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Sofia Gevorgian
In 2.94 terabytes of data containing 11.9 million leaked documents, the International Consortium of Investigative Journalists (ICIJ) exposed 35 world leaders, 14 of which were in power, 130 billionaires as listed on Forbes, mainstream celebrities, and 300 public officials involved with secret offshore bank accounts and shell companies. Named the “Panama Papers,” this is the largest data leak that reveals instances of concealed assets, especially in the form of real estate, as well as possible cases of tax evasion and money laundering. Six hundred journalists from 117 countries collaborated in the world’s largest financial investigation, including The Washington Post, PBS Frontline, The Guardian, and BBC’s Panorama, to expose high profile individuals such as former British prime minister Tony Blair, president of Ukraine Volodymyr Zelenskyy, vice president of the UAE and Dubai ruler Mohammed bin Rashid Al Maktoum, and President of Azerbaijan Ilham Aliyev among many others.
The Pandora Papers, which were released on October 3, 2021, tracked information of offshore shell accounts established by 14 financial providers. While it is legal to invest abroad or hold money in tax havens, not reporting information regarding offshore banking is illegal; information regarding income must be reported to be taxed appropriately.
Select small nations have become tax havens as they allow people to register offshore accounts where low tax rates are incomparable to those the money is produced in, thereby increasing after-tax profit. Even though there is a fine line between the legality and illegality in the use of shell companies, promoting them is a successful way to attract foreign investment that supports local economies. According to Business Insider, the British Virgin Islands is among the most popular offshore haven destinations and “holds more than 5,000 times the value of what” an economy of that landmass and population should hold.
Due to the Pandora investigation and release, it appears that many featured in the files owned shell accounts to avoid attention, investigation, and scrutiny of their wealth since the shell companies were registered in these unregulated regions. In addition to low tax rates, offshore banking allows names to be hidden and protected since the shell company’s name is involved in transactions, not their personal names. As such, many politicians, leaders, and oligarchs outlined in the report who hid behind the companies are in fact guilty of tax evasion at home. Celebrities were also highlighted in the report, namely Ringo Starr, Elton John, and Shakira, for holding money in offshore accounts. Though that does not necessarily imply tax evasion, it likely contributed to the case of Shakira, who in July of 2022 was charged with tax fraud as she had been living in Spain while having registered her official residence in the Bahamas.
The Pandora Papers were not the first of its kind. Prior to the Pandora Papers were the 2016 Panama Papers and the 2017 Paradise Papers, and though neither had the high level of collaboration and investigation as did the Pandora Papers, all entailed the release of documents relating to offshore investments. Notably, the Paradise Papers revealed information on Rex Tillerson (former U.S. Secretary of State), Brian Mulroney (former prime minister of Canada), and Prince Charles. A year before the Paradise Papers were the release of the Panama Papers, which brought with it political turmoil in Iceland. The Panama Papers had exposed Iceland’s prime minister Sigmundur Gunnlaugsson as holding money offshore in the British Virgin Islands, and protests erupted because he had run and won on a finances-based campaign after the financial crisis of 2008. Even though he had paid the relevant taxes in Iceland, Gunnlaugsson resigned due to social pressure.
Through offshore banking, the rich become richer. The loss in taxes is in the trillions of dollars, and most importantly, it redirects revenue from the original country. This tax revenue is often necessary for its development and running of social programs for its citizens. The bombshell Pandora report estimates that the world's most powerful people have hidden away $5.6-$32 trillion, most commonly in the tax havens of the British Virgin Islands, Bahamas, Belize, and even South Dakota and Nevada, both of which hold financial secrecy laws. It is also estimated that 10% of the global GDP is held in offshore accounts.
Jordan
While Jordan is receiving $1.65 billion in U.S. aid, King Abdullah II, ruler of Jordan since 1999, has purchased at least 14 luxury homes in the U.S. and U.K. with 36 shell companies. Hiding beneath a curtain of pursuing growth and prosperity for his country, Abdullah owns properties purchased for over $106 million. Claiming personal money was used, it is important to consider that while he can afford spending over $100 million overseas, his country is ranked 110 in GDP per capita.
