World Politics News   Articles for World Politics Course

The International Consortium of Investigative Journalists (ICIJ) has released a large number of confidential documents on how many public figures have used the offshore banking system to disguise how much money they possess and how that money was spent. The documents, which the ICIJ calls the “Pandora Papers“, build upon a previously released collection of similar papers dubbed the “Panama Papers” and document conclusively how many of the public figures shield their wealth from tax authorities. According to the ICIJ:

“Millions of leaked documents and the biggest journalism partnership in history have uncovered financial secrets of 35 current and former world leaders, more than 330 politicians and public officials in 91 countries and territories, and a global lineup of fugitives, con artists and murderers.

“The secret documents expose offshore dealings of the King of Jordan, the presidents of Ukraine, Kenya and Ecuador, the prime minister of the Czech Republic and former British Prime Minister Tony Blair. The files also detail  financial activities of Russian President Vladimir Putin’s ‘unofficial minister of propaganda’ and more than 130 billionaires from Russia, the United States, Turkey and other nations.

“The leaked records reveal that many of the power players who could help  bring an end to the offshore system instead benefit from it – stashing assets in covert companies and trusts while their governments do little to slow a global stream of illicit money that enriches criminals and impoverishes nations.”

What is especially disturbing about this system is that the very people who use the offshore banking system to hide money from tax authorities are the same people who write the laws that make such duplicity possible. The Washington Post points out the harms done by the system:

““The offshore financial system is a problem that should concern every law-abiding person around the world,” said Sherine Ebadi, a former FBI officer who served as lead agent on dozens of financial-crimes cases.

“Ebadi pointed to the role that offshore accounts and asset-shielding trusts play in drug trafficking, ransomware attacks, arms trading and other crimes. ‘These systems don’t just allow tax cheats to avoid paying their fair share. They undermine the fabric of a good society,’ said Ebadi, now an associate managing director at Kroll, a corporate investigations and consulting firm.

National Public Radio lists some of the people exploiting the offshore banking system for their personal benefit and it includes Ukrainian President Zelenskiy, Kenyan President Kenyatta, Pakistani Prime Minister Khan, former British Prime Minister Blair, Azerbaijani President Aliyev, the Russian confidante to President Putin, Svetlana Krivonogikh, and Jordan’s King Abdullah II. The report also notes that many of these banks are not, for Americans, “offshore” since states such as Nevada and South Dakota have changed their laws providing banking secrecy. The BBC also provides additional details on some of the people identified in the documents.

The fact that these offshore banking sites are legal exposes the corruption sometimes involved in writing tax laws. Few ordinary individuals have assess to these legal loopholes and are thus consigned to pay for the freedom of powerful individuals to avoid paying their fair share. The Guardian explains why it has published some of the papers: “Tax havens are estimated to cost governments anywhere between $400bn and $800bn (£293bn to £586bn) every year in lost tax revenues from corporations and individuals. That may be an unfathomable sum, but it is real money that is not being spent on schools, hospitals or the transition to a low-carbon economy.”