With nearly twelve million documents, it is one of the largest financial data breaches to date. Journalism research collective ICIJ – where in the Netherlands Fidelity, The Financial Times and research platform Investico – looked at leaked emails, registration forms and contracts from tax havens like the British Virgin Islands, the Seychelles and Panama.
Read also Pandora Papers show that there is still plenty of tax evasion
The Pandora Papers include research into offshore structures used by at least 35 world leaders, including current and former heads of government and heads of state.
Latin America is purveyor of Pandora’s box. Of the 35 current and former government leaders who surfaced in the survey published on Sunday, 14 are from this region. Three of them are still at the head of the country’s administration: Presidents Guillermo Lasso of Ecuador, Sebastián Piñera of Chile and Luis Abinader of the Dominican Republic. In the Pandora Papers they are joined by eleven (mainly right-wing) ex-presidents, dozens of high-ranking politicians, a central bank manager (in Brazil) and pop star Shakira.
The financial construction that President Piñera set up is one of the most blatant revelations. The Chilean news sites LaBot and Ciper examined how the billionaire politician who has been in power since 2010 (rich thanks to banking, real estate and aviation) renounced the controversial copper and iron ore mine Minera Dominga. Piñera, who is nearing the end of his second and final term in office, was already before this latest revelation unpopular, after he cracked down on protests against wide income inequality at the end of 2019.
Piñera sold Minera Dominga to a childhood friend and businessman shortly after taking office, largely through a vehicle registered in the British Virgin Islands. The purchase price was divided into three parts, with the last tranche not being paid until the mine was not shut down. Despite pleas from environmentalists, the Piñera government did not decide to do so.
Another spicy revelation is that about the Brazilian economy minister Paolo Guedes. Magazine piaui, part of the renowned business newspaper Folha de Sao Paulo, writes that Guedes, with his wife and daughter, invested $8 million in a so-called shelf company in the British Virgin Islands.
A student of the neoliberal patriarch Milton Friedman at the Chicago School of Economics, 72-year-old Guedes has been advocating low taxes throughout his career, a philosophy he has been practicing for nearly three years as the economic guru of far-right populist Jair Bolsonaro. He reformed the tax system in such a way that wealthy Brazilians are less accountable for assets stored abroad.
As a result, the Brazilian treasury is missing out on a lot of money. Brazilians have parked more than a thousand billion reais (160 billion euros) abroad, even more on the Cayman Islands and in the Netherlands than on the Virgin Islands. Only 50 billion reais (8 billion euros) of this is reported to the tax authorities. The central bank is not allowed to share knowledge about this with the tax authorities. The question is whether she would like that: central bank president Roberto Campos Neto also has offshoreinvestments that he did not give up when he took office.
Three current African presidents pop up in the Pandora Papers investigation. The most notable is Kenyan President Uhuru Kenyatta. His mother, sisters and brother have set up at least six offshore companies and foundations. Those family businesses, which are registered in Panama and the British Virgin Islands, have bank accounts and real estate worth more than 25.8 million euros. The assets are located in the United Kingdom and Hong Kong.
Kenyatta comes from one of Africa’s wealthiest and most powerful families and was re-elected in 2017. Most of the companies were founded before he became president, but some continued to operate even after. His father Jom Kenyatta was Kenya’s first president from 1964 to 1978. He built the family fortune through land transactions during his tenure. A few years ago it was estimated that the family was worth around 430 million euros.
Kenyatta said in a statement Monday that the revelations help increase the “financial transparency and openness we need in Kenya and around the world.”
Among the African heads of state, President Denis Sassou-Nguesso of Congo-Brazzaville also stands out. He turns out to have owned a company that was in charge of diamond mines. That was not known before. The company has been registered in the British Virgin Islands since 1998, when Sassou-Nguesso had just been elected president for the second time.
Heydar Aliyev, the son of the president of Azerbaijan, was 11 years old when he bought an office building worth 42 million euros in the upscale London borough of Mayfair in 2009. He did so as a shareholder of a company in the British Virgin Islands. Heydar is named after his grandfather, who ruled Azerbaijan for thirty years. On paper, other relatives of Ilham Aliyev, president since 2003, also bought hundreds of millions worth of real estate in London via tax detours. One of those buildings was sold for 78 million euros in 2018 to the British Royal Family. An investigation into that deal was immediately launched on Monday after the unveiling on Sunday.
Eastern Europe is well represented in the Pandora Papers. Various government leaders and heads of state use financial constructions through tax havens. Two of them won elections promising to end corruption, fraud and tax avoidance. A month before his election, Volodomir Zelensky, president of Ukraine since 2019, transferred his 25 percent stake in an offshore company to a friend who is now his closest adviser. And Andrej Babis, Prime Minister of the Czech Republic, bought a villa on the French Riviera in 2009 for 15 million euros, through three foreign firms. Journalists who asked billionaire Babis why he used that construction were brutally pushed aside by his bodyguards. According to Babis comes the revelation of “Czech mafia” and not coincidentally just before the elections next weekend.
Russian President Vladimir Putin is only mentioned in the documents through relatives. Here too, real estate figures again: in 2003, shortly after the birth of her daughter, Putin’s suspected mistress Svetlana Krivonogikh acquired a house worth 3.4 million euros in Monaco. The former cleaning lady also co-owns a ski resort in Sochi.
The only entry in Western Europe, besides Wopke Hoekstra, is for Tony and Cherie Blair. The British former Prime Minister and his wife have about 365,000 euros in property tax dodged in 2017, when they bought an office building in London for 7.6 million euros. They had a limited company set up to take over a company, located in the Virgin Islands, under which the property belonged. There is no evidence that the Blairs actively sought a way to avoid that tax, nor is their action illegal. But the construction contradicts Blair’s views during his time as Labor leader, when he vehemently opposed „millionaires with the right accountants who pay no taxes”.
Virtually all of the Middle Eastern figures featured in the revelations hold key positions within authoritarian regimes. The Gulf States lead the way, with five key players in the Pandora Papers. The rulers of these small but immensely rich countries are trying to park their gas and oil riches largely in the West. To avoid taxes, they make full use of anonymous letterbox companies.
London is a favored location for such investments. For example, Sheikh Tamim bin Hamad Al Thani, the Emir of Qatar, used an anonymous company to buy one of the most expensive homes in the British capital, worth around 95 million euros. The Prime Minister of the United Arab Emirates, Mohammed bin Rashid Al Maktoum, is one of the largest landowners in the United Kingdom.
Another Arab protagonist in the Pandora Papers is Abdullah II, the king of Jordan. He has a British mother, a British military education, and a preference for real estate in London and the United States. Showpiece is a villa on a cliff in Malibu, California, overlooking the Pacific Ocean. Costs: 28.8 million euros.
Lebanese politicians are certainly not doing well either. The country is in an economic downturn and the newly appointed government of Najib Mikati is trying to secure international emergency funds. But while 78 percent of the Lebanese population lives below the poverty line and is approaching famine, it appears that Mikati himself bought 8.6 million euros worth of real estate in Monaco through a company in Panama that he owns.
In collaboration with Annemarie Kas
A version of this article also appeared in NRC in the morning of October 5, 2021