The UK's Prince Charles has joined the list of prominent public figures implicated in the Paradise Papers, a trove of more 13 million documents exposing the secret offshore investments of the world's rich and famous.
The papers reveal that in 2007 Prince Charles made secret offshore investments worth several million dollars through his private estate, the Duchy of Cornwall, including spending US$113,500 on 50 shares in a Bermuda-based company.
The firm, Sustainable Forestry Management (SFM), was run by the Prince's friend Hugh van Cutsem, a horse breeder with an estate in Norfolk who served as SFM's director until his death in 2013.
SFM puts a premium on the world's forests, meaning investors gain through the purchase of carbon credits. The company, which was launched in 1999, promises "attractive returns… by investment in the world’s tropical and subtropical forests."
The Duchy of Cornwall is a private estate that was set up in 1337 by Edward III with the aim of providing financial stability to his heir, Prince Edward. At present, it hosts the "public, charitable and private activities of the Prince of Wales and his family."
According to the minutes of one estate meeting, "The chairman thanked Mr. Van Cutsem for his introduction of the Duchy of Cornwall and asked – and the board unanimously agreed – that the subscription by the Duchy of Cornwall be kept confidential, except in respect of any disclosure required by law."
Prince Charles's office later received lobbying documents from SFM, at which point the royal lobbied for "forest now declaration" with the aim of saving tropical forests and emphasizing carbon credits. The same year, he set up a Rainforest Project and, in 2008, released a video declaring "We have to find a way of putting a price on them, on the forests, which makes them more valuable alive than dead, so how do we do it?"
The prince continues: "The immediate priority, I believe, is the need to develop a new credit market which will give a true value to carbon and the ecosystem services the rainforests provide the rest of the world… In other words, pay for the perpetual retention of forests."
Labour MP and tax campaigner Margaret Hodge told the Guardian: "It seems clear to me that Prince Charles could not have known or understood the nature of the investment in his friend’s company. What is clear is that there should be proper transparency of all investments made by the Duchy of Cornwall, that the Prince of Wales should not be involved in investment decisions, and that the Treasury should monitor the investments to ensure that the reputation and integrity of our royal family is protected."
Defending Prince Charles, a Clarence House spokesman told the Guardian: "The prince has never chosen to speak out on a topic simply because of a company that the duchy may have invested in. In the case of climate change, his views are well known. Indeed, he has been warning of the threat of global warming to our environment for more than 30 years.
"Throughout this period, he has highlighted many different ways in which it might be possible to slow or halt the damage that is being done. Carbon markets are just one example that the prince has championed since the 1990s and which he continues to promote today, including in his most recent book published earlier this year."
The duchy's offshore investments were brought to light for the first time by the Paradise Papers. Other investments include land in 23 counties, including Prince Charles’s Gloucestershire home of Highgrove: a major business, with interests in commercial and residential property, along with farmland. The duchy is also expected to invest more than a million US dollars in a private equity fund based in the Cayman Islands.
In response to the Paradise Papers' revelations, the duchy released a statement: "Because it is a private estate, we do not comment on the details of the investments beyond stating that they must adhere to its responsible investment policy, which governs the sectors that the duchy may invest in.
"In all cases, these investments do not derive any tax advantage whatsoever based on their location or any other aspect of their structure, and there is no loss of revenue to HMRC as a result."
The Paradise Papers also shed light on deals that took place right before the G8 summit, a lobby led by the International Financial Centres Forum, which represents offshore law firms, had "superb penetration" and lobbied hard to change certain tax regulations. "The forum had superb penetration of UK policymakers in the lead-up to the G8 through cabinet, Treasury, the FCO and HMRC," an agenda notes.
The EU has blacklisted the UK's network of offshore tax havens, calling for a thorough investigation. "It's time that we agree and publish a blacklist on tax havens," EU tax Commissioner Pierre Moscovici told Reuters on Monday. Commission Vice-President Valdis Dombrovskis said the revelations "put renewed emphasis on the work… to fight tax avoidance."