Panama Papers, A Haven For "Regular Guys" Too

While most attention has been devoted to the VIPs and politicians cited in the leaked documents of the Panama shell-company firm, most of the people turning to tax havens look much more like you and me.

Paris street scene
Paris street scene
Mathilde Damgé

PARIS â€" There are heads of state, billionaires, big names in sports and show biz scattered among the more than 11 million client files of Mossack Fonseca, the firm specialized in the creation of offshore companies that is the source of massive Panama Papers leak.

But the documents also reveal that the vast majority of the names on the lists are nobody you've ever heard of: They belong to "ordinary" people who’ve turned to tax havens. While the Panama Papers files that Le Monde was able to consult don’t always specify the sums that were transferred, thanks to offshore shell firms in places with lenient tax authorities, numerous email exchanges, official business documents and photocopies of passports flesh out a detailed portrait of the regular clientele of the Mossack Fonseca firm that is at the center of the largest leak in newspaper history. Names have been changed.

Of the thousand or so French citizens who appear in the "Panama Papers," 95% are ordinary, low-profile individuals whose backgrounds and motivations for involvement in tax havens and offshore finance are far more diverse than one might imagine.

A poker-player, butcher and opera singer

They aren’t all rich, they aren’t necessarily familiar with the inner workings of the banking industry and they aren’t all out to commit fraud.

Overall, the Panama Papers lists paint a picture that closely matches previous French investigations into tax evasion: There are more people involved from in or around Paris, the south of France and along the country’s borders with Switzerland. Their professions â€" CEOs, business leaders, lawyers, doctors â€" largely coincide with those seen in earlier reports on clients from HSBC or UBS banks.

But among these French citizens who have created offshore businesses, there are also some with professions less commonly associated with tax scandals: a horse breeder, a poker player, a butcher, an opera singer… even a cantaloupe grower. There are also civil servants. One health and safety inspector with a Panama-based operation feebly told Le Monde that he had wanted to "respect his parents’ wishes." He has since tried to remedy his situation with the tax authorities.

There are also some who have barely entered adulthood, who can be seen posing with friends on social media and whose high school baccalaureate exam results date from the previous year. These are children whose parents wanted to give them part of their inheritance.

Fear of inheritance taxes and expatriation

The majority of those with offshore businesses are trying to dodge inheritance taxes, whether for themselves or for their children. Sometimes it’s perfectly legal: Pierre M., a retiree living in Mauritius, designated his son, who lives in France, as beneficiary of the foundation he created. "If he lives in Mauritius, he won’t pay any inheritance tax. If he’s in France and he doesn’t want to pay any taxes, he can always refuse to become the foundation’s beneficiary," Pierre notes.

Le Morne, Mauritius â€" Photo: carrotmadman6

But these family estates are sometimes more a curse than a blessing, especially when decisions involve several people. Camille D., a civil servant, admits that she initially went along with her sisters’ plan to turn to an offshore scheme, but wound up preferring her own peace of mind and did things legally, souring relations with her family.

A $50,000 admission price

Some CEOs rely on offshore businesses to expand internationally. That was the case for Matthieu B., who wanted to launch his firm in Asia and felt it was vital to have a foothold there. So he created a company in the British Virgin Islands via Mossack Fonseca’s Singapore branch.

"At the time, I was planning on moving there myself. Having a company on site allows you to speed up the installation phase, and that’s not illegal. I’d even say it’s necessary to successfully bring your business to Asia," he says.

The "Panama Papers," these Mossack Fonseca files, don’t say anything about the assets of the firm’s clients. However, based on our reporting, the totals reach "hundreds of millions of euros." The price of admission to open this type of offshore business is around $50,000 in capital. For comparison, the median total of assets hidden in Switzerland by UBS fraudsters was 340,000 euros.

From the "shell company" to millions

These totals span highly diverse estates. Some of those involved claim they don’t have a cent in their offshore firms. ("An empty shell," says one. "I didn’t even remember the company existed.") Others acknowledge having placed significant sums there, which would have been heavily taxed in France under the country’s "Solidarity Tax on Wealth," or ISF.

Jean-Charles G., for example, inherited some money from an uncle in the United States. As a taxpayer in France, he explains that "the inheritance followed the American legal process because of an arbitration decision between the U.S. and France, in which France renounced its claim." Perfectly legal, then.

That wasn’t the case for Benoît S., a CEO who wanted to dodge some of the taxes on his businesses so he could invest more in international expansion. He made his fortune in… hair removal. (His company posted a turnover of several million in 2015.) And he created several offshore firms in his children’s and wife’s names, including one based in Hong Kong, to plant a foothold in the Asian market.

The business statements that Le Monde viewed nevertheless mention that Benoît S.’s "firm will continue its commercial activities in medical equipment in Europe." Another document specifies that he wants to "acquire a new company in Hong Kong, with nominee shareholders and nominee directors." Both, basically, dummy companies.

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Ecological Angst In India, A Mining Dumpsite As Neighbor

Local villagers in western India have been forced to live with a mining waste site on the edge of town. What happens when you wake up one day and the giant mound of industrial waste has imploded?

The mining dumpsite is situated just outside of the Badi village in the coastal state of Gujarat

Sukanya Shantha

BADI — Last week, when the men and women from the Bharwad community in this small village in western India stepped out for their daily work to herd livestock, they were greeted with a strange sight.

The 20-meter-high small hill that had formed at the open-cast mining dumpsite had suddenly sunk. Unsure of the reason behind the sudden caving-in, they immediately informed other villagers. In no time, word had traveled far, even drawing the attention of environment specialists and activists from outside town.

