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Panama Papers shed light on spate of non-disclosure divorces

'No court in England and Wales will tolerate non-disclosure'

6 April 2016

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The Panama Papers leak has revealed some of the methods used by divorcing spouses to hide their assets from their former partner and the judicial system.

One of those named in Mossack Fonseca's list of high-net-worth clients is Scot Young, who successfully managed to conceal his true net worth from the High Court and his ex-wife, Michelle Young, in a high profile 2013 case.

It has emerged that he was able to keep his assets hidden and concealed with the help of Mossack Fonseca and various other offshore providers in businesses and bank accounts held in Monaco, Russia and the British Virgin Islands.

Martin Kenney, an asset recovery specialist who has worked with ex-wives involved in non-disclosure case, told the International Consortium of Investigative Journalists that 'these offshore companies and foundations . . . are instruments in a game of hide and concealment'.

He added: 'A dishonest husband is as much a fraudster as Bernard Madoff.'

Mrs Young received a £20m lump-sum order, which she said was a 'disgraceful' sum, given that she believed her husband was actually worth billions of pounds.

She has since struggled to enforce the order, as Scot Young (who died in December 2014) was an undischarged bankrupt.

However, in a precedent setting case in 2015, the Supreme Court ruled that any divorce settlement made while relying on dishonest non-disclosure can be later set aside and reconsidered in light of new evidence – Mrs Young may now have the evidence she needs.

‘Sharland v Sharland and Gohil v Gohil were examples of the court allowing financial settlements within divorce proceedings to be revisited where it subsequently came to light that one spouse had failed to make full financial disclosure,’ commented Joanna Pratt, head of family law at Thomson Snell and Passmore.

‘It remains to be seen whether part of the fallout from the Panama Papers is that there are further cases where the court is asked to revisit financial settlements as a result of material non-disclosure.’

Russian mining magnate Dmitri Rybolovlev and Zimbabwe-born aviation tycoon Clive Joy-Morancho, have also been implicated following their respective divorces.

Binyamin Ali is the editor of Private Client Adviser

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