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Pandora Papers: Massive Leak Exposes How Elite Shield Their Wealth & Avoid Taxes in Colonial Legacy

StoryOctober 05, 2021
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The Pandora Papers, described as “the world’s largest-ever journalistic collaboration,” have revealed the secret financial dealings of the world’s richest and most powerful people. “We’ve uncovered a system that benefits the few at the expense of the many,” says Ben Hallman, senior editor at the International Consortium of Investigative Journalists, who details some of the project’s main revelations so far. We also speak with Vanessa Ogle, professor of history at the University of California at Berkeley and an expert on tax havens, who says the growth of tax havens like the Bahamas and Switzerland is directly linked to wealth extraction from the developing world. “The seed money for the expansion of these tax havens comes out of the colonial world,” she explains.

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: This is Democracy Now! I’m Amy Goodman, with Juan González, as we look at what has been revealed about the murky financial dealings of the world’s richest and most powerful people in a new report by the International Consortium of Investigative Journalists called the “Pandora Papers.”

GERARD RYLE: This leak is really Panama Papers on steroids. This is the Pandora Papers, because we think we’re opening a box on a lot of things. We’re looking at about 12 million documents from 14 different service providers. These are law firms and firms that set up secret offshore accounts for people in multiple jurisdictions — the British Virgin Islands, Belize, Samoa. These documents, for the very first time, is actually showing the U.S. as a tax haven itself.

ON-SCREEN TEXT: 330 politicians from 90 countries.

GERARD RYLE: We’re talking about some of the most famous people in the world that are in these documents: presidents, prime ministers, government ministers, the king of Jordan, a number of very high-profile Russian clients, people that are very close to Vladimir Putin. We’re seeing them buying real estate. We’re seeing them trading in shares using offshore companies. They’re buying houses, cars, artworks. I guess it mostly demonstrates that the people that could end the secrecy of offshore, could end what’s going on, are themselves benefiting from it, so there’s no incentive for them to end it.

ON-SCREEN TEXT: The biggest journalism partnership in history led by ICIJ.

GERARD RYLE: We’re not looking at a couple of million dollars here. We’re looking at trillions of dollars.

LAKSHMI KUMAR: The financial centers of the world, like the U.S., Europe, leaders are able to funnel and siphon money away and hide it in these jurisdictions through the use of anonymous companies.

ON-SCREEN TEXT: Unmasking 29,000 owners of shell companies in tax havens.

GERARD RYLE: These are not just like politicians and powerful people. We’re talking about rock stars, including a lot of celebrities and people that have been convicted of crimes all over the world.

EMILIE IKEDA: A jury here in Los Angeles found 78-year-old Robert Durst guilty of first-degree murder.

REPORTER 1: [translated] Under arrest in Marbella, fugitive Raffaele Amato, boss of a separatist Camorra clan.

REPORTER 2: [translated] The Rosenthal family, accused in the United States of money laundering connected to drug trafficking.

LAKSHMI KUMAR: The ability to hide money has a direct impact on your life. It affects your child’s access to education, access to health, access to a home.

GERARD RYLE: We’re looking at a system here that is harming people. It’s harming the world. And it’s important that people know about it.

AMY GOODMAN: That’s a video by the International Consortium of Investigative Journalists about the Pandora Papers, a collaboration of more than 600 reporters from 150 media outlets in 117 countries. The first reports from the project were published Sunday, and new stories are coming out every day.

For more, we’re joined in Washington, D.C., by Ben Hallman, senior editor at the International Consortium of Investigative Journalists, and Vanessa Ogle, professor of history at the University of California, Berkeley. She’s writing a book on offshore tax havens and did a piece for the New Statesman. It’s headlined “The end of empire and the rise of tax havens.” We’ll talk about the connection between tax evasion and colonialism in a minute, but I wanted to first go to Ben Hallman.

Ben, lay out what you think are your most explosive findings so far.

BEN HALLMAN: Right. I mean, I think the big picture finding is that this — we hav uncovered a system that benefits the few at the expense of the many. You know, you mentioned at the outset some of the — the video mentioned some of the big names. King Abdullah of Jordan, through a convoluted shell game, offshore shell game, bought mansions in Malibu. The prime minister of the Czech Republic secretly bought a château in France. And hundreds of other politicians besides. And I think that is really the big takeaway for us, at least, is that some of the people who are in a position to potentially stop offshore abuses are in fact themselves benefiting from this dark system, dark money system.

JUAN GONZÁLEZ: But, Ben, as your series points out, in many cases, this is not illegal. It’s just hidden. Could you talk about the difference there and how often crimes are committed under the cover of the law, not in violation of the law?

BEN HALLMAN: Right. Well, I mean, what we see here is jurisdiction shopping, right? Sort of an international game of arbitrage, where companies have built tremendous expertise in helping their clients find places to hide their money in secrecy and legally, quite legally. So, you know, a small jurisdiction — you know, the British Virgin Islands or the Seychelles. You know, these are jurisdictions where it’s possible to set up a company for a few hundred or few thousand dollars and not even disclose the fact that you are the actual owner of the company. You can set them up through front men, through what’s called nominee shareholders and directors. So, you know, this is in fact — it’s a legal system. I will say that some of what we just charted is also illegal money flowing through offshore, and so that’s sort of a different story. But, broadly speaking, yeah, the use of offshore shelters is legal.

JUAN GONZÁLEZ: And, of course, it didn’t necessarily start in those small countries. Delaware has a long history right here in the United States, and now South Dakota is becoming a big haven, as well. Could you talk about the local U.S. versions of this?

