Modern privacy. When no news is news
The hunger for news is now insatiable, whether caused by the rise of sharing apps like instagram, Covid Lockdown, WFH boredom, marketing professionals or a world where this is normal for younger age-groups born into it. So how do you maintain a low profile in our over-sharing social media lives and a media industry driven by commercial forces? It can appear at times impossible. However, for UHNWs and their families who include household names like Sir Philip Green, who receives constant media attention, it is a necessity. “With greater wealth comes greater risk”, said Russell Grey, a ‘go-to’ bodyguard for UHNWs and their families. “The wealthy will always be vulnerable to a greater risk of: Kidnap, robbery, extortion, blackmail, exploitation, cyber-attack, damage to image, invasion of property, and in extreme cases there is even the threat of serious targeted assault.”
Ensuring you, your family and your employees are aware of the reasons to think about their information and who sees it is a growing issue. However, it’s never simple, and the current climate of media scrutiny which assumes that anyone hiding anything must be up to something, can also bring reputational issues to the fore. As Magnus Boyd, a partner at reputational firm Schillings, says, “privacy is now a reputational issue”.
Citywealth’s April French Furnell investigates how wealthy families and celebrities can stop themselves from being thrown to the ‘dogs’.
Prime property: Third party prep n checks
Keeping the home location private is a particularly challenging issue. Home ownership in and of itself gives away various details: home location and price paid. On top of that, maintaining the privacy of the home requires attention. “Acquiring a property is the single most exposing event”, said Magnus. “Not only is there inherent privacy associated with the home, it feels even more invasive when this privacy is breached”. Because of this, it’s important to bring in a privacy expert from the initial stages of property hunting. Some of the areas they can help with include: negotiating with the seller for the copyright of the images of the house, and ensuring these are removed from any sites; dealing with interior designers and architects and any imagery of the house they might hold; sweeping the house for bugs left behind or built into the fabric of the house; ensuring the CCTV is operating properly and not looking inwards.
Tearing up the rule book
In the past, super prime property was often bought through a company to add an additional layer of privacy. But this doesn’t work anymore, says Magnus. “You have to be more transparent about beneficiaries of a company or trust purchasing a property. The devil is in the detail”. Overseas companies will soon come under this new regime as well, as part of the government’s commitment to establish a beneficial ownership register by 2021. Once established, all overseas entities that are purchasing land, already own land or have a lease over land for longer than seven years in the UK will be required to identify their beneficial owner and providing information about itself, its beneficial owners and managing officers to Companies House.
Devil in the detail
Helen Marsh, a partner specialising in residential property at law firm Forsters said. “The company route is rarely used now because of taxation. Another option is to have a nominee owner on the title, a bare trust arrangement, which is where the beneficiary has a right to the capital, assets and income in the trust. This doesn’t carry tax complications as it’s a bare nominee, so not actively involved and they don’t own the property. However, there is a question mark over how much longer this will be feasible as beneficial ownership registers will put an end to it”. She flags another problem; the price paid for the property. “It’s very hard to keep this private. It can sometimes be obscured by referring to another unpublished document, but it isn’t always accepted by the land registry. They want to publish the price”.
A matter of public record
Often home improvements can also spark media interest and invasion of privacy. Planning applications are a rich ground as they are mostly in the public domain. Searching via a portal you can see the addresses, plans, and neighbour complaints. A high-profile example is the publicized planning dispute between Robbie William and Jimmy Page over Robbie’s wish to build an underground swimming pool and gym.
Lastly, it then comes down to maintaining your privacy and the key to doing this successfully is education. “You need to educate children and household staff on why they shouldn’t be taking images of their home where it can be easily identifiable, as well as any employees that you have”, said Magnus.
