing a corporation in an offshore tax haven is legal. And there are justifiable reasons for doing so, especially if the owners have a presence in the country and conduct business there.

But tax havens pose a fairness issue, as their complex structures require the services of specialized accountants and lawyers, rendering the domain — and its tax benefits — accessible only to the richest people and largest corporations, said Sanger.

“The biggest companies have done very well during the pandemic and made it hard for mainstreet businesses to compete. And part of the reason why is they take big advantage of the tax havens,” he said. “That also applies to individuals. We’ve had vastly increasing inequality at the top end and that’s connected to the use of tax havens.”

The booming offshore industry has also come under intensifying fire from financial experts for providing corporate anonymity that can undermine the public interest.

As former U.S. President Barack Obama said at the time of the Panama Papers leak, “The problem is that a lot of this stuff is legal, not illegal.”

“We shouldn’t make it legal to engage in transactions just to avoid taxes,” rather we should embrace “the basic principle of making sure everyone pays their fair share,” he said.

Sanger adds that when you cut through the financial jargon, leaks of offshore documents present an ethical question, not a legal one.

“These things might be considered legal, but I think most Canadians would say they’re immoral. It’s unfair that people can avoid paying taxes in such ways,” he said.

Over the next several days, the Star will be reporting on some of the players who inhabit this offshore world, ranging from a convicted fraudster to an alleged arms dealer to an accountant who secretly managed the growth of a Middle Eastern king’s luxury real estate portfolio through offshore accounts.

In some cases, records reviewed by the Star appear to show breaches of offshore transparency laws that were created after publication of the Panama Papers.

The motivations for establishing companies in secret offshore havens are often not transparent and the use of offshore tax havens often doesn’t breach the letter of any specific law.

Proving illegality — which requires a law preventing the conduct, enforcement and successful prosecution — remains treacherous as complex pieces of evidence lie sprinkled across borders, jurisdictions with different laws and corporate registries that were built to keep secrets.

“In this area, the law is so squishy and there are so few experts who are qualified to make a determination about what’s legal, it’s almost as if you’re going into confession and if you pay enough money for the indulgences you can make any sin acceptable,” says James Henry, a leading American economist and attorney who specializes in tax issues including the impacts of tax havens.

“The difference between legal and illegal is in the eyes of the wishful beholder.”

What the newly leaked records clearly reveal is the voracious demand for corporate anonymity among the world’s wealthy, and the armada of international lawyers and accountants meeting that demand by making companies — and their true owners — invisible.

David Tassillo

Bogus corporate directors and shareholders play an important role in obscuring the identities of the real owners of offshore wealth.

So-called nominee directors are people paid a small fee to represent companies on paper in place of their actual owners. They are, essentially, signatures for sale.

One offshore law firm whose documents are contained in the leak says using nominee directors helps to, “preserve privacy by avoiding the identity of the ultimate principal … being publicly accessible.”

This is legal.

David Tassillo, who co-owns Pornhub, one of the world’s largest pornography websites, utilized nominee directors and shareholders, cloaking his identity in several tax haven corporations, the documents show.

The co-owner of Mindgeek, corporate parent of Pornhub, has been accused of profiting from videos depicting sexual assaults, rape, revenge porn and nonconsensual images on one of the most popular websites on the internet.

The new leak reveals Tassillo’s name on two companies registered in Delaware — considered a domestic tax haven in the U.S. — as well as tropical tax havens Anguilla and the British Virgin Islands.

In all four cases, the records show he purchased nominee directors and shareholders.

He is the sole beneficial owner of Delaware-registered Appscrutiny LLC and Appiation Management LLC, the records show. In both cases, he paid a corporate registration firm about $2,500 (US) including fees for “nominee directors” and “nominee shareholders.”

The two offshore tax haven companies Tassillo registered in the documents are Singleron Ltd., registered in Anguilla in October 2017, and a British Virgin Islands company called Teckkix in June 2017.

In a written statement to the Star, Tassillo said the companies were created as part of a pilot program with a U.S. firm he did not name that was intended to use the company’s proprietary bot detection technology — software that identifies and eliminates fake online accounts.

“To support the business, we established companies in Delaware, like many Fortune 500 companies, as well as Anguilla and the British Virgin Islands,” the statement reads.

It says the project, which concluded in 2018, earned $100,000 which went to a Delaware company. All taxes were paid in full, the statement says, “and every facet of the business, including tax obligations, was handled in accordance with the law.”

The statement did not respond to questions about why Tassillo chose to register the companies in tax havens or why he used nominee shareholders and directors.

According to U.S. expert James Henry, the use of nominee directors is often “about hiding your activities from journalists and the government.”

In June, 34 women filed a U.S. lawsuit against MindGeek, Tassillo and other company executives, alleging the company is a “classic criminal enterprise carried out through wide-ranging criminal activities” including human trafficking and child pornography.”

The lawsuit alleges MindGeek’s owners have developed a network of “hundreds of sham shell companies scattered throughout the world … This shell game existed exclusively to implement and mask the enterprise’s criminal schemes, evade taxes, launder money, and insulate enterprise members from culpability.”

