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‘A lot of noise without substance’: profession divided on impact of Paradise Papers

As the contents of the Paradise Papers soaks up column inches worldwide, the profession has offered a mixed response so far to the revelations, with some welcoming public scrutiny while others dismiss it as un-newsworthy.

On 24 October, offshore firm Appleby confirmed that a ‘data security incident’ took place in 2016, raising fears that client information could become publicly available. Appleby also acknowledged that it had received enquiries from the International Consortium of Investigative Journalists (ICIJ), which had published the Panama Papers in 2016, regarding the data breach.

The data, which was leaked yesterday (5 November) revealed how many high-profile figures invest in offshore tax havens. Among the names cited in the Paradise Papers are the Queen, Everton FC shareholder Farhad Moshiri, and former Conservative party deputy chairman Lord Ashcroft.

David Pitt Wilson, executive fellow of the London Business School, has demanded ‘more transparency’ as a result of the leaks, and argued that investment products need a ‘nutrition label’ that can ‘assure us that those who manage our savings, even if they are agents of agents, do so on our behalf.’

But one tax litigator told Legal Business: ‘The leak will have come as a surprise to the law firm, but it struck me as a lot of noise without a lot of substance. It’s not a surprise that wealthy people use offshore structures. Most people’s pensions and life insurance policies are offshore. How many times are we going to have the same story popping up? They are legal. If the government was minded to legislate offshore structures out of existence, then that’s what it should be getting on with.’

Despite playing down the overall significance of the leak, the tax litigator confirmed that firms will see an uptick in client enquiries as a result.

Jolyon Maugham QC of Devereux Chambers, who has previously written for Legal Business on the Panama Papers, commented: ‘It will be good news for reputation management firms and libel lawyers.’

However, he argued that those named in the documents should be open to scrutiny: ‘I have said that the right way to deal with this, if you think you have done nothing wrong, would be to throw the book open to an investigative journalist. If you’re not prepared to do that then you will quite rightly face criticism for your conduct.’

On Appleby, Maugham QC said that ‘you can’t imagine its clients will be especially thrilled to see their affairs splashed across newspapers around the world.’

Ashley Hurst, reputation management specialist at Osborne Clarke, said: ‘There will no doubt be lots of companies and individuals currently seeking advice on their legal rights in relation to the leaked material. Companies have the protection of the law of confidentiality and individuals have the additional protection of privacy laws. There will also be libel issues to consider if there is any suggestion of wrongdoing or hypocrisy.

‘The central issue on a case by case basis will be the extent to which the publication of private and confidential information is in the public interest. In that respect, there is a big difference between publishing the mere fact that a company or individual is named in the papers and publishing details of tax affairs that are legal.’

When Appleby confirmed the data breach last month, a cyber-security specialist told Legal Business: ‘The legal sector needs to take this seriously. It’s only just waking up to it now. These breaches are happening all the time at the moment, four or five big ones a month.’

Speaking to Legal Business in December last year, in the wake of the Panama papers episode, Appleby group managing partner Michael O’Connell said: ‘We believe that ultimately the impact of the Panama papers will be a positive one for the offshore world with further review and focus on those jurisdictions, like Panama, that have less robust client take-on procedures and poor or no adherence to international financial transparency agreements. The impact was felt across the offshore world with cyber-security moving swiftly to the top of everybody’s agenda. The investment in cyber-security across the industry has been significant and rightly so. The protection of our clients data is our number one priority.’