The term “Pandora Papers” refers to a series of financial papers that resulted from a 10-year period dedicated to shedding light on how the world’s richest hid their wealth from the law to avoid high taxes. Many of the avenues discussed are not available to everyone, such as trusts, holding companies, and shell companies that offer anonymity and low taxes.
The International Consortium of Investigative Journalists published the papers in early September 2021.
An Overview of the Pandora Papers
Nearly 12 million documents that were confidential were leaked as part of the Pandora Papers. These papers held the names of celebrities, state officials, and other billionaires whose companies bought jets and mansions with a little secrecy. The papers do not show wrongdoings but instead offer a rare insight into what the world’s richest do with their wealth.
Meaning of “Offshore”
The term “offshore” has a long history, tracing back to its start in Switzerland in 1816. From there, it has grown into a major factor behind global commerce. Assets held outside of one’s area code can be considered offshore.
The offshore accounts referenced in the Panama Papers are largely in places in the Cayman Islands, Panama, and the British Virgin Islands. The term can also reference Nevada, Delaware, and South Dakota, where wealthy individuals are allowed to be anonymous with their finances.
How Much Is Kept Offshore?
Because of the very nature of these accounts, it is difficult to put a true number together, but top economists estimate between 5 and 32 trillion dollars are held offshore. This makes up more than a third of the GDP. The Persian Gulf, Russia, and Latin American countries account for the majority of this.
How Does Money Get Offshore?
The wealthy have a slew of financial and legal experts at their disposal. In fact, the Pandora Papers cite 14 different firms providing legal and financial counsel. One firm, Alcogal, is tied to nearly half the people leaked in the papers and is accountable for 2 million of the 11.9 million documents. Alcogal has gone on the record expressing that they follow due diligence and are in full compliance with rules and regulations.
What Does a Shell Company Do?
Shell companies exist on paper but do not have active operations. They essentially allow companies or individuals to layer and hide their identities. They are also sometimes associated with laundering money. These companies are often found in Panama, but Nevada and Delaware also allow anonymity for corporations.
More Specific Highlights from the Pandora Papers
The vast documents making up the Pandora Papers highlighted a total of $11.3 trillion among over 29,000 offshore companies spread across various countries known for their favorable tax laws.
With the publication, the ICIJ also connected these various offshore companies and assets with 336 top politicians and executives around the world. Together, those high-net-worth individuals created almost 1,000 shell companies in total.
King Abdullah II of Jordan was just one of the figures mentioned in the Pandora Papers. He created 30 or more offshore companies, using them to buy 14 luxury properties worth over $106 million. Guillermo Lasso, the Ecuadorian president, has funds in two trusts that have their headquarters in South Dakota. Andrej Babis, the Czech prime minister, has $22 million in shell companies that he used to buy his Chateau Bigaud.
Legal Status and the Pandora Papers
Those with wealth have good cause to use offshore financial institutes. Offshore accounts offer protection against political climates that are unstable. Hedge funds and money management accounts use the Cayman Islands to reduce administrative costs and lower the financial burden legally.
On the same note, the lack of transparency has made these attractive to those who get money illegally, making it harder to track.
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