World leaders were on the defensive on Monday (4 October) after the release of millions of documents detailing how heads of state use offshore tax havens to stash assets worth hundreds of millions of dollars.
Thirty-five current and former leaders are featured in roughly 11.9 million documents leaked from financial services companies that include reports of luxury mansions on the French Riviera and in Monte Carlo and California.
The so-called “Pandora Papers” were obtained by the International Consortium of Investigative Journalists (ICIJ) and released in stories by media partners including The Washington Post, the BBC and The Guardian.
Allegations range from corruption to money laundering and tax evasion.
Holding assets offshore or using shell companies is not illegal in most countries, but the revelations are embarrassing for leaders who have pushed austerity measures or campaigned against corruption.
While Russian leader Vladimir Putin is not named, he is linked via associates to secret assets in Monaco, including a waterfront home acquired by a Russian woman reported to have had a child with him.
“This is just a set of largely unsubstantiated claims,” said Kremlin spokesman Dmitry Peskov.
“We didn’t see anything on hidden wealth within Putin’s inner circle.”
Ukraine’s President Volodymyr Zelenskiy, who has been vocal on anti-corruption issues, used a network of offshore companies to buy three upmarket properties in London, the ICIJ revealed.
His office said it had been a way of protecting himself against the “aggressive actions” of the regime of his predecessor, the pro-Russia president Viktor Yanukovich.
‘Nothing to hide’
Jordan rejected “distorted” reports that King Abdullah II created a network of offshore companies and tax havens to amass a $100 million property empire stretching from California to London.
Abdullah did not directly address the issue but denounced what he called a “campaign against Jordan”, a royal court statement quoted him as saying to a group of tribal elders. “We have nothing to hide.”
The country’s royal court said the properties were funded with the king’s personal wealth and used for official and private visits.
Ivory Coast Prime Minister Patrick Achi’s office denounced the “malicious use” of information after it emerged that he had become the owner of Bahamas-based company Allstar Consultancy Services Ltd through a trust that obscured his ownership.
His office said the information dated back to the late 1990s when he was an adviser to Ivory Coast’s energy minister.
Kenyan President Uhuru Kenyatta appeared to welcome the papers, which he said would “enhance financial transparency”. But he sidestepped allegations that his family owned 11 offshore companies worth millions of dollars.
Ecuador’s President Guillermo Lasso defended himself after revelations he had lodged funds in two trusts based in the United States.
“All my revenue has been declared and I have paid the corresponding tax in Ecuador,” he said.
Czech PM hits back
The ICIJ found links between almost 1,000 companies in offshore havens and 336 high-level politicians and public officials.
Among them were more than a dozen serving heads of state and government, country leaders, cabinet ministers, ambassadors and others.
More than two-thirds of the companies were set up in the British Virgin Islands.
Family and associates of Azerbaijani President Ilham Aliyev — long accused of corruption — are alleged to have been secretly involved in property deals in Britain worth hundreds of millions.
The documents also show how Czech Prime Minister Andrej Babiš — who faces an election later this week — failed to declare an offshore investment company used to purchase a chateau worth $22 million in the south of France.
“I have never done anything illegal or wrong,” Babiš tweeted, calling the revelations a smear attempt aimed at influencing the election.
Nearly two million of the 11.9 million leaked documents came from a Panamanian law firm called Alcogal, which has rejected accusations of shady dealings.
ICIJ’s director Gerard Ryle said in a video accompanying the investigation that those best placed to halt such practices were the ones benefiting the most.
Transparency International’s Maira Martini called for an end to the offshore industry, saying the investigation once more offered “clear evidence” of how it “promotes corruption and financial crime”.
European Union chief Ursula von der Leyen said the bloc needed to do “more work” to combat tax evasion.
Among the other revelations from the ICIJ investigation:
— In the two-year window between Milo Djukanovic’s sixth and seventh terms as prime minister of Montenegro, Swiss fiduciary firm LJ Management helped create a pair of trusts in 2012 in the British Virgin Islands. One named Djukanovic as the beneficiary; the other named his son, Blazo Djukanovic. Djukanovic told the media that he established the trust when he was not in public office and was engaged in his own business affairs. Montenegrin authorities have called on the State Prosecution to investigate the findings. Prime Minister Zdravko Krivokapic urged the prosecution to investigate the Pandora Papers leak, while Deputy Prime Minister Dritan Abazovic called on him to quit as president if he cared about the reputation of the state.
— A law firm in Cyprus, Nicos Chr. Anastasiades and Partners, appears as a key offshore go-between for wealthy Russians. The firm retains the name of its founder, Cyprus President Nicos Anastasiades, and the president’s two daughters are partners there. Anastasiades said he no longer owns shares in the firm, has no knowledge of its activities after 2013, and is not in a position to answer to the allegations.
— The former head of the International Monetary Fund Dominique Strauss-Kahn transferred millions in consulting fees through a tax-exempt Moroccan company. In response, he tweeted that he had paid tax at 23.8% over the last three years amounting to €812,000.
— Former UK Prime Minister Tony Blair and his wife, Cherie, became the owners of a $8.8 million Victorian building by acquiring the British Virgin Islands company that held the property. The London building now hosts Cherie Blair’s law firm. A spokesperson for the couple insisted the Blairs had “nothing to do with” the decision to use an offshore company, which was the choice of the seller.
— Congo President Denis Sassou Nguesso and Gabon’s Ali Bongo were linked with companies in the British Virgin Islands in a report by Le Monde, one of the media partners in the investigation.
The “Pandora Papers” are the latest in a series of mass leaks handled by the ICIJ, from LuxLeaks in 2014, to the 2016 Panama Papers.
They were followed by the Paradise Papers in 2017 and FinCen files in 2020.
(Edited by Georgi Gotev)