The 13.4 million documents released this weekend, dubbed the Paradise Papers, have shown that among the prominent world figures with offshore accounts, a number of Latin American politicians are under investigation.
Some of the top profiles show politicians, social organizations and businessmen from the tip of South America to the top coast regions have opened offshore shell companies and accounts for tax havens. Although possessing an offshore company or opening an account abroad is not necessarily illegal, failing to accurately declare the amount of income to one’s home country could result in tax evasion or money laundering charges.
BBC reported that in Argentina, one of the most prominent figures to have found himself under suspicion of tax evasion is Finance Minister Luis Caputo. The Consortium of Investigative Journalism, or ICIJ, revealed that prior to assuming his role as minister, Caputo worked as administer for Noctua Partners Llc, which the journalists said is a Miami investment fund manager with connections to Delaware and the Cayman Islands. These are two jurisdictions where secrecy and tax benefits apply.
Not only that, but he also held a managerial role in the Alto Global Fund from 2009 until his election into office in 2015, directing one of Noctua’s hedge fund from the Cayman Islands and controlling high-risk investments.
The minister continued to say that he severed all connections with the two companies in 2015 and refrained from disclosing his associations with them as he had only held an administrative role.
However, in a press conference Sunday, Santos maintained he never invested a “single peso” in either company where he worked as director from 1998 to 2000, prior to assuming his place as finance minister under the former president.
The names of Mexican businessmen and large companies also appeared in the Paradise Papers, with one of the most shocking being deceased leader of the Confederation of Mexican Workers, CTM, Joaquin Gamboa Pascoe, who reportedly had around US$19 million invested in the Cayman Islands and the Bahamas in 1982. One of the richest men in the world, Mexican business leader Carlos Slim, also allegedly used a Bermudan company for one of his first endeavors in 2000.
In Colombia, evidence shows President Juan Manuel Santos, a Nobel Peace Prize Winner, to have connections to two offshore companies in Barbados: Nova Holding Company and the Global Tuition & Education Insurance Corp., a tax-exempt initiative which finances travel expenses for Colombians studying abroad.
The list goes on. A Venezuela-based shipping company, Navigator Holdings Ltd, assisted United States Secretary of Commerce Wilbur Ross to secure million-dollar oil deals. Costa Rica’s tourist corporations, the Florida Ice and Farm (Fifco) and U.S. Marvin M. Schwan Charitable Foundation, created tax havens on the Golfo de Papagayo Tourist Pole, the Bahamas, the British Virgin Islands and Grand Cayman. El Salvador saw more than US$50 million transferred to Bermuda by the microfinance company, Salvadoran Foundation for Economic and Social Development (Fusades), often described as the country’s most powerful think tank.
In Peru, the environmental conservation giant, Bosques Amazonas was found to have debited over US$71 million to its offshore companies in popular tax havens between 2008 and 2013. The company said in a statement that the decision to open an offshore account was made by its offshore associate company, Sustainable Forestry Management Limited, of which members of the British royalty and oil tycoons are among its shareholders.
Former FIFA Vice President Juan Angel Napout and the ex-Confederation of the South American Football Confederation, both based out of Paraguay, were behind the creation of an offshore company in the Bahamas in 2010.
In their report, although creating offshore accounts and shell companies is not inherently illicit behavior, continuing to do so contributes to the deterioration of economies in smaller countries. International economy and taxation experts cite continual rise of corruption, violence and crime in tax haven countries and advise that a global solution be reached in order to reverse the tax crisis.