By: Tanvi Kothari and Nirupama Kalyanaraman
The old legend stays fresh in the minds of many; a curious girl opens a forbidden box, unleashing dark sins and misfortune into the world. This mystical tale of Pandora's box holds great relevance in today's world, emulated by the new trove of classified documents anonymously leaked to the public eye. The aptly titled 'Pandora Papers' - the leak of nearly twelve million files to public discretion, exposes the lucrative methods employed by the ultra-rich to guard their coveted wealth. Laundering, tax evasion and avoidance, and hidden wealth are just a few of the myriads of lucrative methods used by the rich to shelter their prized monetary possessions from the rest of the world. Yet, much like the legend, these papers have revealed the dark and hidden parts of the lives of our world's most affluent and influential as the public desperately questions and loses trust in the equity and morality of many governments and worldwide financial systems.
The International Consortium of Investigative Journalists, a US-based non-profit organisation that comprises independent journalists, reporters, and other media organisations, obtained these documents. It is the 'largest investigation in journalism' that history has ever known to date and aims to expose 'a shadow financial system that benefits the world's wealthiest and powerful (source: icij.org). With the members largely anonymous, the authors of the Pandora Papers have shaken the world by storm as they expose the inner financial workings of many powerful individuals (such as world leaders and media personalities). Most notably, the consortium did this without the political influence or financial incentive that many media journalists have been accused of having. Whilst mentioning one's name in the papers does not always constitute that they have committed illegal events such as tax evasion and money laundering, the paper still maintains its shocking significance; the notion that potential tax money has not been collected is riveting enough for the general population.
The leak of 2.94 TB of data, 6.4 million documents and 11,903676 files is the largest known leak to reveal the supposedly lucrative lives of powerful individuals. Those listed include over three hundred and thirty politicians from ninety countries who have used secret offshore companies to hide their wealth to siphon money away from the prying eyes of taxation.
What is meant by "offshore companies", and is it easy to hide money there?
The pandora papers have uncovered numerous complex networks of international firms known as offshore companies, which hide the ownership of financial assets.
Simply put, offshore companies are firms located in a different jurisdiction -i.e., nation- from its base. Whilst it is a term widely mentioned in the pandora papers, the existence of offshore companies is not illegal per-se. In most cases, companies set up branches in "tax havens" -nations with low tax rates- to have a lower corporate tax imposed upon them and potentially receive tax benefits. It is imperative to note that such companies only become problematic if there is a facade of an offshore company (known as shell companies, which exist only on paper) used for tax evasion, laundering or fraud. They also make it incredibly easy for wealthy individuals and corporations to work around the law by using shell company funds for illicit activities, such as continuously shifting profits to make it difficult to track the sources and their legitimacy. The Pandora Papers depict this perfectly - the erstwhile Prime Minister of the UK, Tony Blair, who purportedly saved around three hundred thousand pounds in property taxes when acquiring a London office building from an offshore company.
To hide money 'offshore', all one has to do is set up a shell company in one of the countries with great anonymity. Behind the aforementioned shell companies, there is usually a large and complex network of skilled individuals who help manage the finances. Lawyers, investors, accountants, and consultants are a few who may be involved to create the facade of legitimacy and leave no trail of the owners or sources. The Papers exposed the English accountant that worked with lawyers in Switzerland to help Jordan's Monarch, King Abdullah II, secretly purchase 14 luxury homes that amounted to over 100 million USD and set up at least thirty-six shell companies within the last two decades.
So, what are nations doing about this?
The Papers have increased the momentum for ending the decades-long corruption and power discrepancies. Many ordinary people who are appalled at these findings are working to hold lawmakers, corporations, and politicians accountable to address their actions. Such public outrage can be seen in Brazil, where Brazilian people and organisations are enraged by the 'Minister of Economy's offshore mass investments amid rapidly rising poverty in Brazil during the pandemic. These individuals and firms are calling for 'higher levels of transparency' pertaining to the beneficiaries of offshore companies so that the public can view the transactions and economic decisions being made by the people in power. Although there are similar situations in countless other countries, there are no definitive statements, let alone changes governments and world leaders address the concerns of the masses. As much of the papers include those who followed perfectly legal means to save their money -albeit there are questions about its equity and ethnicities-, 'investigations' taking place. As a result, to verify the allegations made in the Pandora Papers and the individuals charged. But one thing is for sure - today's rich may be able to squander vast amounts of wealth with the backing from the law, but with greater exposure and outrage, laws may change, and trust may decrease. It may be that the elite would have lost their most valuable asset of all.
Sources:
Commenti