Appleby Responds To ‘Paradise Papers’ Release

November 6, 2017

Appleby — who is the subject of headline news around the world following the release of the ‘Paradise Papers’ — has released a new statement, calling the matter a “patchwork quilt of unrelated allegations with a clear political agenda and movement against offshore.”

Paradise Papers Released

At approximately 2.00pm Bermuda time yesterday, the International Consortium of Investigative Journalists [ICIJ] released the Paradise Papers, saying that they, and 95 media partners, explored 13.4 million files from a combination of “files of offshore law firms and the company registries in some of the world’s most secretive countries.”

The ICIJ said, “The Paradise Papers documents include nearly 7 million loan agreements, financial statements, emails, trust deeds and other paperwork over nearly 50 years from inside Appleby, a prestigious offshore law firm with offices in Bermuda and beyond.”

ICIJ added that the “documents include files from the smaller, family-owned trust company, Asiaciti, and from company registries in 19 secrecy jurisdictions.”

Numerous world leaders and major figures have been named in the papers, including Queen Elizabeth II, Bono, and major donors and Cabinet members of U.S. President Donald Trump.

The ICIJ also added that the files from Appleby “include details of tax planning by nearly 100 multinational corporations, including Apple, Nike and Uber.

Papers Receive Major International Coverage

Numerous major international media [Guardian, BBC, NY Times, CNN, Reuters etc] reporting on the Papers, and the hashtag #ParadisePapers quickly became the top trending topic on Twitter, and, as of this writing, as been the subject of over 340,000 tweets.

Multiple websites ran special coverage, major television networks covered it as ‘Breaking News’, and some major international media are running live updates on their websites.

The front page of the UK’s Guardian newspaper focuses entirely on the ‘Paradise Papers’:

The Guardian Bermuda Nov 6 2017

Appleby Statement

Following the release, the law firm said, “Recent media coverage, including the Panorama programme aired on 5th November, continues to focus on the offshore sector. The journalists do not allege, nor could they, that Appleby has done anything unlawful. There is no wrongdoing. It is a patchwork quilt of unrelated allegations with a clear political agenda and movement against offshore.

“We wish to reiterate that our firm was not the subject of a leak but of a serious criminal act. This was an illegal computer hack. 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. Panorama stated they have nearly seven million of our documents. They also claimed to have sourced information from ‘publicly available documents’. The BBC website states that “the Paradise Papers contains 13.4 million documents”. It is plain that the source of documents is not confined to Appleby.

“We have had lengthy correspondence with the International Consortium of Independent Journalists [ICIJ]. Their claim that we ‘did not reply to their detailed questions’ is false. We responded to their questions and we requested that they show us the documents they have in their possession which belong to us. Extracts of our response to the ICIJ, which they acknowledged on 26 October, are set out below

“We take client confidentiality extremely seriously and we are disappointed that the media has chosen to use information which has emanated from material obtained illegally. This has very little to do with accurate and fair reporting, and everything to do with the pursuit of a political agenda. These journalists will not permit fairness and accuracy to get in the way of their political objectives.

“We also wish to clarify that 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.

“Appleby has thoroughly and vigorously investigated the allegations and we are satisfied that there is no evidence of any wrongdoing. We are a law firm which advises clients on legitimate and lawful ways to conduct their business.

“We operate in jurisdictions which are regulated to the highest international standards. We do not tolerate illegal behaviour and we reiterate our commitment to responsible business conduct. We are committed to the highest standards of client service and confidentiality. It is what we stand for, this commitment remains unequivocal.

“If you are a client of Appleby and you wish to discuss any aspect of this statement, please call +44 [0]1624 647 915, or email enquiries@applebyglobal.com”

Appleby provided the extracts below from their response to the ICIJ Letter, dated 6 October 2017

1. Client Specific Questions

“As a law firm we are under strict legal and regulatory obligations of confidentiality to our clients which we take extremely seriously. We are therefore unable to comment on any client specific activity.

2. Compliance Related Questions

“Across all the jurisdictions in which we operate, we face an ever-increasing level of compliance obligations including in respect of anti-money laundering [“AML”] and anti-terrorist funding [“AFT”] measures. These compliance obligations are extremely complex and strict.

“Our overriding objective is to have the procedures and policies to ensure that we have 100% compliance with these obligations. This is a major undertaking. Appleby invests a significant amount annually in compliance professionals and processes, not only to put in place the requisite procedures and policies but also to review constantly our current practices to see where there can be improvement.

