A massive new leak of documents even bigger than ‘The Pandora Papers’ is highlighting how the rich and famous are hiding their money, and how a world of off-shore tax havens is still thriving. The offshore fortunes of prime ministers, royalty, billionaires, athletes and celebrities are being leaked of tax-haven financial records revealed today by a global consortium of media outlets.
The leaked files, dubbed the Pandora Papers, show 35 current or former world leaders and more than 300 other public officials around the globe who have held assets in or through tax havens. The records disclose that Former British prime minister Tony Blair, the current prime ministers of the Czech Republic and Kenya, and the king of Jordan have all benefited from tax advantages of their offshore holdings.
The 11.9 million files included documents such as emails, bank statements, incorporation documents and shareholder registries. The documents are from 14 firms that administer offshore services and were leaked by a confidential source to the Washington-based International Consortium of Investigative Journalists. The ICIJ also gave the file to its 150 partner news organizations around the world, including CBC/Radio-Canada and the Toronto Star in Canada.
CBC and the Star identified the names of at least 500 Canadian citizens or residents in the records, include former auto-race car driver Jacques Villeneuve and figure-skating champion Elvis Stojko.
Much like the Panama Papers leak in 2016 or the Paradise Papers the following year, the secret files provide a behind-the-scenes view of how certain global elites take advantage of financials or corporate structures to either shield assets, get out of tax obligations, or hide wealth entirely.
After the Panama Papers came to light five years ago, world leaders, including U.S. President Barack Obama and British Prime Minister David Cameron, pledged to constrain such tax abuses and to clean up the shadiness world of offshore finance. However, the new release of documents displays that the global offshore world continued to thrive.
the ICIJ’s director, Gerard Ryle, said “When we published the Panama Papers a few years ago, there was a lot of outcry around the world saying that this was a system that needed to end… But we’re now seeing the very people who could end the system … themselves benefiting from it.”
There is nothing inherently illegal about having an offshore bank account or company, as long as it is properly declared to tax authorities. Despite what is displayed in this article and the leaked documents, there are plenty of major businesses that operate legally in and through tax havens. However, the anonymity provided in offshore jurisdictions, coupled with their minimal or non-existent tax on income makes it easy for money launderers, tax evaders, corrupt politicians, and other criminals.
The leaked files had hundreds of offshore companies and accounts set up by or for Canadians. Here are some examples.
Jacques Villeneuve is the only Canadian to ever win a Formula 1 championship. Villeneuve lived in Monaco and Switzerland during most of his racing career but lived in Quebec for a period in the 1990s and from 2007 to 2013. The leaded documents display he had offshore companies set up in zero-tax jurisdictions from the start of his career in 1992. They were set up to receive racing and endorsement income.
Elvis Stojko is a figure skater who is known for his Olympic performances and world championship wins. The leaked papers display Stojko transferred Canadian assets around $6.5 million to an offshore trust in the Caribbean in 2007, while he was living in Mexico. Stojko told CBC News that he trusted his lawyer to handle his finances and had “no real involvement or interest” in any of it.
Firoz Patel is currently serving a three-year sentence in a Connecticut prison after pleading guilty in the U.S. to conspiring to launder money, via his and his brother’s unlicensed online payment platforms Payza and AlertPay. The Pandora Papers display during the investigation into the Patel brothers, Firoz Patel flew to the United Arab Emirates where he acquired an offshore company. From prison, Patel said the corporation was set up legitimately to do business in Asia.
Alexandre Cazes is the alleged criminal mastermind behind the dark web marketplace AlphaBay which is an online bazaar for buying and selling drugs, guns and stolen credit card info. The marketplace was worth about $29 million, according to U.S. authorities. The Papers show how he used a network of shell companies to obscure his ownership of various assets Cazes died in 2017, a week after he was arrested. It’s believed Cazes took his own life while in custody.
Fred Sharp owned a Vancouver firm, Corporate House, which was known as an investment outfit for wealthy Canadians wanting to keep assets hidden and use offshore havens to minimize their taxes, sources in the wealth management industry told the CBC in 2016.
The Canada Revenue Agency began auditing him but nothing much has been discovered. Sharp and co. filed dozens of lawsuits to block the CRA’s efforts. However, Sharp’s machinations caught the eye of the FBI, and he and a couple of clients were charged with securities fraud in August. The new Pandora Papers leak mainly shows his firm doing routine administration of offshore companies.
CBC News will report in-depth on some of these cases, and other Canadian names, in the weeks ahead.
Outside of Canada, the prominent names in the leak include eight sitting presidents and three current prime ministers.
Czech PM Andrej Babis was in Forbes magazine’s tally of global billionaires, Babis rose to power promising to crack down on corruption and tax evasion. The Pandora Papers reveal he used a string of shell companies to purchase a sprawling estate, Chateau Bigaud, in southern France and seven other nearby properties before he entered public office.
Pop singer Shakira is already well known for her tax troubles. Though she declared herself a resident of the Bahamas, authorities in Spain determined she was living in Barcelona from 2011 to 2014 but not paying taxes. In July she went to trial on criminal charges laid in 2019. The Pandora Papers reveal that she was incorporating new offshore entities in the British Virgin Islands, one of which, Titania Management Inc., has never previously been publicly revealed. A copy of her Spanish ID is among the leaked files.
King Abdullah II is Jordan’s ruler. The leak reveals he secretly owns 14 luxury homes in Britain and the U.S., purchased between 2003 and 2017 through companies registered in tax havens. The total value is more than $134 million. Attorneys denied that there is anything improper about owning homes through offshore companies and stated that the king doesn’t have to pay taxes under Jordanian law. But had the purchases been public, the timing could have alienated many Jordanians.
Former U.K. PM Tony Blair is Britain’s longest-serving Labour prime minister. Him and his wife, lawyer Cherie Blair, purchased an $11-million Victorian building in London in 2017 for her law firm. Instead of buying the property, they acquired the shares of the British Virgin Islands company that owned it. By purchasing the company shares instead of the building, the Blairs benefited from a legal arrangement that saved them from having to pay more than $580,000 in property transfer taxes. Blair said she and her husband took immediate steps after acquiring the property to merge it back into a U.K.-based holding company, making it fully taxable in Britain.
The consequences for countries of wealth moving offshore, out of the reach of tax authorities, are particularly devastating this year, as national companies struggle with COVID-induced economic slowdown.
The equivalent of at least $14.3 trillion is held offshore,
According to a 2020 study by the Paris-based Organization for Economic Co-operation and Development, the equivalent of at least $14.3 trillion is held offshore. The complexity and secrecy of the offshore system make it impossible to know how much of that is tied to tax evasion and other crimes.
Robert Palmer, executive director of the advocacy group Tax Justice UK, told ICIJ partner the Guardian said that These are loopholes that are available to wealthy people but not available to others” and “Politicians need to fix the tax system so that everyone pays their fair share.” For more information about the Pandora Papers click here. This article was originally sourced by CBC.