Appleby, Paradise Papers law firm, scrambles to save reputation

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Nov 07, 2017
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The Queen was among those whose investment affairs were revealed in the Paradise Papers

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Partners at the offshore law firm Appleby scrambled to limit damage to the practice’s reputation yesterday as its clients’ investment affairs were splashed across global media after a data breach.

In a statement, the firm at the heart of the so-called Paradise Papers affair said were no allegations that the lawyers themselves had “done anything unlawful”.

It added that the information now in the public domain — which involves the investment affairs of the Queen, the Conservative Party’s top fundraiser, a senior member of the US government and a range of celebrities including the U2 frontman, Bono — was revealed as the result of “a serious criminal act” when its systems were hacked last year.

“Our systems were accessed by an intruder who deployed the tactics of a professional hacker and covered his/her tracks to the extent that a forensic investigation by a leading international Cyber & Threats team concluded that there was no definitive evidence that any data had left our systems. This was not the work of anybody who works at Appleby,” the firm said.

It was also at pains to distance itself from the increasingly sullied connection to Bermuda, a jurisdiction that has long been accused of having lax money laundering rules and being a home to those evading tax.

“Appleby is a global organisation comprising ten offices which have equal prominence within the global business. We do not have a headquarters. It is not correct to state that Appleby has its headquarters in Bermuda,” it said.

Commentators had some sympathy for the firm. “If Appleby’s advice has gone no further than tax avoidance, we shouldn’t expect to see any prosecutions in the UK arising from this data leak,” said Andrew Smith, a partner at Corker Binning, a white collar crime specialist practice in London.

Smith pointed out that updated criminal offences regarding tax, such as failure to prevent the facilitation of tax evasion, are not retroactive. “But even if they were, nothing has been disclosed so far which suggests they would criminalise what has happened here,” he said.

Miles Dean, the lawyer-managing partner of Milestone International Tax, a specialist practice in London, said that some of the documents in the Appleby breach “relate to matters 75 years ago when the world was a very different place”.

He added that “just because an individual makes an investment that is based offshore does not mean that they have done anything wrong. If they fail to disclose it, and the return they make on their tax return, then that’s tax evasion.

“But to make the quantum leap and suggest that everyone from the Queen to Bono is dodging tax because some of their investments are made via Bermuda, Cayman or Malta is stupidity on a grand scale.”

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