International Consortium of Investigative Journalists unveils major Tax Evasion Scheme
Fifteen months of deep research by the International Consortium of Investigative Journalists (ICIJ), reveals in detail the existence of hidden fortunes in tax havens, whose funds experienced some 12,000 transactions among 13,000 enterprises and individuals involved in the scheme.
The ICIJ had access to 2.5 million digital files, that involve accounts in the Virgin Islands, British Cook and other fortune heavens at sea. The size of the files obtained by the organization is said to be 160 times greater than the package of information given to Wikileaks in 2010 about the diplomatic dealings at the U.S. State Department.
The ICIJ’s work exposes the existence of thousands of offshore accounts – with three major focal points in the Americas: Canada, United States and Venezuela.
Revelations exposed by ICIJ’s investigation tell how Francisco Illarramendi, a Venezuelan citizen who is the head of an investment firm in the U.S. state of Connecticut, created a Ponzi scheme of billions of dollars together with the Venezuelan financial tycoon Moris Beracha, a close friend of Hugo Chavez.
Several lawsuits in U.S. federal courts argue that both men diverted investors’ money into a maze of offshore companies ranging from the Cayman Islands to Switzerland and Panama, for which they had to bribe officials of the ‘Bolivarian’ regime.
The gigantic fraud collapsed in 2011, causing losses of hundreds of millions to unsuspecting investors. Among the victims, there are members of one of the wealthiest families in Latin America’s Southern Cone. According to reports from ICIJ, based on court documents, the Ponzi scheme also devoured part of the pension funds of the state oil company PDVSA, the jewel in the crown of Chávez’ Venezuela and the source that financed Chavez’ revolution.
Illarramendi pleaded guilty in 2011 to charges against him in the U.S. but Beracha, who has not been charged by the U.S. justice, insists that, far from participating in the fraud of his partner and friend, he has been a victim of it.
Other businesses involved with Illarramendi is Juan Montes, a senior investment director at PVDSA-who would have pocketed more than $ 30 million off of bribes in exchange for providing complex bond transactions between pension funds from the Venezuelan oil company and investment funds that belonged to Illarramendi.
In Canada, Tony Merchant, a prominent lawyer and husband of Senator Pana Merchant, buried about two million in a tax haven in the Cook Islands in 1998 while he was locked in battle with the IRS. Known as the King of the Lucrative-Class, because it has won cases in court for his Merchant clients, Merchant transferred the money to the South Pacific and then funneled it to an account in the Caribbean, registered under the name of his wife and his three children.
The 15-month investigation by ICIJ was done in collaboration with Canada’s CBC. The same investigation found out that at least 450 Canadians are involved in tax evasion schemes.
“Keep the correspondence to a minimum,” reads a note attached to a Merchant’s bill at the Cook Islands, that requires communication only with counsel via regular mail.
The documents reviewed by media from 35 countries show how the so-called “offshore financial secrecy has expanded aggressively worldwide, enabling rich and well-connected people to evade taxes feed corruption and economic problems in countries rich and poor alike,” says the report.
In the case of the U.S., the Washington Post, ICIJ’s counterpart in this project, has not yet made public their findings but already has advanced the names of more than 30 Americans involved in fraud, money laundering and other crimes.
To analyze all the information provided, the ICIJ enlisted 86 journalists from 46 countries and the collaboration of British media such as The Guardian and the BBC, the French newspaper Le Monde and The Washington Post.
Details of the investigation will be published gradually until next April 15 while continuing the review many of the documents obtained by ICIJ