Politicians, businessmen, celebrities resort to offshore companies to avoid taxes. This follows from Pandora Papers published today by leading media.
The journalistic investigation of Pandora Papers reveals that 35 current and former leaders – including former British Prime Minister Tony Blair, Jordanian monarch Hussein and Kenyan President Uhuru Kenyatta – have resorted to offshore companies.
The same choice has been made by 330 high-ranking government officials. The finance ministers of the Netherlands, Brazil and Pakistan, as well as former finance ministers of France and Malta, have links with offshore companies. The same goes for the former head of the International Monetary Fund (IMF), Dominique Strauss-Kahn.
These companies usually transfer large sums of money, with the result that the beneficiary hides his real assets from the tax authorities of his country. In many countries the operation of offshore companies is not illegal, but these transactions of the rich and powerful certainly raise many questions about the “legal and ethical”.
The survey, conducted by the International Consortium of Investigative Journalists (ICIJ), involved journalists from 150 media outlets around the world – including Deutsche Welle’s Turkish newspaper.
According to the international journalism network ICIJ, the Pandora Papers show that there are many powerful people who, instead of fighting the system of offshore companies, try to take advantage of it themselves.
Revelations about the European elite
For many decades, former British Prime Minister Tony Blair has been seen as an opponent of tax evasion.
The Pandora Papers now reveal that he and his wife had bought an offshore real estate company from the family of Zayed bin Rashid al-Zayani, Bahrain’s Minister of Industry and Tourism, to become the owners of a $ 8.8 million property. € 6 million), thus avoiding paying taxes totaling $ 400,000.
Both the Blair family and the Zagiani family say they did not know each other was involved. Cherry Blair states that her husband was not involved in the transaction. Today the company is closed.
Another name mentioned in the Pandora Papers is Czech Prime Minister Andrei Babis, a billionaire elected in 2017 with a promise to fight corruption.
The leaks show that in 2009 Babis poured $ 22 million into a network of companies to buy a mansion near the C Αte d’Azur, which includes two swimming pools and a private cinema.
According to the Czech website Investigace.cz, the ownership of these companies was not included in the asset declaration submitted by Andrei Babis.
He did not answer a relevant question from the network. Ukrainian President Volodymyr Zelensky also held a stake in a company based in the British Virgin Islands.
One month before his victory in the 2019 presidential election, the former actor who became a politician had sold his stake in Maltex to Sergei Sefir, a close friend and associate.
On offshore yachts of 300 million!
Offshore companies are not only popular in Europe. Everything else: For example, Kenyan President Uhuru Kenyatta, a descendant of a political dynasty that was elected “flag” in the fight against corruption, is said to own – together with his mother – a secret company in Panama.
During the Arab Spring, when Jordanians took to the streets to protest their outrage over corruption and unemployment – Monarch Abdallah bought offshore companies three beach houses in Malibu, USA.
But also Princess Lalla Hasna of Morocco was found to own – through a network of offshore companies – a company that had bought a private house worth 11 million euros in London, near Kensington Palace. The Emir of Qatar, Hamad bin Khalifa Al Thani, is using offshore companies to invest and manage his wealth.
The Panama Papers had already revealed that the emir’s $ 300 million superyacht is also controlled by offshore companies. Many stars of the show also resort to offshore companies. An example is the popular singer Shakira.
Her lawyer, however, states that all of Shakira’s accounts have been declared and in addition do not offer her any preferential tax treatment. Another example is the former Indian cricket ace Sahin Tendulkar. His lawyers did not respond to a request from DW for comment.
Many of those interested in offshore companies are of course entrepreneurs and multimillionaires. Like the Turkish contractor Erman Ilitsak, who maintains ties with two offshore companies, but which were registered in his mother’s name in 2014.
At the time of publication, Mr. Ilicak had not commented. The Ilicak-owned Ronesans Group had undertaken to build, among other things, the famous 1,500-room presidential palace of Tayyip Erdogan.
The problem with offshore companies
With an initial capital of a few hundred dollars, those interested can set up an offshore company, the ownership of which remains secret. Alternatively, with a capital of $ 2,000 to $ 25,000, they can set up a trust management institution, which allows them to control their money, without being held legally liable for their transactions.
With a little “creative accounting” assets are protected from creditors, bailiffs, tax auditors or ex-spouses. In many countries, setting up offshore companies and conducting transactions through tax havens is perfectly legal. However, it is a practice that provokes strong criticism.
According to Gabriel Chuckman, an assistant professor of economics at the University of Berkeley, 10% of the world’s wealth is now “hidden” in tax havens.
The exact amount remains unknown. An OECD survey in 2020 speaks of at least $ 11.3 trillion. Public opinion usually associates tax havens with exotic destinations in the Caribbean, but the Pandora Papers prove that the same system works well elsewhere, for example in Singapore, the Netherlands, Ireland, Hong Kong, and even some states. USA.
Laxmi Kumar, an executive at the Washington-based Global Financial Integrity Foundation, points out that hiding funds in tax havens has immediate consequences for the lives of all of us.
“It affects the access to the health system, the access of your child to education, your possibilities to get a house”, he says characteristically.
The research methodology
The International Consortium of Investigative Journalists has investigated a total of 11.9 million confidential documents over the past two years. The journalistic team consists of 600 people from 150 different media around the world.
The leaked documents come from 14 service providers for offshore companies. The Pandora Papers came to light just five years after the Panama Papers were unveiled in 2016, causing a sensation around the world, even causing the collapse of governments, for example in Iceland and Pakistan.
source: Deutsche Welle
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