The Pandora papers’ revelations prompted an avalanche of international reaction on Monday, ranging from solemn government pledges to clamp down on tax avoidance to outraged denials and a few cries of “old news”.
The leak published on Sunday by the Guardian and other global media partners revealed the leading role played by the US in the offshore industry, including in the state of South Dakota. It also showcased the use of offshore secrecy jurisdictions by world leaders past and present, as well as other politicians and top public officials.
The Biden administration said it would “crack down on the unfair schemes that give big corporations a leg up” in the wake of the Pandora disclosures. “It’s time to deal in hardworking Americans and ensure the super-wealthy pay their fair share,” the White House said in a tweet.
In Moscow, the Kremlin insisted there was nothing to see, despite the fact that several of Vladimir Putin’s friends and associates – including an alleged former lover – appeared in the data. Dmitry Peskov, Putin’s spokesperson, said the leak was made up of “unsubstantiated claims”.
Peskov said no hidden wealth was found among Putin’s inner circle, despite the leak suggesting the opposite. “What catches the eye is which country is the world’s largest lagoon. This, of course, is the US,” Peskov said at a daily press briefing in Moscow.
The Pandora papers are the largest trove of leaked data exposing tax haven secrecy in history. They provide a rare window into the hidden world of offshore finance, casting light on the financial secrets of some of the world’s richest people. The files were leaked to the International Consortium of Investigative Journalists (ICIJ), which shared access with the Guardian, BBC and other media outlets around the world. In total, the trove consists of 11.9m files leaked from a total of 14 offshore service providers, totalling 2.94 terabytes of information. That makes it larger in volume than both the Panama papers (2016) and Paradise papers (2017), two previous offshore leaks.
Where did the Pandora documents come from?
The ICIJ, a Washington DC-based journalism nonprofit, is not identifying the source of the leaked documents. In order to facilitate a global investigation, the ICIJ gave remote access to the documents to journalists in 117 countries, including reporters at the Washington Post, Le Monde, El País, Süddeutsche Zeitung, PBS Frontline and the Australian Broadcasting Corporation. In the UK, the investigation has been led by the Guardian and BBC Panorama.
What is an offshore service provider?
The 14 offshore service providers in the leak provide corporate services to individuals or companies seeking to do business offshore. Their clients are typically seeking to discreetly set up companies or trusts in lightly regulated tax havens such as the British Virgin Islands (BVI), Panama, the Cook Islands and the US state of South Dakota. Companies registered offshore can be used to hold assets such as property, aircraft, yachts and investments in stocks and shares. By holding those assets in an offshore company, it is possible to hide from the rest of the world the identity of the person they actually belong to, or the “beneficial owner”.
Why do people move money offshore?
Usually for reasons of tax, secrecy or regulation. Offshore jurisdictions tend to have no income or corporation taxes, which makes them potentially attractive to wealthy individuals and companies who don’t want to pay taxes in their home countries. Although morally questionable, this kind of tax avoidance can be legal. Offshore jurisdictions also tend to be highly secretive and publish little or no information about the companies or trusts incorporated there. This can make them useful to criminals, such as tax evaders or money launderers, who need to hide money from tax or law enforcement authorities. It is also true that people in corrupt or unstable countries may use offshore providers to put their assets beyond the reach of repressive governments or criminal adversaries who may try to seize them, or to seek to circumvent hard currency restrictions. Others may go offshore for reasons of inheritance or estate planning.
Has everyone named in the Pandora papers done something wrong?
No. Moving money offshore is not in or of itself illegal, and there are legitimate reasons why some people do it. Not everyone named in the Pandora papers is suspected of wrongdoing. Those who are may stand accused of a wide range of misbehaviour: from the morally questionable through to the potentially criminal. The Guardian is only publishing stories based on leaked documents after considering the public interest. That is a broad concept that may include furthering transparency by revealing the secret offshore owners of UK property, even where those owners have done nothing wrong. Other articles might illuminate issues of important public debate, raise moral questions, shed light on how the offshore industry operates, or help inform voters about politicians or donors in the interests of democratic accountability.
Multiple countries including Spain, Mexico, Panama, Pakistan, India, Brazil, the UK and Australia said they would now investigate the Pandora documents – 11.9m leaked files from 14 offshore providers. The British chancellor, Rishi Sunak, said the UK’s tax authorities would “look through those to see if there’s anything we can learn”.
Sunak – whose father-in-law is an Indian tycoon and billionaire – was asked if he had personally benefited himself from an offshore arrangement. “No, I haven’t,” he told Sky News.
The Australian tax office said it would examine any links to Australians that emerge from the leak. About 400 Australian names are in the papers, which feature southern hemisphere tax havens such as Samoa, as well as the British Virgin Islands, Monaco and Switzerland.
