What the "Pandora Papers" show: Business secrets of 35 leaders, real owners of hidden billions revealed

The secret dealings and hidden assets of some of the world's richest and most powerful people have been exposed in the biggest financial leak in history.

The "Pandora Papers" contain over 11,9 million documents from companies hired by wealthy clients to create offshore structures and funds in tax havens such as Panama, Dubai, Monaco, Switzerland and the Cayman Islands.

The secret offshore business of 35 world leaders, including current and former presidents including Czech Prime Minister Andrej Babis, former British Prime Minister Tony Blair, Azerbaijani President Ilham Aliyev, Pakistani Prime Minister Imran Khan, Jordanian King Abdullah II, Cyprus President Nikos Anastasiades, Ukrainian President Volodymyr Zelenski, many of whom were elected thanks to their promises to cleanse the country of corruption and crime.

The documents were leaked to the International Consortium of Investigative Journalists (ICIJ) in Washington, which provided access to the data to selected media partners including the British "Guardian", "BBC Panorama", the French "Mond" and the American "Washington Post", the Croatian portal "Oštro".

Over 600 journalists reviewed the documents over the course of 18 months as part of a massive global investigation, and will publish their findings in the next few days. Yesterday, the first findings related to the offshore financial operations of some of the most influential political leaders in the world were published.

The documents also shed light on the secret financial transactions of over 300 other public officials such as government ministers, judges, mayors and military generals in over 90 countries around the world.

From celebrities to mobsters

The documents also name over 100 billionaires, athletes, celebrities and business leaders, including Indian cricket superstar Sachin Tendulkar, Colombian singer Shakira, German model Claudia Schiffer, Russian Oscar-nominated television director and producer Konstantin Ernst, as well as Italian mobster Rafaele Amato known as Fat Lel.

The Pandora Papers investigation, according to the ICIJ, reveals powerful men who thought they would hide their businesses and assets behind offshore companies and anonymous bank accounts to own private jets, yachts, villas and artworks from stolen Cambodian antiquities to Picasso paintings and Banksy murals.

The Pandora Papers shed light on how the secret world of finance works, providing a rare insight into the secret operations of the global offshore economy that allows some of the world's richest people to hide their wealth, and in some cases pay little or no tax.

Thanks to these documents, which include e-mails, memoranda, and complex diagrams, a complex corporate structure is shown, and the real owners of more than 29.000 offshore companies, which come from more than 200 countries, are revealed. Most of them are from Russia, Great Britain, Argentina, China and Brazil.

Establishing and profiting from offshore companies is not illegal in itself, and in some cases people have legitimate reasons for doing so. However, the secrecy offered by tax havens is often attractive to tax evaders, fraudsters or money launderers.

In the files and "fighters" against tax evasion

Czech Prime Minister and billionaire Andrej Babiš, former British Prime Minister Tony Blair and Pakistani Prime Minister Imran Khan have dedicated part of their political careers to the fight against tax havens and tax evasion in the countries where they fought for power, writes the Croatian portal "Oštro", whose journalists are participated in the global investigation.

Babiš came to power promising to fight against tax evasion and corruption. In 2011, Babiš told the voters that he wanted to create a state "where entrepreneurs will do business and gladly pay taxes", the Croatian portal reminds.

However, Babiš will now, just before the elections, face questions about why he used an offshore investment company to buy a castle worth 22 million dollars in the south of France, "Guardian".

After leaving the prime ministership, Tony Blair founded the Institute for Global Change, which in February of this year called for an increase in taxes on land and houses. Back in 1994, in the race for Labor Party leader, he warned that the well-connected were avoiding paying their share of taxes.

By looking at the leaked files, journalists found that Blair and his wife Cherie saved £312.000 when they bought the office space in London. Namely, the couple bought an offshore company in the Virgin Islands that owned the building.

Although the purchase move itself is not illegal and there is no evidence that the Blairs deliberately tried to avoid paying property tax, this deal points to a loophole in the law that allows wealthy property owners to avoid paying tax that is mandatory for ordinary Britons, writes "The Guardian".

Ms Blair said the seller insisted they buy the house through an offshore company. The ultimate owner of the property was a family with political connections in Bahrain - and both sides claim they did not initially know who they were dealing with.

