Whatever the issues the so-called Panama Papers raise around privacy, family offices should be aware of the potential consequences of a world demanding greater transparency of the affairs of the rich.
That’s because those that are pushing for greater transparency could well be coming after family offices in the future. Already, the mainstream media is beginning to report on the activities of family offices in not necessarily the most favourable way. Fast forward this scrutiny into the not-too-distance future and it’s entirely possible for the media to demand much greater transparency of the wealth held and managed by family offices.
A senior London lawyer told Family Capital that family offices are vulnerable to demands for more transparency from the rich, particularly those with offshore arrangements. “Family offices that aren’t more transparent and rely on offshore arrangements are obviously the most vulnerable to this type of scrutiny,” he says.
Security experts have said in the past that family offices are vulnerable to cyber-security attacks. And leaked information obtained this way could also find its way into the hands of the media, say lawyers.
Nevertheless, lawyers add that family offices that are upfront about their activities and aren’t hiding behind offshore structures are likely to be safer from negative public attention. Example of family offices with good levels of transparency are Cascade Investment owned by Bill Gates, Vulcan owned by Paul Allen, and in Europe, Ferd owned by Johan Andresen.
Lawyers are advising family offices to be aware of the possibility of greater public scrutiny in the future and to make as great as effort as possible to ensure such scrutiny doesn’t hurt their businesses.