ICIJ's investigation of Offshore

Yesterday, the International Consortium of Investigative Journalists (ICIJ) released an article explaining how they explore the hidden world of shell companies. After a three year long investigation, ICIJ’s director, Gerard Ryle, obtained information about offshore companies that included over 2.5 million files. These files contained information surrounding shell companies, nominee directors, and shareholders for over 122,000 shell companies. ICIJ found that most offshore companies were staffed by nominee directors, or people who sell their name to be listed as part of the company. ICIJ also found that the people setting up offshore companies were mostly from China, Hong Kong, and Taiwan, but that the former Soviet republics were also well represented.

To investigate these files, ICIJ had a team of 86 journalists, which faced challenges in analyzing the large amount of information. The projected used sophisticated software such as NUIX and dtSearch to analyze the databases. But, help also came in the form of a British programmer who designed an online search system, Interdata. One of the findings from using these complex systems was that the same person’s information had been used for several companies. Additionally, the databases revealed that many offshore companies had purposely left the field for beneficial owners empty.

This may be the biggest investigation of this kind to ever come out on offshore shell companies and tax havens.

A partial list of stories from the ICIJ website, with more coming:

Ferdinand Marcos’ Daughter Tied to Offshore Trust in Caribbean

Mega-Rich Use Tax Havens to Buy and Sell Masterpieces

‘Crony’ of African Strongman Among Thai Names in Secret Offshore Files

Taxmen have little clue of offshore companies owned by Greeks

Offshore companies provide link between corporate mogul and Azerbaijan’s president

Disclosure of secret offshore documents may force top Mongolian lawmaker to resign

How ICIJ’s Project Team Analyzed the Offshore Files

Key Findings

“The people identified in ICIJ’s analysis of the data are shareholders, directors, secretaries and nominees of companies and trustees, “settlors” or “protectors” of offshore trusts, as well as power-of-attorney holders who direct the actions of third parties. Many of the structures are designed to conceal the true ownership and control of assets placed offshore. Their identified addresses are spread across over more than 170 countries and territories.

ICIJ’s data analysis showed that the people setting up offshore entities lived most often in China, Hong Kong and Taiwan. Another important group of clients comes from Russia and former Soviet republics. This helps explain why the second-largest source of capital investment flowing into China is the tiny offshore tax haven of the British Virgin Islands. Similarly, a large source of investment flowing into Russia is from Cyprus, a country that also features heavily in the data – and whose financial stability was recently undermined by a crisis precipitated by Cypriot-based banks being bloated by Russian money.”