When the Panama Papers investigation, also by the ICIJ, was published in 2016, Imran Khan was so delighted that he called it a "gift from God." He made good use of the involvement of then Prime Minister Nawaz Sharif in the affair with tax havens, so on the wings of the fight against corruption, he finally won the prime minister's post in 2018, from which Sharif left a year earlier - due to the discovery of the Panama Papers.

The Pandora papers have now shown that members of Khan's inner circle, including cabinet ministers and their families, secretly own firms and funds holding millions of dollars.

In Cyprus, itself a controversial offshore center, President Nikos Anastasiades will have to explain why the law firm he founded has been accused of hiding the assets of a controversial Russian billionaire. The company, as "The Guardian" writes, denies that it violated the law, while the Cypriot president claims that he has not played an active role in its business since he became the leader of the opposition in 1997.

The documents also show that Azerbaijan's ruling Aliyev family has traded properties in Britain worth £400 million in recent years. One of the properties was sold to the royal family, and now we have to explain how it is that the British crown should pay 67 million pounds to a company that acts as a front for a family that runs a country regularly accused of corruption. The Alis declined to comment on the revelations of the Pandora Papers investigation.

The name of the president of Ukraine, Volodymyr Zelenskyi, who was elected in 2019 largely thanks to his promise to rid the country of corruption, is also mentioned in the documents. During the campaign, Zelensky transferred 25 percent of the shares in an offshore company to a close friend who now works as his adviser. Zelensky also declined to comment and it remained unclear whether he still benefits from the company.

Putin again only indirectly

Russian President Vladimir Putin is not directly named in the papers, but the media points out that many of his associates are. Among them are Putin's closest childhood friend Petr Kolbin, whom critics call a "wallet" for Putin's wealth, and a woman with whom the Russian leader allegedly had a romantic relationship. None of them responded to journalists' calls to comment.

The offshore trail stretches from Africa to Latin America and Asia, and politicians around the world will have to answer tough questions.

While the world's most powerful countries exercised strictness against traditional oases such as the Cayman Islands or the Bahamas, in the meantime South Dakota, Nevada and more than a dozen other American states turned into leaders of financial secrecy services.

The president of Kenya, who presents himself as a sworn enemy of corruption, will have to explain why he and his close relatives have over $30 million of wealth in offshore locations.

Jordan's King Abdullah II, who in 2019 ordered the arrest and jailing of a lawyer for asking him how much property he owns, has a $100 million secret empire stretching from Malibu, Washington and London, according to the Pandora Papers. The king of the country, which receives billions of dollars of international aid and the unemployment rate has doubled in the last seven years, refused to answer specific questions from journalists, but said that there is nothing illegal in owning property through offshore companies.

Yesterday, the ICIJ website was blocked in Jordan several hours before the release of the Pandora papers.

The Pandora Papers also revealed some of the fallout from previous leaks about offshore companies, which led to moderate reforms in some parts of the world such as the Virgin Islands where records of the real owners of companies registered there are now kept.

However, new data indicate the movement of money while wealthy clients and their advisors quickly adapt to the new reality, as a result of which there are no significant developments in the suppression of illegal activities.

The Panama Papers on steroids

Gerard Ryle, director of the ICIJ, said that leading politicians who organize their finances in tax havens are partly responsible for the status quo and are likely to be an obstacle to reforming the offshore economy.

"When you have world leaders, politicians, public officials using secrecy and using that word, then I think there is no end to this."

He said he expects the Pandora Papers to have more impact than previous leaks, partly because they were released in the midst of a pandemic that has highlighted inequality and forced governments to borrow fabulous sums of money to be paid back by taxpayers. "This is the Panama Papers on steroids," Ryle said. "It's more detailed, broader and involves more money."

According to a 2020 study by the Organization for Economic Cooperation and Development, at least 11,3 trillion dollars are kept in tax havens, and due to the complexity of that system, it is not possible to fully know how much of this wealth is connected to tax evasion and other criminal acts, and how much has been reported to the competent authorities.

