Processing the Pandora Papers: An Overview of the Newest Financial Leak

Imagine being exempt from paying the average 6.25 tax like everyone else.

    This is the reality for those featured in the Pandora Papers.

     Over the course of years, the world’s elite of public officials, billionaires, and kings have hidden billions of dollars from tax authorities, creditors and citizens by using an offshore system.

     This immense data leak is combined in a series entitled “The Pandora Papers.”

     “The Pandora Papers are a stunning leak of financial secrets and what we see from this mass of data is taxes are rising for ordinary people and yet, there is a sort of elite who use clever offshore structures which are not open for everyone to see to either hide their money or to manage their fortunes,” according to Luke Harding, Guardian foreign correspondent, on the new records.

     The offshore system is located in countries and territories including Panama, Singapore, Switzerland, Belize, Cyprus and the British Virgin Islands.

     According to The Washington Post, an offshore system is “a financial system that offers privacy, which provides an opportunity to hide assets from authorities, creditors, and other claimants, as well as from public scrutiny.”

     It depends if an offshore system is legal or not, as not everyone involved in the Pandora Papers are considered criminals. Many times, wealthy individuals will put their finances offshore to avoid taxes, which is legal.

     The problem begins with tax evasion.

     “Often to really kind of escape taxation altogether, which is more of a gray area and could shade into tax evasion which is illegal,” said Harding.

     For those not hiding their assets for an honest reason, many utilize offshore systems to avoid taxes, crimes, hiding assets, or engage in money laundering. Additionally, these systems can “play in drug trafficking, ransomware attacks and other crimes,” said Sherine Ebadi, a former FBI Officer to the Washington Post.

     These offshore systems work in trusts, or an agreement between traditionally three parties. The Washington Post defines it as , “a settlor places something valuable in the care of a trustee for the benefit of the beneficiary.”

     Since trusts can be any valuable through any party, trusts can usually differ, but have incredible secrecy included.

     For example, a person wants to use the system, let’s say their name is George. George must first contact a service provider or wealth manager, who will in turn essentially purchase an offshore company under a false name for George. Nothing can be traced.

     Under this offshore company, the next step would be to open a bank account which does not actually exist. Therefore, no one will know this account is George’s because it’s his fake company’s.

     Now, George can live it big: buying expensive items and most frequently found in the Pandora papers, property.

     Due to this offshore system, all of this property technically belongs to the fake company, when in truth, it belongs to George.

     Aside from the fake George situation, many political leaders are identified in the Pandora papers.

     These leaders, published in The Washington Post include:

  • King Abdulla II of Jordan
  • Luis Abinader who is the President of the Dominican Republic
  • Volodymyr Zelensky, the President of Ukraine
  • Patrick Achi, the Prime Minister of the Ivory Coast
  • Milo Djukanovic who is the President of Montenegro
  • Andrej Babis, the Prime Minister of Czech Republic
  • Uruhu Kenyatta, the President of Kenya
  • Guillermo Lasso, who is the President of Ecuador
  • C.Y. Leung, the former chief executive of Hong Kong
  • Nirupama Rajapaksa, the former minister of Sri Lanka
  • Sebastián Piñera, the President of Chile
  • Mohammed bin Rashid al-Makotum, the ruler of Dubai and Prime Minister of Arab Emirates

     “What we learned from the Pandora papers is that practically every country on the planet is involved in the offshore world by pumping more information into the system we allow citizens, voters if you like, to have a kind of fuller portrait of the people who rule them and the kind of countries in which they live,” said Harding.

     With the new revelation of the Pandora papers, and the offshore safe havens discovered, these ongoing investigations will reveal the truth behind all the secrecy.

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