More than a year after the huge leak of tax-haven records known as the Panama Papers, there is another massive disclosure of documents involving politicians and corporations and how they park their assets to avoid taxes in their home countries.
This time it’s known as the Paradise Papers, a leak of around 13.4 million records (including 3,000 Canadian accounts) showing how the wealthy stash their money in offshore accounts.
Here is what we know so far.
How were the Paradise Papers obtained?
The Paradise Papers were first obtained by German newspaper Süddeutsche Zeitung (which also obtained the Panama Papers) and then shared them with the International Consortium of Investigative Journalists, including CBC/Radio Canada and the Toronto Star, which published details on Sunday.
The media outlet did not say how it got the documents.
What’s in the leak?
The full extent of information contained in the leaked files is still unknown, but media outlets around the world are starting to publish the information.
The documents consist mostly of client records of the Bermuda-based law firm Appleby, as well as some records from offshore corporate services firms Estera and Asiaciti Trust.
The Paradise Papers also show documents from companies and individuals including Apple, Nike, Facebook, Uber as well as the Queen and U2’s lead singer, Bono.
The names of at least 13 people with close ties to U.S. President Donald Trump also appear in the Paradise Papers, including U.S. Commerce Secretary Wilbur Ross.
WATCH: White House officials named in Paradise Papers linked to Russian money
Ross kept investments in a shipping firm with significant business ties to Russian President Vladimir Putin‘s inner circle, U.S. media reported on Sunday.
There are over 3,000 Canadian names in the Paradise Papers.
Among those names are former Canadian prime ministers Brian Mulroney, Paul Martin and Jean Chretien, according to documents obtained by CBC/Radio Canada and the Toronto Star.
Stephen Bronfman, a financier for one of Canada’s wealthiest families and chief fundraiser for Justin Trudeau’s Liberal party, is also on the list.
Bronfman and his family’s Montreal-based investment company, Claridge Inc., were linked to an offshore trust in the Cayman Islands that may have used questionable means to avoid paying millions in taxes.
WATCH: The Liberal Party’s link to the Paradise Papers
The offshore trust also involved former chief Liberal fundraiser and senator Leo Kolber and his son, Jonathan Kolber, according to the media reports.
Bronfman issued a statement Monday saying he’s never funded nor used offshore trusts, and his “Canadian trusts have paid all taxes on all their income to the Canadian government.”
Bronfman’s post as revenue chair for the Liberals effectively makes him the party’s chief fundraiser, but the party sought to downplay the significance of his position in a statement provided shortly after the revelations.
“The role of revenue chair is a non-voting position,” Liberal Party spokesperson Braeden Caley told Global News. “Mr. Bronfman’s role with the Liberal Party of Canada is as a volunteer, and has consisted strictly of assisting the board on matters related to building on the Liberal movement’s strong grassroots fundraising support, not policy decisions.”
LISTEN: Ian Lee, Associate Professor at Carleton University’s Sprott School of Business, joined AM640’s Kelly Cutrara to explain what you need to know about the Paradise Papers.
Why do people use offshore accounts?
Offshore tax havens typically offer low or zero tax rates to non-residents who keep money there. Companies or individuals often use shell companies, initially incorporated without significant assets or operations, to disguise ownership or other information about the funds involved.
But that money could potentially be taxed in the owner’s home country, like Canada, meaning governments could be losing out on billions in revenue.
According to Canadians for Tax Fairness, the government loses between $10 to $15 billion a year due to tax havens.
Is it illegal?
Neither the CRA nor any court has determined the Canadians did anything wrong.
Offshore accounts are used by wealthy individuals and corporations around the world as a legal way to reduce their tax burden, although the anonymity provided to account holders has also led to associations with tax evasion, money laundering and organized crime.
WATCH: Names of hundreds of Canadians released in Panama Papers
Did the Canada Revenue Agency know?
Before the documents were leaked Sunday, the CRA issued a statement last Friday, detailing the agency’s efforts to crack down on tax evasion and tax avoidance.
The agency said it’s invested $1 billion to tackle the problem and currently has more than 990 audits and more than 42 criminal investigations underway related to offshore tax havens.
As a result of audits over the last two years, the CRA said it identified some $25 billion in unpaid taxes, interest and penalties.
A spokesman for National Revenue Minister Diane Lebouthillier, told the Canadian Press on Sunday that “the CRA is reviewing links to Canadian entities and will take appropriate action in regards to the Paradise Papers.”