Pandora Papers Exposed Offshore Havens And Hidden Riches Of World Leaders And Billionaires Exposed In Unprecedented Leak (#GotBitcoin)

The Pandora Papers reveal the inner workings of a shadow economy that benefits the wealthy and well-connected at the expense of everyone else. Pandora Papers Exposed Offshore Havens And Hidden Riches Of World Leaders And Billionaires Exposed In Unprecedented Leak (#GotBitcoin)

Millions of leaked documents and the biggest journalism partnership in history have uncovered financial secrets of 35 current and former world leaders, more than 330 politicians and public officials in 91 countries and territories, and a global lineup of fugitives, con artists and murderers.

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. 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 leaked records reveal that many of the power players who could help bring an end to the offshore system instead benefit from it – stashing assets in covert companies and trusts while their governments do little to slow a global stream of illicit money that enriches criminals and impoverishes nations.

Among The Hidden Treasures Revealed In The Documents:

A $22 million chateau in the French Riviera – replete with a cinema and two swimming pools – purchased through offshore companies by the Czech Republic’s populist prime minister, a billionaire who has railed against the corruption of economic and political elites.

More than $13 million tucked in a secrecy-shaded trust in the Great Plains of the United States by a scion of one of Guatemala’s most powerful families, a dynasty that controls a soap and lipsticks conglomerate that’s been accused of harming workers and the earth.

Three beachfront mansions in Malibu purchased through three offshore companies for $68 million by the King of Jordan in the years after Jordanians filled the streets during Arab Spring to protest joblessness and corruption.

The Secret Records Are Known As The Pandora Papers.

The International Consortium of Investigative Journalists obtained the trove of more than 11.9 million confidential files and led a team of more than 600 journalists from 150 news outlets that spent two years sifting through them, tracking down hard-to-find sources and digging into court records and other public documents from dozens of countries.

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The leaked records come from 14 offshore services firms from around the world that set up shell companies and other offshore nooks for clients often seeking to keep their financial activities in the shadows. The records include information about the dealings of nearly three times as many current and former country leaders as any previous leak of documents from offshore havens.

In an era of widening authoritarianism and inequality, the Pandora Papers investigation provides an unequaled perspective on how money and power operate in the 21st century – and how the rule of law has been bent and broken around the world by a system of financial secrecy enabled by the U.S. and other wealthy nations.

The findings by ICIJ and its media partners spotlight how deeply secretive finance has infiltrated global politics – and offer insights into why governments and global organizations have made little headway in ending offshore financial abuses.

An ICIJ analysis of the secret documents identified 956 companies in offshore havens tied to 336 high-level politicians and public officials, including country leaders, cabinet ministers, ambassadors and others. More than two-thirds of those companies were set up in the British Virgin Islands, a jurisdiction long known as a key cog in the offshore system.

At least $11.3 trillion is held “offshore,” according to a 2020 study by the Paris-based Organization for Economic Cooperation and Development. Because of the complexity and secrecy of the offshore system, it’s not possible to know how much of that wealth is tied to tax evasion and other crimes and how much of it involves funds that come from legitimate sources and have been reported to proper authorities.

Every Corner Of The World

The Pandora Papers investigation unmasks the covert owners of offshore companies, incognito bank accounts, private jets, yachts, mansions, even artworks by Picasso, Banksy and other masters – providing more information than what’s usually available to law enforcement agencies and cash-strapped governments.

People linked by the secret documents to offshore assets include India’s cricket superstar Sachin Tendulkar, pop music diva Shakira, supermodel Claudia Schiffer and an Italian mobster known as “Lell the Fat One.”

Offshore Havens And Hidden Riches Of World Leaders And Billionaires Exposed In Unprecedented Leak (#GotBitcoin)

The mobster, Raffaele Amato, has been tied to at least a dozen killings. The documents provide details about a shell company, registered in the United Kingdom, that Amato used to buy land in Spain, shortly before fleeing there from Italy to set up his own crime gang. Amato, whose history helped inspire the highly praised movie “Gomorrah,” is serving a 20-year prison sentence.

Amato’s attorney did not respond to ICIJ’s request for comment.

Tendulkar’s attorney said the cricket player’s investment is legitimate and has been declared to tax authorities. Shakira’s attorney said the singer declared her companies, which the attorney said do not provide tax advantages. Schiffer’s representatives said the supermodel correctly pays her taxes in the U.K., where she lives.

In most countries, it’s not illegal to have assets offshore or to use shell companies to do business across national borders. Businesspeople who operate internationally say they need offshore companies to conduct their financial affairs.

But these affairs often amount to shifting profits from high-tax countries, where they are earned, to companies that exist only on paper in low-tax jurisdictions. Using offshore shelters is especially controversial for political figures, because they can be used to keep politically unpopular or even illicit activities from public view.

In popular imagination, the offshore system is often seen as a far-flung cluster of palm-shaded islands. The Pandora Papers show that the offshore money machine operates in every corner of the planet, including the world’s largest democracies. The key players in the system include elite institutions – multinational banks, law firms and accounting practices – headquartered in the U.S. and Europe.

A document in the Pandora Papers shows that banks around the world helped their customers set up at least 3,926 offshore companies with the assistance of Alemán, Cordero, Galindo & Lee, a Panamanian law firm led by a former ambassador to the U.S. The document shows that the firm – also known as Alcogal – set up at least 312 companies in the British Virgin Islands for clients of the American financial services giant Morgan Stanley.

A Morgan Stanley spokesperson said: “We do not create offshore companies. . . . This process is independent of the firm and at the discretion and direction of the client.”

The Pandora Papers investigation also highlights how Baker McKenzie, the largest law firm in the U.S., helped create the modern offshore system and continues to be a mainstay of this shadow economy.

Baker McKenzie and its global affiliates have used their lobbying and legislation-drafting know-how to shape financial laws around the world. They have also profited from work done for people tied to fraud and corruption, reporting by ICIJ has found.

The people that the firm has done work for includes Ukrainian oligarch Ihor Kolomoisky, who U.S. authorities allege laundered $5.5 billion through a tangle of shell companies, purchasing factories and commercial properties across the U.S. heartland.

Baker McKenzie also did work for Jho Low, a now-fugitive financier accused by authorities in multiple countries of masterminding the embezzlement of more than $4.5 billion from a Malaysian economic development fund known as 1MDB.

ICIJ’s reporting found that Low relied on Baker McKenzie and its affiliates to help him and his associates build a web of companies in Malaysia and Hong Kong. U.S. authorities allege they used some of those companies to shift money looted from 1MDB.

A spokesperson for Baker McKenzie said the firm seeks to provide the best advice to its clients and strives “to ensure that our clients adhere to both the law and best practice.”

The spokesperson didn’t directly address many questions about Baker McKenzie’s role in the offshore economy, citing client confidentiality and legal privilege. But he said the firm performs strict background checks on all potential clients.

‘You Know Who’

The Pandora Papers investigation is larger and more global than even ICIJ’s landmark Panama Papers investigation, which rocked the world in 2016, spawning police raids and new laws in dozens of countries and the fall of prime ministers in Iceland and Pakistan.

The Panama Papers came from the files of a single offshore services provider: the Panamanian law firm Mossack Fonseca. The Pandora Papers shine a light on a far wider cross-section of the lawyers and middlemen who are at the heart of the offshore industry.

