Appleby PHOTO

Paradise Papers law firm sues Guardian and BBC

A LAW firm with a large presence in Jersey is suing the Guardian and the BBC after a significant amount of its data was handed to journalists after the so-called Paradise Papers leak.

Appleby, which has offices on the Esplanade, is demanding that the two companies hand over millions of files, which it says were stolen from the firm by hackers.

The leaked documents are reported to contain the tax affairs of dozens of companies and individuals, including Former One world champion Lewis Hamilton and the Queen’s Duchy of Lancaster estate.

The reporting also alleged that Apple had moved two subsidiaries to Jersey from Ireland after the country was forced to toughen up its tax rules by the European Union.

In their report, the BBC’s Panorama claimed that Apple had received advice from Appleby about the transfer, helping it to avoid tax on $252 billion in cash that it holds offshore.

The Jersey Financial Services Commission later said, however, that neither subsidiary was registered in the Island.

In a statement, Appleby, which is suing for breach of confidence, said that it had an overwhelming responsibility to ‘our clients and our own colleagues who have had their private and confidential information taken in what was a criminal act’.

It added: ‘We need to know firstly which of their – and our – documents were taken. We would want to explain in detail to our clients and our colleagues the extent to which their confidentiality has been attacked.

‘Despite repeated requests, the journalists have failed to provide to us copies of the stolen documents they claim to have seen. For this reason, Appleby is obliged to take legal action in order to ascertain what information has been stolen.’

Around six million confidential files outlining Appleby’s affairs were given to German newspaper Süddeutsche Zeitung, before they were shared with the International Consortium of Investigative Journalists, which includes representatives from the BBC and the Guardian.

The ICIJ then launched an investigation.

A spokesman for the BBC said that it would strongly defend its role and conduct in the Paradise Papers project.

He said: ‘Our serious and responsible journalism is resulting in revelations which are clearly of the highest public interest and has revealed matters which would otherwise have remained secret.

‘Already we are seeing authorities taking action as a consequence.’

And a spokesman for the Guardian said the claim could have serious consequences for investigative journalism in the UK.

He said: ‘We can confirm that a claim has been issued against the Guardian. The claim does not challenge the truth of the stories we published.

‘Instead it is an attempt to undermine our responsible public interest journalism and to force us to to disclose documents that we regard as journalistic material.’

Three new law firms open in Jersey in a matter of weeks

Formerly of Appleby, Advocates Victoria Myerson, Carly James and Celanne Scally have teamed up to form boutique family law firm Myersons.

Based in Broad Street, the trio are offering services in all aspects of family law including divorce and pre- and post-nuptial agreements, together with matters involving children such as maintenance and contact disputes.

With a core ethos of ‘wellness’, clients will be encouraged to seek counselling, practice mindfulness and make use of other health support services during their family cases.

Formerly a partner at Appleby, Advocate Myerson is also vice-chairman of the Jersey Family Law Association. Advocate James is the current chairman of relationship support charity Relate.

Advocate Myerson said: ‘We are not a high street firm, we are a boutique offering and our independence affords us the opportunity to work in a completely client-focused way.

‘Over my career, I have seen the stress and impact that family disputes can have on clients’ emotional and physical wellbeing and we are dedicated to ensuring cases are dealt with efficiently and sensitively while encouraging clients to access therapeutic and wellness support. We are not fee focused, we are family focused.’

Also a new firm, Nicholls Law in Wharf Street is focusing exclusively on litigation and dispute resolution work.

Founder Advocate Paul Nicholls previously headed the litigation and dispute resolution department at Walkers and has been practising law for 25 years.

The new service, which promises to be accessible, conflict free and relationship based, offers competitive hourly rate charging and flexible fee arrangements where appropriate, including ‘no win no fee’, deferred fee and fixed fee arrangements, with a free initial consultation for every client.

Advocate Nicholls said: ‘I hope to be able to position myself as a credible alternative to many of the existing Jersey law firms. I strongly believe that the Jersey legal market is changing. I also believe that Jersey law firms need to adapt to be able to offer a more affordable, flexible and timely level of services.

‘My aim is to offer an unbeatable combination of accessibility, experience, quality and value. That credibility comes not from the size of the firm, but from my experience, acumen and proven ability in this type of work.’

In addition, specialist family law firm Corbett Le Quesne has been launched in West’s Centre by Advocates Barbara Corbett and Nicholas Le Quesne, both previously at BCR Law (rebranded from Benest Corbett Renouf).

The experienced family lawyers are qualified in both Jersey and England and Wales and able to advise and represent clients in both jurisdictions. Both are also trained in collaborative law and Advocate Corbett is a mediator and arbitrator.

The ethos of the firm is to help people to resolve their family law issues to ensure the best outcome for the clients and their children, working in a constructive, consensual and holistic way and using out-of-court methods wherever possible.

