[The Pandora Papers reveal the inner workings of a shadow economy
that benefits the wealthy and well-connected at the expense of
everyone else.] [[link removed]]

PANDORA PAPERS: OFFSHORE HAVENS AND HIDDEN RICHES OF WORLD LEADERS
AND BILLIONAIRES EXPOSED IN UNPRECEDENTED LEAK  
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The International Consortium of Investigative Journalists
October 3, 2021
The International Consortium of Investigative Journalists
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_ The Pandora Papers reveal the inner workings of a shadow economy
that benefits the wealthy and well-connected at the expense of
everyone else. _

Millions of leaked documents and the biggest journalism partnership
in history, Image: Inkyfada / ICIJ

 

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
[[link removed]].

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.

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.”

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
[[link removed]],
law firms and accounting practices
[[link removed]] – 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
[[link removed]], 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.

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 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
[[link removed]].
They’ve called shell companies and money laundering “threats to
our security, our democracy and our way of life
[[link removed]].”
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.

 

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LEAK TO ICIJ! [[link removed]] 

ICIJ accepts information about wrongdoing by corporate, government or
public services around the world. We do our utmost to guarantee the
confidentiality of our sources.

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.”

“Our slogan is: The truth will come out.”

_CORRECTION_: Alexander Abramov was named in a U.S. congressional
report submitted under the Countering America’s Adversaries Through
Sanctions Act of 2017. An earlier version of this story erroneously
stated that Abramov was sanctioned.

READ MORE: PANDORA PAPERS: AN OFFSHORE DATA TSUNAMI
[[link removed]], PARADISE
PAPERS: SECRETS OF THE GLOBAL ELITE
[[link removed]], LUXEMBOURG
LEAKS: GLOBAL COMPANIES’ SECRETS EXPOSED
[[link removed]], WHERE IN THE
U.S. ARE YOU MOST LIKELY TO BE AUDITED BY THE IRS?
[[link removed]]

Support independent journalism -- Contribute to The International
Consortium of International Journalists

Do you believe journalism can make a difference? For just $15/month
you can help expose the truth and hold the powerful to account.

Donate
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_CONTRIBUTORS_: MICHAEL W. HUDSON, SCILLA ALECCI, WILL FITZGIBBON,
AGUSTIN ARMENDARIZ, SYDNEY P. FREEDBERG, MARGOT GIBBS, MALIA POLITZER,
DELPHINE REUTER, EMILIA DÍAZ-STRUCK, GERARD RYLE, BEN HALLMAN, DEAN
STARKMAN, FERGUS SHIEL, SERDAR VARDAR AND PELIN ÜNKER (DW TURKEY),
ELYSSA CHRISTINE LOPEZ AND KAROL ILAGAN (PHILIPPINE CENTER OF
INVESTIGATIVE JOURNALISM), PAVLA HOLCOVÁ (INVESTIGACE, CZECH
REPUBLIC), HALA NASSREDINE (DARAJ, LEBANON), ALLAN DE ABREU (REVISTA
PIAUÍ, BRAZIL), LEO SISTI AND PAOLO BIONDANI (L’ESPRESSO, ITALY),
SIMON GOODLEY (THE GUARDIAN, U.K.), RITU SARIN (THE INDIAN EXPRESS),
NASSOS STYLIANOU (BBC, U.K.), FRANCISCO RODRIGUEZ AND ENRIQUE NAVEDA
(PLAZA PÚBLICA, GUATEMALA), DEBRA CENZIPER (WASHINGTON POST, U.S.),
JELENA COSIC, SPENCER WOODMAN, BRENDA MEDINA, MAGGIE MICHAEL, RICHARD
H.P. SIA,  KATHLEEN CAHILL, JOE HILLHOUSE, MIA ZUCKERKANDEL, ASRAA
MUSTUFA, HAMISH BOLAND-RUDDER, MIGUEL FIANDOR GUTIÉRREZ, PIERRE
ROMERA, MADELINE O’LEARY, TOM STITES, KATHRYN KRANHOLD, MARGOT
WILLIAMS, ANTONIO CUCHO GAMBOA, SOLINE LEDÉSERT,  BRUNO THOMAS, ANNE
L’HÔTE, MADELINE O’LEARY, MAXIME VANZA LUTAONDA, DENISE
HASSANZADE AJIRI, JESÚS ESCUDERO, MARCOS GARCÍA REY, MAGO TORRES,
KARRIE KEHOE, SEAN MCGOEY, ANISHA KOHLI, FAKHAR DURRANI,  CARLOS
MONTEIRO, DOUGLAS DALBY AND LAURA BULLARD.

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