Finding out about the Queen of England’s offshore tax haven has been one of the biggest surprises of the whole Paradise Papers scandal. Through its use, over £10 million (about $1.3 million) has been squirreled away without a penny of it going through the tax man. This has caused major upset throughout the UK as a whole, especially after deep cuts have been made to public services, including the much-beloved National Health Service.
The whole episode starts with the Duchy of Lancaster, part of the Queen’s private estate. The Duchy of Lancaster is a private estate managed to generate a return for the reigning monarch. It was set up in 1399 and manages land and investments held in trust for the Queen, who also holds the title of the Duke of Lancaster.
Much like any business, it releases a portfolio and lists of assets along with income and expenditure. Yet now, the Paradise Papers gives us a glimpse into the way the duchy has invested some of its money, including details of complex offshore arrangements not set out in the royal household’s annual statements.
The Duchy invests in a Cayman Islands fund as part of an offshore portfolio. This portfolio has, until now, never been disclosed and means that the Queen has held investments via funds into an array of UK businesses. One such business is BrightHouse, a retailer that has recently been accused of overpricing goods and taking advantage of people with mental health problems and learning disabilities to sell products. Such a connection is extremely damaging for the Royal Family as a whole which has often sought to portray itself as a model for British families to follow.
The Queen is not the only one that has been exposed by this. Prince Charles and his own estate, the Duchy of Cornwall, has also been revealed to have invested heavily in offshore funds and companies including a Bermuda-based company run by Hugh van Cutsem. Hugh is a millionaire horse breeder with a 3,400-acre estate in Norfolk and is one of Charles’ best friends, having met the Prince at Cambridge in the 1960s. What makes the situation awkward is that the $100,000 stake was kept secret, even though there was no clear tax benefit.
While it is unclear whether the Queen or her son personally knew about these schemes, the evidence suggests that their advisors headed up this scheme for the most part. The new revelation will be a major scandal for Her Majesty, possibly one of the worst in recent memory. The Duchy will certainly be facing awkward questions as to whether they have enough oversight and management to ensure that transactions are ethical.
Much like the Queen’s estate, there had been no public disclosure that the prince’s estate had offshore interests. While the royal household does publish annual accounts, it does not go into details about investments and where they are made. Now, calls by British politicians for greater scrutiny of royal spending have become louder and clearer.
In a time when Britons are being asked to tighten their belts and expect cuts in services, there is little sympathy for the Royal Family’s tax-free situation. Why should the Queen, one of the richest women in the world, and her estates avoid taxes when most of her subjects would be punished for doing something similar?
It’s important to stress, once again, that none of this is actually illegal. There isn’t anything here that will result in criminal charges, but like most things, it is the sheer principle of the matter. It reflects badly on the Queen and her family, even if they had nothing to do with the matter.
The Royal Family are considered an essential part of British culture but they are not infallible. In these modern times, they are expected to play their part and shoulder the burden of the nation.
Of course, it should also be noted that it’s not just the ‘establishment’ that gets away with what some kindly view as corruption. There are also large corporations, big-time celebrities and even political outsiders who benefit from the same tax havens that the papers expose. The same outsiders who rail against corrupt elites while being funded by them. Outsiders like Steve Bannon, for example.
But that’s yet another story…