"This is money that does not go to state budgets around the world and money that could be used for recovery from covid," said Ryle. “We're losing it because some people are getting it. It's just like that. It's a simple transaction”.

The USA has become one of the biggest tax havens

In a revelation likely to be humiliating for US President Joe Biden, who has vowed to lead international efforts to bring transparency to the global financial system, the United States has been named as one of the biggest players in the world of tax havens.

Leaked documents indicate that US states such as South Dakota are holding billions of dollars in wealth linked to individuals previously accused of serious financial crimes.

According to the "Oštro" portal, the USA is in the best position to put an end to offshore financial abuses thanks to the huge role they play in the international banking system. Due to the US dollar's status as the de facto global currency, most international transactions go through banking operations based in New York.

Over the past two decades, US authorities have taken measures to compel banks in Switzerland and other countries to hand over information about Americans with accounts abroad. The US, however, is unwilling to share its information with others and has refused to join a 2014 agreement supported by more than 100 countries, including well-known tax havens such as the Cayman Islands and Luxembourg, which would have required US institutions to be obliged to share information about the property of foreigners in their territory.

And while the world's most powerful countries exercised strictness against traditional oases such as the Cayman Islands or the Bahamas, in the meantime South Dakota, Nevada and more than a dozen other American states turned into leaders of financial secrecy services.

The findings by ICIJ and its media partners show how deeply shadowy financing has infiltrated global politics and provide insight into why governments and global organizations have made little progress in ending the financial abuses of tax havens.

KRIK: Mali still owned 24 apartments in Bulgaria

The Crime and Corruption Research Network (KRIK) announced that documents obtained by its journalists as part of the "Pandora's Papers" project prove that Serbian Finance Minister Siniša Mali was the owner of 24 luxury apartments on the Bulgarian coast.

Mali, as the owner of two offshore companies from the British Virgin Islands, bought 23 apartments, and bought another one in his own name, writes KRIK.

Journalists from KRIK and the OCCRP journalist network announced in 2015 that Mali, then the mayor of Belgrade, bought 24 luxury apartments in the Bulgarian summer resort "Sveti Nikola" on the coast of the Black Sea.

The announcement that Mali had bought those properties at the time caused stormy reactions from the public, since their value of around five million euros was many times higher than the income of the then mayor of Belgrade.

Mali then accused the journalists of lying and admitted that he bought one apartment, the one whose ownership was in his name, claiming that he was not behind the two offshore companies that bought the remaining 23 apartments.

Now, however, documents from the agency for the establishment of the offshore company "Trident Trust", of which Mali was a client, have appeared, which are proof that he was the owner of two offshore companies and an apartment in Bulgaria, according to KRIK.

According to KRIK, Mali bought 24 apartments in Bulgaria in 2012 and 2013. He bought the real estate from the company of former basketball player Srđan Dabić, director of the Serbian branch of the Russian oil company Lukoil, according to KRIK.

In the early 2000s, when he worked at the Privatization Agency, Siniša Mali, as director of the Tender Center, oversaw the privatization of the largest state-owned enterprises and was responsible for the sale of the Serbian gas station chain Beopetrol to Lukoil.

Shortly after he bought apartments in Bulgaria, which were worth around five million euros on the market, Mali started selling them. He sold two apartments, which are not among the largest, in 2013 and 2014 for a total of 120.000 euros, and then exited ownership in offshore companies, according to KRIK.

In August 2014, a few months after becoming mayor of Belgrade, Mali transferred the offshore company to lawyer Ana Panayotova, who then sold several more apartments, KRIK adds.

The name of the Croatian minister's son is also in the files

Journalists from the Croatian portal "Oštro" found the names of individual Croatian clients in Pandora's papers. The documents mention, among other things, Rikard Fuchs, the son of the Croatian Minister of Education and Social Welfare, Radovan Fuchs, who founded a company called See Project Ltd. in the Seychelles in 2017. The purpose of the company is explained as "owning a stake in a Croatian company that will buy real estate in Croatia".

Rikard Fuchs told the journalists of the "Oštro" portal that the purpose of the company was not related to Croatia, but that it was about "a project that was supposed to be done in the Netherlands together with an American fund". The project was not realized, and the company, as Fuchs said, was shut down in 2020.