The Pandora Papers: A Step-by-Step Guide to the Leak

The Pandora Papers is a leak of about 12 million documents that reveals hidden riches, tax evasion, and money laundering by some of the world’s wealthiest and most powerful people.

For months, more than 600 journalists from 117 countries combed through 14 sources’ data, uncovering tales that will be published this week.  The information was collected by the International Consortium of Investigative Journalists (ICIJ) in Washington, DC, which has been working on its largest-ever global investigation involving more than 140 media organizations. 

The Pandora Papers contain 6.4 million documents, including three million photos, over a million emails, and nearly half a million spreadsheets. 

So far, the following stories have been revealed:

  • The owners of over 1,500 UK properties purchased through offshore companies, including people accused of corruption
  • The Qatari ruling family who avoided £18.5 million in tax on a London super-mansion
  • Sir Philip and Lady Green went on a property spree after off-loading the BHS retail chain, which went on to collapse 
  • The prominent Tory donor who was involved in one of Europe’s biggest corruption probes
  • The King of Jordan’s £70 million spending spree on properties in the UK and US through secretly owned companies 
  • Azerbaijan’s ruling family’s hidden involvement in property deals worth more than £400 million in the UK 
  • The Czech prime minister’s failure to declare an offshore investment company used to purchase two French villas for £12 million
  • The documents reveal how some of the world’s most prominent people, including more than 330 lawmakers from 90 nations, hide their money through secret offshore businesses. 

These people, according to Lakshmi Kumar of the US think tank Global Financial Integrity, “are able to funnel and siphon money away and hide it,” typically through the use of anonymous corporations. 

What exactly do we mean when we say “offshore”? 

The Pandora Papers expose complicated cross-border networks of companies, which often result in disguised ownership of money and assets.

Someone may own a property in the United Kingdom, but it is owned through a network of companies based in other countries, or “offshore.” 

These offshore countries or territories are those where: 

  • It is simple to form a company; 
  • There are rules that make it difficult to identify company owners; and 
  • Corporation tax is minimal or non-existent. 

The locations are frequently referred to as tax havens or secrecy jurisdictions. Although there is no official list of tax havens, the most well-known include British Overseas Territories like the Cayman Islands and the British Virgin Islands, as well as Switzerland and Singapore.

Is using a tax hideaway against the law? 

People can lawfully avoid paying some taxes by relocating their money or forming corporations in tax havens, although this is widely regarded as unethical. Tax evasion, according to the UK government, “involves functioning within the letter, but not the spirit, of the law.” 

There are also a variety of valid reasons why people would want to keep their money and assets in various countries, such as to protect themselves from criminal attacks or to avoid regimes that are unstable. 

Although it is not unlawful to have secret offshore assets, creating a complicated network of secret corporations to shift money and assets is the ideal approach to conceal criminal proceeds.

Following prior breaches such as the Panama Papers, there have been recurrent calls for politicians to make it more difficult to avoid paying taxes or hiding assets. 

Mr Ryle, on the other hand, claims that the Pandora Papers reveal that “The people who have the power to abolish offshore secrecy are the ones who gain from it. As a result, they have no motive to put a halt to it “.. 

Is it simple to hide money in a foreign country? 

All you have to do is set up a shell business in one of the high-secrecy countries or jurisdictions. This is a firm that simply exists in name, with no employees or a physical location.

However, it is not free. You pay a specialist firm to set up and administer a shell company on your behalf. These companies might provide an address as well as the names of paid directors, leaving no trace of who is really behind the business. 

How much money is stashed away in offshore accounts? 

It’s impossible to say for sure, but the ICIJ reports that estimates have varied from $5.6 trillion to $32 trillion. According to the International Monetary Fund, tax havens cost governments around the world up to $600 billion in missed taxes each year.

It is harmful to the rest of society, according to Ms Kumar: “The ability to hide money has a direct influence on your life… it affects your child’s access to education, health, and a home.” 

What is the UK’s response? 

The United Kingdom has been chastised for allowing property to be owned by anonymous foreign corporations. 

In 2018, the government released a draft bill that would compel the ultimate owners of UK assets to be disclosed. However, it has yet to be presented to MPs.

According to a 2019 parliamentary study, the UK system attracts “money launderers” who “may want to utilize property to conceal unlawful profits.” 

According to the report, criminal investigations are frequently “hampered” since authorities are unable to see who ultimately owns properties. 

The risk of money laundering through property was been elevated from “medium” to “high” by the government. 

It claims to be tightening down on money laundering with stricter rules and enforcement, and that when parliamentary time permits, it would establish a register of offshore entities owning UK property.

The Pandora Papers are a leak of about 12 million documents and files that reveal world leaders’, politicians’, and billionaires’ hidden money and dealings. The data was gathered by the International Consortium of Investigative Journalists in Washington, DC, and has resulted in one of the most comprehensive global investigations ever conducted. Over 600 journalists from 117 countries investigated the secret fortunes of some of the world’s most prominent people. In the United Kingdom, the inquiry was led by BBC Panorama and the Guardian.

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