“The fact that weaknesses were found, candidly reported, addressed and improved upon reflects the importance we attach to this area and our heavy investment in compliance professionals.

“We would also note that your quotes taken from internal compliance-related training programmes have been taken completely out of context. For example, the quote ‘Some of the crap we accept is amazing totally amazing’ has clearly been framed so it sounds like it is referring generally to the take-on of clients. That is not true.

“It was in fact referring simply to the quality of the copy of passport photos or utility bills that were in some cases unreadable. That we apply attention to this detail of the compliance process again reflects the importance we attach to it.

“Another example of how your questions suggest a misleading understanding of the facts is the one which refers to 600+ clients ‘not being compliant’. In fact, our system at that time had two measurement definitions: “Compliant” or “Not Compliant”.

“The vast majority of the 600+ clients referred to would simply have some technical matter regarding the compliance process outstanding which could range from lack of evidence that the entity is ‘exempt’, through to a single document that was not properly certified or had expired. Such outstanding matters could in no way call into question the propriety of acting for the client. Until the client is 100% compliant the status would not change from Not Compliant to Compliant.

“Another example is the question: “We have a current case where we are sitting on about 400K that is definitely tainted and it is not easy to deal with” – “To what situation does this refer?” This was a hypothetical example to demonstrate the seriousness of the implications of SARs. The phrase was used to highlight an example.

“The presenter actually phrased the statement as “Say for example we have a current case where we are sitting on about $400k that is definitely tainted….” The point being that once we accept client assets, should they be tainted in any way then it puts the firm in a very difficult position. The presenter went on to state that if we suspected assets to be the proceeds of crime then we are duty bound to make a suspicious activity report and that if we moved the assets we could breach the law ourselves.

“A further example is the question “We are exposed….This is not the best we can do”. Again, a line in the speaker’s notes has been taken out of context. This presentation did not stand alone. This presentation related to the general criticisms aimed at the finance industry and offshore world.

“Against this background, the presenter went on to make the point that, as a prominent business in this sector, every professional within our business is exposed to individuals who may want to use our services to facilitate activities that we would not knowingly want to be involved in. The presentation was all about setting compliance benchmarks and improving standards.

“As a law firm, Appleby has never had any concerns raised at all by its regulators in respect of its AML or AFT compliance.”

Matter Expected To Continue

This is reported to be the second largest “data leak” ever [behind the Panama Papers] and as there are hundreds of journalists worldwide working with millions of files, reports — and subsequent reactions — are expected to continue to keep coming.

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Comments (8)

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  1. Truth is killin’ me... says:

    This is where you’ll see the real bigots and hypocrites coming after Bermuda! Stand firm Bermy!!

  2. Credit says:

    Not sure whether I want to laugh or cry: On the one hand, I’m delighted to see an arrogant profession exposed for the sleaze that much of it is (and some very imminent cuts in pay as clients abandon them); on the other, this does not bode well for all those who are economically dependent on these cockroaches.

  3. Y-Gurl says:

    Unfortunately Appleby can claim innocence until the ink turns red, Bermuda is again in the world press for all the wrong reasons and has the UK labor party shouting their “told you so” messages from the top of Big Ben, and the call for action has crossed party lines and Bermuda will feel the impact

  4. Peace says:

    I always thought the BBC was impartial; I grew up watching BBC World. Today in their live feed they took what the premier said and totally spun it. As the premier said we take pride in being transparent and compliant.

    This is what was on BBC World’s live feed:
    “Earlier, on the BBC’s Today programme, the premier of Bermuda David Burt said his country had a “robust regulatory regime” and it had had the same tax system since 1898. He added the UK’s tax law allowed the use of offshore tax havens.”

    To take his statements and condense them into that seems far from impartial. I still have faith in the BBC, but that did not seem right to me. Perhaps I am just being biased…

  5. Ringmaster says:

    Nothing has yet been suggested that the tax avoidance is illegal. It’s not. The problem is that Bermuda cannot claim to be intolerant of financial malfeasance
    when it drops court cases against local politicians. Not good.

  6. Responsible says:

    Over $100,000,000+ a year in revenue and no robust IT security, nonsense, and now Bermuda’s stellar reputation as a premier IFC suffers.

    Someone at Appleby must be held accountable, and no we will not accept the cleaner’s resignation.

  7. bdaboy says:

    “Someone at Appleby must be held accountable”

    lol…on an island that refuses to hold its own government accountable?
    Dreamer