This article titled “Offshore tax dealings: celebrities and sportsmen in leaked Jersey files” was written by David Leigh, James Ball and Leila Haddou, for theguardian.com on Wednesday 9th July 2014 14.46 UTC
The Guardian today reveals the identities of celebrities and aristocrats – including Mel Gibson and Placido Domingo – who have had offshore dealings, as controversy grows over the Jersey links of the newly-appointed financial services minister Andrea Leadsom.
Following Wednesday’s disclosure that the Conservatives have received £816,000 in offshore donations from Leadsom’s Channel Islands-based brother-in-law, the Labour MP Paul Farrelly, who campaigns on tax issues, has called for the cabinet secretary to step in.
He said: “Any semblance of political donations influencing ministerial appointments needs to be addressed straightaway. The cabinet secretary should ask what she knew of these donations by people and companies connected to her.”
Leadsom claimed to have been unaware of the size of payments made through a company owned by her brother-in-law and run by her husband until the Guardian published. But it emerged on Tuesday that exact figures were previously made public by Private Eye magazine in May. At the time, it was not realised the company was owned by her own family.
The Jersey files are taken from records of more than 20,000 individuals held with the “wealth management” firm Kleinwort Benson, which were leaked to the International Consortium of Investigative Journalists in Washington DC, and shared with the Guardian. Both organisations are publishing details of carefully selected individuals to further the public debate about off-shoring and tax avoidance.
A wide variety of prominent individuals’ names appear on the Jersey files. On Tuesday the Guardian revealed a raft of prominent Tory donors. Now, a range of celebrities and sportsmen – from Dire Straits musician Mark Knopfler to celebrity London tailor Oswald Boateng and football manager Bryan Robson – are revealed.
They include those who sought a legal tax advantage from offshore activities; those who received legal offshore windfalls from relatives; and foreigners whose tax declarations to their own authorities are often voluntary.
Celebrities, sportsmen and other prominent figures linked to Jersey
Valentino Rossi, motorcycle racer
The highly-paid Italian world champion put cash into a Jersey account. According to the Italian authorities, he exploited the offshore haven’s facilities to avoid tax in his home country where he carried on living. He had arranged “to create a more or less fictitious residency in London in order to avoid paying taxes in [his] own country”. He claimed to be living under UK jurisdiction as a tax-free “non-dom”.
His accountants told the Guardian Rossi eventually “reached an agreement with the Italian tax authorities” and closed down the Jersey accounts. In 2008, Rossi agreed to pay back €35m.
Placido Domingo, opera singer
The Spanish singer’s PR firm in Los Angeles agrees that his family benefited from a Jersey trust. “There was, but no longer is, a trust for his son … administered by a law firm. Mr Domingo Jr is not and never has been a UK resident.” Domingo himself, now living in the US, is also not liable for British tax.
Bryan Robson, football manager and former Manchester United captain
Robson and his wife are Britons who sought a legal tax advantage. They took out one of Kleinwort Benson’s multi-currency offshore mortgages which, if successful, could legitimately avoid any profit being taxed as income or capital gains. They say: “The mortgage is moved from currency to currency to supposedly save money on the amount repaid … by successful currency trading. This did not happen in our case and, after losing money, we paid off the mortgage and closed the account … We have never, in any of our financial dealings, sought to evade tax. We feel everybody has to pay their fair share and have always been happy to do so.”
Sir Edward Evans-Lombe, retired high court judge and Norfolk landowner
As potential beneficiaries, he, his wife and children are listed in Jersey in connection with trusts, including a 1965 trust set up by his deceased father, Vice-Admiral Evans-Lombe, and another trust set up in the name of he and his wife. Neither he nor his son Nick, director of a marketing company, wished to comment.
Oswald Boateng, celebrity tailor
Has dressed Jude Law, Mick Jagger and Daniel Day-Lewis. Listed as a Kleinwort Benson client, along with his former wife, Russian model Gyunel, his son and daughter. Does not wish to comment.
Mel Gibson, actor
The star of Braveheart and other action movies has dual US/Irish nationality. He is not UK-resident or liable for UK tax. He separated from his wife, the mother of his seven children, in 2006, and they divorced in 2011. He and five of his children appear as potential trust beneficiaries on the Jersey files. His representatives in Los Angeles declined comment.
Eddie Jordan, former Formula One motor-racing supremo
Irishman. Sold out his racing team in 2005 for reported US$60m. Jersey-held assets listed included his £5m Sunseeker yacht the Snapper [subsequently sold in 2012 to Chris Evans]. His wife Marie and his children are also listed in Jersey as beneficiaries. Bought London apartment at the Bromptons in 1999. Changed declared residence from London to Monaco in 2011. He and his daughter, London fashion designer Zoe Jordan, both decline to comment.
Mark Knopfler, Dire Straits guitarist
Jersey trust for his ex-wife Lourdes, a US citizen who has been living in London, and their two sons. His accountants said: “All relevant details concerning the trust have been made in tax returns to the authorities both in the UK and the USA.”
