November 29, 2020

Paradise Papers: Lord Ashcroft used offshore trust to shelter wealth while Tory peer

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By Ewen MacAskill From The Guardian

Lord Ashcroft, one of the Conservative party’s biggest donors, faces fresh questions over his offshore affairs after the Paradise Papers revealed a previously unknown trust sheltering his vast overseas wealth.Scores of emails and financial statements chart the inner workings of the Bermuda-based Punta Gorda Trust from its creation in 2000, just after he became a peer.

The documents run until 2016, when the offshore law firm Appleby, which acted as trustee, terminated the relationship, a decision questioned at the time by Ashcroft’s representatives.

The value of the trust fluctuated, but a leaked financial statement recorded it as having assets of $450.4m (£341m) in 2006.

Several emails show concern being expressed by Appleby, the firm at the centre of the Paradise Papers, about the way the trust was being run. The concern was that Appleby, as trustee, was in effect being asked to rubber-stamp decisions it believed it should have been informed about in advance.

n an email in 2010, a senior lawyer for Appleby wrote: “There have been very large sums of money involved and I am very concerned that there has been inadequate supervision of both transactions and distributions … To put it bluntly, we seem to be told nothing, whereas we carry the responsibility of acting as trustee.”

There is nothing illegal about the trust, but its existence could prove awkward for Theresa May. She faces having to square donations from Ashcroft with the Conservative pledge to bring transparency to the offshore industry. Labour is also calling for wide-ranging changes.

Ashcroft, 71, is a former party treasurer and deputy chairman who has given millions to the Conservatives, including £500,000 towards the party’s most recent campaign. The pro-Brexit peer is influential in British politics through his polling company and the website ConservativeHome, a centre-right blog aimed at grassroots party activists.

Ashcroft is also one of the largest individual donors in Australian political history, with gifts to the Liberal party including a single donation of A$1m in November 2005.

Ashcroft’s spokesman, , said the peer had never engaged in tax evasion, abusive tax avoidance or tax avoidance using artificial structures, and “any suggestion or implication that he has will be vigorously challenged”.

Kilkenny declined to pass a series of questions from the Guardian to Ashcroft, dismissing them as “scraps of information, which do not amount to evidence, gained from stolen documents. would not read such a communication and there is no point in attempting by other means to communicate with him.”

George Turner, a spokesman for the Tax Justice Network, which campaigns for reform of the offshore industry, said: “The idea of a trust is that a person gives up their property to a trusted person to manage for the benefit of a third person: a family member, say, or a charity. The fact that the original owner of an asset gives it away and technically no longer owns it can have tax ‘advantages’.”

As a high-profile Tory supporter for more than 20 years, and a man whose businesses have been based in tax havens, Ashcroft remains one of the most divisive figures in British politics.

He was turned down for a peerage in 1999 and 2000 because he was a tax exile in Belize. He gained his title after saying he would take up permanent residence in the UK again.

There was a political storm in 2010 when he confirmed he was still a “non-dom”and did not pay tax in the UK on his earnings abroad. Ashcroft then promised that he would abandon his non-domiciled status to comply with a change of law in 2010 introducing curbs on such individuals sitting in parliament. Ashcroft remained in the Lords until 2015, when he resigned his seat but retained his peerage.

The Punta Gorda Trust was set up in April 2000 when he was a “non-dom”, with his three children named as beneficiaries. Ashcroft was named as the settlor and a beneficiary, the only one entitled to income for life.

The trust became the focal point for a series of multimillion-pound capital distributions, loans and share transactions. Typical of trust activity is a document in March 2002 saying the trustees agreed to forgive a loan of $29.5m to Ashcroft.

The original trustee was the Reid Trust Company, which was taken over by Appleby Services (Bermuda) Ltd.

Concern about the running of the trust emerged within six months of it being set up. Reid warned an Ashcroft adviser: “I would like to emphasise at this point that it is imperative at all times that the trustees are aware of any and all transactions to be entered into prior to transactions occurring.

“To do otherwise will only serve to undermine the integrity of the trust as the trustees are being advised of actions taken in connection with trust assets, which should be under their control, after the event.”

Ashcroft appears to have taken this on board, with the trustee considering and agreeing to various requests.

In a review of the trust in 2009, Appleby expressed further concerns. “My analysis of the final last July indicated that there are very significant payments being made from time to time and we must ensure that these are properly considered and recorded by the trustees,” it said.

Although the children were named as beneficiaries, they seem to have been unaware of this. Minutes of an Appleby meeting in 2010 state that one of Ashcroft’s advisers had “indicated that the settlor’s wife and children were not aware of the existence of the trust”.

The children were replaced in 2010 as beneficiaries by the Cayo Foundation, which distributes money to charities linked to medical research, the military, fighting crime, education, the arts and young people.

The subject of tax surfaces in several of the emails and documents. Appleby drew attention to a law change by the Labour government in 2008 that could have had tax implications if any of the trust beneficiaries were resident in the UK.

The decision of Appleby Services (Bermuda) Ltd to end the relationship with Ashcroft was taken at a 2016 meeting in Hamilton, Bermuda.

Appleby declined to comment about Ashcroft. But in a statement published on 24 October, in response to a series of allegations about this matter and others, the company said it had “thoroughly and vigorously investigated the allegations and we are satisfied that there is no evidence of any wrongdoing, either on the part of ourselves or our clients”.

