Economy International Jake Johnson

U.S. Denounced as ‘Biggest Peddler of Financial Secrecy’ After Pandora Papers Leak

Focusing on the high-profile people named in the explosive Pandora Papers leak can pull focus away from the countries and institutions that have rigged the tax system for the rich.
Money being passed between hands in a handshake
(Wikimedia Commons)

By Jake Johnson / Common Dreams

The leak of an enormous trove of tax haven files over the weekend offered a further glimpse into the secretive world of offshore finance—a system facilitated by the U.S. and other rich nations—and prompted calls for immediate changes to global rules that let the powerful hide their wealth, skirt their obligations, and starve governments of crucial revenue.

“This is where our missing hospitals are,” Susana Ruiz, the tax policy lead at Oxfam International, said in a statement. “This is where the pay-packets sit of all the extra teachers and firefighters and public servants we need. Whenever a politician or business leader claims there is ‘no money’ to pay for climate damage and innovation, for more and better jobs, for a fair post-Covid recovery, for more overseas aid, they know where to look.”

“The biggest blockers to transparency are the U.S. . . . and the U.K., the leader of the world’s biggest tax haven network.”

“Tax havens cost governments around the world $427 billion each year,” Ruiz added. “That is the equivalent of a nurse’s yearly salary every second of every hour, every day. Ordinary taxpayers have to pick up the pieces. Developing countries are being hardest hit, proportionately. Corporations and the wealthiest individuals that use tax havens are out-competing those who don’t. Tax havens also help crime and corruption to flourish.”

Like the 2016 Panama Papers, the International Consortium of Investigative Journalists’ (ICIJ) Pandora Papers shine additional light on the functioning of a “shadow economy” that world leaders, celebrities, and billionaire business moguls—including some accused of egregious crimes—are exploiting to shield trillions of dollars in assets from transparency and taxation.

The 11.9 million files obtained, analyzed, and leaked by the ICIJ reveal the closely-guarded financial maneuverings of more than 330 politicians and top public officials from nearly 100 countries and territories, including dozens of current national leaders.

“The secret documents expose offshore dealings of the King of Jordan, the presidents of Ukraine, Kenya, and Ecuador, the prime minister of the Czech Republic, and former British Prime Minister Tony Blair,” ICIJ notes in a summary of its sprawling cache of documents. “The files also detail financial activities of Russian President Vladimir Putin’s ‘unofficial minister of propaganda’ and more than 130 billionaires from Russia, the United States, Turkey, and other nations.”

The trove also links prominent athletes, models, and artists to offshore assets, including India’s famous cricketer Sachin Tendulkar, pop music star Shakira, and supermodel Claudia Schiffer.

But Alex Cobham, chief executive of the Tax Justice Network, cautioned that a narrow focus on the individuals who have made use of an international tax system rigged in their favor diverts attention from the institutions and countries that have done the rigging.

“These personal actions are shameful and will no doubt come under great scrutiny in the coming days, but it’s important that we don’t lose sight of one crucial fact: few of the individuals had any role in turning the global tax system into an ATM for the superrich,” Cobham wrote in a blog post on Sunday. “That honor goes to the professional enablers—banks, law firms, and accountants—and the countries that facilitate them.”

Cobham observed that the Pandora Papers—the product of a nearly two-year investigation by more than 600 journalists in 117 countries and territories—confirm that the United States is “the world’s biggest peddler of financial secrecy.”

“The biggest blockers to transparency are the U.S. … and the U.K., the leader of the world’s biggest tax haven network,” Cobham wrote. “We need full transparency so we can hold tax abusers accountable, especially when our politicians are among them. U.S. President Biden must match his own rhetoric on shutting down global illicit finance, and start with the biggest offender—his own country.”

As the ICIJ notes, the new files show in some detail “how the United States, in particular, has become an increasingly attractive destination for hidden wealth, although the U.S. and its Western allies condemn smaller countries for allowing the flow of money and assets tied to corruption and crime.”

