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Declassifying the biggest leak of financial documents: Pandora Papers

PUBLISHED ON 2021-10-05 03:54:00 EST Yashasvini

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In the biggest leak of financial documents witnessed by the world, the secret wealth of many businesspersons, politicians, and world leaders has been exposed.

Reports containing information about the secret wealth of around 35 current and former leaders along with nearly 330 public servants in 91 countries and territories, all of whom feature along with names of fugitives, con artists, and murderers.

THE OPERATION 

Independent research led by the International Consortium of Investigative Journalists (ICIJ) procured 1.9 million confidential files and led a team of more than 600 journalists from 150 news outlets. The entire team spent two years going through these documents, tracked down hard-to-find sources, and dug into court records and other public documents from dozens of countries to uncover what is collectively known as the Pandora Papers.

The ICIJ gathered the records from 14 offshore service firms that helped wealthy clients, who wish to keep a certain amount of wealth in the dark, set up shell companies. The investigation identified 956 companies in offshore havens tied to 336 high-level public officials, including country leaders, cabinet ministers, and ambassadors.

More than two-thirds of those companies were set up in the British Virgin Islands.

The 2.94 TB of data accumulated by the team comprises of 6,406,119 documents, 2,937,513 images, 1,205716 emails, 467,405 spreadsheets and 886,923 other records.

U.S. NAMES EXPOSED IN THE LIST

The ICIJ investigation identified 206 U.S.-based trusts linked to 41 countries holding combined assets worth more than $1 billion. Nearly 30 of the trusts held assets connected to people or companies accused of fraud, bribery, or human rights abuses in some of the world’s most vulnerable communities mentioned in the report.

A group of trust company insiders led this expansion in the U.S. by pitching legislative proposals which shielded trusts from creditors, taxing authorities, and foreign governments. 

The proposals were highly appealing to customers in the United States and abroad. State legislators also faced very little opposition and turned many of these proposals into dozens of laws since the late 1990s. 

South Dakota tops the list with 81 trusts facilitating financial secrecy, Florida comes next with 37, Delaware had 35, Texas was fourth with 24 and Nevada recorded 14.

In South Dakota, assets in trusts more than quadrupled over the past decade to $360 billion, of which, the largest trust company in the state, the South Dakota Trust Company, serves international clients from 54 countries.

Legally, trust companies cannot knowingly accept money generated by criminal activity. The Pandora Papers don’t indicate that foreigners with trusts in the United States sheltered criminal proceeds.

ICIJ consulted financial experts who believe that the U.S. trust industry should look beyond convictions and investigate clients who gathered their wealth via credible accusations of crimes, human rights abuses, or ties to corrupt regimes.

It should be noted that it is not illegal to set up an offshore entity to reduce taxes or manage wealth.

America’s biggest law firm Baker McKenzie with 4,700 lawyers in 46 countries and revenue of $3.1 billion has helped multinationals and the wealthy avoid taxes and scrutiny through the use of shell companies, trusts, and complex structures in tax havens. 

These big names include food and tobacco giant RJR Nabisco, for whom it helped set up an offshore company in Cyprus. For sporting goods company, Nike helped set up a Dutch tax shelter. Even Facebook availed the services of the law firm to route billions of dollars in profits to low-tax Ireland, according to a U.S. government court brief.

OTHER PROMINENT NAMES

Among the major government officials reportedly on the list are King Abdullah II of Jordan, Ukrainian President Volodymyr Zelensky, and leaders of the Dominican Republic, Czech Republic, Montenegro, Ecuador, Chile, the UAE, and Kenya.

The documents revealed that King Abdullah II owns secret properties worth $100 million in Malibu, Washington, and London.

Azerbaijan’s ruling Aliyev family has traded properties in the U.K. worth nearly $544.3 million in recent years. 

The prime minister of the Czech Republic, Andrej Babiš, who is up for election this week, used an offshore investment company to acquire a $22 million chateau in the south of France. 

Meanwhile, former British Prime Minister Tony Blair and his wife Cherie Blair bought an office in Marylebone worth $8.84 million by acquiring a British Virgin Islands (BVI) offshore company. The Guardian reported that the move wasn’t illegal and the documents did not contain any evidence that the Blairs proactively sought to avoid property taxes. Yet, the deal brings to light a loophole that exempts wealthy property owners from paying a tax that is commonplace for ordinary Britons.

The Papers reveal that the chairman of the Indian firm, Reliance ADA Group, Anil Ambani, and his representatives own at least 18 offshore companies in Jersey, the British Virgin Islands (BVI), and Cyprus.

The Pandora Papers also mention Indian cricket superstar Sachin Tendulkar, who has been a Member of the Upper House of the Indian Parliament, along with members of his family. Tendulkar and his family have been listed as Beneficial Owners of an offshore entity in the British Virgin Islands (BVI) which was liquidated in 2016.

(Information sourced from ICIJ, The Guardian, and The Indian Express)

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