The Russian magnates who allegedly worked with the Mossack Fonseca Law Firm in Panama were often the owners of companies located on the British Virgin Islands.Reuters
According to the business newspaper RBK Daily, the expanded database of the so-called Panama Papers, published in May by the International Consortium of Investigative Journalists, contains information on 16 out of the 77 Russian dollar billionaires.
Since it is impossible, based on the documents, to reliably confirm that the situation involves precisely those people, the publication speaks exclusively of the entrepreneurs as “a person whose matches that of...”
Among the offshore owners there are individuals “whose names match” those of Russian billionaires such as Dmitry Rybolovlev (who is worth $7.7 billion, according to Forbes) and Alisher Usmanov ($12.5 billion).
There are 11 cards with the latter's name in the Panama archive, showing his link to 15 offshore companies. In addition, many offshores belonging to Russian oligarchs were closed in 2015 when the Russian government launched its much-trumpeted business de-offshorization campaign.
At the end of 2014 Russia adopted a law on controlled foreign organizations. In accordance with this document, Russian shareholders must pay a tax on the retained earnings from the foreign companies they control, primarily from those registered offshore or in any foreign jurisdiction.
The Panama Papers show that in 2015 the offshores owned by men whose names match those of Oleg Deripaska (who is worth $2.1 billion, according to Forbes), the owner of Rusal, one of the world's largest aluminum companies, and Dmitry Pumpyansky ($1), the chairman of the board of TMK, which supplies pipes to Gazprom, were shut down.
In general, the Russian magnates who allegedly worked with the Mossack Fonseca Law Firm in Panama were often the owners of companies located on the British Virgin Islands. A total of 47 offshores are registered in that jurisdiction. Only two offshores were registered in the Bahamas and one in the Seychelles.
It is cannot be ruled out that the Russian entrepreneurs' decision to close their offshores was influenced by the de-offshorization policy, said director of operations on the Russian capital market at Freedom Finance Georgy Vaschenko.
According to him, owners of more than 11,000 offshores have so far only informed the government of the existence of the companies. They will be able to legally transfer their revenues throughout the current amnesty, whose results will be available no sooner than the fall, added Vaschenko.
"Panama is only one of the used offshores and the Panama archive most likely does not cover the entire list of open accounts. You can't really speak of the success or failure of de-offshorization [based only on this information]," said Bogdan Zvarich, an analyst at the FINAM investment holding.
Despite Russia's economic de-offshorization policy, no one in the country has really prohibited the offshores and there is really nothing illegal about them, Russian presidential press secretary Dmitry Peskov told Interfax.
However, in the future, companies registered offshore will not be able to participate in state purchases and apply for government investment and aid, says Stanislav Verner, vice president of IFC Financial Center. In his view, considering the big role of the state in Russia's economy, this is an important factor for private business.
Bogdan Zvarich, meanwhile, believes that the main effect of de-offshorization can be the return of capital to Russia – a problem that Georgy Vaschenko was keen to highlight.
"In the third quarter of 2015 there was a net inflow of capital to Russia and in the entire year the outflow decreased by 2.5 times and resulted in $56 billion," explained Vaschenko.
However, Vaschenko adds that this is due not to de-offshorization but to the situation with the economy and foreign policy: Capital is squeezed back to Russia also because of the international sanctions.
"In today's reality Russian capital is looking for investment opportunities within Russia," said Emile Martirosyan, a professor at the Russian Presidential Academy of National Economy and Public Administration
According to Martirosyan, it is the growth of domestic investments that will be the key result of de-offshorization.
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