New report sheds light on how world leaders, powerful politicians, billionaires and others have used offshore accounts to protect assets collectively worth trillions of dollars over the past quarter century.
The report by the International Consortium of Investigative Journalists made promises of tax reform and demands for resignations and investigations, as well as explanations and denials from those targeted.
The investigation, dubbed the Pandora Papers, was published Sunday evening and involved 600 journalists from 150 media outlets in 117 countries.
Hundreds of politicians, celebrities, religious leaders and drug traffickers have hidden their wealth in shell companies and used other tactics to hide their investments in mansions, exclusive beachfront properties, yachts and more. assets, according to a review of nearly 12 million files obtained from 14 companies located around the world.
Most tax evasion is legal. Gabriel Zucman, an economist at the University of California at Berkeley who studies income inequality and taxes, said in a statement that a solution is “obvious”: ban “shell companies – companies without economic substance, whose sole purpose is to avoid taxes or other laws. ”
The more than 330 current and former politicians identified as beneficiaries of the secret accounts include King Abdullah II of Jordan, former British Prime Minister Tony Blair, Czech Prime Minister Andrej Babis, Kenyan President Uhuru Kenyatta, Ecuadorian President Guillermo Lasso , and associates of two Pakistanis Prime Minister Imran Khan and Russian President Vladimir Putin.
Billionaires cited in the report include Turkish construction mogul Erman Ilicak and Robert T. Brockman, the former CEO of software maker Reynolds & Reynolds.
Many accounts were designed to evade taxes and conceal assets for other reasons, according to the report. Some of those targeted strongly denied the allegations on Monday.
“The new data breach must be a wake-up call,” said Sven Giegold, a Green Party lawmaker in the European Parliament. “Global tax evasion is fueling global inequalities. We need to expand and refine countermeasures now.”
Oxfam International, a UK consortium of charities, applauded the Pandora Papers for exposing brazen examples of greed that have deprived countries of tax revenue that can be used to fund programs and projects for the greater good.
“This is where our missing hospitals are located,” Oxfam said in a statement. “This is where the salaries of all the teachers, firefighters and extra civil servants we need are found.”
The European Commission, the executive body of the 27-country European Union, said in response to the revelations that it was preparing new legislative proposals to improve tax transparency and strengthen the fight against tax evasion.
The Pandora Papers follow a similar project released in 2016 called “Panama Papers” compiled by the same journalistic group.
The latest bombshell is even bigger, drawing on data leaked by 14 different service providers doing business in 38 different jurisdictions. Records date back to the 1970s, but most date from 1996 to 2020.
The investigation explored accounts registered in familiar offshore havens, including the British Virgin Islands, Seychelles, Hong Kong and Belize. But some of the secret accounts were also scattered in trusts set up in the United States, including 81 in South Dakota and 37 in Florida.
The investigation found that advisers helped King Abdullah of Jordan set up at least three dozen shell companies from 1995 to 2017, helping the monarch buy 14 homes worth more than $ 106 million from the United States and United Kingdom. see property purchased in 2017 through a British Virgin Islands company. The advisers have been identified as an English accountant in Switzerland and lawyers in the British Virgin Islands.
Abdullah denied any irregularities in a comment posted by the Royal Palace on Monday, citing security needs to keep transactions silent and saying no public funds were used.
British lawyers for Abdullah said he was not required to pay taxes under his country’s law and that he had not embezzled public funds. Lawyers also said most of the businesses and properties are unrelated to the king or no longer exist, although they declined to provide details.
Blair, British Prime Minister from 1997 to 2007, became the owner of an $ 8.8million Victorian building in 2017 by purchasing a British Virgin Islands company that owned the property, and the building now houses the law firm of his wife, Cherie Blair, according to the survey. The two men bought the company from the family of Bahraini Minister of Industry and Tourism Zayed bin Rashid al-Zayani. Buying the company’s shares instead of the London building saved the Blairs more than $ 400,000 in property taxes, the investigation found.
The Blairs and al-Zayanis both said they were initially unaware the other party was involved in the deal, the investigation revealed. Cherie Blair said her husband was not involved in the purchase, which she said was aimed at bringing “the business and the building back into the UK tax and regulatory regime”. She also said she did not want to own a company in the British Virgin Islands and that the “seller for his own purposes only wanted to sell the company”, which is now closed.
A lawyer for al-Zayanis said they obeyed British laws.
The report also analyzed a transaction involving the British monarchy.
The UK Crown Estate, the real estate firm owned by Queen Elizabeth II, has announced that it will consider buying a London apartment building for Â£ 67million ($ 91million) from a company that is said to be a front for the family of Azerbaijani President Ilham Aliyev. The Guardian said the deal raised questions about whether the transaction should be investigated into money laundering issues. Aliyev, who has ruled Azerbaijan since 2003, has been accused of corruption and rights violations.
The Crown Estate said it had carried out pre-purchase verifications, but amid questions raised it “is revisiting the matter.”
Khan, the Pakistani Prime Minister, is not charged with any wrongdoing. But members of his entourage, including Finance Minister Shaukat Fayaz Ahmed Tarin, are accused of hiding millions of dollars of wealth in companies or secret trusts, according to journalists’ conclusions.
In a tweet, Khan pledged to recover “ill-gotten gains” and said his government would review all citizens mentioned in the documents and take action, if necessary.
The consortium of journalists revealed that Putin’s image maker and managing director of the main Russian TV station Konstantin Ernst got a rebate to buy and develop Soviet-era cinemas and surrounding properties in Moscow after having led the 2014 Winter Olympics in Sochi. Ernst told the organization the deal was not secret and denied suggestions that he had been given special treatment.
In 2009, Babis, the Czech Prime Minister, invested $ 22 million in shell companies to buy chateau property in a hilltop village of Mougins, France, near Cannes, the investigation revealed. The shell companies and the castle were not disclosed in Babis’ required asset declarations, according to documents obtained by the journalism group’s Czech partner, Investigace.cz.
A real estate group indirectly owned by Babis bought the Monegasque company that owns the castle in 2018, the investigation revealed.
Babis has denied any wrongdoing. He said the report was aimed at harming him ahead of parliamentary elections in the Czech Republic to be held on Friday and Saturday.
The Czech Police Organized Crime Unit has announced that it will launch an investigation.
Montenegro President Milo Djukanovic has been called on to resign after being listed as one of the world leaders who used secret accounts to hide their assets. His office denied a report by the Local Montenegrin Network for the Affirmation of the Non-Governmental Sector, which claimed that he and his son had established a trust to hide their wealth behind a complex web of businesses.