The largest investigation in journalism history exposes a shadow financial system that benefits the world’s most rich and powerful
Curated by over 600 journalists from more than 117 countries, the Pandora Papers have taken social media by storm. Identifying a list of celebrities and world leaders, the Pandora Papers have revealed multiple instances of money laundering, hidden wealth and tax avoidance. The data obtained by the International Consortium of Investigative Journalists (ICIJ) based in Washington DC, the operation has become one of the world’s largest investigations, with an estimated 12 million documents leaked.
The ICIJ, founded in 1997, is a unique organisation, developed by journalists around the world. With the aim of addressing global issues such as corruption, cross-border crime and holding powerful people accountable for their actions, the ICIJ was created to facilitate international investigations, similar to the Pandora Papers. The ICIJ director, Mr Gerard Gyle states that “We’re not looking at a couple of millions of dollars here, we’re looking at trillions of dollars” when asked about the Pandora Papers investigation.
Tax havens have become a popular escape for people to hide money in territories or countries that do not have strict laws to trace the whereabouts of users, and have easily available property for people and businesses to invest in. Companies set up authorised firms in such locations to run businesses while saving millions due to low taxes or none at all. Popular destinations of such avoidance include Switzerland, Singapore, British Virgin Islands and the Cayman Islands amongst many others.
Providing insight into a “global offshore economy” the Pandora Papers are not the first to reveal such a scandal. The Panama Papers released in 2016, and the Paradise Papers in 2017 were similar investigations which released data about other such offshore tax avoidance.
While offshore investments are not illegal and are sometimes intended to protect people and their wealth from unstable governments or criminal threats; the use of tax havens is considered and majorly used as an unethical practice of hiding profits from criminal activity. Attempts to overcome loopholes in the legal system and prevent the use of an offshore economy were made, following the release of the Panama Papers in 2016. These attempts however, proved to be unsuccessful and the Pandora Papers suggests that politicians and leaders who could tighten laws surrounding tax avoidance, also benefit from the use of tax havens.
The ICIJ estimates between $5.6 trillion and $32 trillion to be hidden in such tax havens, costing other governments around the world over $600 billion in lost taxes. Some names revealed in the investigation include political leaders such as Jordan's King Abdullah II, Czech Prime Minister Andrej Babis, Kenyan President Uhuru Kenyatta, Ukrainian President Volodymyr Zelensky and celebrities such as singer Shakira and Indian cricketer Sachin Tendulkar.
The documents leaked include passport copies, tax declarations, property contracts and other records, alongside a series of images, providing adequate evidence against the named individuals. Many of these celebrities revealed in the list will face minor or no consequences at all, as loopholes in legislative law in their own countries legally permit such activity. However, world leaders who find their names in the documents leaked have begun facing a wave of backlash as populations question and criticise their anti-corruption policies and laws.
Public scrutiny of the political leaders has seen a drastic increase, as they become subject to more political and economic struggle brought upon by the Pandora Papers exposure. Lebanon, a country stricken with economic crisis, hyperinflation, lack of resources and a majority of the population and army living in absolute poverty has shown outrage over the prime minister’s offshore economic ventures. The billionaire prime minister has faced increasing backlash as the people criticise him for removing over $6 billion from the country, while citizens struggle with no electricity and food and medical shortages. The public claims “the country is being ripped of its potential by the political class.”
Links to Pakistani Prime Minister Imran Khan’s cabinet have also surfaced. Pakistani Finance Minister Shaukat Tarin, is one of the estimated 700 names, known to own four firms in offshore countries under his family name. While the prime minister has pledged to “take action if any wrongdoing is established”, allegations against the Tarin family have been overturned, claiming that they were investments and deals with Saudi business that did not move forward. Chaudhry Moonis Elahi, the minister for water resources, also one of the names leaked in the Pandora Papers, has denied all allegations of offshore tax avoidance, with his spokesperson stating that “Political revenge and misinterpretation of the data have been spread in the documents in bad faith.”
Similarly, names of various Indian celebrities and businessmen have led to the Indian government promising to take action. Claiming that “the government will also proactively engage with foreign jurisdictions for obtaining information in respect to relevant taxpayers/entities.” The government has however said, according to Reuters, that not many names were revealed in the documents leaked in the investigation, leaving the country questioning whether any action for such tax avoidance will be taken.
Following the release of the Pandora Papers, the United Kingdom, unlike many other countries, has played an active role in tightening tax laws giving law enforcement access to tracking users and their activity in British offshore territories such as the Cayman and British Virgin Islands. Tax returns for former British Prime Minister David Cameron as well as members of his parliament were released in an attempt to suppress public opposition and backlash. Having been previously criticized for allowing investments and property to be under anonymous names, the UK has raised the risk of money laundering from “medium” to “high”. They further claim to be introducing tougher laws and enforcement in an attempt to bring to light a register of offshore companies, once cleared by the parliament.