Advocate Corbett said: ‘Nick and I share a desire to help people by providing exceptional service, support, guidance and representation at what can often be one of the most stressful and traumatic periods of their lives. For us, this means being creative in our approach and accessible whenever our clients need us.’

Appleby explored connecting tax haven to Halifax, leaked documents show

New leak reveals 3,000-plus Canadians, including three former prime ministers, had links to offshore business.

It was to be a little tax haven in Nova Scotia.

The idea was simple: the companies would be registered in Bermuda but the people processing the paperwork would be in Halifax.

Appleby, the leading offshore law firm in the Paradise Papers leak, explored this vision for outsourcing its back office administrative functions in 2007.

With direct Bermuda-to-Halifax flights, “very reasonable operating costs” and “very significant payroll tax rebates,” the case for Halifax was strong.

But Appleby needed assurances that its clients, who had incorporated in a zero-tax jurisdiction, wouldn’t have to pay tax to Canada.

No problem, wrote Halifax lawyer Jim Cruickshank, who was hired to analyze the legal issues.

“We do not believe the activities of (Appleby) could in any way constitute your clients ‘carrying on business in Nova Scotia,’ ” Cruickshank wrote in a memo to Appleby.

What about extending offshore financial secrecy to the new office in Canada? For this, Cruickshank, had a creative solution.

“We believe a ‘paperless office’ and ‘dummy terminals’ for (Appleby) would provide significant but not complete practical immunity from search and seizure by Canadian authorities.”

While the Halifax outsourcing project would never come to fruition, Appleby’s internal records reveal a preoccupation with secrecy that pervades tax havens. For this reason, governments around the world are targeting the law firms that operate in tax havens, to force them to reveal the hidden transactions that deprive public coffers of trillions of dollars each year.

Estimates put Canada’s own losses to offshore activity at $6 billion to $7.8 billion each year.

But tax haven secrecy has, once again, been pierced by a massive leak.

Unlike last year’s Panama Papers leak, which exposed Panamanian law firm Mossack Fonseca, a firm that has been criticized as a bad apple in the offshore world, the Paradise Papers leak reveals the business of one of the world’s most prestigious blue-chip law firms, Appleby, which caters to the world’s biggest multinational corporations and the wealthiest families on the planet.

Appearing in Appleby’s files are:

Two generations of Liberal party chief fundraisers, Leo Kolber and Stephen Bronfman, who are linked through a Cayman Islands trust fund. Through a lawyer, Kolber and Bronfman said they always acted “properly and ethically, including fully complying with all applicable laws.”

Former prime minister Brian Mulroney, who sat on the board of Said Holdings, a Bermuda company controlled by Syrian-Saudi businessman Wafic Said. Said was a key intermediary in a British-Saudi oil-for-arms deal that led to a $400-million (U.S.) criminal fine for bribery in 2010 against British airplane manufacturer BAE. Mulroney’s lawyer said he is “proud” to have served on the board, and considers Said “a good friend.” Said said he is “proud of the role I played” in the arms deal.

Former Canadian prime minister Jean Chrétien, who is listed as having received options in a Madagascar oil venture registered in Bermuda. He confirmed he consulted for the company in 2007 but says he never received any options.

Paul Martin’s former company, Canada Steamship Lines (CSL), which was one of Appleby’s “biggest clients.” CSL said it “uphold(s) the highest ethical and business standards,” while a spokesperson for Martin said he “has not been involved in CSL in over a quarter century.”

Much of the activity in tax havens is legal, and Appleby considers itself an ethical leader in the offshore industry. Documents found in the 6.8 million internal Appleby files in the leak show the firm was aware of multiple cases where it accepted dirty money.

The emails, client records, bank applications, court papers and other files were obtained by the German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists (ICIJ), the Star and CBC/Radio-Canada. They represent the inner workings of Appleby from the 1950s until 2016.

Canada is a big part of Appleby’s business. With more than 2,700 Canadians and 560 Canadian businesses named in the Appleby database — five times more Canadians than were in the Panama Papers — Canada is the firm’s fourth-biggest market behind the U.S., the U.K. and China.

Appleby has administered 1,450 offshore corporations and trusts with Canadian owners, officers or addresses, mostly in Bermuda. Its lawyers made regular trips to Toronto, Calgary and Vancouver to drum up business, meeting with accountants and lawyers.

Appleby billed Canadian clients and law firms at least $12 million between 2009 and 2013, the documents show.

Canada has a long history of working closely with Caribbean tax havens, said Université de Quebec à Montreal professor Alain Deneault, who has written extensively on the subject.

“We’re so connected to tax havens, they’ve become an integral part of our economy,” he said. “In the end, all the large Canadian companies and family fortunes are structured to circumvent Canadian laws in such a way to allow the owners to avoid taxes.”

