Pirate Legacy of the British Empire


In the early 2015, clouds started to gather over British Prime Minister David Cameron and the elites of the City of London. Few months before the next parliamentary elections, there was a massive leak of files, obtained through an international collaboration of news outlets, which showed that HSBC's Swiss private bank, HSBC Private Banking Holdings (Suisse) SA, was helping more than 100,000 clients from over 200 countries to evade tax and provided bank accounts to international criminals, corrupt businessmen, people connected to African corruption scandals (including blood diamond trading), arms industry figures and many others. It had, for example, laundered hundreds of millions of dollars for the world’s biggest crime syndicate based in Mexico, Sinaloa Cartel, which was responsible for the death of at least 100,000 people.517 At the time of the alleged offences Stephen Green, whom David Cameron appointed trade secretary in 2010, was HSBC's chairman.518 Plenty of financial speculators, tax dodgers, large investors etc. with very suspicious affiliations and with offshore accounts, were donating money to both the Conservative Party and the UK Independent Party (UKIP), in order to ensure this system remains intact and that they can continue to evade and avoid tax and protect their wealth from the scrutiny of the tax authorities. When in 2013 the EU authorities started to implement laws which aimed to strengthen the fight against tax fraud and tax evasion, the interests of many Conservative donors were under threat. Consequently, some members of the Conservative Party started to support UKIP's rhetoric that United Kingdom should leave the European Union and remain independent from EU regulations and authorities. To appease those Conservative backbenchers who represented those groups of interest, but also to appease those who were falling for the anti-EU and anti-immigration rhetoric of Nigel Farage, Prime Minister David Cameron made it part of his Party's manifesto to hold a referendum on UK's membership in the EU in the middle of the next parliament. Initially, it seemed that the gamble paid off. In May 2015 parliamentary elections the Conservatives won 11.3m votes and 329 seats, winning an outright majority. Labour Party won 9.3m and just 232 seats, 25 less than it achieved in 2010. The Labour Party members were shocked to learn they lost all seats in Scotland, in favour of Scottish National Party. Leader of the Labour Party Ed Milliband announced his resignation. Although UKIP came third, getting 3.9m votes, the “first past the post” system limited their representation in the Parliament to one seat only. English social scientist Sir David Butler observed “It was the harshest treatment that our capricious electoral system has ever inflicted on a nationwide party.”519

The success of the Conservative Party in the parliamentary elections meant that David Cameron had to fulfil his promise and hold a referendum on the UK's membership in the EU in the following year. Meanwhile, more revelations started coming out about the extent of corruption that was taking place under British jurisdiction. In spring of 2016, there has been an unprecedented leak of 11.5m files and 2.6 terabytes of information from the database of the world’s fourth biggest offshore law firm, Panama-based Mossack Fonseca. The leak disclosed for the first time the hidden network of offshore tax havens which operated in great part under British jurisdiction that helped thousands of politicians, celebrities, businessman, bankers and criminals from across the world hide and multiple their profits. The company at the centre of the affair, Mossack Fonseca, was cofounded by Jürgen Mossack, son of a former Nazi-German, Erhard Mossack, who served as a senior corporal in the Waffen SS during the Second World War. After the war he moved to Panama, where he offered to spy for the CIA on the communist activity in Cuba. His son Jürgen earned a law degree in Panama and practised law in London before returning to Panama in 1977.520 The other cofounder of Mossack Fonseca, Panamian lawyer Ramon Fonseca, also spent some time in London, acquiring useful knowledge at the London School of Economics, before returning to Panama and merging his business with that of Jürgen Mossak.521 In 1987, Mossack Fonseca made its first big move abroad, establishing a branch in the British Virgin Islands, which a few years before had passed a law that made it easy to set up offshore companies without public disclosure of owners and directors. Rosemarie Flax, Mossack Fonseca’s longtime managing director there, told a British Virgin Islands news outlet in May 2014 that “Mossack Fonseca was the first to come from Panama to the BVI and others followed.”522 The leak of 2016 had showed that half of all companies that were set up by firms like Mossack Fonseca were registered in British-administered tax havens, as well as in the United Kingdom itself.523 British Virgin Islands were most popular holding more than 100,000 companies. Mossack Fonseca acted on instructions from intermediaries usually accountants, lawyers, banks and trust companies that were concentrated in Switzerland, Jersey, Luxembourg and the United Kingdom.524 Twelve national leaders were among 143 politicians, their families and close associates from around the world. Among national leaders with offshore wealth were prime minister of Pakistan Nawaz Sharif; ex-interim prime minister and former vice-president of Iraq, Ayad Allawi; president of Ukraine Petro Poroshenko; President of the United Arab