The allegations, which remain before the courts and have not been proven, are denied by Pornhub.

“The allegations … that Pornhub is a criminal enterprise that traffics women and is run like ‘The Sopranos’ are utterly absurd, completely reckless and categorically false,” reads a statement from the company responding to the lawsuit. “Pornhub takes seriously every complaint regarding the abuse of our platform.”

A Pornhub spokesperson who asked not to be named said any connection between offshore shell company allegations in the class action suit and those appearing in the new leaked documents is false and inaccurate.

Tassillo’s written statement says the offshore structure identified by the Star “was the first and only I have ever set up on behalf of MindGeek, and the transactions and structure were entirely appropriate.”

Elvis Stojko

The karate-chopping figure skater won hearts with his edgy and gritty Olympic podium performances, but the prize and endorsement money from his success wasn’t bad, either.

The leaked files show that in 2007 Stojko transferred Canadian assets worth up to $6.5 million into an offshore trust in Belize.

Stojko told Pandora Papers partner the CBC this was done on the advice of his longtime lawyer and he was only vaguely aware of what was transpiring.

Tax experts told the CBC that it’s quite likely such a transfer of wealth to a tax haven was legal and had no tax consequences for Stojko.

Even so, Stojko’s Canadian lawyer emphasized that the skater’s name should not be disclosed to anyone, for any reason.

“Kindly keep these records in safekeeping with your records and in complete discretion and confidence, not open to any public inspection or, indeed, any inspection whatsoever, except by the insured, Mr. Stojko,” wrote lawyer Anthony Malcom.

“From a young age, I made significant personal and physical sacrifices to represent Canada,” Stojko told the CBC. “Nearing a breakdown and filled with self-doubt, I moved to Mexico to look after myself and try to heal.”

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“Some years later, when my longtime lawyer recommended that I set up a trust … I did not question his advice, and I trusted him to act in a manner which was both in my best interests and in compliance with the law,” Stojko wrote.

The trust was closed in 2012.

Joseph Tsai

In some cases, the leaked records reveal businesspeople using offshore companies to conduct hidden transactions behind very high-profile companies.

Joseph Tsai — described by Forbes as Canada’s second wealthiest person — has become a prominent figure in the business world, especially after his recent purchases of the NBA’s Brooklyn Nets and a $157-million Manhattan penthouse.

The Taiwanese-Canadian’s estimated $14.5-billion net worth is mostly based on his stake in Alibaba Group, the Chinese e-commerce giant.

The leaked records detail control of a network of offshore firms by Tsai, who is considered Alibaba co-founder Jack Ma’s right-hand man.

Tsai’s name shows up as director or shareholder of at least a dozen companies registered in offshore tax havens including the British Virgin Islands, the Cayman Islands and Bahamas.

While Tsai is the second-largest shareholder of Alibaba, the Canadian citizen is not allowed to make a direct investment in the Chinese firm as China restricts direct foreign investment in tech, media and other sectors. Instead, he is able to hold Alibaba shares in its subsidiary firms incorporated in the tax havens, said Doris Fischer, chair of China business and economics at the University of Würzburg in Germany.

Alibaba is among many Chinese businesses that have set up holding companies in tax havens through a corporate structure known as “variable interest entities (VIE)” which opens a back door for foreigners to invest in Chinese companies.

The VIE structure falls into a legal grey area in China.

Fischer, who reviewed the documents at the Star’s request, said they provide new insights into the significant role Tsai has played in building the complex offshore business structure underpinning Alibaba.

“It’s quite obvious he was using these constructions and using these opportunities that the tax havens offered for doing this type of task that he was doing for Alibaba, IPOs and so on,” Fischer said.

Among those companies are MFG Limited which was incorporated in the British Virgin Islands in 1999 — the same year as the Alibaba Group. Corporate ledger documents detail how Tsai used MFG to hold millions of Alibaba shares which moved through a network of offshore firms and individuals connected to him.

On Dec. 15, 2003, for example, Tsai transferred more than three million Alibaba shares from MFG Limited as a “gift” to another BVI-based company called PMH Holding, the leaked records show.

Two years later, Tsai would be named sole director of PMH.

Five years after that, in 2010, MFG purchased nearly the same number of shares from PMH.

While the purpose behind shuffling assets between the two offshore companies is unclear, millions of shares issued by MFG for free could have been used to compensate those who worked for the company, including Tsai himself, said Craig Geoffrey, a professor of finance at the University of Toronto who reviewed the records. Normally shares are issued in exchange for cash, he added.

Tsai did not respond to questions about the purpose of his offshore portfolio of companies and the movement of wealth between them.

Lawrence Stroll

Lawrence Stroll, a Canadian billionaire, fashion industry mogul and part-owner of the Aston Martin Formula 1 Team featured in a recent Netflix series, appears in the leaked documents as a shareholder in Superwit Profits Limited.

