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5 Key Things to Know About the Pandora Papers

Above: Photo Collage / Lynxotic

These disclosures about the how the world’s wealthy and powerful hide their vast fortunes will hopefully turn up the heat on the politicians that maintain the wealth-hiding status quo.

This week we are closely watching the disclosures emerge from the Pandora Papers, a massive leak of secret data about the illicit financial activities of the super-wealthy from 200 countries. In the days to come, we will learn more about the tax avoidance of billionaires and the ways states like South Dakota and Florida have become U.S. tax havens.

Here are Five Things You Need to Know:

1. The Largest-Ever Journalistic Collaborative, More Significant Than the Panama Papers 

The Pandora papers are a massive expose about the secret shell games and tax avoidance schemes of the world’s ultra-wealthy, from over 200 countries. This massive undertaking involved 600 journalists from 117 countries and was coordinated by the International Consortium of Investigative Journalists(ICIJ) in what they describe as the “largest-ever journalistic collaborative.”   See initial coverage here in The Washington Post and The Guardian, two of the key media outlets part of the consortium.

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

The Pandora papers draws on leaks from confidential records at 14 different offshore wealth service firms in Switzerland, Singapore, Cyprus, Samoa, Vietnam, Hong Kong, as well as firms in well-known tax havens such as Belize, Seychelles, Bahamas and the British Virgin Islands (BVI).  These firms help wealthy individuals and corporations to form trusts, foundations, incorporate companies, and establish other entities in low- or no-tax jurisdictions.

The Pandora Papers analyzed 12 million files from these firms including leaked emails, memos, tax declarations, bank statements, passport scans, diagrams of corporate structures, secret spreadsheets and clandestine real estate contracts. Some reveal the real owners of opaque shell companies for the first time.

2. The Global Implications Are Huge and Politicians Will Be Embarrassed 

The Pandora Papers are truly a global story, with major implications for many countries.  Some of the largest revelations involve Russian nationals with connections to Vladimir Putin and elites from Latin America. For example, journalists from the Spanish daily El Pais, exposed the “Secret Vault of Mexican Billionaires.” In Mexico they found over 3,000 wealthy and powerful Mexicans in the 11.9 million leaked files, with connections 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), along with shell companies and trusts in the British Virgin Islands, and real estate purchases in Miami and around the US. 

The Pandora Papers will hopefully turn up the heat on the politicians that maintain the wealth-hiding status quo. The files list over 330 current and former politicians and world leaders from 91 countries that are implicated in transactions. This is twice the number implicated in the 2016 Panama Papers.

Political leaders include King Abdullah II from Jordan and former British Prime Minister Tony Blair (according to The Guardian, Jordan blocked the ICIJ web site hours before the Pandora papers release). This explains why existing political bodies seem incapable of closing down systems that enable wealth hiding and tax dodging. 

“It demonstrates that the people that could end the secrecy of offshore systems… are themselves benefiting from it,” said Gerald Ryle, director of the ICIJ. “So there’s no incentive for them to end it.”

3. The US is Exposed as a Global Tax Haven 

U.S. citizens are under-represented in these leaks, largely due to where the service providers are located. No U.S. wealth-advisory firms were part of the leaks. Nonetheless over 700 companies revealed in the Pandora papers have ties to beneficial owners connected to the United States.

The Pandora Papers do, however, expose how the U.S. has become a global destination for global wealth, some of it ill-gotten. The Panama Papers, the Paradise Papers (Bermuda and Singapore) and Luanda Leaks (Angola) all reinforced the misperception that most of these financial shell games take place “off shore,” in secrecy jurisdictions and tax havens in small countries with weak banking laws.

But the Pandora Papers show that the U.S. and states like South Dakota now rival notoriously opaque jurisdictions in Europe and the Caribbean in financial secrecy. The states with the most active trusts revealed in the files were South Dakota (81), Florida (37), Delaware (35), Texas (24), and Nevada (14). 

4. Shady Billionaires from Around the World Are Going to South Dakota 

Findings suggest that South Dakota has sheltered billions in wealth linked to wealthy individuals previously accused of serious financial crimes and labor violations.  Two examples: Brazilian orange juice baron, Horst Happel, was fined $88 million in 2016 for underpaying his workers. In 2017, he moved substantial wealth to a trust in South Dakota.  Carlos Morales Troncoso was the former vice-president of the Dominican Republic. He ran a sugar company called Central Romana sugar company that was accused of human rights violations. He set up trusts for his daughters in the Bahamas that were moved, after his death, to South Dakota. The reason global money is flowing to the “Mount Rushmore State” is because of their low taxes and advantageous dynasty trusts.

5. The Pandora Papers Will Boost the Case for US Tax Reform

The Pandora Papers will hopefully give a boost to the US Congress in passing a progressive tax plan to fund the Build Back Better program—and that includes money for IRS enforcement to ensure the wealthy pay their fair share. 

