Hush-Hush Money, Pandora Papers Unbox How World's Rich Hide Trillions

Named for a Greek myth about a sealed box containing the world's evils, The Pandora Papers – the work of 600 journalists in 117 countries who pored through 11.9 million leaked confidential records – showed how the world's elite and powerful, from business leaders to kings and politicians – hide their wealth.

The information dug out by the International Consortium of Investigative Journalists (ICIJ) revealed the secret dealings of the allegedly corrupt too, using offshore accounts to keep secret assets worth trillions of dollars.

Hundreds of politicians, celebrities, religious leaders and drug dealers were named, secreting fortunes in offshore shell companies and other means to keep private their holdings in mansions, exclusive beachfront property, yachts and other assets.

The report shone a spotlight on the famous and those not so well-known publicly, Jordan's King Adullah II said to have acquired $100 million in homes in Malibu, London and Washington.

Gary Kalman, Director of the U.S. office of Transparency International, which tracks corruption, told The New York Times that Jordanians now know the king “spent money on properties in Malibu and Georgetown, while in Jordan they don’t have enough money to provide basic services. That looks really bad.”

The papers said that Czech Republic Prime Minister Andrej Babis moved $22 million through offshore companies to buy a lavish estate on the French Riviera in 2009 while keeping his ownership secret.

Babis had campaigned as an anti-corruption crusader and at the time he bought the property Czech media reported his giant conglomerate was the secret owner of a luxury resort south of Prague that may have improperly obtained millions of dollars in European Union subsidies intended for small businesses.

EU authorities would later find “irregularities” in the way Babis’ company had obtained the funds but there was no evidence the chateau's purchase was linked to the subsidy, the report said.

Babis, with a net worth of $3.4 billion, is the second-richest person in his country and in June police asked for him to be charged with fraud for allegedly and fraudulently obtaining 2 million euros ($2.32 million) in EU funds to build a hotel.

In August the European Commission threatened to suspend payments of EU subsidies to the Czech Republic over suspected conflicts of interest in Babis’s business dealings.

With elections looming, he blamed the “Czech mafia” for the allegations surrounding the house purchase and said the revelations were made to undermine his re-election bid.

But the methods he took mirrored those of other figures in the findings who use the offshore system to help them escape public scrutiny while cultivating their images, politicians wanting to present a better side.

TANGLED WEB WEAVED

Experts interviewed by ICIJ said the offshore arrangement used by Babis could have reduced his tax bill while hiding his ownership of the property from the public, the wealthy doing whatever they can to shelter their wealth.

Companies were hired to create offshore structures and trusts in tax havens such as Panama, Dubai, Monaco, Switzerland and the Cayman Islands, as well as South Dakota in the United States, seemingly an unlikely tax dodge hideaway.

The papers exposed the secret offshore affairs of 35 world leaders, including current and former presidents, prime ministers and heads of state as well as the hidden finances of more than 300 other public officials such as government ministers, judges, mayors and military generals in more than 90 countries, said the British newspaper The Guardian in a review of the findings.

Montenegro’s President Milo Djukanovic faced calls to resign after the local Montenegrin Network for the Affirmation of the Non-Governmental Sector alleged he and his son established a trust to conceal their wealth behind a complicated network of companies. His office denied the report, the AP said.

What those disclosed did isn't necessarily unlawful but hiding it could hurt their reputations, analysts said. Loopholes in the law allow people to legally avoid paying some taxes by moving their money or setting up companies in tax havens, but it is often seen as unethical. The UK government said tax avoidance "involves operating within the letter, but not the spirit, of the law,” The Guardian noted.

The report by the International Consortium of Investigative Journalists brought promises of tax reform and demands for resignations and investigations, as well as explanations and denials from those targeted, The Associated Press said.

“The legality is the true scandal,″ the activist and science-fiction author Cory Doctorow wrote on Twitter. “Each of these arrangements represents a risible fiction: a shell company is a business, a business is a person, that person resides in a file-drawer in the desk of a bank official on some distant treasure island.″

Estimates of how much is hidden have ranged from $5.6 trillion to $32 trillion, according to the ICIJ. The International Monetary Fund has said the use of tax havens costs governments worldwide up to $600 billion in lost taxes each year.

Also named were former UK Prime Minister Tony Blair, Kenyan President Uhuru Kenyatta, Ecuador’s President Guillermo Lasso, and associates of both Pakistani Prime Minister Imran Khan and Russian President Vladimir Putin.

SHAPE SHIFTERS

Blair, in power from 1997-2007, became the owner of an $8.8 million Victorian building in 2017 by buying a British Virgin Islands company that held the property, and the building now hosts the law firm of his wife, Cherie Blair, according to the investigation.

The two bought the company from the family of Bahrain’s industry and tourism minister, Zayed bin Rashid al-Zayani. Buying the company shares instead of the London building saved the Blairs more than $400,000 in property taxes, the investigation found, said Al Jazeera.

The United Kingom has been criticized for allowing property to be owned by anonymous companies overseas with draft legislation from 2018 requiring the true owners to be declared still languishing in limbo.

A 2019 parliamentary report said the UK system attracts people "such as money launderers, who may wish to use property to conceal illicit funds" and that criminal investigations are often "hindered" because police cannot see who ultimately owns properties.

The government recently raised the risk of money laundering through property from "medium" to "high,” the BBC reported, showing another side of how hiding wealth can be used for illicit purposes too.

Besides politicians and heads of state, singer Shakira and former Indian cricket captain Sachin Tendulkar are among celebrities and sport stars named in the investigation.

There's also Lebanon's Prime Minister Najib Mikati, his predecessor Hassan Diab, Riad Salameh, the governor of Lebanon’s central bank – currently under investigation in France for alleged money laundering – and former minister of state and the chairman of Al-Mawarid Bank Marwan Kheireddine.

“The Pandora Papers reveal the inner workings of what is a shadow financial world, providing a window into the hidden operations of a global offshore economy,” said the Independent Commission for the Reform of International Corporate Taxation, a Paris-based advocacy group that welcomed the report. It said the system “enables some of the world’s richest people and multinationals to hide their wealth and in some cases pay little or no tax.”

“The new data leak must be a wake-up call,” said Sven Giegold, a Green party lawmaker in the European Parliament. “Global tax evasion fuels global inequality. We need to expand and sharpen the countermeasures now.”