Pandora Papers: The biggest ever financial data leak reveals secret wealth and dealings of influentials from across the world

NEW DELHI: In an extraordinary development that took place on Sunday night (IST), the International Consortium of Investigative Journalists (ICIJ) (an independent Washington D.C based, international coalition of investigative journalists network of more than 200 investigative journalists and 100 media organizations from over 70 countries) has once again shaken the world by it’s biggest ever leak of financial data records that contain details of secret wealth and offshore dealings of influential personalities from all across the world. (Before this it was ICIJ only that revealed about the Panama Paper leaks, then the biggest leak, to the world in 2016).

ICIJ took to Twitter two days ago to set the stage for this huge announcement that has the potential to disrupt global economies and national and international politics. Pandora papers is a result of a mammoth investigation that included around 600 journalists from 117 countries who toiled hard day and night for almost a year to produce verified results for the most astonishing revelation to date.

Pandora Papers leak are significant in many ways, as the name suggests, it opens the pandora box of financial records of the super-rich and popular personalities from all across the world. It is the most voluminous record ever produced, that consists of around 12 million files (mostly from the 1990s to 2019) in 2.94 TB of data from 14 global corporate service firms with details of around 29,000 offshore companies and private trusts being set up in not just tax haven territories(Panama, Cyprus, British Virgin Islands) but also in regulatory economies like New Zealand, Singapore and the United States, for their clients all across the world.

Pandora files expose how some of the most influential and powerful people in the world which includes more than 330 politicians from more than 90 countries (including 14 heads of state, 21 former heads of state and more than 130 billionaires) who made use of offshore companies to hide their secret wealth and financial dealings to evade taxes in their jurisdictions. The list also includes at least 380 persons of Indian nationality, the Indian Express (which is a part of the ICIJ investigation), has so far validated and corroborated documents related to 60 organisations and individuals, the investigation is ongoing for the rest in the list.

What Pandora papers leak is all about?

The Pandora papers reveal how the rich, powerful and ill-famed individuals (many of whom are already on the radar of intelligence and enforcement agencies for tax evasion and money laundering related matters), set up multi-tiered trust structures for their offshore businesses and estate planning in tax haven territories(which are loosely regulated and tightly tied to the secrecy laws) .

There could be many purposes for setting up such trusts. However, scrutiny of Pandora papers largely categorised them into two parts: (i) for hiding their real identities and distancing themselves from the offshore businesses to make it difficult for tax authorities to reach out to them. (ii) to shield their investments (real estate, shareholdings, cash etc.) from law enforcement agencies. The other malafide purposes could be to park their illegal money, to insulate it from creditors to whom they owe a huge sum of money and sometimes to fund criminal activities.

How Pandora papers are different from previously leaked Paradise and Panama papers?

Paradise and Panama papers largely dealt with the offshore entities which were set up by corporates and individuals respectively whereas Pandora papers reveal how “trusts” are being used as a vehicle along with the offshore entities to hold assets and investments by business families and super-rich individuals. These trusts were usually set up in tax haven nations like Panama, Cyprus, British Virgin Islands(BVI), or in Singapore, New Zealand which offers relative tax advantages than their regulatory counterparts.

Is it illegal to set up a trust in India or one offshore?

No, it is not illegal to set up a trust in India. Indian Trusts Act, 1882 provides legal recognition to trusts. Trust is an arrangement where a third party holds assets and investments on behalf of the organisations and individuals. Indian laws see trusts as the obligation of the trustee to manage and utilise the assets of the trust in the interest of its beneficiaries. India also recognises offshore trusts.

What are some of the popular names which have been revealed as a part of the Pandora papers leak?

The documents reveal the King of Jordan secretly establishing a property empire of more than £70 million (around $100mn ) in the UK and the US, Kenyan President and his family members owning a network of offshore companies having a worth of $30 million, Presidents of Cyprus, Ukraine and Ecuador have been accused of similar charges in the papers to launder their money and evade taxes. From India, prominent names that have come up so far are- Sachin Tendulkar who, along with members of his family have been reported as the Beneficial Owners of an offshore entity in the British Virgin Islands (BVI) which was liquidated in 2016, Anil Ambani who has not revealed his $1.3 billion networks of offshore companies. Nira Radia, Jackie Shroff and Biocon Founder Kiran Mazumdar Shaw are other well-known names that have been figured on the list.

How much money exactly is hidden offshore as per Pandora papers?

It is difficult to say for sure, but estimates have ranged from $5.6 trillion to $32 trillion, according to the ICIJ. IMF has declared last year that the use of tax havens have costs governments worldwide up to $600bn in lost taxes each year.

However, not everyone who is named in the papers is doubted of malfeasance. Only those who have a record of morally questionable behaviour and involvement in criminal activities are answerable to these revelations and worthy of being charged with an offence. The rest of them can submit their legitimate reasons and documents to defend their offshore assets and investments to the law enforcement authorities.

The Pandora papers give an insight into the shadow financial world that operates elusively of the global economic governance and the revelation certainly poses an imminent threat to already crippled economies around the world. Such a system endangers the lives of common citizens and honest taxpayers whose hard-earned money is being mocked and puts in danger the future of their children.

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