Dukes of Westminster pumped millions into secretive offshore firms

Tony Gosling tony at cultureshop.org.uk
Fri Nov 24 00:28:33 GMT 2017

Dukes of Westminster pumped millions into secretive offshore firms


Paradise Papers bring to light key parts of 
structure used to manage £9.5bn fortune inherited 
last year by Hugh Grosvenor, 26
Grosvenor became Britain’s youngest billionaire 
following his father’s death in 2016. Photograph: PA/Guardian Design Team

Tuesday 7 November 2017 13.00 GMTLast modified on 
Friday 10 November 2017 06.39 GMT

Duke of Westminster’s four main rural estates: 
Estate, Cheshire; 
Estate, Lancashire; 
Forest estate Sutherland and 
Garganta in neo-fascist Spain.

The international property empire of the dukes of 
Westminster pumped dividends worth millions of 
pounds into secretive companies in Bermuda and 
Panama, the 
Papers reveal.

Hugh Grosvenor became Britain’s youngest 
billionaire after his father’s death last year. 
Thanks to careful planning by his predecessors, 
the 26-year-old inherited the sprawling Grosvenor 
Group without having to pay the 40% death duties 
imposed on most British taxpayers.

leak of 13.4m files, including documents from the 
archives of the offshore law firm Appleby, 
combined with public information from the UK 
companies register, has brought to light key 
parts of the structure used to manage the seventh 
duke’s fortune - estimated at £9.5bn in the Sunday Times rich list.

What are the Paradise Papers?

The Paradise Papers is a special investigation by 
the Guardian and 95 media partners worldwide into 
a leak of 13.4m files from two offshore service 
providers and 19 tax havens' company registries. 
The files reveal the offshore financial affairs 
of some of the world’s biggest multinational 
companies and richest individuals, and set out 
the myriad ways in which tax can be avoided using artificial structures

They reveal for the first time the names, 
settlors and creation dates of the five UK trusts 
that have been used, for generations, to keep in 
the hands of a single family an estate that 
includes much of Belgravia and Mayfair in London, 
165,000 acres of British countryside, hundreds of 
developments in North America, Australia and Hong 
Kong, and an island in Vancouver.

The trusts established by successive dukes to 
control Grosvenor are UK resident and subject to 
British tax – they pay a 6% charge on the value 
of many of their assets every 10 years. Assets 
worth £600m belonging 
to the 6th Duke, which were not held in trust, 
were inherited by his wife exempt from tax, as is 
normal for married couples. Death duties will be 
payable in the UK when her children inherit.

But the papers show that not all the family’s 
wealth was managed onshore. Until 1999, about 
half of the shares in a subsidiary that ran 
Grosvenor’s North American and Australian 
operations were controlled by tax haven companies.

Managed from Canada, the international wing of 
Grosvenor was created in 1953 when the estate 
made its first big expansion outside Britain by 
acquiring the 485-hectare Annacis Island in the 
middle of the Fraser river in Vancouver.

By the turn of the century, Grosvenor 
International Holdings Ltd (GIHL) had assets 
worth more than C$1bn (£600m), with 42% of its 
shares held by screen companies in 
and Panama.

Vesta Ltd, incorporated in Bermuda in 1964, 
controlled Trumpet Company Ltd, another Bermuda 
company, which in turn held shares in GIHL. 
Alongside it was a parallel 
structure: Nakar Holding SA, incorporated in 
1977, owned shares in Compact International Inc, 
which in turn held part of GIHL.
The identities of the owners of these four 
companies have never been publicly disclosed by 
Grosvenor. However, Appleby’s internal database 
listed Vesta and Trumpet as belonging to the “Grosvenor Family Trust”.

Grosvenor’s annual reports show millions in 
payments collected in Panama and Bermuda: a 
combined £1m in 1999, direct from GIHL, and a 
similar sum the year before. Eventually, the 
offshore companies swapped their shares in GIHL 
for a 6.5% holding in the overall Grosvenor 
Group, collecting £3.7m over a seven-year period.

In March 2007, Grosvenor announced it was buying 
out Vesta and Nakar for £40m. The reason given 
was to “better align the shareholders’ interests 
with the group’s activities”. The companies were dissolved later that year.

A spokesman for the Grosvenor estate said: “Two 
small overseas trusts were established over 50 
years ago, when it was accepted common practice 
to facilitate the acquisitions of some non-UK 
assets. No family member has received any benefit 
derived from these but, as UK residents, if they 
ever did then they would be fully liable to tax in this country.

“Our policy is to uphold the highest standards of 
business practice. We are careful to ensure that 
our ownership of overseas property is through 
vehicles incorporated in the same country as the 
asset. Where the group occasionally has entities 
in offshore locations, it is typically as a 
result of the requirements of joint-venture partners.”

The papers reveal a number of other offshore 
entities, some of which held investments in Asia. 
By 2009, the sixth duke’s trustees appear to have 
become wary of transacting too much of his business via tax havens.

That year, a member of the Appleby marketing team 
visited Jeremy Moore, the head of tax at 
Grosvenor Group, and another colleague. He took a 
few notes on their conversation. Grosvenor liked 
working with the firm but was wary of giving it 
too much to do. Appleby’s officer noted: “They do 
not have too many offshore holdings as they have 
to be very careful reputationally, as the 
property group is owned by trusts for the Duke of Westminster’s family.”

Documents from 2012 show Grosvenor’s shares were 
held by five trusts and by the sixth Duke of 
Westminster in his name. The oldest trust, simply 
referred to as ADWSLF in the data, was settled, 
or created, in 1953 by the second duke upon his 
death. The family’s enthusiasm for trusts may be 
explained by the fact that death duties of £17m 
swallowed much of the second duke’s £25m fortune.
The next oldest was the Fourth Duke of 
Westminster’s Settlement, which dates from 1964, three years before his death.