This mining dumpsite situated less than 500 meters outside of the Badi village in the coastal state of Gujarat has been a matter of serious concern ever since the Gujarat Power Corporation Limited began lignite mining work here in early 2017. The power plant is run by the Power Gujarat State Electricity Corporation Limited, which was previously known as the Bhavnagar Energy Company Ltd.

Vasudev Gohil, a 43-year-old resident of Badi village says that though the dumping site is technically situated outside the village, locals must pass the area on a daily basis.

"We are constantly on tenterhooks and looking for danger signs," he says. Indeed, their state of alert is how the sudden change in the shape of the dumpsite was noticed in the first place.

Can you trust environmental officials?

For someone visiting the place for the first time, the changes may not stand out. "But we have lived all our lives here, we know every little detail of this village. And when a 150-meter-long stretch cave-in by over 25-30 feet, the change can't be overlooked," Gohil adds.

This is not the first time that the dumpsite has worried local residents. Last November, a large part of the flattened part of the dumpsite had developed deep cracks and several flat areas had suddenly got elevated. While the officials had attributed this significant elevation to the high pressure of water in the upper strata of soil in the region, environment experts had pointed to seismic activities. The change is evident even today, nearly a year since it happened.

It could have sunk because of the rain.

After the recent incident, when the villagers raised an alarm and sent a written complaint to the regional Gujarat Pollution Control Board, an official visit to the site was arranged, along with the district administration and the mining department.

The regional pollution board officer Bhavnagar, A.G. Oza, insists the changes "aren't worrisome" and attributes it to the weather.

"The area received heavy rain this time. It is possible that the soil could have sunk in because of the rain," he tells The Wire. The Board, he says, along with the mining department, is now trying to assess if the caving-in had any impact on the ground surface.

"We visited the site as soon as a complaint was made. Samples have already been sent to the laboratory and we will have a clear idea only once the reports are made available," Oza adds.

Women from the Surkha village have to travel several kilometers to find potable water

Sukanya Shantha/The Wire

A questionable claim

That the dumpsite had sunk in was noticeable for at least three days between October 1 and 3, but Rohit Prajapati of an environmental watchdog group Paryavaran Suraksha Samiti, noted that it was not the first time.

"This is the third time in four years that something so strange is happening. It is a disaster in the making and the authorities ought to examine the root cause of the problem," Prajapati says, adding that the department has repeatedly failed to properly address the issue.

He also contests the GPCB's claim that excess rain could lead to something so drastic. "Then why was similar impact not seen on other dumping sites in the region? One cannot arrive at conclusions for geological changes without a deeper study of them," he says. "It can have deadly implications."

Living in pollution

The villagers have also accused the GPCB of overlooking their complaint of water pollution which has rendered a large part of the land, most importantly, the gauchar or grazing land, useless.

"In the absence of a wall or a barrier, the pollutant has freely mixed with the water bodies here and has slowly started polluting both our soil and water," complains 23- year-old Nikul Kantharia.

He says ever since the mining project took off in the region, he, like most other villagers has been forced to take his livestock farther away to graze. "Nothing grows on the grazing land anymore and the grass closer to the dumpsite makes our cattle ill," Kantharia claims.

The mining work should have been stopped long ago

Prajapati and Bharat Jambucha, a well-known environmental activist and proponent of organic farming from the region, both point to blatant violations of environmental laws in the execution of mining work, with at least 12 violations cited by local officials. "But nothing happened after that. Mining work has continued without any hassles," Jambucha says. Among some glaring violations include the absence of a boundary wall around the dumping site and proper disposal of mining effluents.

The mining work has also continued without a most basic requirement – effluent treatment plant and sewage treatment plant at the mining site, Prajapati points out. "The mining work should have been stopped long ago. And the company should have been levied a heavy fine. But no such thing happened," he adds.

In some villages, the groundwater level has depleted over the past few years and villagers attribute it to the mining project. Women from Surkha village travel several kilometers outside for potable water. "This is new. Until five years ago, we had some water in the village and did not have to lug water every day," says Shilaben Kantharia.

The mine has affected the landscape around the villages

Sukanya Shantha/The Wire

Resisting lignite mining

The lignite mining project has a long history of resistance. Agricultural land, along with grazing land were acquired from the cluster of 12 adjoining villages in the coastal Ghogha taluka between 1994 and 1997. The locals estimate that villagers here lost anything between 40-100% of their land to the project. "We were paid a standard Rs 40,000 per bigha," Narendra, a local photographer, says.

The money, Narendra says, felt decent in 1994 but for those who had been dependent on this land, the years to come proved very challenging. "Several villagers have now taken a small patch of land in the neighboring villages on lease and are cultivating cotton and groundnut there," Narendra says.

They were dependent on others' land for work.

Bharat Jambucha says things get further complicated for the communities which were historically landless. "Most families belonging to the Dalit or other marginalized populations in the region never owned any land. They were dependent on others' land for work. Once villagers lost their land to the project, the landless were pushed out of the village," he adds. His organization, Prakrutik Kheti Juth, has been at the forefront, fighting for the rights of the villages affected in the lignite mining project.

In 2017, when the mining project finally took off, villagers from across 12 villages protested. The demonstration was disrupted after police used force and beat many protesters. More than 350 of them were booked for rioting.

The villagers, however, did not give up. Protests and hunger strikes have continued from time to time. A few villagers even sent a letter to the President of India threatening that they would commit suicide if the government did not return their land.

"We let them have our land for over 20 years," says Gohil.

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