Among the Canadian companies who hired Appleby to set up offshore businesses are:

The Montreal Canadiens set up two trusts in Bermuda, including an employee benefit fund that was shut down in 2010. The organization says its offshore business was “in full compliance with the existing Canadian tax legislation.”

Food giant Loblaw says it paid all appropriate taxes on the two subsidiaries it set up with Appleby’s help in Barbados and Bermuda in 2005. They were used to insure cardholder balances from its President’s Choice Financial MasterCard, according to leaked documents.

Hydro-Québec incorporated an offshore company in Bermuda to invest in power-generation projects in China, even though the company is exempt from income tax in Canada. A representative for the public utility said the company was dissolved in 2007 and capital gains taxes were paid.

Brookfield, a Canadian investment giant, set up Brookfield Infrastructure Partners (BIP) in Bermuda to hold international investments. Documents show how the company set up 29 corporations and limited partnerships in nine jurisdictions in a 48-step “specific sequencing” to “ensure” that units of BIP “are not taxable Canadian property.” A company spokesperson said “the tax treatment of partnerships like BIP . . . is the same whether they are domiciled in Bermuda, Canada or the U.S.”

Appleby also performed offshore services for many seemingly regular Canadians, including doctors, engineers, geologists, housewives, a police officer, a speech pathologist and a retired admiral in the Canadian navy.

The database also contains a Bermudian company incorporated by Gerald Bull, the late Quebec engineer who attempted to develop a supergun to shoot satellites into space but ended up working on a massive cannon for Iraqi dictator Saddam Hussein. Also in Appleby’s files is online gambling baron Isai Scheinberg, who started the online gambling site PokerStars, but ran afoul of U.S. authorities and is now actively wanted by the FBI.

While Appleby prides itself on its high ethical standards and has been named “offshore law firm of the year,” internal documents reveal that it hasn’t always succeeded in keeping out questionable clients.

“Some of the crap we accept is amazing totally amazing,” state presentation notes prepared by Appleby’s director of compliance in 2011. “We have a current case where we are sitting on about 400K that is definitely tainted and it is not easy to deal with.”


The firm did not answer detailed questions sent by the ICIJ and the Star.

“We are an offshore law firm who advises clients on legitimate and lawful ways to conduct their business. We do not tolerate illegal behaviour. It is true that we are not infallible. Where we find that mistakes have happened we act quickly to put things right and we make the necessary notifications to the relevant authorities,” reads a statement put out by Appleby after it was contacted about the leak.

Appleby is already publicly associated with the Bermuda Longtail Trust, one of the biggest tax scams in recent Canadian history.

The scam, originally revealed by a Star investigation in 2007, duped almost 10,000 people, including nurses, teachers and at least one police officer, into making donations to bogus charities in order to receive a tax receipt worth four times more. Appleby administered the trust for Canadian businessman Edward Furtak. The trust had collected more than $100 million by the time the Canada Revenue Agency (CRA) got wise to the scheme, and a group of clients sued. Appleby settled the class action for $17.5 million last summer. The firm admitted no wrongdoing.

As governments around the world have turned their attention to cracking down on offshore tax evasion — including almost $1 billion pledged to the CRA in the last two years — Appleby has publicly defended the use of tax havens (also known as “offshore financial centres” or OFCs).

“The myth perpetuated by the OECD and G-20 nations is that OFCs encourage tax evasion,” two Appleby lawyers wrote in the Cayman Islands Journal. “In reality, excessive tax burdens in welfare states encourage tax evasion, leading to capital flight to OFCs. Logic dictates that if politicians wish to eliminate capital flight, they should lower their country’s oppressive taxes.”

Appleby’s Canadian lawyers practiced what they preached.

All of them left the country to avoid paying Canadian taxes, according to an email sent by the firm’s managing partner in the BVI, Michael Burns.

There were a lot of them — 21 of Appleby’s 182 lawyers spread out around the globe were educated in Canada, one indication of the surprisingly strong Canadian presence in Caribbean tax havens.

Burns, who declined to comment for this article, worried that a Halifax branch would draw these Canadian tax expats back into the reach of the CRA.

“Are you able to provide us with any general guidance as to any possible concerns that might arise, such as a liability to Canadian tax?” Burns inquired of his contacts in Halifax.

The CRA returned to Appleby with warm reassurances that no taxes in Canada would be owing if the firm decided to come. An advanced tax ruling in 2008 guaranteed Appleby that any future business in Halifax would not require staff — or its clients — to pay Canadian taxes.

Despite that green light, the firm ultimately bailed on the plan to bring a little piece of Bermudan tax haven to Halifax.

“With regret, we are not now likely to take up the opportunity at this time of proceeding with the Halifax Outsourcing Platform,” Burns wrote in 2009. “Isle of Man was already our top choice for outsourcing, for many reasons, although Halifax was a very close second.”