The Pandora Papers provide more than twice as much information about the ownership of offshore companies. In all, the new leak of documents reveals the real owners of more than 29,000 offshore companies. The owners come from more than 200 countries and territories, with the largest contingents from Russia, the U.K., Argentina and China.

The 150 news outlets that joined the investigative partnership include The Washington Post, the BBC, The Guardian, Radio France, Oštro Croatia, the Indian Express, Zimbabwe’s The Standard, Morocco’s Le Desk and Ecuador’s Diario El Universo.

A global team was needed because the 14 offshore providers that are the sources of the leaked documents are headquartered around the globe, from the Caribbean to the Persian Gulf to the South China Sea.

Three of the providers are owned by former senior government officials: a former government minister and presidential adviser in Panama and a former attorney general of Belize, who controls two providers.

For a few hundred or a few thousand dollars, offshore providers can help clients set up a company whose real owners remain hidden. Or, for perhaps $2,000 to $25,000, they can set up a trust that, in some instances, allows its beneficiaries to control their money while embracing the legal fiction that they don’t control it – a bit of paper-shuffling creativity that helps shield assets from creditors, law enforcement and ex-spouses.

Offshore operatives don’t work in isolation. They partner with other secrecy providers around the globe to create interlocking layers of companies and trusts. The more complex the arrangements, the higher the fees – and the more secrecy and protection clients can expect.

The Pandora Papers show that an English accountant in Switzerland worked with lawyers in the British Virgin Islands to help Jordan’s monarch, King Abdullah II, secretly purchase 14 luxury homes, worth more than $106 million, in the U.S. and the U.K. The advisers helped him set up at least 36 shell companies from 1995 to 2017.

In 2017, the king bought a $23 million property overlooking a California surfing beach through a company in the BVI. The king paid extra to have another BVI company, owned by his Swiss wealth managers, act as the “nominee” director for the BVI company that bought the property.

In the offshore world, nominee directors are people or companies paid to front for whoever is really behind a company. Application forms sent to clients by Alcogal, the law firm working on the king’s behalf, say that the use of nominee directors helps “preserve privacy by avoiding the identity of the ultimate principal . . . being publicly accessible.”

In emails, offshore advisers used a code name for the king: “You know who.”

U.K. attorneys for the king said that he is not required to pay taxes under Jordanian law and that he has security and privacy reasons to hold property through offshore companies. They said the king has never misused public funds.

The attorneys also said that most of the companies and properties identified by ICIJ have no connection to the king or no longer exist, but declined to provide details.

Experts say that, as ruler of one of the Middle East’s poorest and most aid-dependent countries, the king has reasons to avoid flaunting his wealth.

“If the Jordanian monarch were to display his wealth more publicly, it wouldn’t only antagonize his people, it would piss off Western donors who have given him money,” Annelle Sheline, an expert on political authority in the Middle East, told ICIJ.

In neighboring Lebanon, where similar questions about wealth and poverty have been playing out, the Pandora Papers show top political and financial figures have also embraced offshore havens.

They include the current prime minister, Najib Mikati, and his predecessor, Hassan Diab, as well as Riad Salameh, the governor of Lebanon’s central bank, who is under investigation in France for alleged money laundering.

Marwan Kheireddine, Lebanon’s former minister of state and the chairman of Al Mawarid Bank, also appears in the secret files. In 2019, he scolded former parliamentary colleagues for inaction amid a dire economic crisis. Half the population was living in poverty, struggling to find food as grocers and bakeries closed.

“There is tax evasion and the government needs to address that,” Kheireddine said.

That same year, the Pandora Papers reveal, Kheireddine signed documents as owner of a BVI company that owns a $2 million yacht.

Al Mawarid Bank was one of many in the country that restricted customers’ U.S. dollar withdrawals to stem economic panic.

Wafaa Abou Hamdan, a 57-year-old widow, is among the regular Lebanese who remain angry at their country’s elites. Because of runaway inflation, her life savings plummeted from the equivalent of $60,000 to less than $5,000, she told Daraj, an ICIJ media partner.

“All my life’s efforts went in vain. I have been working continuously for the past three decades,” she said. “We are still struggling on a daily basis to maintain our living” while “the politicians and the bankers” have “all transferred and invested their money abroad.”

Kheireddine and Diab did not respond to requests for comment. In a written response, Salameh said he declares his assets and has complied with reporting obligations under Lebanese law. Mikati’s son, Maher, said it is common for people in Lebanon to use offshore companies “due to the easy process of incorporation” rather than a desire to evade taxes.

‘Coalition of The Corrupt’

Imran Khan was elated when ICIJ’s Panama Papers investigation came out in April 2016.

“The leaks are God-sent,” the Pakistani politician and former cricket superstar said.

The Panama Papers revealed that the children of Pakistan’s prime minister at the time, Nawaz Sharif, had ties to offshore companies. This gave Khan an opening to hammer Sharif, his political rival, on what Khan described as the “coalition of the corrupt” ravaging Pakistan.

“It is disgusting the way money is plundered in the developing world from people who are already deprived of basic amenities: health, education, justice and employment,” Khan told ICIJ’s partner, The Guardian, in 2016. “This money is put into offshore accounts, or even western countries, western banks. The poor get poorer. Poor countries get poorer, and rich countries get richer. Offshore accounts protect these crooks.”

Ultimately, Pakistan’s top court removed Sharif from office as a result of an inquiry sparked by the Panama Papers. Khan swept in to replace him in the next national election.

ICIJ’s latest investigation, the Pandora Papers, brings renewed attention to the use of offshore companies by Pakistani political players. This time, the offshore holdings of people close to Khan are being disclosed, including his finance minister and a top financial backer.

The documents also show that Khan’s water resources minister, Chaudhry Moonis Elahi, contacted Asiaciti, an Singapore-based offshore services provider, in 2016 about setting up a trust to invest the profits from a family land deal that had been financed by what the lender later claimed was an illegal loan. The bank told Pakistani authorities that the loan had been approved due to the influence of Elahi’s father, a former deputy prime minister.

Asiaciti records say that Elahi backed off from putting money into a trust in Singapore after the provider told him it would report the details to Pakistani tax authorities.

Elahi did not respond to ICIJ’s requests for comment. Hours before the release of Pandora Papers stories, a family spokesman told ICIJ media partners that “misleading interpretations and data have been circulated in files for nefarious reasons.” The spokesman added that the family’s assets “are declared as per applicable law.”

Also today, a spokesperson for Khan told a press conference that if any of his ministers or advisors had offshore companies, “they will have to be held accountable.”

Other political figures have also spoken out against the offshore system while surrounded by appointees and other supporters who have assets stowed offshore. Some who have spoken out have used the system themselves.

“Every public servant’s assets must be declared publicly so that people can question and ask – what is legitimate?” Kenyan President Uhuru Kenyatta told the BBC in 2018. “If you can’t explain yourself, including myself, then I have a case to answer.”

The leaked records listed Kenyatta and his mother as beneficiaries of a secretive foundation in Panama. Other family members, including his brother and two sisters, own five offshore companies with assets worth more than $30 million, the records show.

Kenyatta and his family did not reply to requests for comment.

Czech Prime Minister Andrej Babis, one of his country’s richest men, rose to power promising to crack down on tax evasion and corruption. In 2011, as he became more involved in politics, Babis told voters that he wanted to create a country “where entrepreneurs will do business and will be happy to pay taxes.”