BEN HALLMAN: Yeah, look, one thing we wanted to do is point out a little bit of, I guess we’ll call, Western world hypocrisy on the subject. You know, the U.S. and the U.K. and others have been quick to chide smaller countries. You know, you’re kind of — when you think of a tax shelter, you think of a palm tree-lined island, you know. But, look, I mean, the U.S. is one of the biggest jurisdictions — secrecy jurisdictions in the world. We have a story that focuses on South Dakota, which over the last few decades has really come to rival traditional offshore tax havens as sort of a haven for people to hide their assets. The trust industry, we report, has essentially written the law — rewritten the laws of that state to make it possible for people to hold money, like — and one of the things they advertise is not just secrecy but sort of longevity, in perpetuity, forever, they promise.

AMY GOODMAN: So, go through some of the names. I was struck by how — I mean, you’re talking about, you know, Uhuru Kenyatta in Kenya. You’re talking about King Abdullah. But some of the richest men in the world are right here in the United States, and you’re not seeing their names.

BEN HALLMAN: Well, no. Well, we have a story about Robert Brockman, one of the richest — one of the richest men in the U.S., who set up tax shelters in Belize. But it’s true that, generally speaking, U.S. billionaires are not mentioned very much in this data leak. And that could be for a few reasons. For one is, look, this is the most expansive, the biggest offshore leak ever. It has — I think, offers an unparalleled view into the economy. But it’s not — it doesn’t include everything. I mean, the Cayman Islands are a massive tax haven. We do not have any documents with the Cayman Islands. I think the other thing you might be seeing here is just simply that American billionaires have figured out other ways to avoid taxes.

AMY GOODMAN: So, let’s bring professor Vanessa Ogle into this conversation. You’re a professor of history at University of California, Berkeley. You’re working on a book on tax havens and the offshore economy. And you wrote a very telling article in the New Statesman headlined “The end of empire and the rise of tax havens.” Give us the historical context here, how you relate colonialism to tax evasion.

VANESSA OGLE: Yeah, absolutely. And thank you for having me on. It’s an honor and a pleasure.

So, we see tax havens emerge, really, for the first time on a sort of significant scale already in the 1920s and '30s. And at this point it is a direct reaction to the introduction of income taxes in many countries in Europe and also in the United States. But then there's a second phase during which tax havens expand, and new tax havens, important tax havens that we know today, appear on the scene. And that is in the 1950s and ’60s. So, that is when you get places like the Bahamas that really sort of take off as a tax haven. That is when you get the Cayman Islands, eventually British Virgin Islands and so on.

And so, during these decades, there’s a direct connection between the end of colonial rule, the end of European empires, and the expansion of these havens at the same time. So what you have is a situation where European settlers, European businessmen, who have been doing business, who have been living in the colonial world — for instance, in Kenya, which is a British colony at that point, of course — they have been living there, and they have been doing business there, and they begin to see, if you want, the writing on the wall. And they begin to see local anti-colonial independence movements, and they begin to worry about the safety of their assets in these places, because, after all, they’ve been there for decades, sometimes centuries, and they’ve, you know, in the view of local populations, certainly, oppressed these populations and ruled against their will. So it might be that new governments might not look so favorably on the presence of these Europeans.

So, what they do when it becomes clear that some of these places will become independent is, these Europeans begin to move assets out of the colonial world. And because at this time tax rates in places like Britain, in places like France, are relatively high — right? — these are the sort of decades in which European welfare states are financed by high tax rates. Because that is the case, they decide to move assets to other places. And among other places, they choose the Bahamas. French settlers and French businessmen choose Switzerland. And essentially, you get the situation where, in a place like the Bahamas, the seed money for the expansion of these tax havens comes out of the colonial world, comes from these settlers and others who are about to, essentially, leave these places and who are looking for shelters to place their assets, because they don’t want to pay the high taxes back home in Britain. And that puts in place a whole infrastructure of tax evasion, if you want, an ecosystem of lawyers, of bankers, of accountants who facilitate this and who enable this. And so, I think it is important, when we talk today about elite corruption in low-income countries, especially those with a colonial past — it is important to point to the kind of longer histories of this and the legacies of European colonialism.

JUAN GONZÁLEZ: And, Professor Ogle, could you talk specifically about Mauritius and its central role in basically hiding the colonial wealth of portions of Africa?

VANESSA OGLE: Absolutely, yes. So, Mauritius is a tax haven that has appeared on the scene a little more recently, sort of since the 1990s. And basically, Mauritius has — through a combination of so-called tax treaties and very low tax rates for companies registered in Mauritius, Mauritius has found a way to make itself a sort of stepping stone for investments in sub-Saharan Africa. And it means that Western companies that want to, you know, funnel funds, route funds into sub-Saharan African countries, they basically go through Mauritius in order to avoid paying taxes in these countries in sub-Saharan Africa, and to instead benefit from the extremely low or zero tax rates that Mauritius essentially sort of offers them.

And this is particularly harmful for economies in this part of the world, because they rely to a greater extent than many rich countries on corporate taxes as a source of revenue, which has to do with the sort of makeup of these economies, where you have a big informal sector where it is much harder to collect revenue and collect taxes, which means that corporate taxes, which are, generally speaking, easier to collect sometimes —

AMY GOODMAN: Five seconds.

VANESSA OGLE: — are an important source of revenue.

AMY GOODMAN: Professor Vanessa Ogle, we want to thank you for being with us, a University of California, Berkeley history professor, writing a book on offshore tax havens. And thank you so much to Ben Hallman, who is senior editor at ICIJ, the International Consortium of Investigative Journalists. We’ll link to the articles on the Pandora Papers. I’m Amy Goodman, with Juan González.

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