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#Analize / Mălina Mîndruțescu

The Pandora Papers

On Sunday, October 3rd, a leak of offshore accounts of massive proportions, unprecedented in size and significance, exposed the financial secrets of some of the richest and most powerful individuals on the planet.

In a concerted effort spearheaded by some 600 journalists from 117 countries and territories, in collaboration with over 114 media organisations from across the world, including the Guardian, Washington Post, Le Monde and BBC Panorama, the leak of offshore accounts is one for the history books: containing 2.94 terabytes, the Pandora Papers represents the largest leak of the three (the Panama Papers in 2016 contained 2.6 terabytes, whereas the Paradise Papers in 2017 were 1.4 terabytes).

The leak was initially published by the ICIJ (International Consortium of Investigative Journalists) in Washington and in the following few days, more revelations will be unearthed by ICIJ and its media partners.

The 11 million documents detail the secret life of the world’s high and mighty, as the leak include offshore deals, assets and financial agreements of more than “100 billionaires, 30 world leaders and 300 public officials”, cites The Guardian.

Who are the world leaders?

Some of the most noteworthy names include the president of Azerbaijan, Ilham Aliyev, his family and close associates, who acquired dozens of Prime London apartments worth almost $700 million. The OCCRP (Organized Crime and Corruption Reporting Project) note that “a vast network of offshore companies, administered by service provider Trident Trust and fronted by a small group of trusted cronies, helped the Aliyevs secretly own vast real estate holdings in the British capital.

Leaked documents from the Pandora Papers reveal how these properties were held by an interconnected network of 84 offshore companies”.

In addition, there are world leaders, like the president of the Czech Republic, Andrej Babiš, who is facing questions over why he used his offshore company to acquire a $22m chateau in the south of France. His recent hostile interaction with BBC journalists over the allegations and his refusal to answer will leave a stain.

world leaders

Photo source: The Guardian


There is also Ukrainian president, Volodymyr Zelenskiy, who was elected in 2019 on an anti-corruption platform. A former comedian, Zelenskiy came into office promising to rid the country of a heavy oligarch-run economy, political system and society. Even though he is mentioned in the leak, it is not clear the level of his involvement in the scheme. However, during the campaign, Zelenskiy transferred his 25% stake in an offshore company to a close friend who now works as the president’s top adviser.

There is also Russian President Vladimir Putin, who sources and experts are of the opinion that he amassed close to a fortune, though the nature of his assets is kept under wraps. However, while the leaks did not mention the president by name, several of his close associates were involved. This included Petr Kolbin, one of Putin’s oldest friends, who was dubbed to be Putin’s wallet, as well as a female associate, alleged a woman the president had been previously romantically involved with.

However, state leaders with dubious contexts in developing democracies or all out autocracies are not the only ones that made the cut. Former British Prime Minister, Tony Blair and his wife, Cherie, reportedly bought a £6.5m office in Marylebone (one of London’s high-end districts) by acquiring a British Virgin Islands offshore company.

The list goes on: from Montenegrin President Milo Đukanović and his son to Kenyan President, Uhuru Kenyatta, donors of the ruling British Conservative Party and the King of Jordan, who amassed over £70 million secret property empire.

But, what is offshore?

By offshore, the nature of the documents and the leak attempts to explain how powerful, rich and influential people are trying to trick the system by way of taking advantage of the available loopholes, or indeed breaking the law. Hence, people who siphon and move around large sums of money do not want it to be discovered, disclosed as their own or pay significant amounts of taxes for such sums, as you do in most of the Western world.

Therefore, such resourceful individuals resort to finding countries or territories, where it is easy to set up companies, there are laws that make it difficult to identify owners of companies and there is low or no corporate tax.


Photo source: James O’Brien/OCCRP


However, are tax havens illegal?

Tax havens, or offshore financial centers, are generally countries or places with low or no corporate taxes that allow outsiders to easily set up businesses there. Tax havens also typically limit public disclosure about companies and their owners. Because information can be hard to extract, tax havens are sometimes also called secrecy jurisdictions. Tax havens nearly always deny being tax havens, cites ICIJ.

There is nothing illegal about doing business offshore, but not all taxpayers play by the same set of rules. ICIJ states that “with the help of lawyers, accountants, white-shoe professionals and complicit Western governments, the wealthy and well-connected have avoided paying trillions of dollars in taxes.

By some estimates, about 10 percent of the total output of all the economies in the world is parked in offshore financial centres, held by shell companies that exist only on paper. The cost to governments, in lost revenue, is estimated to exceed $800 billion a year”.

tax havens

Photo source: BBC


Benefits of an offshore account

In recent years, the United States has become one of the world’s favorite tax havens. Nevada, Wyoming, and South Dakota now hold a large amount of foreign money, but the reason is not primarily for favorable tax treatment.

One of the main advantages of keeping foreign money in the United States, Switzerland, and other developed nations is their stability. People living in nations with political and economic upheaval fear that their money, as well as their lives, could be in danger. What if the economy collapses? What if there’s a civil war? What if their government comes after them for some reason? If their money is kept overseas, it’s harder for their own government to seize it, cites Investopedia.

As we speak, the Pandora Papers is the largest investigation in journalism history and its exposure of the world’s elite will have immeasurable ramifications.

For more True Story Project analyses, please click here and here.


Photo source: ICIJ

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