Have you heard? A trove of financial data on the offshore banking habits of the ultra-wealthy from around the world was leaked (again). The intrigue includes trillions of dollars, 330 politicians from approximately 100 countries, 35 current and former state leaders, and much more. The Pandora Papers deliver a broad—if incomplete—view of the hidden world of offshore banking and tax evasion.
In 2016, the so-called Panama Papers made headlines as the first big look at global tax evasion. The leak, from a now defunct Panamanian law firm brought down political careers, led to criminal investigations, and rubbed some of the shine off of celebrities who were revealed to stash their cash in foreign bank accounts to avoid taxes. In 2017, another leak from two offshore tax service companies to a German Newspaper, called the Paradise Papers, shone more light on secrecy jurisdictions.
The research and release of the Panama Papers, the Paradise Papers, and the Pandora Papers (clearly someone is enjoying the alliteration) is a collaborative investigative project of the International Consortium of Investigative Journalists (ICIJ). The ICIJ is a network of approximately 280 journalists and investigative reporters partnering in over 100 countries and territories around the world.
Let’s dig into some of the new details:
- What is in the document leak? The Pandora Papers represent about 11.9 million records received from 14 entities involved in servicing and secreting wealth in shell companies, trusts, and other structures in order to hide money and sometimes avoid taxes. Keep in mind, the use of offshore tax strategies is not illegal, but can easily cross the line when financial institutions or taxpaying citizens forgo regulations designed to prevent money laundering, tax fraud, and tax evasion. The Pandora Papers represent the largest collaboration of investigative reporting to date.
- What kind of data was leaked? The ICIJ is not detailing how the records were leaked to the organization from so many sources. The data was provided in the form of spreadsheets, documents, email, images, slide decks, video, audio, and other document formats. This included more than four million PDFs and approximately 1.79 million Word documents.
- What is the date range of the document sets? The Pandora Papers cover a broad range of transactions, some dating back to the 1970’s, but mostly between the years 1996 to 2020.
- What is the basic content? The documents touch on most of the options that a tax attorney might advise for use by a wealthy client interested in protecting—or hiding—their money. This includes estate planning, the use of foundations and trusts, creation of shell companies to hold and transfer assets, and high-ticket purchases like jets, yachts, or life insurance policies. In some instances, the documents reveal the path taken through banks, shell companies, and tax havens to launder money, commit tax crimes, and other financial wrong-doing.
- Who is in the Pandora Papers? So far, we know that the Pandora Papers involves data from 27,000 companies and approximately 29,000 owners. The Pandora Papers involves about twice as many owners, politicians, and public officials as the Panama Papers. While the document set does include transactional data from Russian oligarchs, it does not include mention of high-profile Americans gazillionaires like Warren Buffett, Jeff Bezos, Elon Musk, or Bill Gates. That likely means wealthier Americans use different avenues to protect their wealth that may (or may not) be less secretive.
- News you can use: Access to competitive secrecy jurisdictions may be closer than you think. The ICIJ notes South Dakota and Nevada “have adopted financial secrecy laws that rival those of offshore jurisdictions.”
Like the Panama Papers in 2016, the release of the Pandora Papers lays out how and where some of the world’s wealthiest people move money away from legitimate tax agencies in their home countries. In some cases, politicians bemoaning the low income of populations they represent are among those using abusive tax structures to live a life of luxury.
The ICIJ will release more data and reporting on the document trove over time. Stay tuned.
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