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tv   Close up - Paradise Papers - The Ethics of Tax Havens Part 1  Deutsche Welle  November 14, 2017 2:15am-2:46am CET

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a friend tell a friend to face crime fighters don't miss it. the paradise papers we've acquired an astonishing view into a world in which prophet rings king. for an entire year and international consortium of investigative journalists analyzed an enormous trove of leaked documents many of which come from appleby one of the largest and best known offshore legal service providers politicians major corporations and celebrities can all be found among its clients this time. the things the said the c.e.o. are mostly legal but the end result is the same people don't pay taxes. the paradise papers is
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a joint project comprising almost four hundred journalists some from the new york times there are several. trump connected people who are in the files. that actually show a business relationship between senior members of the government on people who are in putin's inner circle. others may be the biggest thing ever and if they do with sex they've never ory that. we thought this was a leak of leaks act and here we are i meet again. it's like a hydra you cut off one head and to grow back what's next. it's a network of tech savings it year after year the e.u.
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loses about a billion euros through tax evasion and avoidance. and. we have a total economy where the most powerful and and the richest people to fire society to their game. these leagues shows us that that time will stop secrets is over. we're approaching the isle of man attacks even located between britain and ireland the leaked documents that we've been on allies in for the past year have let us
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hear a quote from an email on the isle of man seems to be what looks and borg was a few years ago. the island is a crown dependency answerable to the u.k. but has its own parliament and its own tax laws. and show up the seventy's early eighty's i mean the main economy drive it was tourism. but it was a you know what i call the bucket and spade tourism and it's no longer there so we had to find something else to do. so or the secret of the success. i think is the tax regime. i mean i have no capital gains tax we have no interest in it so the idea is to trap people rich people. what they call high net worth customers. from holiday are all to tax paradise for the global elite. with roughly twenty six thousand residents the comparable douglas's
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a financial hub despite the all time charm of routes or strong tramway. we meet phil crane a tax compliance activist. yes sure this is the guy and government district in the financial district around here. companies pay little or no tax here so it's very lucrative for them to be incorporated here all they need is a postbox. it's about twenty eight thousand in this street no no it rate companies registered in the all of that and most of them will be in this street or the next to us three stories this this quarter is the financial quarter so they will be registered here in the company's registry at the end of the road and three quarters of them will be foreign will be owned by people off the are. so much of the business is legitimate but some of it is connected with offshore and this is what the problem is that's not to say it's illegal evasion it might be tax
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avoidance so what that means to worry about this is that. they are facilitating people from around the world to put that money in here to escape. legally or illegally paying taxes in their home countries that's the problem at the v.a. is one of the law of the slothful the is a large eight legal system again very connected to the offshore. applebee as one of the major players in the offshore business this company video gives a soft pitch for its hard hitting services that has a branch on the isle of man and seven other tax havens hundreds of lawyers and financial consultants create tailor made solutions for clients eager to avoid tax and grow their assets. most of the data we examined comes from appleby and us tara thirteen point four million electronic documents were leaked to the german
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newspapers did georget site don't want to share them with an international consortium of journalists the files reveal the machinations that normally take place in secret the deals that deprive public coffers of billions of euros in tax funds urgently needed for schools hospitals infrastructure. one of applebee's major clients came from germany court and on and on his name is associated with what is probably germany's largest ever tax evasion trials now the financial dealings of court and go home and his family are back in the spotlight. the. the german billionaires eightieth birthday party captured on a video that gives a rare glimpse behind the scenes the family concealed their wealth behind trust sent offshore tax havens but out of public view they led a lavish lifestyle. during
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his lifetime coat and on gave millions of euros to his daughters c.c. and kanina gifts that eventually would draw the attention of tax investigators. that. will. the way. we go to bavaria to delve deeper into anger on story. in one thousand nine hundred five the billionaire moved his residence to bermuda where he founded a holding company. that shielded his family's assets from the german tax authorities. this file