“The Pandora Papers include documents from 206 U.S. trusts in 15 states and Washington, D.C., and 22 U.S. trustee companies,” the ICIJ points out. “The documents provide details about the movement of hundreds of millions of dollars from offshore havens in the Caribbean and Europe into South Dakota, a sparsely populated American state that has become a major destination for foreign money.”

“We in the U.S. should be embarrassed that we’ve become a magnet for kleptocratic funds,” said Chuck Collins, director of the Program on Inequality and the Common Good at the Institute for Policy Studies.

Conspicuously absent from the Pandora Papers is any mention of the wealthiest people in the U.S., including Bill Gates, Elon Musk, Warren Buffett, and Jeff Bezos—the richest man in the world. But as the Washington Post explains, that could be because “the uber-rich in the United States tend to pay such low tax rates that they have less incentive to seek offshore havens.”

In response to the Pandora Papers revelations, Oxfam called on world governments to crack down on tax havens by taking a number of steps, including:

  1. Ending tax secrecy on individuals, offshores, and multinational corporations. Set up a public register on the real owners of bank accounts, trusts, shell companies, and assets. Require multinational corporations to publicly report their accounts where they do business, country-by-country.
  2. Increasing the use of automatic exchange, allowing revenue authorities access to information they need to track the money.
  3. Ending corporate profit shifting to tax havens via new rules, and by setting a global minimum tax under the OECD’s BEPS deal, ideally of around 25%.
  4. Agreeing a global blacklist of tax havens and taking counter measures, including sanctions, to limit their use.
  5. Setting a new global agenda on taxing wealth and capital fairly; addressing tax competition between countries on high-net-worth-individuals, either on income or wealth, against agreed standards.

“Governments’ promises to end tax havens are still a long way from being realized,” said Ruiz. “We cannot allow tax havens to continue to stretch global inequality to breaking point while the world experiences the largest increase in extreme poverty in decades.”

4 comments

  1. HE is correct- the richest men in the world were not mentioned. But he is mistaken, It is not Bezo, Musk, etc.. The richest people who have their assets in offshore accounts and who have not reported their wealth, are such as Rockefeller, who makes all legislation from THE COUNCIL OF FOREIGN RELATIONS, or Rothschild, who owns the federal bank of every nation, printing currencies at cost of paper and ink and selling at face value; and the Queen of England, who owns more than 1/5th the real estate on the planet, earning 360 million dollars a day in interest alone. There are about a dozen more. But hey, those are such brilliant journalists, many of them, and they have classified documents. I just did some research. What do I know? I am an author and ex-con. Where do you think Assange is going? What happened to Manning? Why is Snowden hiding? Because truth is treason in an evil empire of lies.

  2. I agree with Chuck Collins, but what power does he have? No more than I do, I’ll bet.

    I am ashamed to be a citizen of a country (the Netherlands) that many people mistakenly think of as tolerant and just, but which is fact right-wing and oligarchic as fuck. The Socialist Party membership card in my wallet makes no difference to this. Thanks to technology, the ultra-rich have won. Forever.

    Claudia Schiffer, Jesus Christ. Fifteen-year-old boys jerk off over your pictures, you get to pull a fast one on the rest of society… Whore.

  3. Notice the pathetic attempt to involve President Putin in this list. The “Russians” in this situation are those who have taken all they can and left Russia, living in the UK in most cases.

  4. When one Rothschild said: “Give me control of the monetary suppIy and I care not who runs the Government”, he said it all. All corruption, greed , wars, crimes, etc. arise out of the finite impression of a Monetary Supply and the trillions of lies that make up the administration of the monetary supply. We are debt slaves and will always be debt slaves until we move beyond, money and all of the cancer it causes in society. We could all work to guaranty all basic necessities of life, and it would not be a 40 hour a week job but much less. And we’d have time to do anything we’d want, all without money.

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