Opening the Box: Unmasking the Secret Dealings of the Pandora Papers’ Elite

This October, the International Consortium of Investigative Journalists (ICIJ) released a three-terabyte reserve containing 12 million files to the general public. These documents shed greater light on the discreet network of tax avoidance that benefits a narrow bracket of wealthy elites to the detriment of the wider population. The Pandora Papers expose the concealed and clandestine financial offshore holdings of 35 current and former world leaders 330 politicians and public officials, and a plethora of millionaires and billionaires from Europe and North America. As we begin to comprehend the extent of global financial secrecy within the offshore economy, its influence on politics and the consequential dwindled efficacy of governments and global organizations becomes worrisome.

The ICIJ includes over 600 journalists from 150 different news organizations who collaborated on the Panama Papers of 2016. After two years of rigorous fact-checking and investigation of offshore companies, bank accounts, real estate, private jets, yachts, and famous artworks, this mastermind group revealed the most extensive data leak to date.

Noteworthy mentions of the Pandora Papers include several prominent political leaders. For instance, the King of Jordan purchased 68 million USD worth of property investments in the UK and the US through covert companies amidst Jordanian protests against corruption during the Arab Spring. The family of Kenyan president Uhuru Kenyatta has managed secret offshore companies containing 30 million USD for decades. In Europe, the Czech Prime Minister failed to declare his offshore investment company used to purchase French villas for 22 million USD. Sir Philip and Lady Green embarked upon a real estate rampage after dumping the BHS retail chain immediately before its collapse. In Central America, a Guatemalan dynasty family and owner of a soap and lipstick conglomerate hid 13 million USD while the company faced accusations of environmental damage and poor working conditions. There is also an ongoing investigation and bid for the impeachment of Chilean President Pinera following evidence of corruption in the sale of a mining project to a close childhood friend.

The Pandora Papers is not the first major data leak to uncover a series of shocking financial secrecies. The Panama Papers investigation led to mass protests in Iceland and Pakistan, eventually resulting in the fall of both presidents. The effects of this publication are still ongoing, as can be seen via court proceedings in Malta to charge Keith Schembri, former chief of staff to Prime Minister Joseph Muscat, with money laundering and fraud. However, the Pandora Papers represent a tremendously greater feat.

In size alone, the Pandora Papers uncover the owners of over 29,000 offshore companies, more than twice of its predecessor. Further, this year’s publication provides greater insights into the underground offshore economy by unmasking the vast network of lawyers, accountants, and middlemen at the heart of the industry. The Papers identified Baker McKenzie, the largest law firm in the US, as an engineer of the underground offshore economy. Additionally, the documents provided evidence that several banks worked with a Panamanian law firm, Aleman, Cordero, Galindo & Lee, to help their customers establish at least 3,926 offshore companies; close to 10% of these accounts were set up in the British Virgin Islands for clients of Morgan Stanley.

While considered unethical, loopholes in the tax law of most states allow asset-holders to avoid paying taxes by moving their money into offshore accounts or tax-havens. According to the UK government, tax avoidance in this form “involves operating within the letter, but not the spirit, of the law.” Reasonable rationales for off-shoring funds may include protection from a corrupt government or a dangerous enemy. Although it is a legal practice, off-shoring is an ideal method for concealing illegally-obtained funds, perhaps through money laundering or theft. Off-shore protection is controversial for political figures who are able to use their accounts and private companies to obscure the public eye from unpopular or illegal endeavours. As mentioned above, the Chilean President faces impeachment for his concealment of documents within offshore sanctuaries detailing a corrupt mining project sale. Since the deal’s disclosure to the public, outraged Chileans have pushed for Pinera’s investigation. 

For the general public, the offshore economy poses a multi-faceted concern. Profits from criminal activity concealed in a network of covert companies or offshore shelters should be uncovered, identified, and seized. In order to accomplish this objective, greater regulation of the offshore economy is vital. However, nearly all of those in power with the capability to do so benefit from such a system and prefer it to remain discreet and unaffected. Further, even those offshore accounts holding assets for loophole (legal) tax avoidance cost ordinary citizens the benefits of tax revenue, such as social welfare programs, infrastructure, and government spending on the domestic economy. For instance, Abdullah II of Jordan’s citizens lined the streets during the Arab Spring, protesting inflation, unemployment, and inadequate government efforts to mitigate these issues. The King is named in the Papers as the owner of several offshore companies and property. The wealthy and elite hold the power over the majority. Correcting the situation would prove contrary to their interests. 

The Pandora Papers investigation has indeed provided unprecedented evidence exposing the hidden vaults of the extremely rich. Along with it, the Papers offer new insight into the maze of money, power, and politics. Most politicians preach financial transparency and a tax system to support the fair distribution of government services within their own state. Yet many of those same politicians manage secret funds elsewhere to avoid making their fair and proper contributions. The degree to which the Pandora Papers reveal this hypocrisy is nothing short of astonishing. However, uncovering these secrets is only the first step towards addressing them. The contents of the Pandora Papers will certainly shake the world in a more significant way as did the Panama Papers. With investigations like the Pandora Papers revealing more of the underground offshore economy, we can work to eliminate this network and eventually achieve financial transparency.