We always say that the rich are rigging the system. It’s hard to pin down exactly what they’re doing, but it feels like they’re perpetually scheming and circumventing the rules to embellish their wealth. A new blockbuster report, called the “Pandora Papers,” now proves our suspicions have been validated.
This report exposed the manner in which powerful politicians, billionaires and celebrities utilized offshore accounts and other measures to hide trillions of dollars over the last 25 years. Many have done this legally through well-connected tax accountants, lawyers, offshore tax havens and exploiting loopholes. The Pandora Papers found that, in addition to politicians and celebrities, religious leaders, drug dealers, successful business owners, doctors and affluent people have been hiding their investments in large yachts, mega-mansions, high-end beachfront property and other hard to trace assets.
The voluminous Pandora Papers is one of the world’s largest-ever journalistic collaborations. Over 600 journalists from 150 media outlets in 117 countries were involved. The investigation started with a leak of confidential records from offshore service providers. These are the professionals who specialize in taking good care of their rich clients.
The attorneys, accountants and money managers create shell companies, trusts, foundations and other entities in countries that have little or no taxes and are lenient when it comes to asking questions about the flow of money. These entities help hide the identities of the rich and famous. The coterie of bankers, brokers and professionals make it hard for regulators, the press and public to scrutinize their fortunes. The international well-to-do have shell companies registered in lightly regulated jurisdictions, such as the British Virgin Islands, Seychelles, Hong Kong, Belize and Panama.
The uber-rich also shield their wealth through elaborate purchases of real estate, yachts, jets and life insurance. Moving money around between bank accounts, estate and inheritance planning, engaging in a web of complex financial engineering, help them from paying their fair share of taxes. Some of the documents suggest the possibility of financial crimes, including money laundering.
The Pandora Papers is different from the Panama Papers, when about five years ago, the International Consortium of Investigative Journalists and more than 100 media partners around the globe published an investigation that blew the lid off financial machinations, global political corruption and wealth inequality.
According to Reuters, the “massive leak of financial documents was published by several major news organizations on Sunday that allegedly tie world leaders to secret stores of wealth, including King Abdullah of Jordan, Czech Prime Minister Andrej Babis and associates of Russian President Vladimir Putin.”
The Washington Post, part of the consortium, also reported on one of the salacious stories emanating from the report. A Russian woman, Svetlana Krivonogikh, became the owner of a Monaco apartment purchased via an offshore vehicle incorporated on the Caribbean island of Tortola. The real estate acquisition in April 2003 was only weeks after she gave birth to a girl. It was alleged that Krivonogikh was in a secret, long-term relationship with Putin.
You might be surprised that the Americans weren’t prominently displayed in the Pandora Papers. This could be attributed to the fact that the U.S. has a myriad of ways for multimillionaires and billionaires to engage in tax avoidance schemes, legally.