On Monday morning 14 heads of state, 21 former heads of state and more than 130 billionaires woke to a shock. Their offshore banking affairs – usually extremely private – were suddenly public and would dominate global news headlines for days.
They had fallen foul of the Pandora Papers, the largest leak of documents ever.
What are the Pandora Papers?
In 2019 an anonymous source began sending huge quantities of documents to the International Consortium of Investigative Journalists, based in Washington.
The files revealed a global cast of fugitives, convicts, celebrities, football stars and others, including judges, tax officials, spy chiefs and mayors, and the secret assets, covert deals and hidden fortunes of the super-rich.
“We’re not talking about millions of dollars here, we’re talking about trillions of dollars,” ICIJ director Gerard Ryle says.
As the document dumps continued into 2020, the ICIJ realised the leak was at a level not seen before.
How big is Pandora Papers?
The data set is 11.9 million documents in 2.94 terabytes of data. Some records go back to the 1970s, but most of the companies, trusts and foundations were set up between 1996 and 2010. The ICIJ shared the files with more than 600 journalists in 130 media organisations – the biggest journalist collaboration in history.
What is the ICIJ?
The International Consortium of Investigative Journalists (ICIJ) was set up in Washington in 1997 by the US Centre for Public Integrity but has been independent since 2017. Its staff work across North and South America, Europe, Asia and Australia.
It has pioneered a new form of collaborative journalism where media organisations and journalists around the world work together to investigate leaks on a shared platform, like a very large newsroom.
How does Pandora Papers compare?
The ICIJ’s Offshore Leaks in 2013 was a 260-gigabyte set of 2.5 million documents from the Portcullis offshore group, obtained by Ryle.
The Panama Papers in 2016 comprised 11.5 million files of Panama law firm Mossack Fonseca, with 2.6 terabytes of data.
Paradise Papers in 2017 contained 13.4 million documents in 1.4 terabytes of data from British Virgin Islands law firm Appleby.
Pandora Papers, rather than just one firm, has files from 14 different offshore service providers. The code name for the 12-month investigation was Aladdin.
Which countries are included?
Bahamas, Belize, British Virgin Islands, Cayman Islands, Cook Islands, Cyprus, Dubai, Gibraltar, Hong Kong, Isle of Man, Jersey, Latvia, Malta, Nevis, New Zealand, Panama, Samoa, Seychelles, Singapore and Switzerland.
How many Australians are in the Pandora Papers?
The ICIJ has identified approximately 40,000 names of global citizens. The Australian Financial Review has identified 402 Australian names but this undercounts people with dual nationality who use another passport, where intermediary firms did not name the beneficial owner, and blurred documents that defeat optical character-recognition search programs.
Why are the documents hard to analyse?
The documents are unstructured data: a mix of email files, images, PDFs, Word and Excel documents and other formats. While the ICIJ uses powerful search engines with optical character recognition, low-quality, blurred images can cause the search to fail.
Some offshore investors have appeared in several leaks, which builds a broader picture. Pandora Papers include many former Mossack Fonseca clients who moved their accounts after the Panama Papers.
Will the ICIJ make the documents public?
The ICIJ is planning on publishing some of the data in November, with the rest early next year. The information is likely to be in graphic form, as with Panama Papers.
Is using tax havens illegal?
International investors routinely use low-tax jurisdictions to avoid being taxed twice. Profits are taxed back in their home country. It only becomes tax avoidance or tax evasion when the offshore profits are not disclosed to tax authorities. Many of the politicians in Pandora Papers have campaigned publicly against tax haven secrecy.
Reputational risk is another issue. Bona fide investors in offshore entities can later discover their service provider is also associated with clients involved in money laundering and other crime.
What happens now?
Most of the global reforms triggered by the Panama Papers have stalled. In Australia, moves to implement rules first proposed in the 2006 Anti-Money Laundering and Counter-Terrorism Financing Act and adopted elsewhere in most OECD countries have been repeatedly blocked. Another Senate inquiry on money laundering will report in December.
Who is in the files?
Countries where current and former heads of state are linked to offshore holdings include:
Argentina, Azerbaijan, Bahrain, Chile, Colombia, Comoros, Congo-Brazzaville, Cote d’Ivoire, Czech Republic, Dominican Republic, Ecuador, El Salvador, Gabon, Georgia, Haiti, Honduras, Hong Kong, Jordan, Kenya, Kuwait, Lebanon, Mongolia, Montenegro, Mozambique, Pakistan, Panama, Paraguay, Peru, Philippines, Qatar, Spain, UAE, Ukraine and the United Kingdom.
In some cases more than one head of state appears.
By : Neil Chenoweth (An investigative reporter for The Australian Financial Review. He is based in Sydney and has won multiple Walkley Awards) – FINANCIAL REVIEW