Azerbaijan
The Azerbaijani government, which has maintained presidential power within the same family since the USSR, has held a consistent record of human rights and freedom abuses that have long been overlooked due to the oil Azerbaijan provides. With oil feeding the economy of this country and encompassing 95% of its exports (35% of which goes to Italy), Azerbaijan’s oil and gas revenue allows for corruption and money laundering, as was the case in the 2014 Azerbaijani Laundromat. In 2017, the Organized Crime and Corruption Reporting Project (OCCRP) revealed that $2.9 billion was laundered to European banks through shell accounts as a part of Azerbaijan’s “caviar diplomacy”; to burnish a positive reputation of Azerbaijan, the Aliyev regime has near-successfully been buying the silence of European politicians to assuage the world from criticizing its political crackdowns and brutish rhetoric and policy against its neighbor Armenia.
Expanding on the Panama Paper’s findings regarding the elite of Azerbaijan, the Pandora Papers in 2021 further exposed the Aliyev family’s unethical financial schemes as documents linked his children to purchases, and then the sales, of $120 million properties in an upscale region of London; they were shareholders in 44 companies registered in the British Virgin Islands.
Illham Aliyev’s son Heydar was recorded to have become a shareholder in a company that purchased a $49 million office block in London; at that time, Heydar was 11 years old. Through her own shell company, his older sister seven months later purchased a building in that same London area. When sold, she brought in a $40 million profit. The examples go on with those around the Aliyev family benefiting from offshore companies and purchases, and notably, the British crown estate was recorded to have made a $91 million purchase from Azerbaijan’s corrupt ruling family.
Russia
Incriminating revelations continue with Russia, where billionaires in President Vladmir Putin’s circle have been growing their wealth— overseas. CEO of Channel One Russia (Russia’s leading TV station) Konstantin Ernst was revealed to own “23% stake in a billion-dollar deal…with a loan from a Cypriot bank,” which is partially owned “by the Kremlin-linked VTB Bank.” State-owned Channel One is an arm of the Russian government, so Ernst’s company held an advantage at a Moscow government-run auction of valuable properties in the city. In this auction, an anti-corruption activist alleged that all but the company Ernst had interest in were excluded from participating. In the end, the properties were sold at half their taxable value.
Putin’s former mistress Svetlana Krivonogikh was also included in the Pandora Papers. Krivonogikh was raised with a modest background and worked as a janitor upon graduating high school. Years later, Russian investigative journalists from Proekt have found she owns property worth over $14.5 million. She is also involved with assets held by Putin’s circle, namely 3% of Bank of Rossiya. With the Pandora Papers came evidence of her shell accounts. Under that offshore company, she bought a $4 million apartment in Monaco after allegedly giving birth to Putin’s daughter. Funds in connection to Putin’s inner circle of oligarchs were likely used in this transaction.
Ukraine
The Pandora Papers traced Volodymyr Zelensky to offshore companies though he had become president on a campaign of anti-corruption. According to the files, Zelensky had transferred, not sold, ownership of his shares of the company to his friends, just before winning the presidency in 2019. The papers went on to show that that company would continue paying dividends to a company owned by Zelensky’s wife.
Congo
Denis Sassou-Nguesso has been the president of the Republic of Congo from 1997 and is widely known for abusing power as he rules with an iron fist, marring the country with corruption and repressive leadership. Diamond exports are among the top industries of Congo, and as the owner of Inter African Investment Ltd, a company that controlled diamond mines in Congo, assou-Nguesso was sure to hide his involvement with the company.
The Pandora Papers tracked his transfer of that company to the British Virgin Islands in 1998. Sassou-Nguesso also owned Ecoplan, a company that “holds rights to the diamond mines” in Congo; one of his daughters served on Ecoplan’s board of directors.
United Kingdom
Tony Blair was the former Prime Minister of the U.K., and he evaded taxation…somewhat legally. He owned a company registered in the U.K., and he used that company to purchase another company, this one based in the British Virgin Islands. That company owned a building in London worth $8.8 million, and because Blair bought a company that owned a property rather than buying the property directly, Blair did not need to pay upwards of hundreds of thousands of dollars in property taxes.
Sri Lanka
Former deputy minister of Sri Lanka Nirupama Rajapaksa and her husband Nadesan used a shell company to buy properties in London and Sydney. Nadesan also purchased South Asian artwork from the Sri Lankan government and transferred them to the Geneva Freeport, where assets are not taxed. The Pandora Papers document that the companies amassed approximately $18 million and that Nirupama Rajapaksa and Nadesan’s total wealth was $160 million in 2011.
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These 11.9 million files of incriminating evidence were collected from only 14 offshore service providers that promoted avenues to tax evasion for the select few. Without investigative journalists collaborating and bringing to light possible corruption around the world, it is near impossible to allow hope to also escape from Pandora’s Box.