The leaked records show that, in 2009, Babis injected $22 million into a string of shell companies to buy a sprawling property, known as Chateau Bigaud, in a hilltop village in Mougins, France, near Cannes.

Babis has not disclosed the shell companies and the chateau in the asset declarations he’s required to file as a public official, according to documents obtained by ICIJ’s Czech partner, Investigace.cz. In 2018, a real estate conglomerate indirectly owned by Babis quietly bought the Monaco company that owned the chateau.

Babis didn’t respond to requests for comment.

A spokesman for the conglomerate told ICIJ that it complies with the law. He didn’t respond to questions about the acquisition of the chateau.

“Like any other business entity, we have the right to protect our trade secrets,” the spokesman wrote.

‘A Haven of Scams’

The secret files provide a layer of behind-the-curtain context to public pronouncements this year about wealth and offshore refuges — as governments around the world struggle with revenue crunches, a pandemic, climate change and public distrust.

In February, a commentary from the Tony Blair Institute for Global Change urged policymakers to seek, among other measures, higher taxes on land and homes. Blair, the institute’s founder and executive chairman, talked about how the rich and well-connected shirk paying their share of taxes as far back as 1994, when he campaigned to become the leader of the U.K.’s Labour Party.

“For those who can employ the right accountants, the tax system is a haven of scams, perks … and profits,” he said during a speech in England’s West Midlands. “We should not make our tax rules a playground for …. tax abusers who pay little or nothing while others pay more than their share.”

The Pandora Papers show that, in 2017, 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.

The records indicate that Cherie Blair and her husband, who served as a diplomat in the Middle East after stepping down as prime minister in 2007, bought the offshore company that owned the building from the family of Bahrain’s industry and tourism minister, Zayed bin Rashid al-Zayani.

By purchasing the company shares instead of the building, the Blairs benefited from a legal arrangement that saved them from having to pay more than $400,000 in property taxes.

The Blairs and the al-Zayanis said they didn’t initially know about each other’s involvement in the deal.

Cherie Blair said that her husband was not involved in the transaction and that its purpose was “bringing the company and the building back into the U.K. tax and regulatory regime.”

She also said that she “did not want to be the owner of a BVI company” and that the “seller for their own purposes only wanted to sell the company.” The company is now closed.

Through their lawyer, the al-Zayanis said their companies “have complied with all U.K. laws past and present.”

“These are loopholes that are available to wealthy people but not available to others,” Robert Palmer, executive director of Tax Justice UK, told The Guardian. “Politicians need to fix the tax system so that everyone pays their fair share.”

In June, Brazil’s economics minister, Paulo Guedes, proposed a tax reform package that included a 30% tax on profits earned through offshore entities. Experts estimate that Brazil’s richest people hold almost $200 billion in untaxed funds outside the country.

“You cannot be ashamed of being rich,” Guedes said. “You have to be ashamed of not paying taxes.”

After bankers and business leaders objected to tax hikes in the legislation, Guedes, a millionaire former banker, agreed to remove the proposed tax on offshore profits. Negotiations over the legislation are continuing.

The Pandora Papers reveal that Guedes created Dreadnoughts International Group in 2014 in the British Virgin Islands.

In response to questions from an ICIJ partner in Brazil, Revista Piauí, a spokesperson for Guedes said the minister has disclosed the company to Brazilian authorities. The spokesperson did not answer a question about the removal of the offshore tax from the legislation.

‘Pandora’s Box’

In December 2018, the Bahamas enacted legislation requiring companies and certain trusts to declare their real owners to a government registry. The island nation was under pressure from larger countries, including the U.S., to do more to block tax dodgers and criminals from the financial system.

Some Bahamian politicians opposed the move. They complained the register would discourage Latin American clients from doing business in the Caribbean. “The winners of these new double standards are the U.S. states of Delaware, Alaska and South Dakota,” one local attorney said.

Months later, a confidential document indicated that the family of the Dominican Republic’s former Vice President Carlos Morales Troncoso had abandoned the Bahamas as a go-to sanctuary for their wealth.

For their new refuge, they chose a place 1,600 miles away: Sioux Falls, South Dakota.

The family set up South Dakota trusts, leaked records show, to lay away various assets, including shares they’d held in a Dominican sugar company. The family did not respond to questions about the assets moved from the Bahamas to South Dakota.

The Pandora Papers provide details about tens of millions of dollars moved from offshore havens in the Caribbean and Europe into South Dakota, a sparsely populated American state that has become a major destination for foreign assets.

Over the past decade, South Dakota, Nevada and more than a dozen other U.S. states have transformed themselves into leaders in the business of peddling financial secrecy. Meanwhile, most of the policy and law enforcement efforts of the world’s most powerful nations have stayed focused on “traditional” offshore havens such as the Bahamas, the Caymans and other island paradises.

The U.S. is one of the biggest players in the offshore world. It is also the country best situated to bring an end to offshore financial abuses, thanks to the outsize role it plays in the international banking system. Because of the U.S. dollar’s status as the de facto global currency, most international transactions flow in and out of New York-based banking operations.

U.S. authorities have taken action over the past two decades to force banks in Switzerland and other countries to turn over information about Americans with overseas accounts.

But the U.S. is more interested in forcing other countries to share information about Americans banking offshore than in sharing information about money moving through U.S. bank accounts, companies and trusts.

The U.S. has refused to join a 2014 agreement supported by more than 100 jurisdictions, including the Cayman Islands and Luxembourg, that would require American financial institutions to share information they have about foreigners’ assets.

Year after year in South Dakota, state lawmakers have approved legislation drafted by trust industry insiders, providing more and more protections and other benefits for trust customers in the U.S. and abroad. Customer assets in South Dakota trusts have more than quadrupled over the past decade to $360 billion.

“As a citizen, I’m so sad that my state was the state that opened Pandora’s box,” Susan Wismer, a former lawmaker, told ICIJ.

By 2020, 17 of the world’s 20 least-restrictive jurisdictions for trusts were American states, according to a study by Israeli academic Adam Hofri-Winogradow. In many cases, he said, U.S. laws have made it more difficult for creditors to put their hands on what they are owed, including child support payments from absent parents.

Using documents from the Pandora Papers, ICIJ and The Washington Post identified nearly 30 U.S.-based trusts linked to foreigners personally accused of misconduct or whose companies were accused of wrongdoing.

Among them is Federico Kong Vielman, whose family is one of Guatemala’s economic powerhouses.

In 2016, Kong Vielman moved $13.5 million into a trust in Sioux Falls. Some of the money came from his family’s company, which makes floor waxes and other products.

Guatemalan media reported for decades on the family’s ties to politics. In the 1970s, the family was identified as a key ally of Gen. Carlos Manuel Arana Osorio, the former Guatemalan dictator known as the “Jackal of Zacapa.” In 2016, the family’s luxury hotel in Guatemala City made a gift of 100 free nights to then-President Jimmy Morales. Guatemalan media outlets reported that a possible payment for “political favors” was suspected.

In 2014, U.S. labor officials filed a complaint against Guatemala’s government that included allegations that the family’s palm oil company underpaid workers and exposed them to toxic chemicals. Company records show Kong Vielman was previously the company’s treasurer.

Offshore Havens And Hidden Riches Of World Leaders And Billionaires Exposed In Unprecedented Leak (#GotBitcoin)

A year later, U.S. environmental authorities, providing technical assistance to Guatemala, found that the company released pollutants into the Pasion River. The family company, Nacional Agro Industrial SA, known as Naisa, was not charged.

