An investigation based on one of the biggest ever leaks of financial documents has exposed a hidden world of shielded wealth belonging to hundreds of politicians and billionaires.
One of the largest ever global media investigations, the Pandora Papers involved more than 600 journalists who together analyzed some 11.9 million documents from financial services companies around the world. They found links between almost 1,000 companies in offshore havens and 336 high-level politicians and public officials, including more than a dozen serving heads of state and government.
The files show King Abdullah II, who has faced angry protests against austerity measures in recent years, created a network of offshore companies and tax havens to amass a US$100 million (S$136 million) property empire between 2003 and 2017, including 15 homes from Malibu, California to Washington and London.
Family and associates of Azerbaijani President Ilham Aliyev - long accused of corruption by rights groups - are alleged to have been secretly involved in property deals in Britain worth hundreds of millions, including a roughly US$45 million office block in the name of the president's 11-year-old son, Heyder.
According to the documents, Czech Prime Minister Andrej Babis (who is facing an election this week) failed to declare an offshore investment company used to purchase a chateau worth US$22 million in the south of France.
The investigation says Kenyan President Uhuru Kenyatta - who has campaigned against corruption and for financial transparency - along with six family members secretly own a network of 11 offshore companies, one of which was valued as holding assets of US$30 million.
President Vladimir Putin is linked via associates to secret assets in Monaco - notably a waterfront home acquired by a Russian woman who is believed to have had a child with Putin.
Previously an outspoken critic of tax loopholes, former British prime minister Tony Blair and his wife were found to have purchased an $8.8 million building in London in 2017 by buying the British Virgin Islands company that owned it. By doing so, they avoided paying hundreds of thousands of dollars in taxes.
One of the most “troubling revelations” for the United States 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.
Delaware, Nevada, and Wyoming have all spent years marketing themselves around the world as a welcome home for anonymous shell companies, providing legal secrecy and protection to anyone looking to bury their finances away from investigators and authorities. But as the Pandora Papers make clear, another state, South Dakota, has introduced a brand-new tool to pull in as much anonymous wealth as it can, attracting little attention and even less criticism. More than 80 of the 200 U.S. trusts exposed by the Pandora Papers were in South Dakota—the most of any state.
The documents reveal that in 2017, Ecuadoran President Guillermo Lasso, a former banker, sheltered assets in a pair of South Dakota trusts—only three months after Ecuador passed legislation barring politicians from using tax havens.
Family members of Carlos Morales Troncoso, the former vice president of the Dominican Republic, moved millions in assets into South Dakota trusts, along with shares controlling the country’s largest (and most controversial) sugar-production facilities. According to the Guardian, the Pandora Papers show that South Dakota “is sheltering billions of dollars in wealth linked to individuals previously accused of serious financial crimes.”
South Dakota trusts provide precisely the kind of anonymity that shady people are looking for. Not only can those establishing South Dakota trusts list themselves as beneficiaries (contradicting the original purpose of a trust, which is to shield assets for others) but they don’t even need to visit the state to set one up. The state prohibits sharing information about these trusts with other governments, and any court documents pertaining to South Dakota trusts are kept private in perpetuity. More importantly, South Dakota pioneered regulations that allow its trusts (which typically expire after 100 years) to remain in place forever, forming the bedrock for dynastic wealth.
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