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Pandora Papers Leak

The secret deals and hidden assets of some of the world’s richest and most powerful people have been exposed. The leak is the biggest of its kind ever, in terms of data size (2.94 terabytes). The Pandora Papers leak is the largest investigation in the history of journalism. It surpasses an earlier release of the Panama Papers in 2016 which was 2.6 terabytes.

The Pandora Papers originates from 14 sources and has involved more than 600 journalists from over 100 countries, analysing the data. The 12 million documents exposes money laundering, hidden wealth and tax avoidance from some of the world’s biggest figures.

The Papers were published by the International Consortium of Investigative Journalists (ICIJ) on 3rd October 2021. As of writing, the ICIJ have not identified the source of the leak. They claim between US$ 5.6 trillion to US$ 32 trillion of money is held offshore. This is essentially money being held outside the country it was originally made.

What are the Pandora Papers?

The Pandora Paper are the release of millions of documents revealing the hidden, and often corrupt or unethical behaviour of the world’s wealthy and elite. The expose includes billionaires, world leaders, politicians, celebrities and corporate executives. The Pandora Papers leak includes 6.4 million documents, 11.9 million files, 3 million images, half-a-million spreadsheets, over a million emails and 2.94 TB of data. The documents come from 14 financial service companies across the world. The countries include well-known tax havens, such as the British Virgin Islands, Panama, Switzerland and the United Arab Emirates.

The ICIJ claimed the document leak was their biggest expose of financial secrecy. The leak included secret offshore accounts of 35 world leaders. This included prime ministers, heads of state, former presidents and current presidents. It also includes 100s of billionaires, business leaders and celebrities.

How does the Pandora Papers Compare With Previous Leaks?

The first major leak was Offshore Leaks in 2013 which included 2.5 million files and 260 GB of data. Panama Papers were released in 2016 TB of data and 11.5 million files. The largest leak in terms of number of files was the Paradise Papers in 2017 which featured 13.4 millions files of 1.4 TB of data.

Pandora Papers released in 2021 is the biggest overall, with 2.94 TB of data with 11.9 million files.

What Do the Pandora Papers Show?

The Papers show how the rich and powerful can use secret offshore companies to hide their wealth. They can funnel money and hide it, often using anonymous companies. It’s important to note, not everybody named in the Pandora Papers are accused of wrongdoing. Whilst unethical, some of the actions aren’t entirely illegal. The extent of the papers shows how wealthy individuals can hide their income and assets from scrutiny by holding them in offshore jurisdictions.

These ‘tax havens’ are also hidden away from potential taxation. Individuals exposed have been proven to be using companies or trusts incorporated in these tax havens, thus avoiding have to pay tax on the assets or income.

Is it Illegal to Use a Tax Haven?

Using a tax haven isn’t necessarily illegal, due to loopholes in the law. There are often legitimate reasons to hold assets in different countries, although it is considered unethical. It is an ideal method for criminals to hide the proceeds of crime. There have been continued calls for politicians to make the process harder to hide assets. There are concerns, however, that the people who can halt this, are also benefitting from it.

Is It Easy To Hide Money Offshore?

A shell company is needed in a country where there are high levels of secrecy, thus helping anonymity. Specialist firms will charge a large sum of money to run the company on behalf of individuals. They will provide details of paid directors, leaving no trail of the actual individual behind the business.

It is estimated up to $32 trillion of assets are being hidden offshore. The IMF have said this costs governments across the world approximately $600 billion in lost taxes.

Who Has Been Exposed?

100’s of high profile individuals have been exposed including 35 world leaders. Some of these people include: –

  • Tony and Cherie Blair – They saved £300,000 in stamp duty after acquiring property owned by an offshore business. Although this doesn’t suggest any wrongdoing as such, it highlights how the use of offshore companies in high value transactions can avoid tax implications.
  • The King Of Jordan (Abdullah al-Hussein) – The King has built up a $100 million property portfolio, all of which has been hidden via offshore companies. His lawyers say he has done nothing wrong, but it is a sensitive issue in his home country.
  • Vladamir Putin’s close circle – The group have amassed significant hidden wealth through offshore companies.
  • Russian born tycoon Viktor Fedotov – The tycoon made huge donations to the Conservative party so is a prominent figure in the UK. The papers highlight how he co-owns a company that is involved in massive corruption.
  • Ukranian president Volodymyr Zelenskiy – Transferred his shares in offshore companies weeks before his election.
  • President of Kenya, Uhuru Kenyetta – His family have accumulated $30 million of offshore assets, many of which are in London.
  • Heads of Government, Oligarchs, Ruling Families, Monarchy and Business Tycoons – These are all among anonymous owners of more than £4 billion in property in the United Kingdom. A large proportion of these properties are in the most exclusive London postcodes, including Mayfair, Belgravia, Kensington, and Knightsbridge.

What Is Being Done In The UK?

The UK Government has been openly criticised for allowing property in the UK to be owned by anonymous companies overseas. Draft legislation was published by the government in 2018 requiring owners of UK property to be declared. The legislation is still awaiting approval by Parliament.

The risk of money laundering through property has now been increased to ‘High’ by the government. Once legislation is published they will be able to apply tougher laws and enforcement. This will also help criminal investigations, allowing the police to see who ultimately owns UK property.

If you would like advice on your tax affairs please contact us. Call us on 0800 471 4546 or you can contact us here

Nigel Carr

Nigel Carr

Nigel is a freelance financial writer and Author at Kinsella Tax. A business graduate he writes on financial matters as well as music for a number of high quality websites.