Pandora Papers: Secret tax havens of world leaders, celebrities revealed

The Pandora Papers reveal the inner workings of a shadow economy that benefits the wealthy and well-connected at the expense of everyone else.

Millions of leaked documents reveal the financial secrets of how world leaders, billionaires and celebrities use tax havens. Tony Blair, Ukraine’s Zelenskyy and Shakira are among those named.

The Pandora Papers investigation has revealed that 35 current and former world leaders — including former British Prime Minister Tony Blair, the king of Jordan and Kenya’s President Uhuru Kenyatta — as well as powerful billionaires were affiliated with companies that use offshore tax-havens.

Offshore accounts are often used to secretly manage and move large sums of money to hide a person’s true wealth.

The investigation, carried out by the International Consortium of Investigative Journalists (ICIJ) and a team of 150 news outlets — including DW’s Turkish service — also found that more than 330 high-level politicians and public officials worldwide have ties to offshore accounts.

The millions of leaked documents examined by the biggest journalism partnership in history show the extent to which secretive offshore operations are entangled in global finance politics.

The secret documents expose offshore dealings of the King of Jordan, the presidents of Ukraine, Kenya and Ecuador, the prime minister of the Czech Republic and former British Prime Minister Tony Blair. The files also detail financial activities of Russian President Vladimir Putin’s “unofficial minister of propaganda” and more than 130 billionaires from Russia, the United States, Turkey and other nations.

According to ICIJ, the Pandora Papers show that the power players who could help bring an end to the offshore system are instead benefiting from it — stashing assets in covert companies and trusts while their governments do little to slow a global stream of illicit money that enriches criminals and impoverishes nations.

Blair to Babis: Europe’s elite uncovered

Former UK Prime Minister Tony Blair has spoken out against tax avoidance for decades, but the leaks reveal he and his wife were able to own an $8.8 million (€7.6 million) building when they bought an offshore real estate company from the family of Bahrain’s industry and tourism minister, Zayed bin Rashid al-Zayani.

By purchasing the company shares — and not the building directly — Blair and his wife Cherie were able to avoid having to pay property taxes totalling $400,000.

Both the Blairs and the al-Zayanis said they did not initially know about each other’s involvement in the deal. Cherie Blair said her husband was not involved in the transaction. The company is now closed.

The leaked records reveal that many of the power players who could help bring an end to the offshore system instead benefit from it – stashing assets in covert companies and trusts while their governments do little to slow a global stream of illicit money that enriches criminals and impoverishes nations.

Among the hidden treasures revealed in the documents:

• A $22 million chateau in the French Riviera – replete with a cinema and two swimming pools – purchased through offshore companies by the Czech Republic’s populist prime minister, a billionaire who has railed against the corruption of economic and political elites.
• More than $13 million tucked in a secrecy-shaded trust in the Great Plains of the United States by a scion of one of Guatemala’s most powerful families, a dynasty that controls a soap and lipsticks conglomerate that’s been accused of harming workers and the earth.
• Three beachfront mansions in Malibu purchased through three offshore companies for $68 million by the King of Jordan in the years after Jordanians filled the streets during Arab Spring to protest joblessness and corruption.

The secret records are known as the Pandora Papers.

What are the Pandora Papers?

The International Consortium of Investigative Journalists obtained the trove of more than 11.9 million confidential files and led a team of more than 600 journalists from 150 news outlets that spent two years sifting through them, tracking down hard-to-find sources and digging into court records and other public documents from dozens of countries.

The leaked records come from 14 offshore services firms from around the world that set up shell companies and other offshore nooks for clients often seeking to keep their financial activities in the shadows. The records include information about the dealings of nearly three times as many current and former country leaders as any previous leak of documents from offshore havens.

In an era of widening authoritarianism and inequality, the Pandora Papers investigation provides an unequalled perspective on how money and power operate in the 21st century – and how the rule of law has been bent and broken around the world by a system of financial secrecy enabled by the U.S. and other wealthy nations.

The findings by ICIJ and its media partners spotlight how deeply secretive finance has infiltrated global politics – and offer insights into why governments and global organizations have made little headway in ending offshore financial abuses.

An ICIJ analysis of the secret documents identified 956 companies in offshore havens tied to 336 high-level politicians and public officials, including country leaders, cabinet ministers, ambassadors and others. More than two-thirds of those companies were set up in the British Virgin Islands, a jurisdiction long known as a key cog in the offshore system.

At least $11.3 trillion is held “offshore,” according to a 2020 study by the Paris-based Organization for Economic Cooperation and Development. Because of the complexity and secrecy of the offshore system, it’s not possible to know how much of that wealth is tied to tax evasion and other crimes and how much of it involves funds that come from legitimate sources and have been reported to proper authorities.

A document in the Pandora Papers shows that banks around the world helped their customers set up at least 3,926 offshore companies with the assistance of Alemán, Cordero, Galindo & Lee, a Panamanian law firm led by a former ambassador to the U.S. The document shows that the firm – also known as Alcogal – set up at least 312 companies in the British Virgin Islands for clients of the American financial services giant Morgan Stanley.

A Morgan Stanley spokesperson said: “We do not create offshore companies. . . .  This process is independent of the firm and at the discretion and direction of the client.”

The Pandora Papers investigation also highlights how Baker McKenzie, the largest law firm in the U.S., helped create the modern offshore system and continues to be a mainstay of this shadow economy.

Baker McKenzie and its global affiliates have used their lobbying and legislation-drafting know-how to shape financial laws around the world. They have also profited from work done for people tied to fraud and corruption, reporting by ICIJ has found.

The people that the firm has done work for includes Ukrainian oligarch Ihor Kolomoisky, who U.S. authorities allege laundered $5.5 billion through a tangle of shell companies, purchasing factories and commercial properties across the U.S. heartland.

The leaked records come from 14 offshore services firms from around the world that set up shell companies and other offshore nooks for clients often seeking to keep their financial activities in the shadows.

The Pandora Papers are published five years after the landmark Panama Papers investigation, which took the world by storm in 2016. The revelations spawned police raids, lawmakers passed dozens of new laws across dozens of countries and led to the downfall of several top politicians — including the prime ministers of Iceland and Pakistan. 

The ICIJ and media partners contributed to this report. The text was edited by Paul Knaggs.

Read more at the ICIJ LINK