Naisa told ICIJ that it followed the law and did not pollute the river. The labor complaint was resolved by an arbitration panel, the company said.

Kong Vielman declined to respond to questions about the South Dakota trust.

Another wealthy Latin American who set up trusts in South Dakota is Guillermo Lasso, a banker who was elected as Ecuador’s president in April. Leaked records show that Lasso moved assets into two trusts in South Dakota in December 2017, three months after Ecuador’s parliament passed a law prohibiting public officials from holding assets in tax havens.

The records show that Lasso moved two offshore companies to the South Dakota trusts from two secretive foundations in Panama.

Lasso said that his past use of offshore entities was “legal and legitimate.” Lasso said he complies with Ecuadorian law.

Trusts set up in South Dakota and many other U.S. states remain cloaked in secrecy, despite enactment this year of the federal Corporate Transparency Act, which makes it harder for owners of certain types of companies to hide their identities.

The law is not expected to apply to trusts popular with non-U.S. citizens. Another glaring exemption, financial crime experts say, is that many lawyers who set up trusts and shell companies have no obligations to examine the sources of their clients’ wealth.

“Clearly the U.S. is a big, big loophole in the world,” said Yehuda Shaffer, former head of the Israeli financial intelligence unit.

“The U.S. is criticizing all the rest of the world, but in their own backyard, this is a very, very serious issue.”

‘Extraordinary Expenses’

Billionaire Erman Ilicak’s construction empire had a big year in 2014.

The Turkish mogul’s company, Rönesans Holding, finished building a 1,150-room presidential palace for his country’s pugnacious leader, Recep Tayyip Erdoğan, amid media rumblings about cost overruns and corruption and a court order attempting to stop the project.

Another notable event involving the Ilicak family took place in 2014, this time out of the public glare. The corporate titan’s 74-year-old mother, Ayse Ilicak, became the owner of two offshore companies in the British Virgin Islands, according to the Pandora Papers.

Both companies were fronted by nominee directors and nominee shareholders. One of the companies, Covar Trading Ltd., held assets from the family’s construction conglomerate, the records say. During its first full year in operation, Covar Trading earned $105.5 million in income from dividends, according to confidential financial statements. The money was stashed in a Swiss account.

It didn’t stay long.

That same year, the statements show, the company paid almost the entire $105.5 million as a “donation” listed under “extraordinary expenses.” The statements do not describe who or what received the money.

Illiack did not reply to questions for this story.

Ilicak and the other billionaires in the Pandora Papers come from 45 countries, with the largest number from Russia (52), Brazil (15), the U.K. (13) and Israel (10).

The American billionaires mentioned in the secret documents include two tech moguls, Robert F. Smith and Robert T. Brockman, whose trusts have been the targets of investigations by U.S. authorities. Both were clients of CILTrust, an offshore provider in Belize operated by Glenn Godfrey, a former attorney general of Belize.

Smith agreed last year to pay U.S. authorities $139 million to settle a tax probe and is cooperating with prosecutors. A U.S. grand jury indicted Brockman, Smith’s mentor and financial backer, in what prosecutors called the biggest tax fraud in U.S. history.

Smith declined to comment. Brockman has pleaded not guilty.

Neither CILTrust nor Godfrey have been accused of wrongdoing. Godfrey did not respond to requests for comment.

A law firm in Cyprus, Nicos Chr. Anastasiades and Partners, appears in the Pandora Papers 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.

The records show that, in 2015, a compliance manager at the Panama law firm Alcogal found that the Cypriot law firm helped a Russian billionaire and former senator, Leonid Lebedev, conceal ownership of four companies by listing law firm employees as owners of Lebedev’s entities.

Lebedev – an oil tycoon and movie producer with Hollywood connections – fled Russia in 2016 after authorities accused him of embezzling $220 million from an energy company. Lebedev did not respond to requests for comment. The status of the Russian case is unclear.

The Cypriot law firm also prepared reference letters for Russian steel magnate Alexander Abramov, including one drafted days after the U.S. added the billionaire’s name to the list of sanctioned oligarchs close to President Putin. Abramov didn’t respond to requests for comment.

Theophanis Philippou, the law firm’s managing director, told the BBC, an ICIJ partner, that it has never misled authorities or concealed the identity of a company owner. He declined to comment on clients, citing attorney-client confidentiality.

Another Russian in the Pandora Papers who has ties to Putin is Konstantin Ernst, a television executive and Oscar-nominated producer. He has been called Putin’s top image-maker, a creative talent who sold the nation on the idea that the president is “Russia’s strong-willed savior.”

The Pandora Papers reveal that Ernst was given a chance to participate in a lucrative opportunity soon after producing the opening and closing ceremonies of the 2014 Winter Olympics at Sochi, creating a spectacle that boosted Putin’s reputation inside and outside the country.

Ernst became a silent partner, hidden behind layers of offshore companies, in a state-funded privatization contract – a deal to buy dozens of movie theaters and other property from the city of Moscow.

The leaked records show that, by 2019, the value of Ernst’s personal stake in the property holdings topped $140 million.

Ernst told ICIJ that he has “never made a secret” of his involvement in the privatization deal, and that the deal was not compensation for his work during the 2014 Olympics.

“I haven’t committed any illegal actions,” he said. “Nor am I committing any now or about to. This is how my parents raised me.”

‘Our Way of Life’

As a human rights and anti-poverty activist, Mae Buenaventura joined the fight to secure the return of billions of dollars the late Philippine dictator Ferdinand Marcos, his family and cronies concealed in Swiss accounts and other hard-to-trace locations.

Many in her home country, Buenaventura said, “know that the wealthy have ways and means to accumulate riches and also hide them in a way that ordinary people cannot get their hands on.”

The Marcos scandal also educated the world, encouraging stepped-up efforts to discover illicit money and punish the people who hide it.

Over the last 20 years, political leaders have vowed to “eradicate” tax havens. They’ve called shell companies and money laundering “threats to our security, our democracy and our way of life.” They’ve passed new laws and inked international agreements.

But the offshore system is nothing if not adaptable, and cross-border financial crime and tax dodging continue to thrive.

When an offshore provider or jurisdiction is exposed by a leak or comes under pressure from authorities, others use its misfortune as a marketing opportunity, snapping up clients fleeing for safer havens.

An ICIJ analysis identified hundreds of offshore companies that ended relationships with the scandal-tarred law firm Mossack Fonseca after the release of the Panama Papers investigation. Other providers took over as the companies’ offshore agents.

One of those companies was controlled by an offshore trust whose beneficiaries included the wife of Jacob Rees-Mogg, a member of the British Conservative Party and current leader of the House of Commons.

The Pandora Papers indicate that a holding company and a trust benefiting his spouse, Helena de Chair, owned “pictures and paintings” worth $3.5 million.

Another company that moved away from Mossack Fonseca was a BVI entity controlled by the widow and two sons of Indian underworld figure Iqbal Memon. Memon has been identified in news reports as a major drug dealer with links to terrorists. His widow and sons are accused of laundering drug money and have been wanted since 2019 by authorities in New Delhi.

In the Philippines, money being moved around in the shadows continues to be a problem, despite the attention given to Marcos’ offshore loot. In recent years, the U.S. has labeled the Philippines as a “major money laundering jurisdiction.”

