HAMILTON, Bermuda, Nov 9, CMC  –  An expert in compliance rules says Bermuda is “up the creek without a paddle” after a massive leak of documents stolen in a cyberattack on Bermuda-based law firm Appleby.

Is it all about taxes?

“This is actually really, really bad and it’s bad because it demonstrates Bermuda’s jurisdictional attitude to shifting public opinion and reality and the rather rigid line of legality,” said the source, who asked not to be named.

He added: “Bermuda is looking down the barrel of a gun – there has been the Panama Papers and that play is still ongoing. We haven’t seen the end of it.”

The expert’s claim came after Premier David Burt, who is also Finance Minister, told a news conference on Tuesday that Bermuda, a British Overseas Territory with a population of 65,000, is an “open, transparent jurisdiction” with a “vigorous regulatory framework” and nothing to hide.

Burt, whose Progressive Labour Party swept to power in July’s general election, told reporters that Bermuda is a recognised leader in international tax compliance with 114 treaty partners who receive information by request and automatically for tax purposes.

But the newspaper source, with experience in international business and compliance on an international level, said: “In Bermuda, it’s perceived a thing is OK if it’s legal, but morality issues and the social contract precede the making of law.

“We’re talking about jurisdictions who are going to respond to this situation based on public opinion — not on the back of Bermuda law and international law.

“They don’t care if something’s legal; what they care about is the tax bill they could have had.”

The source was speaking after the International Consortium of Investigative Journalists, working with more than 90 media organisations around the world, highlighted financial dealings offshore in the cache of documents hijacked from Appleby — which has 10 offices around the world including ones in the Cayman Islands and British Virgin Islands — last year.

The 13.4 million documents, dubbed the Paradise Papers, included more than six million taken from Appleby.

The leak of the data followed a similar, but smaller, release of the Panama Papers last year when the ICIJ released more than 11 million documents obtained from law firm Mossack Fonseca, based in the Central American country.

The source said that tax information exchange agreements signed by Bermuda with other countries were held up as a shield against allegations the island was a secretive tax haven.

But he added that tax information agreements worked only if overseas authorities knew “exact details” like where the asset was held, in whose name and who the beneficiaries were. And he added that Bermuda’s claim to have operated a register of beneficial ownership for decades did not stand up in the court of world opinion.

He said: “Anyone who says that that’s always existed is referring to the old model, which was not all that helpful because people had to know half the information already to make a sensible request.”

The source added that Appleby “doesn’t have one kind of client — they have hundreds of kinds of clients, high net-worth individuals doing estate planning, multinational corporations and local Bermuda companies”.

He said that it was hard to predict what kind of backlash might come in the wake of the release of the papers.

The source added: “It’s yet to be seen; it’s anybody’s guess. This has happened only once before — to Mossack Fonseca.

“I would say because we have no precedent here, Bermuda is literally up the creek without a paddle.

“We have no idea of how this is going to play out.”