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footage shows and on at his pharmaceutical company during a monday night. for the company patriarch the tax haven was the perfect place to turn his mind company into a global enterprise called college today more than twenty building a company's worldwide a base that feeling on. in one thousand nine hundred seventy one on sold his stake in the company for the equivalent of more than ten billion dollars german tax authorities didn't see a cent going on published a memoir for his friends he said if called him time and autobiography of an entrepreneur his family and his fortune. thirty two chapters here's one on trusts a complicated animal to. bequeath star
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family firm worth billions to the trust and it was a good decision. of course there was criticism from all corners especially germany claiming that the end going on for tax evaders who were hiding out in bermuda that i could just shrug off since as head of a global group it was my job to hold it together guides. us. colleen were always dear to my heart they weren't to go empty handed either though the money never went to their head. as beneficiaries of the trust they both received ample dividends should. the law of trust dates back to the middle ages when a landowner left england to fight in the crusades he would transfer his estate to a trust in his absence. a trust operates as a foundation. but without a public beneficiary the founder in this case court and on transferred his assets
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to the trust officially he was no longer the owner. his assets ended up in a tax haven in the caribbean the trust is administered by a trustee who acts as a representative. eventually the assets are disbursed to predetermined beneficiaries they're also unknown to the public. for investigators it's practically impossible to determine who's the founder and who is the beneficiary of a trust after examining the thousands of documents the tax authorities determined that coat hanger on had transferred assets to his daughters they didn't pay all the tax they owed an estimated four hundred forty million euros. the tax investigation in the german city of oxburgh lasted three years the anger on sisters even spent several days in investigative custody in the end the authorities could only
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document a fraction of the suspected tax they owed in an out of court settlement the daughters paid one hundred forty five million in back taxes and fines and the case was closed . down hundred b.s.t. head of the bavarian finance trade union is very familiar with the case. and we're talking about huge sums no one ended up in jail just. the toasters and so forth in the daughters immediately absconded to switzerland for me and my colleagues that's a major aggravation by meal and light including the more prominent the case under investigation the more professional the defense so on fire. in cases like this our opponents if i may call the night is engaged very professional high caliber defense teams need to celine and off. so it's not a battle among equals. it's in no way
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a battle of equals companies and the consultancy firms they hire always a step ahead. in the shell game aspect that's an inherent part of the problem. in the appleby files we find about a dozen trusts and companies belonging to the engelhorn clan that apparently eluded discovery by the tax authorities like the bella vista trust the beneficiary was the angel foundation and its beneficiaries were quote angry holmes daughters that lend support to the suspicion that the daughters owed far more tax than their one hundred forty five million euro payment. bus design what would happen in the enron case if a previously unknown tax avoidance schemes were now discovered. might your side take up the case again. as there is if we were to obtain information relevant to the case new investigations might indeed be forthcoming was. a militia in kind
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of. we were in new york. the applebee files contain information that could implicate high ranking members of the us government. most prominent is u.s. businessman and current commerce secretary wilbur ross with acclaimed estimated net worth of around three billion dollars ross may be the richest person in president trump's cabinet. he's also one of applebee's top twenty clients ross has a stake in dozens of offshore holdings one of these is especially problematic for the trumpet ministration. for more than a year journalists at the new york times have been investigating whether the president and his associates have ties to russia. pulitzer prize
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winner mike macintyre and his colleagues have compiled long lists of names of people with ties to president trump who they ran those names through a search engine created by the i.c.i. j. the international consortium of investigative journalists. they got twenty four thousand hits many of the names turned up no evidence but one lead straight into the white house. a tight lid is being kept on the investigation we're not even permitted to talk about it in the newsroom. the coverage of trouble. for us at the new york times has been in some ways. a twenty four seven exercise and one that is unlike anything i've ever experienced before i think that any revelations that further suggest that there are a business ties or any other types of connections between members of the
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administration and russia are potentially problematic what documents. did you find and what can they say one of these companies navigator holdings is a shipping firm which does show up in the apple b attorney files. it is a company that during mr ross has ownership of it started doing business with a major russian gas company c bore. and that company has some interesting connections to the to the kremlin and so what you see here is sort of an indirect profiting on the part of mr ross through this business relationship with this kremlin connected russian gas company. the russian company is owned by several other gox some of them are even on the list of russians under u.s. sanctions these are two of the principle owners of seaboard land at mickelson carol