Philippine political figures in the Pandora Papers include Juan Andres Donato Bautista. He served from 2010 to 2015 as the chairman of the Presidential Commission on Good Government – the panel established to track down Marcos’ billions.

A month after he was appointed to lead the commission, Bautista created a shell company in the British Virgin Island that held a bank account in Singapore, secret records show.

Bautista was later tapped to head the country’s election agency, but lawmakers impeached him in 2017 after his wife claimed he’d hoarded millions of dollars in undeclared domestic and foreign accounts.

In a phone call and emails to ICIJ, Bautista said he created his BVI company on the advice of bankers. The bank account was opened before he joined the government, he said, adding that it never received significant deposits and that he disclosed his interests to authorities. He denied wrongdoing and said there are no formal charges against him.

Despite failures by the Philippines and other nations to curb the flow of covert money, Buenaventura and other reform advocates say there are reasons for hope.

Street protesters helped topple top leaders in Iceland and Pakistan after the Panama Papers. The Philippines has joined dozens of countries that now require companies to disclose their real owners. Philippine authorities have recovered roughly $4 billion stolen by Marcos and his circle, using it to buy land for landless farmers and to compensate families of people targeted for murder or “enforced disappearance” by the Marcos regime.

Many obstacles remain. Big banks, law firms and other powerful groups often oppose stronger transparency rules and tougher enforcement against offshore abuses. And in the Philippines and many other countries, anti-corruption activists endure legal threats, arrests and violence.

Last month police fired water cannons at protesters who marked the 49th anniversary of Marcos’ declaration of martial law by drawing attention to similarities with current President Rodrigo Duterte’s rule.

Buenaventura said she and other grass-roots activists will keep working to expose wealth that’s “deeply hidden.”

Here Are The Biggest Revelations From The Pandora Papers Leak

An unprecedented leak of financial records known as the Pandora Papers has revealed the offshore financial assets of dozens of current and former world leaders and hundreds of politicians from Asia and the Middle East to Latin America.

The International Consortium of Investigative Journalists obtained 11.9 million confidential documents from 14 separate legal and financial services firms, which the group said offered “a sweeping look at an industry that helps the world’s ultrawealthy, powerful government officials and other elites conceal trillions of dollars from tax authorities, prosecutors and others.”

Moving money through offshore accounts, in mostly low-tax jurisdictions, is legal in most countries, and many of the people named in the data release aren’t accused of criminal wrongdoing.

But the journalist group said the 2.94 terabytes of financial and legal data — which makes this leak larger than the 2016 Panama papers release — shows the “offshore money machine operates in every corner of the planet, including the world’s largest democracies,” and involves some of the world’s most well-known banks and legal firms.

Here Are Some Of The Biggest Revelations In The Release:

Jordan King’s Real Estate Empire

Jordan’s monarch, King Abdullah II, used an English accountant in Switzerland and lawyers in the British Virgin Islands to secretly purchase 14 luxury homes worth $106 million, including a $23 million property in California overlooking a beach, the ICIJ reported, noting the country relies on foreign aid to support its people and house millions of refugees.

U.K. attorneys for the king told the ICIJ that he was not required to pay taxes under Jordanian law, has never misused public funds and has “security and privacy reasons to hold property through offshore companies.”
French Riviera estate

Czech Prime Minister Andrej Babis, who is currently running for re-election, “moved $22 million through offshore companies to buy a lavish estate on the French Riviera in 2009 while keeping his ownership secret,” ICIJ said.

The five-bedroom Chateau Bigaud, which is owned by a subsidiary of one of Babis’s Czech companies, sits on 9.4 acres (3.8 hectares) in a hilltop village where Pablo Picasso spent the last years of his life, the group said.
The Queen and Azerbaijan

The data release revealed that Azerbaijan’s ruling Aliyev family traded around $540 million worth of U.K. property in recent years, reported the Guardian, one of the ICIJ’s media partners. Queen Elizabeth II’s Crown Estate bought one property worth almost $91 million from the family, and is currently in the middle of an internal review into the purchase, the Guardian said.

“Given the potential concerns raised, we are looking into the matter,” a spokesperson for the Crown Estate told the paper, which added the Aliyevs declined to comment.

South Dakota, Nevada havens

One of the most “troubling revelations” for the U.S. was the role of South Dakota, Nevada and other states that have adopted financial secrecy laws that “rival those of offshore jurisdictions” and demonstrate America’s “expanding complicity in the offshore economy,” said the Washington Post, one of the ICIJ’s media partners.

A former vice president of the Dominican Republic finalized several trusts in South Dakota to store his personal wealth and shares of one of the country’s largest sugar producers, the paper said.
Pakistan’s political elite

Several members of Pakistani Prime Minister Imran Khan’s inner circle, including current and former cabinet ministers, “secretly owned an array of companies and trusts holding millions of dollars of hidden wealth,” the group reported. That could create a political headache for the former cricket star, who campaigned for the South Asian country’s highest office as the head of a reformist party that promised a strong anti-corruption agenda.

Before the release of the Pandora papers, a Khan spokesperson told a news conference Khan had no offshore company, but ministers and advisers “will have to be held accountable” for their individual acts.
Tony Blair property purchase

The documents show former U.K. Prime Minister Tony Blair and his wife saved around $422,000 by using an offshore company to purchase an almost $9 million office in London’s Marylebone area that was partially owned by the family of a Bahraini minister, the Guardian reported. The paper said there was nothing illegal about the deal, but it “highlights a loophole that has enabled wealthy property owners not to pay a tax that is commonplace for ordinary Britons.”

Updated: 10-4-2021

Pandora Papers Show The Rich Will Always Find A Way

Those tasked with law reform are often the ones with most to lose if the free flow of capital is stemmed. That’s why efforts to wind back the system have gone nowhere.

If you want to know why nearly 40 million leaked documents on the salting away of assets in offshore financial centers have failed to result in comprehensive change since the revelations started eight years ago, Billie Holiday provides a clue: “Them that’s got shall get; them that’s not shall lose. So the Bible said, and it still is news.”

The latest set of leaks to the International Consortium of Investigative Journalists is the largest yet. After sifting the data, media organizations have named King Abdullah II of Jordan, associates of Russian President Vladimir Putin, Czech Prime Minister Andrej Babis, and Kenya’s President Uhuru Kenyatta in connection with assets stashed offshore.

For all the remarkable revelations about the shadow global financial system for wealthy individuals and businesses since the ICIJ’s first revelations in 2013, though, it’s striking how little has changed.

Measures to wind back this system seem ineffectual at best. Eight years have passed since governments promised coordinated action to crack down on the use of offshore structures to minimize corporate taxes and starve states of revenue, but if anything the movement has been in the opposite direction.

So much money now moves through the world’s offshore financial centers that such paper transactions now account for a greater flow of capital than any country receives from genuine foreign investments. The royalties and licensing fees that underpin thesestructures are growing faster than trade in physical goods and conventional services.

Far from taking a larger share, most developed nations have coped with the leakage of taxable profits over the past decade by cutting their own corporate tax rates — a tacit admission that enforcement has failed. Mandatory disclosure rules introduced in 2014 to prevent European banks’ use of tax havens seem to have made no real difference, according to a report last month by the EU Tax Observatory.

Why Have All These Worthy Efforts Achieved So Little?

