Pandora Papers
Unmasking the shadow financial system that benefits the world’s most rich and powerful
The name “Pandora'“ was given as these documents may prove to open a Pandora’s box of investigations and lawsuits in the future.
Case Summary
The Pandora Papers are a leak of 11.9 million documents amounting to 2.9 terabytes of data that the International Consortium of Investigative Journalists (ICIJ) published beginning in October 2021. The leak exposed the secret offshore accounts of many high flyers around the world, which includes, but are not limited to, former and current presidents, ministers, billionaires, celebrities and business leaders.
The Pandora Papers is considered to be the most expensive exposure of financial secrecy yet, with the estimation of money held in the offshore accounts ranging from US$5.6 trillion to US$32 trillion.
This is not the first instance where such papers were leaked. The leak first surfaced in 2013, and across the years, there were 2 other leaks (Panama Papers in 2016; Paradise Papers in 2017), before leading up to the Pandora Papers this year (2021). Every leak in the later years consists of more documents with larger amounts of data exposed.
The offshore accounts and entities exposed in the Pandora Papers are what the wealthy and highly influential people use to conceal their assets and wealth, specifically into countries that are deemed as tax havens. Although tax havens are legal entities and serve some legitimate purposes (i.e., offer clients privacy, safety and lawful tax avoidance), they can other times be misused for illegal purposes.
In the cases exposed in the Pandora Papers, the mentioned accounts and entities were involved in fraudulent activities, such as money laundering and buying of personal properties. The offshore accounts belong to these wealthy people, but may not be held under their legal names, allowing the wealthy to effectively conceal their assets. Simply put, tax havens are sometimes used to hide assets from authorities and creditors, park illicit gains, evade taxes and launder corrupt payments.
Note that in many countries, offshore accounts or ownership in foreign corporations is not illegal or unethical, but not declaring those holdings and using them to avoid taxes or hide business dealings are!
Who were exposed?
Among the 35 current and former leaders and more than 300 politicians and public officials in 91 countries and territories, some notable individuals include:
Jordan’s King Abdullah II
Prime Minister of the Czech Republic
Syakira
Ringo Starr
Elton John
Julio Iglesias
… and many more
How are the Pandora Papers relevant to the laymen?
Now you might be wondering, what does it have to do with laymen like us? Aren’t these rich people’s problems - avoiding taxes and hiding their dirty laundry? Well, yes and no.
All these mean that our government is collecting less taxes every year, as these wealthy people relocate their wealth offshore. This consequently leads to less amount of money (or taxes collected) for expenditure that improve the lives of citizens, such as healthcare and education. It is estimated that tax havens cost governments anywhere between $400bn and $800bn every year in lost tax revenues from corporations and individuals (Lewis, 2021).
These havens also promote the under-funding of public services and widening inequalities in developing countries, whose wealthiest residents use tax havens extensively.
Are governments and regulators doing anything about this?
The revelations in the Pandora Papers has led to OECD flagging out the overhaul of global corporate tax rules as a priority, to fight against tax evasion by wealthy individuals. Also, the expose could spur governments to consider closing some of their own tax loopholes such as tax exemptions on profits parked overseas, that encouraged individuals to use tax havens.
Check out this Pandora Paper Brief for general overview and stay tuned as we unmask more of the Pandora Papers!
