London: Millions of pounds from the private estate of Britain's Queen Elizabeth II have been invested in offshore tax haven funds, a huge new leak of financial documents have revealed, but the monarch's estate managers defended the investments by calling them "fully" legitimate. The 91-year-old monarch's investments appear among a series of high-profile names to feature in the Paradise Papers, a leak of 13.4 million files from two offshore service providers and the company registries of 19 tax havens.
The Duchy of Lancaster, which provides the Queen with an income, held funds in the Cayman Islands and Bermuda – British overseas territories with no corporation tax and at the centre of the offshore financial industry. A small amount from the funds ended up in the company behind BrightHouse, a chain accused of irresponsible lending, and retail chain Threshers, which went bust owing 17.5 million pounds in UK tax.
A spokesperson for the Duchy of Lancaster said: "We operate a number of investments and a few of these are with overseas funds. All of our investments are fully audited and legitimate. "The Queen voluntarily pays tax on any income she receives from the Duchy." The Duchy added the BrightHouse holding now equates to only 3,208 pounds and it was not involved in fund investment decisions and claimed that it had been unaware the retail featured in the investments.
"The Duchy's investment policy is based on advice and recommendations from our investment consultants and asset allocation rather than tax strategy," said Chris Adcock, the duchy's chief finance officer. "The Duchy has only invested in highly regarded private equity funds following a strong recommendation from our investment consultants," he said. The documents show the Duchy of Lancaster put 5 million pounds in the Jubilee Absolute Return Fund Limited in Bermuda in 2004, with the investment coming to an end in 2010. In 2005, the Duchy agreed to put 7.5 million dollars in the Dover Street VI Cayman Fund LP. The Duchy, which is worth more than 500 million pounds, said that it received no tax advantages from investing offshore.
It, however, admitted it had no idea about its 12-year investment in the controversial BrightHouse chain from one of the funds until approached by the 'Guardian' newspaper and other partners in the international project called Paradise Papers. BrightHouse has since been accused of overcharging UK customers, and using hard sell tactics on people with mental health problems and learning disabilities. Last month, it was ordered to pay 14.8 million pounds in compensation to 249,000 customers.
The company told the newspaper that it follows all relevant tax regulations and pays its tax in full and on time. Opposition Labour MP Margaret Hodge, the former chair of the House of Commons Public Accounts Committee, said she was "pretty furious" with the Queen's investment advisers for endangering her reputation. "It is so obvious that if you're looking after the money of the monarchy, you've got to be actually cleaner than clean and you must never go near the dirty world of money laundering, tax avoidance, tax evasion or actually making money in dubious ways," she said.
There is no allegation of anything illegal in the investments being exposed and no suggestion that the Queen is not paying tax. However, it raises questions about whether the British monarch should be investing in offshore finance. While the practice is legal, the revelations have wider implications on the way the finances of the rich and famous are handled.
By Aditi Khanna (PTI)