One explanation suggested by the list of powerful figures named in the latest leaks, dubbed the Pandora Papers, is simply that the people in charge of writing the laws and treaties that underpin international capital flows have much to gain from the current set-up.

For as long as an unreasonable amount of wealth and power is concentrated in the hands of a few individuals and businesses, they’ll seek ways to move assets to whichever places promise to treat them most leniently. Consultants will aim to profit from assisting this trade and, in the process, become experts at finding loopholes, further accelerating the concentration of wealth and the erosion of tax bases.

In the U.S. there’s a revolving door between senior roles in major legal and accounting firms and government jobs, as the New York Times reported last month, with a similar situation around secondments in the U.K. As a result, firms with an interest in minimizing their clients’ tax bills often have a role in developing the policies that will decide how much the same clients will have to pay.

There’s a deeper issue, however. Those tax laws and treaties are, by their nature, long and complex. When divided up between the world’s 320 national and sub-national jurisdictions crossing as many as five different countries, as with the famed “double Irish Dutch sandwich” tax avoidance structure, the possibilities for loopholes are almost limitless.

Any attempts to restrain them are like a game of Whac-A-Mole. That applies even to the Organization for Economic Cooperation and Development’s attempts to reset the world’s tax rules via an accord between 130 jurisdictions due to be finalized this month. The centerpiece of the proposal, a 15% global minimum tax rate that can be applied unilaterally by governments that feel they’re losing out, is over time as likely to end up as a global maximum tax.

The Biden administration’s attempts to restore rates cut to 21% under Donald Trump will stop at 26%, rather than the 28% originally sought or the 35% that existed previously. There’s little sign the race to the bottom that’s been going on for four decades is about to end.

Ultimately, the problem lies with the unrestrained capital flows that have moved around the globe since the decline of the Bretton Woods system in the 1970s. While capital can move across borders without restraint, a small portion of that money will always be available to those who want to keep their wealth out of the hands of legal or tax authorities.

The world’s financial architecture is only tentatively starting to contemplate whether the opening of capital accounts — and the loss of monetary independence or exchange-rate stability that inevitably results — has been a good deal, or a devil’s bargain. If governments want to address the cause of tax avoidance rather than apply endless Band-Aids to the symptoms, that decision must ultimately be revisited.

Law Firm At Center of Pandora Helped Global Rich Hide Money

Two decades ago, Jaime Aleman was looking to re-establish Panama’s reputation as a stable business center following the U.S.’s 1989 invasion.

So, the Duke-educated attorney brought together heads of the country’s top law firms to back legislation inspired by Liechtenstein’s friendly rules on private foundations. The story, as told by Aleman in his autobiography, “Honesty is Priceless,” was the beginning of an offshore-entity boom, in which world leaders, celebrities and more used hundreds of thousands of shell companies in Panama to hide their assets and take advantage of accounting and tax loopholes.

Now, his law firm — Aleman, Cordero, Galindo & Lee, or Alcogal — is at the center of an investigation by the International Consortium of Investigative Journalists for creating thousands of offshore companies that stashed money in tax havens for politicians and public figures. In sheer size, the leak of those financial records, known as the Pandora Papers, eclipses that of the Panama Papers in 2016.

“Over the past three decades, Alcogal has become a magnet for the rich and powerful from Latin America and beyond seeking to hide wealth offshore,” the report said. “The firm acted as corporate middleman for more than 160 politicians and public officials.”

The law firm’s clients included Jordanian King Abdullah II, former presidents of Panama, the president of Ecuador and a presidential candidate in Honduras, according to the report. Almost half of the politicians whose names appear in the leaked records and nearly 2 million of the 11.9 million documents in the Pandora Papers were tied to Alcogal.

In total, ICIJ tallied 14,000 entities in Belize, the British Virgin Islands, Panama and other tax havens created with Alcogal’s support as part of efforts to hide money away from public scrutiny for some 15,000 clients over 25 years.

Alcogal said in a letter to ICIJ that company incorporation is only one aspect of its legal services and that it operates in “full compliance with all applicable requirements in every jurisdiction in which we operate.”

The firm “performs enhanced due diligence on a client who is determined to be a high-risk customer, regardless of the nature of the relationship or service,” it said. Alcogal didn’t reply to a request for additional comment.

Co-founded in the 1980s by Aleman, a former Panamanian ambassador to Washington, D.C., the firm worked with figures from some of the biggest corruption cases in recent history, including the so-called Carwash scandal that involved Brazil construction giant Odebrecht SA, the report said.

The report found that Alcogal set up more than 200 shell companies in Panama and other jurisdictions for Banca Privada d’Andorra, a bank based in a European principality between France and Spain, which the U.S. government blacklisted in 2015 for being a “primary money laundering concern.”

Alcogal is just one player in a larger industry. Aleman, 71, said in his autobiography that he helped create Panama’s law on private foundations along with other firms, including Mossack Fonseca, which was at the center of the Panama Papers. That firm closed in 2018 after it faced raids and arrests as part of the Carwash scandal.

Aleman’s book also mentions Morgan & Morgan, as well as Icaza, Gonzalez-Ruiz & Aleman and Arias, Fabrega & Fabrega as part of the group that shaped Panama’s foundation law in the 1990s. But they aren’t necessarily the biggest players in the space.

Those Panamanian firms are not in the top ranks of Chambers and Partner’s list of the global offshore law firms, which includes Maples and Walkers in the Cayman Islands, Harneys in the British Virgin Islands, Mourant in Jersey and Appleby in Bermuda.

That may be why Panama feels like it’s being picked on. Former president Ricardo Martinelli, who was named in the ICIJ report because of Alcogal shell companies linked to two of his sons, tweeted that the ICIJ report aimed to “destroy the country.” His sons were held in Guatemala last year after facing U.S. indictments for their alleged roles in the bribery case involving Odebrecht.

Siempre supe que jamás publicarían lo que les escribí. Por eso publiqué preguntas y respuestas al no ser cliente de ALCOGAL. Esta hecho con mucha colaboración de algunos panameños resentidos sociales sin ningún ánimo de hacer periodismo si no de destruir su país. Son apatridas https://t.co/eYtVPG6ga3

— Ricardo Martinelli (@rmartinelli) October 3, 2021

Juan Carlos Varela, another former Panamanian head of state, was also named in the report for two companies that Alcogal registered in 2000 and 2001 in the British Virgin Islands, owned by him, family members and other associates.

Varela said in a statement on Twitter that he was transparent by declaring the shareholding as he became president in 2014, and as he left office in 2019.

Panamanian authorities have also recommended that Varela be charged in the corruption case of Brazilian builder Odebrecht, after Varela admitted in 2017 that during his vice presidential campaign, he received donations from the construction firm. But Varela has denied that the money was a bribe, and told ICIJ that the campaign donations were made in accordance with the law and were reported to electoral authorities.

A statement from the Panamanian president’s office says the government is working to “counter negative repercussions” of the leak.

“It’s our duty to defend the interests of the nation and fight so that the name of the country isn’t associated with activities that we repudiate,” said President Laurentino Cortizo Cohen.

Why Putin’s Money Eludes Offshore Investigators

The Pandora Papers’ findings suggest that Russian kleptocrats are relying less on the West as a financial haven.

You would expect the biggest leak of offshore data in history to contain lots of damaging information about Russian President Vladimir Putin, or at least his close circle of friends.