Cute as it may be to photograph your child on the doorstep, you need to be careful that any photos do not give away distinctive features of your home that might make it recognisable to those wanting to know where to find you. “A good example here is of a wealthy Massachusetts hedge fund manager whose children were targeted for kidnap. The would-be kidnappers had learned where the children attended school after their nanny had posted photos of their first day there on social media. These photos clearly revealed the school insignia”, recalls Russell. “To us in the security field, this really was a “schoolboy error”. In the nanny’s defence, she had never been issued with anything more than the most basic of briefings when she first took the job. She stated that she did it out of pride for the children. But it is naive. Once the kidnap plot was discovered, the family engaged a professional security company who undertook a briefing to all members of staff and family members on the importance of thinking before posting or revealing personal information”, he added.
Thinking before speaking
To avoid this kind of problem, Russell recommends that household staff need to be coached. “They need to be able to recognise when apparently polite conversation is in fact, questioning or information gathering. They need to learn the true meaning of discretion. They need to be given real life examples of when social media offerings have been used adversely, and how it can be potentially harmful”.
Love of the sport
Making a large investment into a company or acquiring a company, is another area in which information about yourself will enter the public realm from the Registrar of Companies at Companies House.
Chris Scott, at law firm Slateford says, “Overseas investors buying a sports team is a good example. There are emotional stakeholders and in the past, the owners have not anticipated the level of interest a purchase generates in who they are. There’s an expectation of engagement from fans, beyond what is expected in other areas of business.”
Fail to prepare and prepare to fail
Chris’ top tips for buying a business overseas team? “Understand what you are buying, go a step further to understand the risks you might face. Before and after acquisition what might cause concern in the specific business and in its sector. What will be expected of you in terms of engagement and people’s interest. Understand your current level of privacy and how easy it is for people to find information and contact you. Prepare your profile so it fits with the future commitments you will face”.
It’s vital to understand the company you are buying and the expectations stakeholders have of you, says Chris. “If acquiring a company where people want to dig into who you are and your role in it all, then it is best to be prepared before the transaction triggers interest, check your profile is compatible with the role you are going into. If it’s a public facing entity, then privacy needs to be tight. For example, you wouldn’t want customer feedback or union requests being sent to a personal email address or home address. It’s about understanding the risks and how your existing profile applies to it”, he explains.
A proposal to create new powers for the UK to protect itself from malicious investment and strengthen economic resilience could have an impact on the scrutiny of those investing in certain sectors which fall under its remit. One of these is technology, which is an attractive investment with the possibility of strong returns. “It’s meant to be about national security and nothing else. But in the future will it be used in a political way? For family offices and UHNWs, the important thing is to understand that some countries will be looked at in greater detail so they need to be aware of this”, explained Peter Yapp, a cyber security partner at Schillings. The information used will likely include what’s publicly available, so ensuring information held about you online is accurate is essential.
Cyber security in check
As more and more data is held online, it’s not only vital to consider your online footprint, but also to assess your risk of cyber-attack. Rosalyn Breedy, a corporate partner at Wedlake Bell who advises family offices, explains: “Phishing attacks are very easy and a big risk. Families need to keep their antivirus software up to date”.
Family offices are also an attractive target for fraudsters because of the information they store. “The threat for family offices has increased since the recent implementation of the Common Reporting Standard. Designed to help fight against tax evasion and to protect the integrity of tax systems, this is an information gathering and reporting requirement for financial institutions in participating countries which requires banks and investment management firms to collect and report certain information relating to each customer’s tax status. This information is sent by family offices and stored at the financial firms and also communicated and shared with tax authorities – thereby creating opportunities for unauthorised access”, explains Rosalyn.
Transparency is a way of life
While their ultimate aim might be to maintain their privacy, UHNWs need to balance this with the need to ensure their attempts are not misconstrued as an attempt at hiding, explains Magnus. “Sometimes we need to advise a client not to take more convoluted steps but to do it in an open-handed way. Accepting a degree of scrutiny but it won’t be scrutiny plus spin. Everything we do is through the prism of the current thinking and reporting of the media. We need to acknowledge the times”.
So with staff briefed, a plan and rules followed, even the biggest of celebrity names, with the biggest credit cards and shopping habits should be able to dance among the waiting wolves.
For more information on those quoted throughout this article, click on their name to visit their Leaders List profile.