Tue. May 17th, 2022

A massive leak that reveals the secret assets of some of the world’s most powerful figures adds new pressure on global leaders to crack down on shady finances.

The so called Pandora papers consists of millions of leaked financial documents that were reviewed and analyzed over two years by more than a hundred news outlets, including The Washington Post and the BBC, which is part of the International Consortium of Investigative Journalists (ICIJ).

Trove illustrates the secret practices that world leaders and wealthy individuals have used to keep their assets hidden in dozens of countries, including the United States.

Here are four takeaways from Pandora Papers.

South Dakota appears as a tax haven

South Dakota was highlighted in the study as a leading offshore tax haven that has been used by current and former world leaders over the years.

There were 81 trusts uncovered in South Dakota in the comprehensive survey, as well as 37 in Florida, 35 in Delaware, 24 in Texas and 14 in Nevada.

“The Pandora papers contain details of tens of thousands of dollars that have moved from waters in the Caribbean and Europe to South Dakota,” the ICIJ said.

The probe found that the family of Carlos Morales Troncoso, the former vice president of the Dominican Republic, began storing their assets in trusts in the Midwest in 2019.

The family of Ecuador’s newly elected president, Guillermo Lasso, also moved two offshore companies from Panama to trusts in South Dakota in 2017, after lawmakers passed legislation in Ecuador that made it illegal for government officials to use tax havens to protect their assets. Lasso told ICIJ that his previous offshore financial activity has been “legal and legitimate.”

The ICIJ reported that state law in South Dakota over the years has helped allow for more covert investment.

Lauren Kohr, senior director of anti-money laundering in the Americas for the Association of Certified Anti-Money Laundering Specialists, said South Dakota, Nevada, Delaware, Arkansas and Wyoming have a reputation as “onshore offshore states.”

“South Dakota is a trust-friendly state with minor restrictions that make it attractive domestically and globally for legitimate and illegal use,” she said.

Lawmakers seek to crack down on financial ‘enablers’

A two-part group of lawmakers introduced legislation in the wake of the Pandora papers, which sought to crack down on financial “enablers” who help foreign clients hide their wealth in the United States using shell companies, trusts and other means.

“If we get banks to report dirty money but allow law, real estate and auditing firms to look the other way, it creates a loophole through which crooks and kleptocrats can sail a yacht,” Rep. Tom MalinowskiThomas (Tom) MalinowskiPandora Papers urges lawmakers to push for financial ‘enablers’ congress to help Libyan people and enact bills order probe into war crimes and torture The Hill’s Morning Report – Posted by Facebook – Biden to restart COVID -19 plan MORE (DN.J.), one of the four co-authors of the bill, said.

The legislation will require the Treasury Department to introduce stronger due diligence rules by the end of 2023 for “intermediaries,” including attorneys who help set up limited liability companies for clients who abuse the law.

Ian Gary, CEO of the Financial Accountability and Corporate Transparency Coalition, called the bill a step in that direction.

“Unlike the banking sector, which is heavily regulated and has to file suspicious activity reports and do ‘Know Your Client’ due diligence, these lawyers, investment advisers, accountants … real estate agents are not subject to that kind of basic due diligence requirement,” he said.

“That’s why I think the Enablers Act is so important,” he said. “Again, the United States is behind some other countries and has no requirements for these industries either.”

King of Jordan has huge overseas assets, including in the United States

The investigation revealed that King Abdullah II of Jordan owned 14 properties in the United States and Britain in purchases amounting to more than $ 106 million.

One of the properties in California was purchased for $ 23 million in 2017 through an offshore company. Although the company is said to be based in the British Virgin Islands, the king also had another company that served as the nominated director of the original company.

“In the offshore world, nominated directors are people or companies who are paid in front of the one who really stands behind a company,” ICIJ said.

The king’s legal team said the purchases were made in part for security reasons.

There were a total of three properties on the beach in Malibu, which the investigation found that the king, whose lawyers also said, is not legally obliged to pay taxes in Jordan, bought through offshore companies.

The king has withdrawn control in light of the investigation as his nation remains dependent on aid from other countries.

ICIJ linked the king to nearly 40 shell companies set up between 1995 and 2017.

“If the Jordanian monarch were to show his wealth more publicly, it would not only oppose his people, it would make Western donors who have given him money annoying,” said Annelle Sheline, a non-resident fellow at the Baker Institute Center for Middle East, ICIJ said.

There are also world leaders on the list who have a history of speaking out against corruption and similar offshore trades used by the wealthy who apply the same practices or have people in their inner circle who do so.

Kenyan President Uhuru Kenyatta, who has previously said public servants should publicly declare their assets transparent, has siblings who owned offshore companies amounting to tens of millions of dollars, the ICIJ said.

Leaked files also showed that Kenyatta was named as the recipient of “a secret foundation in Panama”, the group said.

‘The Panama Papers were not just a one-time condition’

Pandora Papers was published by the same group behind 2016 Panama Papers study based on leaked offshore financial documents from a law firm in Panama that illustrated how thousands of clients, including world leaders and celebrities, used practices such as tax havens and shell companies to hide their wealth.

However, Pandora Papers was centered around an even more robust study that retrieved documents from 14 offshore service companies across the globe that experts say provide a much broader insight into an intricate underground system.

The ICIJ said its investigation has revealed “financial secrets for 35 current and former world leaders, more than 330 politicians and officials in 91 countries and territories”, in addition to refugees, fraudsters and murderers.

Prominent leaders named in the study include King Abdullah II of Jordan, former British Prime Minister Tony Blair and the presidents of Ukraine, Kenya and Ecuador. The probe has also detailed some in inner circle of the Russian president Vladimir PutinVladimir Vladimirovich Putin Equality / Sustainability-Tesla transports to Texas to trot trucks Russia hits new daily COVID-19 death record Microsoft report finds Russia’s dominant force behind cyber attacks last year MORE.

Although the group in its study noted that it is legal to keep assets offshore or use shell companies for security purposes in many countries, some lawyers have called for more regulation around practices, which they note can also be misused for tax evasion or corruption.

Gary, with the Financial Accountability and Corporate Transparency Coalition, said the probe shows that there is a “massive system of economic secrecy operating around the world.”

“It really is a validation that the Panama Papers were not just a one-time situation,” he said, adding that the study indicates that there are “two separate financial systems operating in the world.”

“One who is people like us follow the law and pay taxes, and another to some of the global rich and political elites who have been identified in the Pandora Papers who are able to use economic secrecy to hide their assets abroad to avoid paying taxes. ”


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