Emirates, Khalifa bin Zayed Al Nahyan and Alaa Mubarak, son of Egypt’s former president. It was revealed that Russian president’s, Vladimir Putin's best friend – a cellist and director of the St Petersburg State Rimsky-Korsakov Conservatoire Sergei Roldugin – controlled directly or indirectly a group of affiliated companies that controlled a significant share of a business empire that usually did one of three things: dubious over-the-counter transactions with shares of the largest state-owned Russian companies such as Rosneft; ‘donations’ from major Russian businessmen often laundered through paper deals; or preferential loans from the Cyprus-based RCB Bank, controlled by the Russian state-owned VTB Bank.525 Listed in the Panama Papers were: Putin's long-standing friend and oil trader, Gennady Timchenko, his former KGB colleagues, as well as Jewish oligarchs Arkady and Boris Rotenberg, the owners of Stroygazmontazh group, the largest construction company for gas pipelines and electrical power supply lines in Russia who made fortune on supplying pipelines for the Nord Stream project.526 Panama Papers revealed names of two daughters of former dictator of the Philippines, Ferdinand Marcos: Imee Marcos Manotoc and Irene Marcos Araneta, along with his grandsons.527 The Panama Papers revealed that a number of Maltanese leading politicians associated with Prime Minister Joseph Muscat including Energy Minister Konrad Mizzi, the Prime Minister's chief of staff, Keith Schembri and Prime Minister's wife, Michelle Muscat, all had offshore companies.528 The links between Malta, a former British colony, and the offshore tax havens had been investigated for years by the Maltese investigative journalist Daphne Caruana Galizia. She found out, before she was murdered in 2017, that many Maltanese political leaders were using offshore accounts for various illegal purposes.529

Panama papers revealed that more than 500 banks registered nearly 15,600 shell companies with Mossack Fonseca, with HSBC and its affiliates accounting for more than 2,300 of the total. Dexia and J. Safra Sarasin of Luxembourg, Credit Suisse from the Channel Islands and the Swiss UBS each requested at least 500 offshore companies for their clients. Rothschild Trust Guernsey Limited had also taken part in incorporation of offshore trusts.530 Fourteen German banks used the Panamanian law firm to set up more than 1,200 anonymous shell companies.531 Deutsche Bank is said to have brokered or managed more than 400 of them by 2007.532 In 2016 alone, more than 900 customers were served by a Deutsche Bank subsidiary registered on the British Virgin Islands.533 Many of the companies registered offshore dealt with mining, oil and gas, arm deals, human and drug trafficking. Mossack Fonseca’s files revealed offshore companies dealing with petroleum and gas in 44 of Africa’s 54 countries siphoning off billions of dollars each year.

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517 Ed Vulliamy, HSBC has form: remembered Mexico and laundered drug money”, The Guardian, 15 February 2015 https://www.theguardian.com/commentisfree/2015/feb/15/hsbc-has-form-mexico-laundered-drug-money »

518 Patrick Wintour, Josh Halliday, Juliette Garside, Kim Willsher, “No 10 forced to defend PM's appointment of former HSBC boss as trade minister”, The Guardian, 9 February 2015 https://www.theguardian.com/business/2015/feb/09/margaret-hodge-accuses-ex-chairman-lord-stephen-green-overhsbc-files »

519 “UKIP, the 2015 General Election and and Britain's EU Referendum”, Political Studies Association https://www.psa.ac.uk/insight-plus/ukip-2015-general-election-and-britains-eu-referendum »

520 TOI Staff, “Law firm at heart of 'Panama Papers' leak owned by Nazi's son”, The Times of Israel, 4 April 2016 https://www.timesofisrael.com/law-firm-at-heart-of-panama-papers-leak-owned-by-nazis-son/ »

521 Evelyn Robert Adrian de Rothschild has been the Governor of London School of Economics https://family.rothschildarchive.org/people/132-evelyn-robert-adrian-de-rothschild-1931 »

522 Martha M. Hamilton, Panamian Law Firm is Gatekeeper to Vast Flow of Murkey Offshore Secrets, International Consortium of Investigative Journalists, 3 April 2016 »

523 Luke Harding, “What are the Panama Papers? A guide to history's biggest data leak”, The Guardian, 5 April 2016 https://www.theguardian.com/news/2016/apr/03/what-you-need-to-know-about-the-panama-papers »

524 Ibid. »

525 Most of the money earned by these companies came from simple stock and contract manipulation of Russian state companies. ‘Donations’ from important Russian businessmen to these companies were not direct payments but transactions of such dubious financial usefulness that might be considered direct payments. The Cyprus-based RCB Bank granted loans to these companies without any security or collateral. Part of the fortune accumulated in Roldugin’s name by his offshore companies was invested in Russia, either in purchasing of the strategic assets or in resorts, yacht clubs and palaces. See “Secret Caretaker”, Organized Crime and Corruption Reporting Project, 3 April 2016 https://www.occrp.org/en/panamapapers/the-secret-caretaker/ »

526 Ibid. »

527 Offshore Leak Database, by The International Consortium of Investigative Journalists https://offshoreleaks.icij.org/search?c=PHL&cat=1&e=&q=marcos&utf8=%E2%9C%93 »

528 Panama Papers' law firm announces that it is closing down', The Malta Independent Online, 15 March 2018 http://www.independent.com.mt/articles/2018-03-15/panama-papers/Panama-Papers-law-firm-announces-that-it-isclosing-down-6736186268 »

529 529'Adrian Delia files fourth libel case against Daphne Caruana Galizia', The Malta Independent Online, 29 August 2017 http://www.independent.com.mt/articles/2017-08-29/local-news/Adrian-Delia-files-fourth-libel-case-against-Daphne-Caruana-Galizia-6736178416 »

530 Orlando Crowcroft, “Panama Papers: British tax havens Jersey and Guernsey in spotlight over Mossack Fonsecka leak”, International Business Times, 4 April 2016 »

531 Luke Harding, “Deutsche Bank offices raided in connection with Panama Papers”, The Guardian, 29 November 2018 https://www.theguardian.com/business/2018/nov/29/deutsche-bank-offices-raided-connection-with-panama-papers »

532 Ibid. »

533 Ibid. »