First the International Consortium of Investigative Journalists (ICIJ) published the Panama Papers, then came the Paradise Papers and now the Pandora Papers landed with a mighty bang. Never before have more journalists around the world collaborated to investigate the hordes of tax evaders and kleptocrats that roam the vast and magnificent palace of global grand corruption. Millions of documents leaked by law firms and ICIJ sources had to be reviewed. Clear allegations have been followed up and verified as much as possible. If the evidence pointed to an individual or organization, then these so-called villains had a chance to explain themselves before the stories were printed. It was indeed a gargantuan journalistic enterprise.
In a suite of rooms in the great palace of corruption, we find the King of Jordan and other tycoons whose massive real estate holdings have come to light. The king is above the law in the country he rules. There is no clarity as to whether his ownership of a large California estate violated any laws. He may have legitimately kept it a secret for his own safety. Still, the disclosure came as a shock. Then we find an endless number of so-called tax evaders: the very rich whose greed leads them to find mechanisms to minimize their tax payments – and sometimes pay no tax at all. For example, the former British Prime Minister Tony Blair reportedly acquired a posh office building in London through a British Virgin Island shell company in a way that lowered its tax liability on the transaction. On another level there are the art dealers, like the British antique collector Douglas latchford, and other agents in cross-border transactions who allegedly move assets across the globe, hide their gains in remote places, out of sight of tax authorities, and thrive.
The conclusions of the Pandora Papers raise the question: how far does corruption go?
UNVEILING THE DEPTH OF CORRUPTION
The CIPI ‘P’ papers also revealed the profound role of lawyers and other facilitators, who serve their crooked clients by create offshore shell companies for those who hide the actual beneficial ownership of the stolen goods.
The scale of grand corruption is reaching almost unimaginable numbers. For example, a few years ago the UN Secretary General Antonio Guteres affirmed: “$ 1 trillion is paid in bribes each year, while another $ 2.6 trillion is stolen; all because of corruption. With its “P” papers, the ICIJ has just touched a fraction of the operations carried out across the world of grand corruption. The real value of newspapers lies in the precise details of individual scams and their scams, which brings out the depths of financial depravity that abound in ways that highlighting giant global numbers, as the boss of the UN, simply cannot do it. Yet, in their entirety, the ICIJ ‘P’ documents present only a few pieces scattered around the global mansion of corruption. The great halls, master bedrooms and foyers of the Palace of Corruption are occupied by kleptocrats and their political and business associates from over 100 countries who are their frequent partners in transnational crime.
The scale of the Palace of the Grand Corruption is so massive that describing it has a numbing impact. Such disclosures, however, have led to some political action. Former Pakistani Prime Minister Nawaz Sharif fled to UK to avoid prosecution in Pakistan after the Panama Papers revealed its real estate holdings in London. Another example, Czech Prime Minister Andrej Babis blamed his electoral defeat on the Panama Papers, which noted that in 2009, the The Czech billionaire had used a series of shell companies to secretly buy 16 properties in Mougins, a French village near Cannes. The leaked records showed that he had channeled the money through the British Virgin Islands, Washington, DC and Monaco.
The CIPI ‘P’ papers also revealed the profound role of lawyers and other facilitators, who serve their crooked clients by create offshore shell companies for those who hide the real beneficial ownership of stolen legal assets – or at least acquired in a dubious way. These lawyers use trusts under the laws of South Dakota and Nevada and other states or the accommodating corporate registration facilities of Delaware or the British Virgin Islands or Isle of Man or Luxembourg and Lichtenstein to “protect” their clients – even if what they’re really engaged in is bribery, outright.
ACTIONS, NOT RHETORIC, ARE NEEDED NOW
Tax authorities must go through the “P” papers and prosecute the bad guys if the allegations are valid. The FBI and its European counterparts must use the “P” documents as leads to investigate crooked politicians and the banks, lawyers, auditors and real estate brokers who can help them and bring them to justice. Sunlight must also shine on these front companies. These fancy laws of South Dakota and Delaware, and so many other places that hide the beneficial owners of shady investments, must also be removed. These are just a few clear messages the Pandora Papers have for all heads of government who consider tax evasion, theft of public funds and money laundering crimes.
Will tax evaders and kleptocrats and their enablers continue to prosecute their crimes despite the ICIJ’s disclosures? Will governments, especially western democratic countries, try to hold these actors to account? They should – and can. There is no better place to start than at President Joe Biden’s next conference “Summit for Democracy”. The Summit takes place over two days generally considered to be the occasion for rhetoric about the need to make this world a better place, but is rarely followed by concrete actions: December 9 is the annual meeting of the United Nations “International Anti-Corruption Day” and December 10 is the annual UN holiday “Human Rights Day.”
Let’s see if the Democracy Summit will serve as a starting point for accountability.
Franck Vogl is an Assistant Professor at Georgetown University and teaches a graduate seminar on “Corruption, Conflict Resolution and Security”. He is the co-founder of the world’s leading anti-corruption organization, International Transparency and the president of Partnership Fund for Transparency. His book, The Catalysts: How the West Supports Kleptocrats and Corruption – Endangering Our Democracy is coming in November 2021.