A leading international law firm wrote an analysis of the Cayman Islands and Bermuda as possible places to host Blairmore Holdings Inc, as it considered whether to “migrate” the investment fund from Panama.
Blairmore was moved in June 2012 to Ireland – another tax haven with many of the advantages of offshore jurisdictions.
The Panama Papers highlight how Blairmore’s directors wanted to continue to avoid paying UK taxes at a time when David Cameron was already the leader of the Conservative party.
And the move to Ireland came in the same month as Cameron, by then prime minister, was railing against tax avoidance schemes, describing them as morally unacceptable.
“Some of these schemes we have seen are quite frankly morally wrong,” he said.
This latest disclosure will add to the awkward questions facing Downing Street from the Panama Papers leak.
While Cameron has insisted he will not benefit from any offshore funds in the future, he has not said whether he benefited in the past.
Papers seen by the Guardian show the directors of Blairmore sought advice from the London solicitors Simmons & Simmons in March 2008.
They were seeking guidance on the advantages and disadvantages of moving Blairmore, which was set up in 1982 with the help of Cameron’s father, Ian. The fund was registered in Panama by Mossack Fonseca, the firm at the centre of the Panama Papers leak.
The legal advice was written for Cameron Sr and other directors, who appear to have been “jurisdiction shopping” for the best place to secure the fund in the future.
At the time, Panama was coming under pressure from the Organisation for Economic Co-operation and Development over the secretive nature of its regime.
The five-page analysis was written by a lawyer who set out the benefits of different Caribbean islands, noting that in one, the “level of actual regulation is very light”.
“Both the Cayman Islands and Bermuda are considered market-leading offshore financial centres with sophisticated investment fund infrastructures,” noted a lawyer at Simmons & Simmons.
“Both offer political stability, an abundance of professional service providers and responsive regulatory bodies.”
The document explains how much it would cost Blairmore to transfer to Bermuda or the Caymans.
Simmons & Simmons said it would charge £40,000-£50,000 for a transfer to either jurisdiction. It recommended additional support from another law firm.
To move registration to Bermuda would cost Blairmore an additional $6,000 for work carried out in the Caribbean, and £15,000-£17,000 in London.
The Cayman move would cost $7,300 on the island and £15,000-£17,000 in London.
Mossack Fonseca would charge $4,500 for either move.
Simmons also noted that: “In general, regulatory intervention in Bermuda is considered slightly heavier than in some other offshore jurisdictions.”
The memo also highlights the advantages of operating in the Cayman Islands.
It explains: “The Cayman Islands is by far the jurisdiction of choice for hedge funds and hedge-fund managers. By June 2007, over 8,300 registered mutual funds were operating in the Cayman Islands.”
Ian Cameron died in September 2010. In June 2012, the fund was shifted to Ireland, where it is subject to EU regulations – which would have made it much easier to market to European investors.
An email in the Panama Papers between Mossack Fonseca employees discusses the transfer to the different jurisdiction.
It says: “While most of the holdings and cash will transfer out to the new Irish fund, we will leave some funds behind – this will be less than 0.5% of the fund’s total assets. There will be some cash left to pay invoices and also a few companies which have not yet been sold and are not eligible [for regulatory reasons] in the new Irish fund.”
Blairmore Holdings, named after the Cameron family’s ancestral home in Aberdeenshire, has managed tens of millions of pounds on behalf of wealthy families.
Clients have included Isidore Kerman, an adviser to Robert Maxwell who once owned the West End restaurants Scott’s and J Sheekey, and Leopold Joseph, a private bank used by the Rolling Stones.
The Guardian has confirmed that in 30 years Blairmore has never paid a penny of tax in the UK on its profits.
Cameron addressed the issue of tax avoidance head on in June 2012 after the Times revealed the aggressive tax avoiding arrangements of the comedian Jimmy Carr.
“I think some of these schemes – and I think particularly of the Jimmy Carr scheme – I have had time to read about and I just think this is completely wrong.
“People work hard, they pay their taxes, they save up to go to one of his shows. They buy the tickets. He is taking the money from those tickets and he, as far as I can see, is putting all of that into some very dodgy tax avoiding schemes.
“That is wrong. There is nothing wrong with people planning their tax affairs to invest in their pension and plan for their retirement – that sort of tax management is fine. But some of these schemes we have seen are quite frankly morally wrong.”
Carr later changed his tax arrangements.