October 21, 2021
  • October 21, 2021

The Pandora Papers Leak

By on October 5, 2021 0

The Pandora Papers, a massive leak of secret data about the illicit financial activities of the super-rich, will provide revelation for weeks and possibly months to come.

The Pandora Papers venture involved 600 journalists from 117 countries and was coordinated by the International Consortium of Investigative Journalists (ICIJ) in what they describe as “the greatest journalistic collaboration of all time”. (You can follow the progressive versions on The Washington Post, the American partner in the collaboration, and The Guardian, the British partner.)

Five and a half years ago, the ICIJ published the Panama Papers, which focused on a leak from a single Panamanian law firm, Mossack Fonseca. According to Gerald Ryle, director of the ICIJ, the Pandora Papers are the “Panama Papers on steroids”.

Pandora leaks come from confidential files of 14 different offshore wealth management service companies in Switzerland, Singapore, Cyprus, Samoa, Vietnam, Hong Kong, as well as wealth managers in well-known tax havens. such as Belize, Seychelles, Bahamas and the British Virgin. Islands (BVI). These businesses help high net worth individuals and businesses create trusts, foundations, incorporated companies, and other entities in low and no tax jurisdictions.

The Pandora team analyzed nearly 12 million files from these companies, including leaked emails, memos, tax returns, bank statements, passport scans, diagrams of corporate structures. business, secret spreadsheets and underground real estate contracts. Some are revealing for the first time the real owners of blackout shell companies.

In the coming weeks, we’ll learn more about the world’s 130 billionaires with owned entities in secret jurisdictions (100 with total assets worth over $ 600 billion in 2021). US citizens are so far under-represented in these leaks, in large part due to the location of wealth management service providers. No US estate advisory firm was among the leaks. Nonetheless, more than 700 companies revealed in the Pandora Papers have links to the real human owners in the United States.

The big news for the rest of the world is how the United States has become a major tax haven and a global destination for illicit wealth. Earlier leaks, such as the Panama and Paradise newspapers, have reinforced the mistaken perception that most of these financial fund games take place ‘offshore’, in secret jurisdictions and tax havens in small countries with weak banking laws. .

Pandora leaks show states like South Dakota and Delaware compete with Caribbean nations and European protectorates as top secret jurisdictions (a subject The nation covered previously). Pandora’s disclosures revealed that the US states with the most active trusts were South Dakota (81), holding at least $ 367 billion in assets, Florida (37), Delaware (35), Texas (24) and Nevada (14). The trusts appear to be aimed primarily at non-US citizens.

Examples of global billionaires moving funds to South Dakota include Brazilian orange juice baron Horst Happel, who was fined $ 88 million in 2016 for underpaying his workers. In 2017, he transferred substantial wealth to a trust in South Dakota. Carlos Morales Troncoso, the former vice president of the Dominican Republic, ran a sugar company called Central Romana accused of human rights violations. He created trusts for his daughters in the Bahamas who were moved, after his death, to South Dakota. The Guardian item on South Dakota discloses more examples. The reason global money is flowing to “Mount Rushmore State” is because of their low taxes, weak disclosure rules, and poor disclosure rules. advantageous dynasty trusts.

The Pandora Papers are truly a global story, with major implications in many countries. Some of the biggest revelations concern Russian nationals with ties to Vladimir Putin and elites in Latin America. For example, journalists from the Spanish daily El Pais, exposed the “secret safe of Mexican billionaires”. In Mexico, they found more than 3,000 wealthy and powerful Mexicans in the 11.9 million leaked files, with links to current and previous presidents. They discovered a common pattern of wealthy Mexican elites using a single Panamanian law firm, Alcogal (Aleman, Cordero, Galindo & Lee), as well as trusts in the British Virgin Islands and real estate purchases in Miami and the States. -United.

Hopefully the Pandora Papers will step up the pressure on politicians in the United States and abroad who maintain the status quo that hides wealth. The files list more than 330 current and former politicians and world leaders from 91 countries involved in transactions. This is double the number involved in the 2016 Panama Papers.

Political leaders include King Abdullah II of Jordan and former British Prime Minister Tony Blair (according to The Guardian, Jordan blocked the ICIJ website hours before the publication of the Pandora articles). This explains why the existing governing bodies seem unable to shut down the systems that allow wealth concealment and tax evasion. “This shows that the people who could end the secrecy of offshore systems… benefit themselves,” said Gerald Ryle, Director of ICIJ. “So there is no incentive for them to end it.”

American transparency activists are mobilizing to keep the pressure on American lawmakers. The first step in solving this problem is for the United States to clean up its own internal tax havens. Federal laws should prevail over state trust laws which create dynasty trusts forever and outlaw certain forms of trust and loopholes that serve no business purpose other than tax evasion. Congress should fund President Biden’s plan to rebuild the IRS’s ability to oversee the tax shenanigans of the super-rich, ensuring they pay their fair share.

“While strong implementation of the new laws is important, we must see vigorous enforcement of current laws and increased resources for tax authorities and government agencies around the world investigating financial crimes,” said Ian Gary, executive director of the American agency Financial Accountability. and the Coalition for Business Transparency (FACT). “In the United States, this means significant increases in IRS funding to combat tax evasion and to [the Treasury Departments Financial Crimes Enforcement Network] conduct investigations commensurate with the scale of the global offshore secrecy problem highlighted by the Pandora Papers. ”


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