FTC high-level event: Pandora Papers & impact on financial transparency

December 7th, 2021

The FTC organised on 3 December a fascinating high-level event on the Pandora Papers and whether these and past revelations have spurred any financial transparency reforms,helping prevent $7 trillion of private wealth being held in secrecy jurisdictions and haven countries, equivalent to 10% of the world income, according to the United Nations.

Panellists included Ecuador presidential candidate Andrés Arauz, threatened for backing financial investigations in the aftermath of the Pandora Papers release; Will Fitzgibbon, Africa and Middle East coordinator of the International Consortium of Investigative Journalists (ICIJ); Chenai Mukumba from Tax Justice Network Africa which has led the push for financial transparency reforms in the continent; Alex Cobham, chief executive of Tax Justice Network; and Kaisa de Bel, from Global Financial Integrity, offering a US perspective.

The panel discussion, which can be viewed in its entirety here, analysed the aftermath of the Pandora Papers two months after their release, and how those named in the leaks reacted to compared to previous revelations. Panellists also reflected on how the United States has become “a tax haven of choice”, and the small promising initiatives made in some countries like Nigeria to address financial transparency issues, but how these are insufficient.

Here are some of the highlights from the panelists, including key quotes and discussions during their presentations:

Andrés Arauz

Ecuadorian presidential candidate

“There has been retaliation after [Ecuadorian] parliamentarians after they published their investigation confirming the link [of President Guillermo Lasso] with the offshore Banisi Bank in Panama, the MPs, not the president, are now being investigated! This is similar to what happened with the Panama Papers a few years ago when those who published the information, who investigated, who presented the breakdown of the data to the world were also threatened, including sadly myself.”

“The United States has become an offshore center … the US Congress should investigate all political figures who appeared in the Pandora Papers who have ties to not only with [the tax haven of] South Dakota but also have shady Florida real estate, use corporations in Delaware, and have financial ties with tax havens outside the US but done through transactions with US banks… we have seen politicians mentioned in the Pandora Papers desperately seeking legitimacy by having their pictures taken with the US president.”

 Kaisa de Bel

Policy Analyst, Global Financial Integrity

“The Pandora Papers have really exposed the United States as the primary tax haven of choice for the most powerful and wealthy elites. This includes celebrities but also kleptocrats and politicians accused of corruption and human rights abuses. They´ve all looked at the US as a safe haven for their dirty money. The Pandora Papers have really contributed to recognition by US lawmakers but also the general public that the US plays an important role in facilitating this.”

“South Dakota trusts currently hold about $360 billion in assets and the Pandora Papers show that this includes trusts linked to people linked to corruption and bribery and human rights abuses, and meantime other US states have been looking at South Dakota and the growth of the sector…similar problems already exist in states like Delaware, Alaska, Wyoming and Nevada.”

Will Fitzgibbon

Coordinator, ICIJ Africa and Middle East

“For first time we received significant information from inside trusts and service corporate providers within the United States which led us to look at South Dakota and the US trust industry. A few things struck me with the Pandora Papers, one is that with the data itself we did see reflections of the changing landscape of the offshore industry, how beneficial ownership registries in countries…really have had an impact on the way some people used offshore systems, usually that means that they try to find somewhere where there isn’t a beneficial ownership requirement, like the case of the King of Jordan and his advisers.”

“Politicians caught out this time in the Pandora Papers were better prepared and had more professional advice from lawyers, and PR companies to help them navigate this. The most striking example was the president of Kenya, Uhuru Kenyatta, who published a statement thanking journalists for the Pandora Papers, but also failing to answer any questions why he and his family had foundations in Panama set up through a private bank in Switzerland that had also been the private bank of [former Kenyan president] Daniel Arap Moi.”

Chenai Mukumba

Policy Research and Advocacy Manager, Tax Justice Network Africa

“The Pandora Papers [where 49 of the 330 politicians named, including heads of state, were African, and amid the rise of newer tax havens such as Casablanca and Kigali] really reiterated the need for African countries to improve their beneficial ownership transparency legislation, and do away with politicians and their family members’ ability to hide their interests in various entities that control state resources. For example, in Cameroon we saw that the wife of a former mining minister held interests in a mining company that had major iron ore exploration interests in the country at the time.”

“Unlike other regions, we haven’t seen as much traction in Africa [after the Pandora Papers release]. President Kenyatta of Kenya for example said he wasn’t listed in the Pandora Papers and he actually was. Part of the reason for that is that there’s been a sustained media misinformation campaign largely because the media particularly in Kenya and elsewhere is controlled by the state. The only country where we have seen some level of response has been Nigeria where the Code of Conduct bureau said they are investigating findings of Pandora Papers, but apart from that there hasn’t been much work on this.”

Alex Cobham

Chief Executive, Tax Justice Network

“The European Parliament is willing to call out the US as the biggest provider of financial secrecy to other countries’ tax residents, and calling out the United Kingdom which, with its network of dependent territories, is the biggest single actor in global tax havens…With the Pandora Papers, even more than the Panama Papers, people are coming out and saying, yes you got me but I didn’t do anything illegal, go away. Given the power of the elites which are pushing that line and all the professional enablers whose jobs depend on it, there’s a consistent drumbeat in the media, which they have better access to than we do, saying this is fine, there’s nothing illegal here.”

“Global revenue loses to cross-border tax abuse is $483 billion a year, a third of which is from offshore hiding by individuals, so we know that those lost tax revenues directly contribute to all sorts of social harms including higher child and maternal mortality particularly in lower income countries, why do we accept that? I don’t care if it’s legal, stop doing it! The risk is perhaps that we get to a position like in Kenya where there are so many revelations without action, that the public’s response to more revelations would be to roll their eyes over and think the elites have impunity and that’s it.”

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