Pandora papers leak: what to know

The headlines thundered: The King of Jordan amassed $ 100 million in hidden assets, including homes in Malibu, London and Washington. An alleged mistress of the Russian leader managed to secretly buy a luxury residence in Monaco. The President of the Czech Republic, an anti-corruption activist, has secretly acquired an estate on the French Riviera.

The revelations of the Pandora Papers report, a collaboration of the International Consortium of Investigative Journalists and media partners that include The Washington Post and The Guardian, began to reverberate through and beyond the financial world of the rich and the powerful almost. immediately after the authors started posting them on Sunday.

The report (the name Pandora comes from the Greek myth of a sealed jar containing the evils of the world) was based on what its authors described as 11.9 million leaked documents from 14 companies in the offshore financial services industry, describing how the rich hide their assets. More than 600 journalists in 117 countries worked there.

The Pandora Papers have established offshore activity ties with more than twice as many politicians and public officials as the Panama Papers, an incriminating report on the offshore banking sector released by the journalism consortium five years ago. The Pandora Papers contain information on more than 330 politicians and public officials from over 90 countries and territories, including 35 current and former country leaders.

A thriving sector of the financial services industry specializes in helping high net worth clients hide their assets and legally minimize the taxes they would otherwise have to pay. These benefits are achieved through a few basic methods, built around the principles of disguised ownership and weak regulation. Hiding wealth is a specialty offered by tax havens like Panama, Dubai, Monaco, Switzerland and the Cayman Islands, as well as some US states like South Dakota and Delaware.

Secret ownership of homes and other assets can be obscured by limited companies – companies that are not required to identify their owners. In some countries, there are no regulatory requirements to identify and register the purported beneficial owners of a property, i.e. people who benefit directly from a property even if someone’s name is another is registered as the owner. Using this beneficial ownership loophole allows the real owners to hide behind layers of legal documents that may be difficult or impossible to disentangle: the owner of Company A can be identified as Company B, and the owner of Company B. company B can be identified as company C, and so on.

Many high net worth individuals may have valid reasons for legally protecting disclosures about their assets – to protect them from unscrupulous associates or extortion attempts, for example, or to secure the inheritance of their descendants. But proponents of greater financial transparency say the system is abused, vulnerable to corruption and built for greed. Much of the offshore financial services industry is unregulated or self-regulated. Some of the bankers, auditors and accountants who work in the industry are former public servants who know the shortcomings of the system.

“The Pandora Papers reveal the inner workings of what is a phantom financial world, providing a window into the hidden operations of a global offshore economy,” said the Independent Commission for the Reform of International Business Taxation, a group of Paris-based defense who hosted the report. He said the system “allows some of the richest people in the world and multinational corporations to hide their wealth and, in some cases, pay little or no tax.”

The report was released against the backdrop of an ever-deepening rift between the rich and the poor around the world, exacerbated by the pandemic, which has exacerbated emotional resentments over the privileges of the rich in many countries.

Disclosures can also have a political effect, even in countries where rulers have limited accountability to the public, such as Russia, which has an authoritarian leader, and Jordan, which is a monarchy. This type of report gives the public information and insight into its leaders that the political structure denies, and can be politically damaging.

Russian President Vladimir V. Putin is not directly named in the Pandora report but was linked by associates with assets in Monaco, including a house acquired by a Russian woman who allegedly had a child with him. Mr Putin’s spokesperson called the findings unfounded.

King Abdullah of Jordan has been accused of using shell companies registered in the Caribbean to acquire 15 properties in the United States, Britain and elsewhere. His office said the king used his own personal wealth to buy them.

“I don’t think this is the end of Vladimir Putin – let’s not get carried away,” said Gary Kalman, director of the US office of Transparency International, an organization that monitors financial corruption around the world. “But I think the leaders of these countries, King Abdullah and others, are worried about their reputation,” Kalman said in a telephone interview.

For King Abdullah in particular, he said, Jordanians now know “that he spent money on properties in Malibu and Georgetown, while in Jordan they don’t have enough money. money to provide basic services. It looks really bad.

For leaders who campaigned on pledges to reduce corruption – like those in Pakistan, the Czech Republic and Kenya, for example – to be included in the Pandora report is extremely embarrassing.

“In any country there is a tipping point, at which people are angry and upset,” said Lakshmi Kumar, policy director of Global Financial Integrity, a Washington-based research group on illicit financial flows. and other corruption. “We are already there, in many of these countries. “

Ms Kumar and others said they hoped the Pandora report would speed up measures to strengthen international financial regulations, tackle tax evasion and significantly restrict the means by which the rich can hide assets. One of her main lessons from the report, she said, was the bankers’ complicity in helping their wealthier clients.

“When you’re so rich and looking for a creative way to hide money, you can’t do it alone,” she said. “You need a network of professionals to help you. These people are often the people who are supposed to protect the financial system. “

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