The government of Panama said it would begin a “supervision” of offshore service companies mentioned in the Pandora papers. One of those providers, a Panama-headquartered law firm known as Alcogal, plays a major role in helping Latin America’s political class set up shell companies in tax havens. It says it complies with all legal requirements wherever it operates.
Pakistan’s prime minister, Imran Khan, said his government would investigative all citizens mentioned in the documents – including several of his own ministers and key members of his inner circle.
They include Pakistan’s minister for water resources, Chaudhry Moonis Elahi. Elahi pulled out of making a large investment in a tax haven after he was told his country’s tax authorities would be informed, documents in the Pandora papers suggest. Instead he set up a trust structure in the UK. Elahi denies impropriety and says his family’s assets were declared.
“If any wrongdoing is established, we will take appropriate action. I call on the international community to treat this grave injustice as similar to the climate change crisis,” Khan tweeted. The ruling elite in the developing world was plundering national wealth in the same way the East India Company once looted India, he said.
“Unfortunately, the rich states are neither interested in preventing this large-scale plunder nor in repatriating this looted money,” Khan said. The UN had calculated that a staggering $7tn in stolen assets was parked in largely offshore tax havens, he said, pointing out that corruption caused poverty in his and other countries.
Meanwhile, the billionaire Czech prime minister, Andrej Babiš, reacted angrily to the Pandora claims. They show he used a convoluted offshore structure to finance his purchase in 2009 of a £13m mansion in the south of France. The timing of Sunday’s publication – ahead of elections on Friday and Saturday – was a murky political plot, he suggested.
“So it’s here. I had expected them to pull something out on me just before the elections in order to harm me and influence the Czech elections,” Babiš tweeted. He said he had never done anything “illegal or wrong”. “That does not prevent them from trying to denigrate me again and influence the Czech parliamentary elections.”
Babiš did not deny the substance of the offshore claims. He conceded that a politician should not proceed in this way, but said he was not active in politics at the time. “Of course a politician cannot afford to do that, but I did the transaction 12 years ago,” he said. Czech police’s organised crime unit said it would investigate the disclosures relating to Babiš and about 300 other Czechs.
There was a similarly unhappy reaction from the royal family in Jordan. On Sunday it emerged that the country’s ruler, King Abdullah II, had splurged $100m on properties in the US and UK, including a mansion in Malibu, California, and three houses in Belgravia in central London. All were concealed behind a dense web of shell corporations.
In a statement, Jordan’s royal court dismissed the reports by the Guardian, Washington Post and other media as “distorted”. It said they “included inaccuracies and exaggerated the facts”. Identifying the properties’ addresses was “a flagrant security breach and a threat to His Majesty’s and his family’s safety”, it said, adding that the king had “personally funded” the purchases.
In Ukraine, opposition politicians used the Pandora papers to attack the country’s comedian turned president, Voldymyr Zelenskiy. The data suggests Zelenskiy had an undeclared interest in an offshore company, which he secretly transferred to a friend in March 2019, weeks before winning power. The head of Zelenskiy’s office, Mykhailo Podoliak, dismissed the report and said the president had complied with anti-corruption laws.
Zelenskiy’s predecessor, Petro Poroshenko, however, launched a furious attack in parliament. He said that thanks to Zelenskiy’s actions, Ukraine featured in world headlines as a place associated with global corruption and money laundering. No investigation was happening because the country’s SBU intelligence service was associated with Ukraine’s “top political leadership”, Poroshenko said.
He added: “If anyone wants confirmation of this, I ask you to just look at the Guardian, El País , the Washington Post, Euronews, CNN, Deutsche Welle. The last place we can talk about this is the parliament. The leadership of the majority is trying to shut [us] up here as well.”
Transparency campaigners urged politicians to act. “This is another shocking exposé of the oceans of money sloshing around the darkness of the world’s tax havens that must prompt immediate action, as has long been promised,” Susana Ruiz, tax lead for the global anti-poverty group Oxfam International, said in a statement.
Alex Cobham, an economist and chief executive of the Tax Justice Network, said the “personal actions” of some in the leak were “shameful”. But he stressed: “Few of the individuals had any role in turning the global tax system into an ATM for the super-rich. That honour goes to the professional enablers – banks, law firms and accountants – and the countries that facilitate them.”
European politicians described the Pandora papers as a “wake-up call” for EU finance ministers. They are poised to reduce the number of countries on an EU tax haven blacklist. Sven Giegold, a Green MEP, described the move as grotesque, absurd, and badly timed. He said a number of leading tax havens were missing from the list, including the British Virgin Islands, which features heavily in leaked files.