Stroll shares the BVI-based firm with a roster of fellow ultra-wealthy businesspeople, including Hong Kong fashion billionaire Silas Chou, Hong Kong fashion designer David Tang and French-born billionaire investor Nicolas Berggruen.

Jonathan Dudman, personal financial adviser to Stroll, responded to questions from the Star saying Superwit Profits was a “small business” originated by Stroll’s friend Tang in 1998.

The BVI firm is part of a complex offshore corporate structure through which wealthy shareholders like Stroll held interest in separate offshore companies.

Stroll shows up in the documents as holding about 15 per cent interest in Superwit through a decades-old family trust called Polo Trust registered in Liechtenstein, another known tax haven.

This is legal.

“Trusts have existed for a thousand years,” said Dudman. “People create trusts to own assets and to establish and manage and administer those estates. There’s nothing spectacular or special about it.”

Chou, who is listed in documents as “protector” of the Polo Trust — a role in which he is to supervise the trustees — has a history with Stroll dating back to 1989 when the duo founded a fashion company that would acquire and reinvigorate the then-failing Tommy Hilfiger brand.

The bulk of Stroll’s fortune reportedly comes from selling his shares in Michael Kors after masterminding the American brand’s successful turnaround in 2011 with Chou.

In 2018, Stroll led a consortium of investors including Chou and Dudman to acquire Force India Formula One Team for 90 million pounds (about $152 million Canadian at the time).

Stroll’s son Lance joined the team — now called Racing Point — at the age of 20 the following year, becoming one of the youngest members to compete in Formula One.

In one recent episode of the Netflix series, Stroll appears commanding a boardroom meeting of staff who stutter as they report their plans to him.

“I’ve always won in the businesses I’ve run,” Stroll later deadpans to the camera. “I plan on winning here.”

World leaders

The Pandora Papers investigation has uncovered the secret financial dealings of politicians, including some who have spoken out against offshore tax havens.

“Every public servant’s assets must be declared publicly so that people can question and ask — what is legitimate?” Kenyan President Uhuru Kenyatta told a BBC interviewer in 2018. “If you can’t explain yourself, including myself, then I have a case to answer.”

The leaked records listed Kenyatta and his mother as beneficiaries of a secretive foundation in Panama, the ICIJ and partners found. Other family members, including his brother and two sisters, own five offshore companies with assets worth more than $30 million (U.S.), the records show.

Kenyatta and his family did not reply to requests for comment.

Czech Prime Minister Andrej Babis, one of his country’s richest men, rose to power promising to crack down on tax evasion and corruption, once telling voters that he wanted to create a country “where entrepreneurs will do business and will be happy to pay taxes.”

A review of the leaked records by the ICIJ and partners found that, in 2009, Babis injected $22 million (U.S.) into a string of shell companies to buy a sprawling property, known as Chateau Bigaud, in a hilltop village in Mougins, France, near Cannes. A year later, French records show, he acquired, through another Monaco shell company, seven properties near the chateau, including a two-story villa with a pool and a garage.

Babis has not disclosed ownership of these shell companies and homes in the asset declarations he’s required to file as a public official, according to documents obtained by ICIJ’s Czech partner, Investigace.cz. In 2018, a real estate conglomerate controlled by Babis bought the Monaco companies that owned the chateau and the villa.

A spokesman for the conglomerate told ICIJ that the company complies with the law. He didn’t respond to questions about the acquisition of Babis’s properties.

Babis didn’t respond to requests for comment.

Tony Blair

For decades, former U.K. Prime Minister Tony Blair has talked about how the rich and well-connected shirk paying their share of taxes.

“For those who can employ the right accountants, the tax system is a haven of scams, perks … and profits,” he said during a speech last February. “We should not make our tax rules a playground for revenue avoiders and tax abusers who pay little or nothing while others pay more than their share.”

The Pandora Papers show that in 2017, Blair and his wife, Cherie, became the owners of a $8.8 million (U.S.) Victorian building by acquiring the British Virgin Islands company that held the property. The London building now hosts Cherie Blair’s law firm.

By purchasing the company shares instead of the building, an ICIJ analysis suggests the legal arrangement saved the Blairs from having to pay more than $400,000 (U.S.) in property taxes.

Cherie Blair said that her husband was not involved in the transaction and that its purpose was “bringing the company and the building back into the U.K. tax and regulatory regime.”

She also said that she “did not want to be the owner of a BVI company” and that the “seller for their own purposes only wanted to sell the company.” The company is now closed.

With files from Zach Dubinsky, CBC, Pavla Holcova, Hana Čápová and Zuzana Sotova, Investigace.cz and Simon Goodley, The Guardian.

The Pandora Papers is a global collaboration between the Toronto Star and the nonprofit International Consortium of Investigative Journalists. If you like journalism like this, please make a donation to ICIJ to support it.

Robert Cribb is a Toronto-based investigative reporter for the Star. Reach him via email: [email protected]

Marco Chown Oved is a Toronto-based investigative reporter for the Star. Follow him on Twitter: @marcooved

Sheila Wang is a municipal politics and general assignment reporter for YorkRegion.com and its sister papers. Reach her via email: [email protected]

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