But the Russia-related portion of the Pandora Papers, an almost-3-terabyte cache of information about offshore companies and their end beneficiaries that took 600 journalists more than a year to research, appears to be disappointing. The findings are dated, relatively insignificant or both.

Although the Pandora Papers are far from a complete or even statistically representative reflection of the global shell company industry, the relative thinness of these findings suggests that Putin and his people have drawn conclusions from previous revelations, such as the Panama Papers, which lent international prominence to Putin’s cellist friend Sergei Roldugin and his remarkably active offshore companies.

It also indicates that the widespread narrative of the Russian kleptocracy’s dependence on the West as a safe haven for its capital may well be inaccurate in 2021 — or indeed, may have missed the point for years.

The international network coordinated by the U.S.-based International Consortium of Investigative Journalists found 336 “politically exposed persons” among 29,000 offshore beneficiaries, meaning about 1.2% of the shell company owners are officials or their close relatives and associates.

The 19 politically exposed Russians make up only 0.4% of 4,400 Russian beneficiaries (the biggest “national delegation” in the data).

Only three Russians made the ICIJ’s list of 50 “power players,” deemed by the investigative organization to be the Pandora Papers’ most prominent PEPs in the eyes of the international audience.

They are Konstantin Ernst, chief executive officer of the state-controlled Channel One, Svetlana Krivonogikh, whom the now-banned Russian investigative outlet Proekt alleged was Putin’s ex-girlfriend, and oil billionaire Gennady Timchenko, known to be close to Putin. Kremlin spokesman Dmitry Peskov on Monday dismissed the leaks as “just a set of largely unsubstantiated claims.”

Russian speakers can peruse the Russia-related findings on the website of Important Stories, the Moscow-based investigative team led by Roman Anin which had been chosen by ICIJ as its Russia partner. Important Stories reporters are some of the country’s best, with some serious tech chops.

They’re also fearless: After police raided Anin’s apartment and interrogated him, and authorities declared the outfit, as well as Anin and other reporters, to be “foreign agents” under a repressive law used to silence independent media, Anin and his colleagues didn’t close shop or emigrate as some others have done.

Instead, they just kept digging. “Foreign agents” are required by law to register a company in order to file burdensome financial reports to the authorities; Anin named his and his colleagues’ firm “Important Foreign Agents,” the proud name under which it is now registered with the Russian Justice Ministry.

So I have little doubt that this team has done a thorough job with the material it parsed.

The reporters themselves will probably disagree with me about the importance of what they unearthed, but I just can’t get excited about Timchenko’s alleged offshore dealings from 2007 and 2008, long before he was sanctioned by the U.S. government in the wake of Russia’s attack on Ukraine in 2014; or about Krivonogikh’s alleged apartment in Monaco, apparently acquired in 2003; or about a free voyage on an oligarch’s yacht, allegedly undertaken by Anton Vaino, then not yet Putin’s chief of staff, in 2012.

Though the data obtained by ICIJ include records as recent as 2019 for most shell company factories, and even fresher ones for some of them, the Russia stuff is mostly quite stale, with the notable exception of Ernst’s alleged involvement in an offshore scheme to convert state bank loans into Moscow commercial real estate: That story is at least post-2014.

(The relatively recent dealings of some smaller fish were also in the database, but their lesser prominence takes away from their impact).

The year 2014 is a watershed because Ukraine-related Western sanctions have since made it harder for politically-connected Russians to acquire overseas assets or even run their Russian deals through offshore chains to ensure solid property rights under English law. Even if a Russian PEP wasn’t hit by sanctions directly and immediately, like Timchenko, he or she couldn’t but entertain the possibility.

Putin has been calling on Russian business to “deoffshorize” for a decade, but his rhetoric had little effect until Putin launched a new Cold War by invading one part of Ukraine and fostering a separatist uprising in another.

Post-Crimea, Russia embarked on the path of self-isolation, at first somewhat reluctantly because wealthy Russians, including Putin’s friends, had indeed developed something of a lifestyle dependence on their French villas and British Virgin Islands-based business empires.

But then Putin and his entourage seem to have discovered that their wealth and power were undiminished by less access to these attributes of globalization.

The Soviet elite, after all, didn’t have resort to these trappings, and Russia is big and diverse enough to satisfy anyone’s taste for luxury.

The post-2014 chic includes majestic palaces on the Black Sea, the likes of which could never be built or bought on the Cote d’Azur, and opulent vineyards in Crimea and Southern Russia, where French and Italian vintners produce wines that can rival their home countries’ best.

In Russia, a palace and a wine estate like the ones linked by now-imprisoned corruption fighter Alexei Navalny to Putin’s closest circle can simply be explained away as expensive hotel projects; there’s less and less public scrutiny as independent media outlets come under pressure and activists are forced to flee the country.

The Putin elite has no hopes of escaping, if push comes to shove, to some Caribbean island to nurse exotic cocktails and their billions. The Russian president’s circle has dug in close to the sources of its wealth, fully intending never to be uprooted.

Rather than panic in the face of Western pressure which has shut off some of the previous opportunities, these powerful people cut their losses and turned their attention inward focused on coup-proofing. Some of the golden eggs they’d scattered around have been lost, but they still have the hen that lays them — Russia — firmly by the throat.

But how about all those thousands of Russia offshore owners in the Pandora Papers database? Many of them, of course, are beneficiaries of the regime, too, but by no means major ones. Even the wealthiest of these businesspeople, even the most seemingly well-connected, cannot feel secure because, unlike Putin’s old guard, they cannot be certain of his personal protection. In the end, a billionaire tycoon is as exposed as a car dealer or restaurant owner to the corruption in the justice system and to empowered law enforcers’ naked greed.

Trying to play the globalization game is risky these days: Just look at the recent case of Ilya Sachkov, founder of information security firm Group-IB, headquartered in Singapore since 2019. His attempts to combine public disapproval of Russian hacking activity in the West, necessary to do business there, and an ability to keep winning lucrative state contracts in Russia have landed him in a Russian jail on treason charges.

But, unless you belong to Putin’s narrow circle, it’s an almost unavoidable risk. Between 2014 and 2020, capital outflow from Russia reached $390 billion, more than the $330 billion exported in the previous seven years.

Much of that money is corruptly made and is a corrupting influence in its destination countries. But even for the best investigator, the pickings from searches for “Putin’s money” in this stream of outbound cash are likely to be slim.

Updated: 10-5-2021

Sentenced ‘Bitcoin Czar’ Named Among Pandora Papers

The ICIJ’s report suggests the “Bitcoin czar” may have been a member of the Carbanak hacking group.

The International Consortium of Investigative Journalists (ICIJ) has identified a major crypto criminal among those exposed to have funneled funds into shadowy tax havens in its “Pandora Papers.’

According to an Oct. 3 ICIJ document summarizing the organization’s findings from its Pandora Papers investigation, offshore assets belonging to a so-called “Bitcoin czar sentenced for money laundering in connection with the largest cyberheist in history” were identified to be handled by one of the firms.

The Pandora Papers comprise a 2.94 terabyte data trove spanning 11.9 million records from 14 different offshore services providers. The documents claim to expose the hidden assets of more than 330 politicians and high-ranking public officials from 90 different jurisdictions, including 35 country leaders and more than 130 billionaires.

The ICIJ also noted that the assets of “bankers, big political donors, arms dealers, international criminals, pop stars, spy chiefs and sporting giants” can be identified among the documents.

