Words by Maisie Levitt, Online News Editor
Over 600 journalists from 140 media organisations led one of the largest financial investigations ever attempted in order to leak 11.9 million documents, revealing how powerful individuals use offshore companies in order to hide their wealth.
Named the Pandora Papers, the investigation exposed the finance concealments and tax avoidances of some of the world’s most powerful and wealthy individuals.
The documents were leaked to the International Consortium of Investigative Journalists (ICIJ) in Washington. Consisting of certificates, memos, records, emails etc, the Pandora Papers is the largest offshore data leak ever, having contained 2.94 terabytes of information. Found via investigations into 14 companies that specialise in creating offshore trusts and companies, the companies create these in tax havens such as Switzerland, Panama, Dubai and Monaco, where the ultra wealthy may have to pay very little to no tax at all.
The leaked group of super rich individuals included 35 world leaders, including current and former presidents, prime ministers and heads of state. Over 300 public officials were also implicated, including judges, mayors and military generals. Over 100 billionaires were also exposed, along with famous musicians and celebrities. The files also disclose information about major donors to the Conservative party.
Although some people use offshore companies for privacy and security, a variety of powerful individuals exposed in the Pandora Papers have been found to have used the companies for suspicious activity.
Azerbaijan’s ruling family, the Aliyevs, sold one of their UK properties to the Queen’s crown estate. The company that received the £67 million from the estate has been found to have operated as a front for the family.
The Czech prime minister has been questioned about his use of an offshore investment company to buy a $22 million dollar property in France. Both he and the Aliyevs have declined to comment.
Former British prime minister Tony Blair was also included in the leak when it was found that he and his wife, Cherie, saved over £300,000 (as reported by the BBC) in property taxes after getting hold of a £6.5 million London office. This was done by registering a U.K. rental-property company and then using the rental company to buy an offshore company that owned the London office. By buying the company instead of the property itself, the Blairs were able to avoid property taxes. Cherie Blair has now stated that “all taxes have been paid ever since and all accounts openly filed in accordance with the law”.
The Russian president Putin, who has been suspected of hiding a secret fortune, does not appear on the list, although a variety of close friends and suspected partners do.
The US president, Joe Biden, has previously pledged to increase transparency to the international financial system. However, the United States was proven to be a leading tax haven in which many of the ultra rich pay little to no tax. The leak indicated that South Dakota in particular is concealing vast amounts of wealth, relating to people who have already been accused of serious financial crimes.
While the acts of buying or using offshore companies are not illegal, they cost governments around the world billions, while also highlighting the ways in which the ultra wealthy are able to avoid spending money that ordinary civilians have to (such as taxes). Not everyone named in the Pandora Papers has been accused of ill activity. However, those who use companies or trusts in tax havens typically conceal their wealth from taxation and criticism, which ordinary people cannot afford to do.
The tax havens in which these powerful individuals conceal their assets are often notoriously secretive, which has proven beneficial to fraudsters, tax evaders and money launderers.
In a 2020 study by the OECD, it was found that over $11.3 trillion in wealth is kept in offshore funds and companies. With the Pandora Papers being released during a pandemic, the leak is expected to make a larger impact than previous ones, since Covid has emphasised inequalities and has heavily affected large demographics of ordinary taxpayers. Gerard Ryle, the director of the ICIJ, has described the offshore funds as being “money that is being lost to treasuries around the world and money that could be used to recover from Covid…we’re losing out because some are gaining…it’s a very simple transaction”.