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shammal. there he is purported to be president putin's son in law. all members of the cabinet mcentire reminds us must disclose all their business interests before taking office especially when it comes to anything that might pose a conflict of interest. but in a written declaration and during his congressional confirmation hearing commerce secretary ross failed to mention his relationship to putin's on the dark side despite ross's claims of full disclosure he still held shares in the shipping for money. coughers. if you would take a look at these specific questions in areas where you would recuse yourself in addition to what you've already done with ethics i would so. intend to be quite scrupulous about route to sue and any topic with floyd to scintilla of don't think it will get that to you richard painter is
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a professor of law at the university of minnesota there is a commission from the president signed by president george w. bush and. this is a commission which is given to the higher ranking officials in the white house challenging job to be the chief white house ethics lawyer because every time somebody gets in trouble you have to deal with it and you have to tell people what they can do you have to tell people they have to sell off their interests and in businesses they create conflicts of interests. we filled painter in on the results of the investigation though. the conservative attorney was unsparing in his verdict that something. could there be a clash of interests. and yes if he has financial holdings. that could be affected. by his government work then he is at risk of violating a criminal statute if a protest sufficing government matters that have
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a direct predictable effect on his financial holdings you know a lot about the government's whole farm. influence on decisions about centuries of the commerce secretary would be expected to have an important role in making decisions about economic sanctions imposed on any foreign country what we're talking about had been possible had been think we'll in the times when you served in the white house. i have no idea what's going through his mind he absolutely has to solve this company and we cannot have a commerce secretary who has an interest that a shipping company it's not going to work and this episode is an illustration of exactly why it's not going to work. we return to the isle of man much of what is happening here also has an unsavory air to it. appleby helps make it all possible. the boeing seven thirty seven is approaching
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the ninety million dollar private jet belongs to a billionaire only the pilot and a small crew are on board they've got a brief meeting with the customs authorities we can guess its purpose. the private jet center turns to a very will heal the clientele. its employees tell us that many private jets are registered on the isle of man. the island serves as a gateway to the e.u. with a twist. private jets imported through the island aren't subject to european b a t taxes. it's a scheme that enables the owners to save millions so many am planes. imported to europe and pointed by at all from that how does this come and that's it's the eighty weights. and i don't know how they compare with with all the facilities around europe and bits preferentially deck of command the premise that
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accounts yeah the fee it's human rights you know so. you can save a lot of tax if you do it by a lovely example you know. what the value of an aircraft a large aircraft that it's a lot of money how much you think i can save money if i am part of my plane. i will. pending on the value of your excess but this definitely runs into the millions there are many celebrities you know who do that. no answer. but we're already familiar with one story formula one world champion lewis hamilton and appleby client now with a staff. he bought his twenty million euro aircraft to jet off to sea is then the pop star girlfriend nicole scherzinger between races has done us a company to do. this is how the tax scheme works
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applebee sets up two letterbox companies for the client the first company imports the jet to the our love match. and then leases the private jet to the second company. on paper the second firm is an aircraft leasing company a sleight of hand that turns the private jet into a business jet they're reimbursed for the import tax. the owner events. if the import tax is the total twenty percent in this instance five million euros the owner then charters his own jet from the charter company and can use it for private travel. when we add up all the tax schemes involving aircraft contained in the appleby files we arrive at an estimated two hundred fifty million euros of taxes that were saved or not paid. lewis hamilton insists the entire operation was legal he paid all the taxes that he owed and he's
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right on the isle of man these schemes are legal and have official sanction the idea behind it was originally devised by an applebee employee who now works for a start. i brought in some new ideas to make it even more efficient and most safe than previously and i co-created all those and their reputation just greed everybody who registered the aircraft told their friends about how good it was and so on and so if you use seti at which customs say that they know when they're coming they level the paperwork ready as soon as the aircraft's on the ground indiana man they will complete the paperwork so there is wherever you go in europe if a customs man comes at teen and says what he says status they at craft show in this poll and he's satisfied that the v.a. t. s. been paid and there's no text you. two hundred fifty million euros worth of taxes that are lost to europe with that money the e.u.