While the “Bitcoin czar” identified in the Pandora Papers is not named directly, their sentencing in connection with the most significant cyberheist in history narrows the scope of possibility as to who the individual may be.

Reporters have described the operations of hacker group Carbanak as having been unrivaled in scale and value, with the cybergang estimated to have stolen more than $1.24 billion from financial institutions and businesses located in more than 100 countries between 2013 and 2017.

While two of the six individuals have been sentenced over their role in Carbanak, the circumstances surrounding the 2018 arrest of the presumed leader of Carbanak, Denis Tokarenko (also known as Denis Katana), suggest that he may be the culprit identified in the Pandora Papers.

According to a Bloomberg Businessweek article recounting Tokarenko’s March 2018 arrest, Spanish National Police found 15,000 Bitcoin (BTC), worth $162 million at the time, in the hacker’s possession.

Carlos Yuste, chief inspector of the Spanish National Police’s cybercrime center, told the publication that Tokarenko had also used a Bitcoin mining operation purchased in China to launder his stolen funds into BTC.

Many analysts have also described the 2016 Bangladesh Bank cyberheist, in which hackers stole nearly $1 billion from a Federal Reserve Bank of New York account owned by the Bangladeshi central bank, as the largest digital theft in history.

However, former Rizal Commercial Banking Corporation employee Maia Santos Deguito is the only individual to have been sentenced over the cyberheist to date, and a Cointelegraph investigation has not revealed any sources associating Deguito with crypto assets.

The Pandora Papers Show Why People Love Crypto: You Can’t Trust The Powerful

The same offshore fig leafs helping elites to dodge taxes have underpinned decades of rampant state-backed abuse.

There are many nuanced, detailed arguments for the inevitability of cryptocurrency and blockchain’s growth and adoption – advantages of efficiency, trust, privacy and autonomy that are already proving out at a global scale.

But interest in cryptocurrency is driven perhaps most of all by something more elemental and emotional, a deep intuition that has been rising around the world for decades: that the people in charge cannot, and should not, be trusted.

That sense of rising distrust was validated yet again with the Oct. 3 release of the so-called Pandora Papers, a trove of almost 12 million leaked documents from law firms and other organizations around the world. The documents unmask the previously unknown owners of 29,000 offshore companies hiding billions of dollars in assets from taxation or oversight.

The owners include political leaders, celebrities and underworld figures from more than 200 nations, with the bulk from Russia, the U.K., Argentina and China, according to the International Consortium of Investigative Journalists, which coordinated initial reporting on the documents.

The leak shows that former British Prime Minister Tony Blair, singer Shakira and many other familiar faces engaged in, at best, aggressive tax avoidance that was accomplished by hiding assets in extremely complex corporate legal entities.

Though in some cases hidden funds seem linked to outright corruption, much of this activity is nominally legal – but the very existence of such structures almost guarantees they’re being used for deeply harmful ends well beyond dodging taxes.

For those in the crypto world, it is tempting to frame these revelations in terms of simple “whataboutism.” And hooboy, what about this: By one estimate, as much as $32 trillion in assets worldwide may be in offshore tax havens.

That’s roughly 15 times the total value of all cryptocurrency in existence, and much of it amounts to theft by world leaders from their own citizens. The tax revenues missing thanks to those hidden funds mean immense amounts of missing public infrastructure and services worldwide, at the particular expense of the poorest and most vulnerable people.

That certainly drives home the absurdity of global regulators’ relentless focus on cryptocurrency systems as vectors for money laundering and tax evasion. Regulators, it seems, find it easier to punch downward at an emerging technology than to challenge the legalized corruption of the legacy banking system, or the hegemony of their bosses.

Focusing on that “what about,” though, is playing the short game. It can be tempting to argue that crypto makes the same tricks available to everyday people, which may be appealing to those of a libertarian bent, but strikes me as nothing but a race to the bottom. More importantly, it’s a false equivalency: What world leaders have accomplished through offshore entities and shady banks simply can’t be replicated by average people using crypto.

On a superficial level, that’s because crypto cannot match the secrecy assured by offshore entities. While much early coverage of bitcoin focused on its “anonymity,” it has become clear that it’s relatively easy to triangulate ownership of bitcoin and many other tokens with a little elbow grease. Even so-called “privacy coins” are imperfect. But if you can afford a private jet to the Caribbean, it appears, you can afford truly anonymous banking.

More importantly, the cross-border asset concealment detailed in the Pandora Papers is part of a much larger and more complex system of shadow influence that relies on institutional political power and generational wealth, not just the ability to hide large amounts of money from monitoring.

The same channels used for tax avoidance and personal secrecy are also powerful tools for even more nefarious activities: state-sponsored drug trafficking, murder and anti-democratic violence.

To pick just one well-documented example, consider the Bank of Credit and Commerce International, or BCCI. Nominally a Pakistani bank, BCCI was revealed in the early 1990s to have been a likely front for the U.S. Central Intelligence Agency (CIA).

The “bank” was a major funnel for international drug trafficking proceeds, and the CIA allegedly protected those laundering activities from scrutiny by international law enforcement. That protection was extended because the agency allegedly needed a channel to move its own off-book drug-running proceeds to anti-communist South American guerillas.

Those guerillas, particularly the Contras in Nicaragua, turned out in substance to be terrorist death squads. The CIA was even alleged, in the pages of the Washington Post, to be running a network of assassins out of BCCI’s headquarters.

Though the scandal triggered some nominal reforms, this kind of international meddling and manipulation would seem to still be quite feasible under the current global financial system. It remains to be seen precisely what sort of activities are revealed in the Pandora Papers: They have been combed by dozens of journalists for more than two years, and reporting on the documents should be trickling out in coming days and weeks.

We already know that they further implicate perhaps the most ambitious government kleptocrat and state-backed thug in the world, Vladimir Putin.

Even short of outright criminality, the offshore holdings by world leaders revealed in the Pandora Papers look an awful lot like hedges against the decline of their own countries – and an abdication of responsibility for fighting that decline.

The most egregious example of this so far may be from the U.K., where a major supporter of the Conservative Party government in power has apparently been exposed for involvement with a massive $220 million bribe to the leader of Uzbekistan.

This is ironic, of course, because the Tories have been a major force behind Brexit, the U.K.’s separation from the European Union. Among its many impacts, Brexit is threatening the U.K.’s mainstream financial sector by tightening capital controls and strangling trade flows crucial to businesses large and small.

Many vocal Brexit supporters had already been discovered to be hiding money offshore via the 2017 Paradise Papers leak. In effect, their attitude seems to have been “Little Britain for thee, but not for me.”

The takeaway is simply this: Global leaders too often consider themselves completely separate from the people they rule. Their aggressive thievery conveys the same attitude towards you or me that alleged sex trafficker and globetrotting heiress Ghislaine Maxwell reportedly had towards her victims: “They’re nothing, these girls. They are trash.” (Maxwell was also closely linked to the CIA through her father, “superspy” Robert Maxwell.)

The global banking system, which grants secrecy to only the wealthiest and most powerful while freely censoring the activities of everyday citizens, can only reinforce that apparent sense of superiority and separation.

It’s unclear whether cryptocurrency provides a substantive answer to this rampant elite corruption. But the Pandora Papers at least explain much of the emotional drive behind crypto adoption: the simple desire to quit a system that is rotten to its absolute core.

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