Photo Credit: The Guardian
The Pandora Papers- the biggest offshore financial document leak yet- 12 million documents from 14 different offshore service providers, 2.49 TB of data, 600 journalists from 117 countries, and 330 politicians, celebrities, and high-end clients from 91 countries implicated. These numbers are said to be only the beginning of an even greater financial exposé implicating the world’s elite class.
The Pandora Papers leak was the result of a financial investigation piloted by the International Consortium of Investigative Journalists (ICIJ) based in Washington DC, USA. These leaked documents exposed how the world’s richest use offshore companies to conduct their high-value business transactions, hide extensive wealth, and evade tax payments in tax havens around the world. Some of the well-known names implicated in these documents are amongst the Qatari Royal Family who has allegedly avoided tax payments worth £18.5 million on property in London through offshore companies. Kenya’s first family, the Kenyatta family, is reported to have offshore wealth worth $30 million, and the King of Jordan, King Abdullah II is reported to have property abroad worth $100 million.
Through the leaked documentation, countries like Switzerland, Panama, and the British Virgin Islands have been exposed as the hub of these offshore companies and extensive secret wealth. Due to their non-bureaucratic but legal company establishment procedures, their negligible corporation tax rates- especially for wealth and investment deemed to be ‘international’ and the availability of companies ready to secretly manage high-value wealth.
What does the Pandora Papers leak mean for the non-elite class?
For many, this may just come across as an expose that only impacts the world’s elite class. However, the wealthy elites in different countries and their investment choices indirectly tell a lot about the state of our local economies and the global economy. What does such a high-value capital flight signify? Are the very people running our economies not confident in the policies they are implementing? Are the overall trajectories of our local economies not promising? Finally, should the non-elite class be more mindful about our local investment as well? All these are the questions that the general population could be asking in the wake of this quest for financial transparency among the financial and political elites.
Additionally, the tax revenue that this offshore wealth generates could be a game-changer for several economies if the wealth was invested and managed in these respective countries, prompting further suspicion as to whether the choice to manage this wealth offshore is because state resources were used to acquire and grow this wealth. Therefore, it is being managed abroad in a very calculated manner to limit any suspicion or probe any investigation that could expose corruption.
On the other hand, it is possible that the management of this wealth through offshore companies abroad is legal. However, this poses the question: even if it is legal, is it ethical? Is the ethical dilemma created far too great to overlook the said ‘benefits’ of managing wealth abroad through offshore companies? It’s debatable but has definitely probed governments to criticize and revise current laws regarding tax evasion and tax justice, especially in the European Union government. The EU government recently restarted the conversation of reforming the 1997 Code of Conduct on business taxation. According to the parliament’s rapporteur, Aurore Lalucq this Pandora Paper headline was essential- she commented, “For all those engaged in the fight for tax justice, it is good news that the European Parliament has backed our proposal to empower the EU in the fight against tax abuse and tax crimes”.
As we continue to put efforts towards curbing corruption and enhancing transparency within our governing bodies, those who govern and those who influence the governor’s it is important for us to remember that we are directly and indirectly affected by their choices and can use exposes like the Pandora Papers and future similar exposes to understand our economies better and be more critical of the elite-class.