Pandora Papers exposes the shadow system in the service of the greed of the super-rich
Most Shocking Thing About The Pandora Papers – A Huge Trove Of Leaked Financial Documents At International Consortium of Investigative Journalists– is not the sheer volume of the revelations they contain. It is also not particularly surprising that so many current and former politicians and heads of state (over 300 public officials in 90 countries) are named there. It is not even the appearance of world political luminaries like the former British Prime Minister Tony Blair, the former Italian billionaire Prime Minister Silvio Berlusconi or the billionaire President of Chile. Sebastien Piñera, among many others: after the previous publication of the Panama Papers in 2016 and the Paradise Papers in 2017, we are used to it.
What is most shocking about the leaks is how completely legal the unreasonable hoarding of offshore wealth they reveal is. For the world’s super-rich elite, as long as there is no corruption or money laundering, overseas tax evasion and money storage is pretty much a fair game.
Story after story on the leaks, journalists try to point out variations of the claim that “there are perfectly legitimate reasons for having an offshore bank account / offshore company”. And they are right: if you are one of the class of people who can afford to move your wealth “offshore” in various ways, then there is a whole legitimate wealth management system that has been put in place to serve your clients. interests.
This offshore wealth management system exists separately from the more “plebeian” system that the rest of us rely on. Ordinary people usually leave their savings in banks and pension funds. They are forced to open their accounts to scrutiny to access rudimentary social benefits, and any interest their money may accumulate will be subject to tax. Their retirement funds are exposed to the risks associated with fluctuations in the stock market, etc. The super-rich, on the other hand, can hide their wealth securely, anonymously and tax-free in the global network of tax havens.
The American NGO the National Bureau of Economic Research estimates that almost a tenth of the world’s wealth is held in offshore accounts. The Pandora Papers add weight to this claim and expose many individual cases of unfathomable greed.
Jordan’s King Abdullah II is estimated to have a personal fortune of US $ 750 million, and the leaks expose his vast portfolio of offshore properties, worth US $ 100 million. As the King acquires luxurious seaside homes in Malibu, over a million Jordanians languish below the poverty line. Of course, the king’s lawyers were quick to assure the world that “His Majesty [His Majesty] has at no time embezzled public funds or made any use whatsoever of the proceeds of aid or assistance intended for public use ”. He is one of the many bullies with many zeros at the end of their offshore bank balances.
Kenyan President Uhuru Kenyatta, a descendant of the powerful Kenyatta political dynasty, has a family fortune of over $ 500 million. Leaks show that he and his family have started a number of offshore companies, including one registered in Panama with at least $ 30 million in stocks and bonds, as well as real estate investments in the UK and in Hong Kong. Congolese President Denis Sassou-Ngeusso, whose son stole $ 50 million from the public treasury in another scandal of offshore accounts – created a series of accounts in the British Virgin Islands to conceal his ownership of diamond mines and construction and real estate companies.
It is not only in the Global South that political leaders seek the services of the offshore wealth industry. Tony Blair and his partner managed to avoid paying US $ 400,000 in taxes by buying an office building in London through an offshore company. Former French Finance Minister and IMF President Dominique Strauss-Kahn has received millions in “advisory fees” from Russian and Chinese companies, paid directly to an account in the United Arab Emirates.
Russian President Vladimir Putin’s oligarchic associates Gennady Timchenko and Konstantin Ernst, oil and media wealth respectively, revealed hundreds of millions of dollars in loans from Kremlin-linked banks via offshore accounts, and the $ 100 million in wealth Putin’s famous mistress, Svetlana Krivonogikh, has also been exposed. These revelations are just the tip of a very large iceberg.
According to Guardian, which has access to the whole mine of information, 400 Australians are named in the Panama Papers. This includes, writes senior business journalist Ben Butler, “personalities from the finance and real estate industries.” But shamefully, the Guardian has “chosen not to identify them”. For the mainstream media, it seems, the privacy of the super-rich individuals who hide their wealth abroad matters more than in reality, for once, forcing them to justify themselves in front of the public.
Why do the governments of the world continue to allow this to happen? Surely it can’t be that hard to crack down on these much abused loopholes? To put it more clearly: how is it possible that most of the shady practices exposed in the Panama Papers are perfectly legal?
The answer is that capitalist states exist to serve capital, and when tax codes are drafted, the interests of big business and super-rich individuals will take precedence over everything else. Which politician is going to alienate his comrades and donors by forcing them to repatriate their offshore wealth (especially, as is the case with many politicians, when they have their own offshore wealth)?
There is no doubt that following these latest revelations, there will still be some superficial gestures to fight against offshore tax evasion. Nonetheless, as long as the competitive system of world capitalism exists, some things seem certain: there will always be countries that choose to offer themselves as ideal (i.e. tax-free) destinations for the wealth of the world. world elite; there will always be an army of lawyers, accountants and others desperate to skim off that wealth a bit by helping the rich move their money to these places; and, finally, capitalist governments will always prefer to cut funding for social assistance and vital services rather than actually imposing something akin to a fair tax regime on their wealthier constituents.
Changing all of that will require a lot more than a little tinkering with tax codes here and there. What the Pandora Papers show, above all, is the need to challenge the whole rotten system.