Pandora Papers Expose How World Elite Uses Legacy Finance To Hide Fortunes

Source: AdobeStock /alphaspirit

Recent global investigative efforts by the International Consortium of Investigative Journalists (ICIJ) – called the Pandora Papers – have revealed how the world’s elite uses offshore structures and trusts in tax havens such as Panama, Dubai, Monaco, Switzerland and the Cayman Islands to hide their wealth.

More than 600 reporters spent two years searching a cache containing nearly 12 million files of 14 companies hired by the world’s rich to hide their assets, including 35 current and former world leaders, as well as 300 other officials in more than 90 countries.

The ICIJ said:

“More than five years after the Panama Papers that revealed the law firm Mossack Fonseca, the latest leak ends forever the idea that abuse of the offshore system is the work of some bad apples. Instead, the files expose a vast and often interconnected system that feeds crises and discontent around the world.”

The files expose the global nature of offshore business, a world in which a reported secret mistress of Russian President Vladimir Putin receives a luxury apartment in Monaco through an offshore mailbox company and the King of Jordan secretly buys real estate in prime locations such as London and Malibu, according to the committee.

In addition to dictators and royalty, the papers also shed light on a number of European leaders who derive their legitimacy from democratic elections. These include Czech Prime Minister Andrej Babiš, who is running for re-election in the parliamentary elections from 8 to 9 October. The politician, who is also one of the richest citizens in his country, is facing scrutiny over whether he used an offshore investment company to acquire a $ 22 million castle in the south of France, according to the Guardian, which obtained access to the files.

Another European politician seen in the leak is Ukrainian President Volodymyr Zelenskiy, who was elected on an anti-corruption platform in 2019. During his successful campaign, the actor, who became a politician, transferred his shares in an offshore company to a close friend, who, according to the files, now acts as a top adviser to the president.

While many of the financial operations uncovered are not illegal in nature, they are likely to spark controversy over how powerful policymakers are using the offshore industry to override their countries’ tax systems. Former British Prime Minister Tony Blair and his wife Cherie saved an estimated USD 423,000 (GBP 312,000) in taxes on the purchase of a USD 8.8M (GBP 6.5M) London building by buying an offshore company in the British Virgin Islands that had owned the property.

Meanwhile, the papers also show how the US is increasingly positioning itself as an offshore port for the world’s rich and influential.

“Due to the central role the US plays in the global banking system, the country is in a uniquely powerful position to launch secret offshore financing,” the ICIJ said. “But while the federal government has been making efforts lately to curb industry overseas, many states – like Delaware, Alaska, and Nevada — have persevered or are moving in the opposite direction. In recent years, lawmakers in over a dozen U.S. States have voted to expand their financial secrecy.”