As The Guardian reports: “The Pandora papers also place a revealing spotlight on the offshore system itself. In a development likely to prove embarrassing for US President, Joe Biden, who has pledged to lead efforts internationally to bring transparency to the global finance system, the US emerges from the leak as a leading tax haven.  The files suggest the state of South Dakota, in particular, is shelter billions of dollars in wealth linked to individuals previously accused of serious financial crimes.”

Originally published on Common Dreams by CHUCK COLLINS and republished under a Creative Commons license  (CC BY-NC-ND 3.0).

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US Denounced as ‘Biggest Peddler of Financial Secrecy’ After Pandora Papers Leak

Above:Photo Collage / Lynxotic / Original Image by ICIJ

“U.S. President Biden must match his own rhetoric on shutting down global illicit finance, and start with the biggest offender—his own country.”

The leak of an enormous trove of tax haven files over the weekend offered a further glimpse into the secretive world of offshore finance—a system facilitated by the U.S. and other rich nations—and prompted calls for immediate changes to global rules that let the powerful hide their wealth, skirt their obligations, and starve governments of crucial revenue.

“This is where our missing hospitals are,” Susana Ruiz, the tax policy lead at Oxfam International, said in a statement. “This is where the pay-packets sit of all the extra teachers and firefighters and public servants we need. Whenever a politician or business leader claims there is ‘no money’ to pay for climate damage and innovation, for more and better jobs, for a fair post-Covid recovery, for more overseas aid, they know where to look.”

“Tax havens cost governments around the world $427 billion each year,” Ruiz added. “That is the equivalent of a nurse’s yearly salary every second of every hour, every day. Ordinary taxpayers have to pick up the pieces. Developing countries are being hardest hit, proportionately. Corporations and the wealthiest individuals that use tax havens are out-competing those who don’t. Tax havens also help crime and corruption to flourish.”

Like the 2016 Panama Papers, the International Consortium of Investigative Journalists’ (ICIJ) Pandora Papers shine additional light on the functioning of a “shadow economy” that world leaders, celebrities, and billionaire business moguls—including some accused of egregious crimes—are exploiting to shield trillions of dollars in assets from transparency and taxation.

The 11.9 million files obtained, analyzed, and leaked by the ICIJ reveal the closely-guarded financial maneuverings of more than 330 politicians and top public officials from nearly 100 countries and territories, including dozens of current national leaders.

“The secret documents expose offshore dealings of the King of Jordan, the presidents of Ukraine, Kenya, and Ecuador, the prime minister of the Czech Republic, and former British Prime Minister Tony Blair,” ICIJ notes in a summary of its sprawling cache of documents. “The files also detail financial activities of Russian President Vladimir Putin’s ‘unofficial minister of propaganda’ and more than 130 billionaires from Russia, the United States, Turkey, and other nations.”

The trove also links prominent athletes, models, and artists to offshore assets, including India’s famous cricketer Sachin Tendulkar, pop music star Shakira, and supermodel Claudia Schiffer.

But Alex Cobham, chief executive of the Tax Justice Network, cautioned that a narrow focus on the individuals who have made use of an international tax system rigged in their favor diverts attention from the institutions and countries that have done the rigging.

“These personal actions are shameful and will no doubt come under great scrutiny in the coming days, but it’s important that we don’t lose sight of one crucial fact: few of the individuals had any role in turning the global tax system into an ATM for the superrich,” Cobham wrote in a blog post on Sunday. “That honor goes to the professional enablers—banks, law firms, and accountants—and the countries that facilitate them.”

Cobham observed that the Pandora Papers—the product of a nearly two-year investigation by more than 600 journalists in 117 countries and territories—confirm that the United States is “the world’s biggest peddler of financial secrecy.”

“The biggest blockers to transparency are the U.S. … and the U.K., the leader of the world’s biggest tax haven network,” Cobham wrote. “We need full transparency so we can hold tax abusers accountable, especially when our politicians are among them. U.S. President Biden must match his own rhetoric on shutting down global illicit finance, and start with the biggest offender—his own country.”

As the ICIJ notes, the new files show in some detail “how the United States, in particular, has become an increasingly attractive destination for hidden wealth, although the U.S. and its Western allies condemn smaller countries for allowing the flow of money and assets tied to corruption and crime.”

“The Pandora Papers include documents from 206 U.S. trusts in 15 states and Washington, D.C., and 22 U.S. trustee companies,” the ICIJ points out. “The documents provide details about the movement of hundreds of millions of dollars from offshore havens in the Caribbean and Europe into South Dakota, a sparsely populated American state that has become a major destination for foreign money.”

