The fact that Ian Cameron — father of UK Prime Minister David Cameron — ran a firm called "Blairmore Holdings" that rich Britons used to move their assets offshore and out of reach of UK taxation is no secret.
But the argument all along has been that Cameron Sr's tactics were merely sophisticated, not illegal or immoral. The Panama Papers leak sheds light on the details of Blairmore's activities that call this into question, revealing a kind of elaborate kabuki around its board of directors where formal measures were used to make the company's decision-making look like it was based out of the UK, when in reality, all the decisions were directed from the UK (meaning that the company's holdings were taxable there).
A spokesman for the Prime Minister said it was a "family matter" and had no further comment. David Cameron inherited millions of pounds from his father.
HMRC (the British tax authorities) have requested access to the Panama Papers in order to pursue investigations for tax avoidance.
In addition to the Cameron family, several elite UK political figures, especially Tories, are linked to the Panama Papers.
Cameron Sr was one of five UK-based directors until shortly before his death in 2010. In order to avoid UK tax, his venture had to be managed and controlled from abroad. A team of six other directors from Switzerland and the Bahamas was recruited, to ensure that a majority of the board was based outside Britain. However, the paper trail suggests this was a conjuring trick, albeit one tolerated by the law. Board meetings were held every year in Nassau and Switzerland, often in the five-star Hotel Beau-Rivage in Geneva. While the Europeans regularly jetted out to the Caribbean, there is little evidence of travel in the opposite direction, raising questions about how much the Bahamas directors contributed to strategy and decision making.
For Blairmore, 2006 was an important year. It sent out a prospectus calling for new investors – clients were asked to put in a minimum of $100,000 (£70,000) each. However, the prospectus stated two of the three Bahamian board members waived their $5,000 fee that year. They were the only directors recorded as doing so.
Through the Bahamas branches of Coutts and later SG Hambros, Blairmore retained dozens of local residents. There is no suggestion this arrangement was illegal and it was used by other offshore funds at the time.
The signatories were authorised to perform complex financial tasks. They could, company minutes state, "sell or buy any stocks, shares, annuities" and even "precious metals".
In reality, according to the documents, big investment decisions appear to have been taken in the UK. Strategy was seemingly discussed in London where the investment management firm Smith & Williamson and five of the directors including Cameron were based.
Fund run by David Cameron's father avoided paying UK tax
[Juliette Garside/The Guardian]
UK tax officials seek access to huge leak of Mossack Fonseca papers
[Luke Harding and David Pegg/The Guardian]
(Image: Cameron with Russian president Vladimir Putin in May 2013, Kremlin.ru, CC-BY)