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could double its aid programs for natural disasters such as floods or earthquakes. the applebee files also contain many references to berlin. the city has become a magnet for investors and speculators. there for an extra aid and real estate investment company has been snapping up rental properties all across the city. resistances that he had to see he has to be since the start of the financial crisis real estate is considered a sound investment just any time. he and charlotte books in the midst of gentrification is in full swing it was about you but i'm also one of the rebel here who i mean by off the renovations rents are roughly forty one percent higher than they were under the previous lease i mean. these have to be profits are
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helping to make berlin and investors paradise. trying to break already has more than seven thousand eight hundred apartments on its books profit and a steady increase in value are all that matter. the renters are largely irrelevant . in recent years investors such as family excrete have caused rents in the city just skyrocket. show the independent financial and tax expert christoph trial fetta the statistics we compiled about for an exploration. of this building i was born to buy for an expressway what do you think the reasoning is behind the purchase of such a relatively modest looking building with a movie i'd stay. off an experience even ten years ago when i bought a series of buildings at a price of just under one thousand euros past. thousand obey me and i'd also know once it's been renovated a unit in a building like this can be sold for four five six thousand euros passed. me
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a call from. a very attractive profit. but it seems that's not enough because there's also a scheme to avoid paying taxes on those profits. and once again appleby is in the thick of it. our research showed that appleby administers a letter box company for a phone explaining on the island of jersey the profits earned in berlin through real estate appreciation and dire rents are registered in jersey last year alone this amounted to some forty nine million euros. the tax rate on the island zero percent the how exactly do firms like through an expressway managed to shift profits abroad for next place like i'm behind finishing phrase not just an investment company it's a whole slew of companies that are all linked in that sign contracts with. more
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aggressive in avoiding taxes and some other investors that patches real estate in ballarat. and germany also does its part in making itself an attractive tax haven here's how it works when real estate is purchased the buyer is supposed to pay a land transfer tax but there's a trick to avoid this tax too it's called a share deal. if for example for an expression doesn't purchase one hundred percent of the building but allows others to retain small shares in it no land transfer tax is owed absurd on the face of it but true so furnish prey and stalls to people as straw men and issues them loans so they can purchase a small share in the building through a single deal saved four point four million euros. were out for an experience official berlin address there is not even a sign and accounting firm receives mail for the company or
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a letter box company right in the middle of berlin. we receive a letter from friend express that says the company is above board in all its dealings and follows the law. with a single share deal for an expiration avoided four point four million in tax that money would have allowed berlin to renovate this dk being school building. how much tax do you estimate that real estate firms avoid paying through such share deals here in berlin is. probably in the hundreds of millions of euros of course the city would like to have those hundreds of millions which is why we're taking the matter to the point. so was the government asleep at the wheel. we could have reacted sooner but when we started talking about this issue on the federal level two years ago it was already apparent that this was new territory for us and that many didn't want to us to. talk about it does have
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a deal has diminished over it and. it's a depressing story first the state practically encourages tax avoidance then twiddles its thumbs and now it's frantically racing to catch up with the tax dodging. the fast pace of life in the digital shift has the lowdown on the web showing new developments and providing useful information the wittiest finds and interviews
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with makers and users. next on d w. just listen this is the sound of time passing as far as the size of twenty five football fields are lost every minute adding to greenhouse gases but what is the sound of a tree not for us the sound of biodiversity tourism community development reliable food and water. the united nations development program is listening and working with communities to protect forests for the future we want if you're hearing what we're hearing find out more. shift living in the digital age. coming up a remote controlled garden.

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