“We in the U.S. should be embarrassed that we’ve become a magnet for kleptocratic funds,” said Chuck Collins, director of the Program on Inequality and the Common Good at the Institute for Policy Studies.

Conspicuously absent from the Pandora Papers is any mention of the wealthiest people in the U.S., including Bill Gates, Elon Musk, Warren Buffett, and Jeff Bezos—the richest man in the world. But as the Washington Post explains, that could be because “the uber-rich in the United States tend to pay such low tax rates that they have less incentive to seek offshore havens.”

In response to the Pandora Papers revelations, Oxfam called on world governments to crack down on tax havens by taking a number of steps, including:

  1. Ending tax secrecy on individuals, offshores, and multinational corporations. Set up a public register on the real owners of bank accounts, trusts, shell companies, and assets. Require multinational corporations to publicly report their accounts where they do business, country-by-country.
  2. Increasing the use of automatic exchange, allowing revenue authorities access to information they need to track the money.
  3. Ending corporate profit shifting to tax havens via new rules, and by setting a global minimum tax under the OECD’s BEPS deal, ideally of around 25%.
  4. Agreeing a global blacklist of tax havens and taking counter measures, including sanctions, to limit their use.
  5. Setting a new global agenda on taxing wealth and capital fairly; addressing tax competition between countries on high-net-worth-individuals, either on income or wealth, against agreed standards.

“Governments’ promises to end tax havens are still a long way from being realized,” said Ruiz. “We cannot allow tax havens to continue to stretch global inequality to breaking point while the world experiences the largest increase in extreme poverty in decades.”

Originally published on Common Dreams by JAKE JOHNSON and republished under a Creative Commons License (CC BY-NC-ND 3.0).

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Business, Finance, News, Observation, Politics

Pandora Papers: ‘Biggest-Ever’ Bombshell Leak Exposes Financial Secrets of the Super-Rich

Above: Photo Collage /Lynxotic / Original Image by ICIJ

“This is the Panama Papers on steroids.”

In what’s being called the “biggest-ever leak of offshore data,” a cache of nearly 12 million documents published Sunday laid bare the hidden wealth, secret dealings, and corruption of hundreds of world leaders, billionaires, public officials, celebrities, and others.

The bombshell revelations—known as the Pandora Papers—were published by the International Consortium of Investigative Journalists (ICIJ) and include private emails, secret contracts, and other records obtained during a two-year investigation involving more than 600 journalists in 117 countries and territories.

“This is the Panama Papers on steroids,” said ICIJ director Gerard Ryle, referring to the 2016 exposé of the tax-evading secrets of the super-rich. “It’s broader, richer, and has more detail.”

According to The Guardian:

More than 100 billionaires feature in the leaked data, as well as celebrities, rock stars, and business leaders. Many use shell companies to hold luxury items such as property and yachts, as well as incognito bank accounts. There is even art ranging from looted Cambodian antiquities to paintings by Picasso and murals by Banksy.

“There’s never been anything on this scale and it shows the reality of what offshore companies can offer to help people hide dodgy cash or avoid tax,” said ICIJ’s Fergus Shiel, who added that the people in the files “are using those offshore accounts, those offshore trusts, to buy hundreds of millions of dollars of property in other countries, and to enrich their own families, at the expense of their citizens.”

The leaked documents reveal how some of the world’s wealthiest people avert the financial consequences of their misdeeds by using offshore entities. Dozens of current and former world leaders feature prominently in the files, including Russian President Vladimir Putin, Jordanian King Abdullah II, and former British Prime Minister Tony Blair.

While most of the richest Americans do not appear in the files, The Washington Post reports that “perhaps the most troubling revelations for the United States… center on its expanding complicity in the offshore economy.”

Chuck Collins, author of The Wealth Hoarders: How https://bookshop.org/a/565/9781509543496Billionaires Pay Millions to Hide Trillions, and co-editor of Inequality.org at the Institute for Policy Studies, said in a statement that “the U.S. has become the weak link in stopping global crime and wealth hiding.”

“States like South Dakota and Delaware have morphed their laws to attract billions, sometimes illicitly obtained, from around the world,” he said. “We in the U.S. should be embarrassed that we’ve become a magnet for kleptocratic funds.”

Collins added that the Pandora Papers show “it is time for U.S. lawmakers to shut down the hidden wealth system that allows for such aggressive tax avoidance and the sequestering of wealth.”

ICIJ said Sunday that the “publication of Pandora Papers stories comes at a critical moment in a global debate over the fairness of the international tax system, the role of Western professionals in the shadow economy, and the failure of governments to stanch the flow of dirty money into hidden companies and trusts,” and that the documents “are expected to yield new revelations for years to come.”

Originally published on Common Dreams by BRETT WILKINS and republished under a Creative Commons license  (CC BY-NC-ND 3.0).

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