A new leak of financial documents that follows the so-called Panama Papers has uncovered business ties between U.S. Commerce Secretary Wilbur Ross and Russia, as well as alleged tax evasion by an aide to Canadian Prime Minister Justin Trudeau.
Former state leaders have also been named in the documents, including former Prime Minister Yukio Hatoyama, who became honorary chairman of a Hong Kong-based energy company incorporated in Bermuda, a British territory also known as a corporate tax haven, from 2013 after retiring from politics.
Hatoyama has denied any involvement in the company management of Hoifu Energy Group Ltd., saying, “I was told that just placing my name (among the officials’ list) is enough. I am an honorary chairman and there is no substantial meaning.”
He also admitted that he is being paid advisory fees, but that they are appropriately being reported to tax authorities.
According to the records coming from offshore services firms and others, Ross, a billionaire private equity investor and a close confidant of U.S. President Donald Trump, holds a stake in a shipping company that receives millions of dollars a year in revenue from an energy company effectively owned by Russian President Vladimir Putin’s son-in-law and members of Putin’s inner circle.
The revelation could be a blow to the Trump administration that has already been dogged by allegations of collusion between Trump’s aides and Russian officials, with an investigation underway into suspected Russian interference in last year’s presidential election.
The new leaked documents have been named the “Paradise Papers,” which, similarly to last year’s leak of files from Panama-based law firm Mossack Fonseca & Co. that came to be known as the Panama Papers, were obtained by the German newspaper Sueddeutsche Zeitung and shared with the International Consortium of Investigative Journalists.
Kyodo News and other media outlets are in partnership with the ICIJ.
A total 13.4 million records were leaked, many of which come from Appleby, a Bermuda law firm that operates branches in tax havens around the world including the Cayman Islands, and its affiliates covering the period from 1950 and 2016.
More than 120 politicians, other influential figures and corporate giants such as Nike Inc. have been named in the records, bringing renewed attention to how the rich and the powerful use tax havens to increase their wealth.
While Ross’ case is not about tax evasion, business ties between the U.S. commerce chief and people close to Putin could raise concerns about conflicts of interest, with tensions between the two countries increasing following Russia’s annexation of Crimea in 2014 and its alleged interference in the U.S. presidential election in 2016.
A U.S. Commerce Department spokesman has denied any ethical misconduct by Ross, according to the ICIJ.
Ross divested most of his business assets before joining Trump’s Cabinet in February. But the leaked documents showed how Ross used entities in the Cayman Islands to retain his financial stake in Navigator Holdings Ltd., a shipping company whose top clients include Russia’s gas and petrochemicals company Sibur.
Sibur has contributed some $68 million in revenue since 2014 to the London-based Navigator Holdings, and its owners include Putin’s son-in-law, Kirill Shamalov, and Gennady Timchenko, who was sanctioned by the U.S. Treasury Department in March 2014 due to his links to Putin in the wake of the Crimea annexation.
According to the ICIJ, the offshore entities in which Ross and other investors hold a financial stake controlled 31.5 percent of Navigator Holdings in 2016.
The ICIJ’s coverage of the Paradise Papers has also led to the discovery of a business connection between Navigator Holdings and Petroleos de Venezuela S.A., a Venezuelan state-owned oil company subject to economic sanctions by the United States.
In August, the Trump administration imposed new economic sanctions on Venezuela, calling the administration of President Nicolas Maduro a “dictatorship.” The measures include banning trades of bonds issued by the South American country’s government and the state-run company PDVSA.
Although Navigator Holdings’ ties with PDVSA themselves do not violate sanction-based obligations, they could stir criticism as the business relationship allowed the company closely linked with the U.S. commerce secretary to gain profits from the Venezuelan firm, a move that goes against the purpose of the sanctions.
According to documents of Navigator Holdings, PDVSA has chartered three vessels from the shipping company as of 2016. Revenues from vessel charter contracts with PDVSA and an Indonesian state-run oil company accounted for 20 percent of Navigator Holdings’ total revenue in 2015.
The leaked documents also suggested that Stephen Bronfman, Trudeau’s close friend and chief fundraiser for his Liberal Party, moved millions of dollars to a trust in the Cayman Islands, an offshore maneuvering that may have avoided taxes in Canada and elsewhere.
The trust was set up in 1991 by Leo Kolber, then a member of the Canadian Senate from the Liberal Party with close ties with the famed Bronfman family. The Kolber Trust received millions of dollars in loans from the Bronfmans and held $38.5 million in assets by the mid-1990s, the ICIJ said.
A lawyer representing the Bronfmans and Kolbers was quoted as telling the ICIJ that “none of the transactions or entities at issue were effected or established to evade or even avoid taxation.”
But the allegations may be a blow to the Trudeau government that has been seeking to improve economic fairness and stepping up efforts to combat offshore tax evasion.
Other eye-catching records were linked to the offshore interests of Britain’s Queen Elizabeth II.
The documents showed that as of 2007, the queen’s personal estate invested in a Cayman Islands fund that in turn invested in a private equity company controlling a British firm criticized for selling household goods to cash-strapped people on payment plans with interest rates as high as 99.9 percent, according to the ICIJ.
Appleby has so far denied evidence of any wrongdoing in a statement posted on its website in late October, saying it has recently faced questions over its business and business conducted by some of its clients from the ICIJ and other media organizations.