Kleinwort Benson: the “wealth managers”
Kleinwort Benson was among the first London bankers to descend on the semi-independent Channel Isles in the early 1960s, having spotted their potential as offshore tax havens.
Fifty years later, despite intermittent international clampdowns on tax avoidance, Kleinwort Benson’s current “wealth management” team claims to still manage £5.9bn of assets. Its published motto is: “A fortune once acquired should never be endangered.”
Conveniently near the mainland, the islands were allowed to set their own low tax rates. Jersey and the smaller Guernsey’s other selling point was British political supervision. It was reassuringly unlikely that the clients’ money would be stolen or expropriated in a change of regime.
Over the decades, the cash seeping into these small havens off the coast of France swelled to a torrent. Bank deposits grew from £500m in 1970 to £220bn in 2007.
At its pre-crash peak, the value of assets held through Jersey – its offshore banks, trusts and investment funds – was estimated at £700bn-£800bn, according to the island’s former chief adviser Colin Powell. The figure is equivalent to about half of the UK’s annual economic output.
Jersey’s secretive facilities were a magnet for foreign tycoons and potentates. In 2000, for example, a hoard of up to £100m was discovered in anonymous Jersey accounts owned by the foreign minister of Qatar. Much of it turned out to have been “commissions” on western arms sales.
Philip Ozouf, Jersey’s treasury minister, told the Guardian in 2012: “Did people come here with suitcases full of cash in the 1970s? Of course they did. Was tax evasion widespread? Of course it was. But Jersey moved away from all that a long time ago.”
Its critics would say that Jersey did indeed move away from crude suitcase-smuggling, but only into providing facilities for more sophisticated forms of tax avoidance that, whileartificial, were also perfectly legal.
Only in recent years has the British electorate woken up to the sheer scale of the legal avoidance industry centred on Jersey. The comedian Jimmy Carr was exposed in 2012 for using a Jersey-based scheme to shelter £3.3m a year from income tax: he apologised and called it a “terrible error of judgment”.
But the really big money is hidden in hundreds, possibly thousands, of anonymous, unregistered offshore trusts. The trusts’ stores of capital gains and inheritance tax-free wealth provide a safe haven for the families of the rich, thus effectively blocking any attempts by UK governments at serious wealth redistribution.
Our research found Jersey trusts which husbanded billions. Just one, for the family that controls Nando’s restaurant chain, probably has £1bn in it. A treasure chest of at least £100m has fed more than 40 relatives of the late Edward Lumley, an insurance tycoon. The Kleinworts themselves sold out their bank to a German firm in 1995 for more than £200m, placed in trusts for around 30 members of the clan.
Ronen Palan, professor of international politics at City University, London, describes Jersey as one of the “fictitious spaces” with relatively little regulation that he says are eroding the world’s political structures.
Other critics have even more hostile opinions: Nicholas Shaxson, author of the anti-tax havens book Treasure Islands, made Jersey a key focus of his polemic, calling it a “gigantic sink” for cash.
The Rockley trusts: keeping it in the family
The offshore Rockley trusts uncovered in the files illustrate graphically how wealth in Britain stays in the family – the family in this case being the Cecils, who date back to William Cecil, a key political figure in the reign of Elizabeth I.
Despite rising death duties, which had by 1948 reached 75%, their own Dorset estate, Lytchett Heath, has been successfully held on to for generations. It was inherited by Evelyn Cecil, who became Lord Rockley in 1934: he was a reactionary Conservative MP who opposed women’s suffrage and free school meals. His uncle, the Marquess of Salisbury, was prime minister. His city interests included directorships in railway companies.
The last but one Rockley, the late James Cecil, increased the family’s stockbroking fortune. As director of the Kleinwort private bank which handled his family’s own affairs, his high point came in helping the Thatcher government successfully privatise British Telecom in 1984. The following year he set up the Rockley 1985 Family Settlement to avoid inheritance tax, the replacement for death duties.
It was one of an array of such trusts listed in the Kleinwort Benson files. Others include the 2nd Baron Rockley 3rd Children’s Settlement and the offshore Lord Rockley Cayman Settlement. Beneficiaries included James Rockley’s wife; his Old Etonian son Anthony (present holder of the title); and his brother Charles’s children – David, Arabella and Lucinda.
Anthony, the current Lord Rockley, is an accountant and a partner at KPMG who focuses on private equity funds. He told us: “The Lord Rockley Cayman Settlement … has an account in the Channel Islands. [It] … was created when my family owned property in Canada.”
He added: “The Lord Rockley Cayman Settlement is not resident in the UK, but complies with all UK tax obligations. All income … is paid to a UK trust and is therefore subject to income tax in the UK.”
The other trusts “are resident in the UK for tax purposes and are fully compliant with all UK tax obligations.”
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