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IMAGES:
Belize, where Lord Ashcroft was a tax exile. Photograph: Alamy
Ashcroft at the Conservative party conference. Photograph: Oli Scarff/Getty Images
Related story:

Lord Ashcroft ‘ignored rules’ on offshore trust

From BBC Panorama

Tory donor Lord Ashcroft ignored rules around the management of his offshore investments, leaked documents suggest.

The peer gave assets worth hundreds of millions of dollars to the Punta Gorda Trust in Bermuda in 2000.

The Paradise Papers suggests he sometimes made decisions without consulting trust officials. Such action could see the trust challenged by HMRC.

Lord Ashcroft said he would not respond because of the way he has been treated by BBC Panorama in the past.

Panorama approached Lord Ashcroft during last month’s Conservative Party conference in Manchester but he declined to answer any questions about the trust.

The 71-year-old former party deputy chairman has given millions of pounds to the Tories.

He fell out with David Cameron in 2010 and later he co-authored a controversial unauthorised biography of the then prime minister but remains involved in UK politics through his polling and publishing interests.

Journalist Peter Oborne says Lord Ashcroft has been a “hugely significant figure” in the Conservative Party over the last 20 years.

He said: “Lord Ashcroft has been one of the most significant donors to the… party. But it’s not just… that he’s been a giver of money, he’s also been very important organisationally. He’s involved himself in the internal politics.”

Other documents in the Paradise Papers show Lord Ashcroft has secretly remained non-domiciled in the UK for tax purposes.

‘Inadequate supervision’

The structure of a trust involves one entity legally entrusting a second to look after assets for a third, essentially removing ownership for tax purposes.

Wealthy people can legally avoid paying tax on assets that they have given to a trust because they can tell the authorities they no longer own or control the assets in them.

But for a trust to work as a tax break, decisions about its assets have to be taken independently by the trustees.

A series of leaked emails between trustees and Lord Ashcroft’s advisers suggest he was was willing to ignore the rules.

Presentational grey line

Source document

Extract from trust document
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Despite the warning, Lord Ashcroft appears to have continued to make decisions about the Trust’s assets.

In October 2000, one of the trustees says: “I would like to emphasize at this point that it is imperative at all times that the Trustees are aware of any and all transactions to be entered into prior to transactions occurring.

“To do otherwise, will only serve to undermine the integrity of the Trust as the Trustees are being advised of actions taken in connection with trust assets, which should be under their control, after the event.”

A review of the trust in 2009, discovered that significant payments out had been made that had not been properly recorded.

In an internal email, a lawyer representing the trust says: “There have been very large sums of money involved and I am very concerned that there has been inadequate supervision of both transactions and distributions… to put it bluntly we seem to be told nothing whereas we carry the responsibility of acting as trustee.”

Presentational grey line

Source document

Extract from trust document
Presentational grey line

Paperwork then appears to have been put in place retrospectively “to ensure that we have all the relevant trustee and company authorities in place for the transactions which have occured [sic]”.

‘Red flag’

Trust experts say anybody who puts their money into a trust could face a challenge by tax authorities if it was felt rules had been abused.

This could include a challenge from HM Revenue & Customs if it was to take the view an overseas trust had been controlled from the UK.

Nicholas Shaxson, the author of Treasure Islands, an expose of the workings of tax havens, told Panorama: “On the evidence I have seen, it looks like something that is abusive behaviour and an abusive structure. If the trustees are worried, the trustees are expressing alarm about that, that’s a clear red flag.”

Professor Brooke Harrington, the author of Capital Without Borders, said: “It’s important that trustees be independent because the whole concept of a trust is that a settlor gives over legal ownership of an asset to the trustee.

“That’s why you get these tax benefits and other legal benefits from the trust structure.”

Lord Ashcroft’s spokesman, Alan Kilkenny, is quoted in the Guardian newspaper as saying the peer had never engaged in tax evasion, abusive tax avoidance or tax avoidance using artificial structures.

Paradise Papers explainer box

The papers are a huge batch of leaked documents mostly from offshore law firm Appleby, along with corporate registries in 19 tax jurisdictions, which reveal the financial dealings of politicians, celebrities, corporate giants and business leaders.

The 13.4 million records were passed to German newspaper Süddeutsche Zeitung and then shared with the International Consortium of Investigative Journalists (ICIJ). Panorama has led research for the BBC as part of a global investigation involving nearly 100 other media organisations, including theGuardian, in 67 countries. The BBC does not know the identity of the source.

Paradise Papers: Full coverage; follow reaction on Twitter using #ParadisePapers; in the BBC News app, follow the tag “Paradise Papers”

IMAGE:

Image copyright HIDEFUMI NOGAMI, ASAHI SHIMBU Image caption Lord Ashcroft’s trust was based in Bermuda

For more on this story and video go to: http://www.bbc.com/news/uk-politics-41878306

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Comments

  1. Chris Johnson says

    Now what a surprise! What is even more surprising which virtually no one knows about is that a company in which he owns 95%, Waterloo Investment Holdings Ltd up and until 2013 owned 50% of the Companies Registry and Shipping Registry in Belize. In other words this man encouraged people to buy companies and by the way there was icing on the cake, his trust company would form the company for you. Now that is called a double whammy.

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