There is a Fifth Duke of Westminster’s 
Settlement, created in 1965, and the sixth duke, 
who died last year, created two more. The first 
was settled in 1971, the second in 1974. His 
will, published recently, suggests he created yet more trusts before his death.

The tax advantages of UK trusts such as these 
have been gradually whittled away. Since 1984, 
they have been subject to a 10-yearly tax charge, 
although there are exemptions for agricultural land and trading businesses.

Nimesh Shah, a partner at the accountants Blick 
Rothenberg, said: “Nowadays, trusts are used for 
a variety of reasons and tax is only one of those 
reasons. These trusts are about trying to keep 
control of the assets within the family unit.”

There is no public register listing the names, 
beneficiaries or holdings of any UK trusts, 
despite the fact such vehicles control vast 
tracts of land and property in Britain. HMRC has 
a register of trusts that pay tax, but this is 
not available to the public. In Europe, MEPs have 
been pushing for each member state to improve 
transparency by introducing public registers of 
trusts. The papers reveal how reluctant Grosvenor 
employees were to share trust details.

On one occasion, when tasked with setting up a 
Bermuda company in 1999, Grosvenor 
representatives asked Appleby to “seek 
dispensation” from the normal rules for declaring 
who the trust beneficiaries were.

The information was required by the Bermuda 
Monetary Authority (BMA) before the company could 
be incorporated. Because the Bermuda company was 
to be controlled by trusts, Appleby would need to 
follow standard procedure and disclose the names 
of their beneficiaries and other basic information to the regulator.

Grosvenor did not want to share this data. In a 
fax dated 9 November, Appleby promised to “revert 
to the BMA to determine what they will give in 
on”, saying it had already obtained from the BMA 
that “they have indicated they will not require a 
personal declaration from the duke”.

The Bermuda entity, eventually called Grosvenor 
Land Property Fund Ltd, would go on to invest 
$30m in developing luxury homes in some of Hong 
Kong’s most desirable neighbourhoods, in a joint 
venture with another wealthy family, the 
Keswicks, through their Jardine Matheson Group.
The man from Appleby warned that “it raises 
‘alarm bells’ when persons decline to disclose 
such information fully” and disclosure of 
ownership was a longstanding policy “designed to 
preserve Bermuda’s relatively clean image in the offshore world”.

He then proposed an unusual arrangement: “Would 
it make a difference if the information requested 
was placed in a sealed envelope and marked for 
the eyes of the CEO of the BMA only so that such 
information does not pass through the hands of 
intermediaries such as ourselves?”

The Grosvenor spokesman said, after checking the 
records, no evidence had been found “to suggest 
that the trustees asked for any such dispensation 
from the Bermuda Monetary Authority in 1999”. He 
said investors in the property fund would have 
paid tax in their own countries and the use of 
jurisdictions such as Bermuda was common for 
these types of funds, in order to avoid investors being taxed twice.

The information supplied, whatever it was, 
appears to have satisfied the Bermuda 
authorities, because the company was successfully incorporated on 16 December.

The seven dukes

First duke: 1825-1899. Hugh Lupus Grosvenor was 
MP for Chester and died the richest man in Britain.

Second duke: 1879-1953. Hugh Richard Arthur 
Grosvenor, grandson of the first duke, was known 
to family and friends as Bendor and was a lover of Coco Chanel. He left no son.

Third duke: 1894-1963. William Grosvenor was 
brain damaged at birth, and died unmarried and childless.

Fourth duke: 1907-1967. Gerald Hugh Grosvenor, 
cousin of the second duke, left no son.

Fifth duke: 1910-1979. Robert George Grosvenor, 
brother of the fourth Duke, lived in Northern 
Ireland at Ely Lodge on an island in the middle of Lough Erne.

Sixth duke: 1951 to 9 August 2016. Gerald 
Cavendish Grosvenor, son of the fifth duke, 
mentor to Prince William, served in the Territorial Army for 40 years.

Seventh duke: born 1991. Hugh Richard Louis 
Grosvenor is Britain’s youngest billionaire.

 From South America, where payment must be made 
with subtlety, the Bormann organization has made 
a substantial contribution. It has drawn many of 
the brightest Jewish businessmen into a 
participatory role in the development of many of 
its corporations, and many of these Jews share 
their prosperity most generously with Israel. If 
their proposals are sound, they are even provided 
with a specially dispensed venture capital fund. 
I spoke with one Jewish businessmen in Hartford, 
Connecticut. He had arrived there quite unknown 
several years before our conversation, but with 
Bormann money as his leverage. Today he is more 
than a millionaire, a quiet leader in the 
community with a certain share of his profits 
earmarked as always for his venture capital 
benefactors. This has taken place in many other 
instances across America and demonstrates how 
Bormann’s people operate in the contemporary 
commercial world, in contrast to the fanciful 
nonsense with which Nazis are described in so much “literature.”

So much emphasis is placed on select Jewish 
participation in Bormann companies that when 
Adolf Eichmann was seized and taken to Tel Aviv 
to stand trial, it produced a shock wave in the 
Jewish and German communities of Buenos Aires. 
Jewish leaders informed the Israeli authorities 
in no uncertain terms that this must never happen 
again because a repetition would permanently 
rupture relations with the Germans of Latin 
America, as well as with the Bormann 
organization, and cut off the flow of Jewish 
money to Israel. It never happened again, and the 
pursuit of Bormann quieted down at the request of 
these Jewish leaders. He is residing in an 
Argentinian safe haven, protected by the most 
efficient German infrastructure in history as 
well as by all those whose prosperity depends on his well-being.
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