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

"Famously Russian money flows into London property at massive scales - an acute problem now."

Joe Mellor by Joe Mellor
2022-03-01 13:29
in News
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Alisher Usmanov, who has sponsorship links to Everton, has had his assets frozen as part of sanctions imposed by the European Union in response to Russia’s invasion of Ukraine.

It comes as a political economist had written a thread outlining the wealth oligarchs have hidden offshore.

The Uzbek-born billionaire’s USM Holdings sponsors Everton’s training ground, with an initial five-year deal announced in 2017.

It also has an option on naming rights for the Toffees’ new stadium – a deal worth £30million to the club.

The EU said in a statement that its Council had “added 26 persons and one entity to the list of persons, entities and bodies subject to restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine”.

And a regulation update in the Official Journal of the European Union said Usmanov, a long-time business partner of Everton owner Farhad Moshiri, was among the 26.

The statement said restrictive measures included “an asset freeze and a prohibition from making funds available to the listed individuals and entities”, while “a travel ban applicable to the listed persons prevents these from entering or transiting through EU territory”.

The regulation update describes Usmanov as a “pro-Kremlin oligarch with particularly close ties to Russian president Vladimir Putin”.

It adds: “He has been referred to as one of Vladimir Putin’s favourite oligarchs. He is considered to be one of Russia’s businessmen-officials, who were entrusted with servicing financial flows, but their positions depend on the will of the president.”

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Offshore wealth thread

Political economist Rasmus Corlin Christensen’s thread on offshore wealth held by Russians (and others) is a must-read.

1.

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:https://t.co/s2I6FMBcV0

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

2.

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.https://t.co/s2I6FMjBwq pic.twitter.com/rJMwALveZX

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

3.

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:https://t.co/ACablZiRh9

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

4.

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:

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

5.

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.https://t.co/xCKSxJNzo8

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

6.

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.https://t.co/kUcyEAkvaR

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

7.

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.https://t.co/Gyc8MmgD4E pic.twitter.com/8U9PQv8zOm

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

8.

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.https://t.co/BJSdUVZcis

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

9.

These clients included Vladimir Antonov, a Russian millionaire later convicted of fraud and embezzlement.https://t.co/kqOilidHKD

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

10.

In 2016, the #PanamaPapers revealed an unprecedented scale of secretive offshore entities created by Mossack Fonseca, a corporate service provider in Panama.https://t.co/WA6Q42KUB0

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

11.

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 Rossiyahttps://t.co/4aU3rUZrF0

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

12.

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.https://t.co/4aU3rUZrF0

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

13.

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."https://t.co/A7LRASXIvF

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

14.

Putin, by way, said Roldugin had merely used his money on "acquiring musical instruments from abroad and bringing them to Russia."https://t.co/wGhE96XjIa

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

15.

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."https://t.co/neo2Uk3Ctq

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

16.

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://t.co/JkGu9DFHpGhttps://t.co/T2t6bWTdfo

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

17.

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.https://t.co/ZYl7dBvoba

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

18.

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:https://t.co/ngJnqdmRc6

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

19.

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.https://t.co/3FW8Ta2Wcp

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

20.

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:https://t.co/xWnW5sw8lZ

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

21.

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.https://t.co/ZLBFp67szp

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

22.

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 ministerhttps://t.co/NeWfBz4spF

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

23.

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://t.co/erNQi9lgu0

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

24.

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.https://t.co/2preR5fKjy

— Rasmus Corlin Christensen (@phdskat) February 27, 2022

Related: Labour MP claims BBC let ‘oligarchs’ lawyers’ crack down on ‘free speech’

Tags: Putin

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