The Pandora papers reveal the inner workings of what is a shadow financial world, providing a rare window into the hidden operations of a global offshore economy. Illustration: Guardian Design
The Pandora papers reveal the inner workings of what is a shadow financial world, providing a rare window into the hidden operations of a global offshore economy. Illustration: Guardian Design
I’m signing off now but you can read the latest summary here and our latest news story details how the Pandora papers revelations have overshadowed the start of the Conservative party conference in Manchester, England.
The prime minister and his ministers were forced to answer a string of questions about separate donations given by two businessmen – Mohamed Amersi and Viktor Fedotov – following revelations in the Pandora papers unearthed by the Guardian and BBC Panorama.
Anneliese Dodds, the chair of the Labour party, and Lisa Nandy, the shadow foreign secretary, were among those to challenge the Tories over the sources of their funding, with Dodds saying: “There can’t be one rule for senior Conservatives and their chums and another rule for everyone else.”
Since Tax Justice UK tweeted this 30 minutes ago, signatures have soared further, such that it has now reached more than 17,500 of its 20,000 target in a day.
Writing for Comment is Free, Oliver Bullough, author of Moneyland: Why Thieves and Crooks Now Rule the World and How to Take It Back, says the UK government can take unilateral action to clamp down on shell companies if it is so inclined.
Why does nothing get done? The reason is that kleptocrats, tax avoiders and other criminals are not the main users of shell companies. The world’s richest corporations, investment funds and individuals also like to use cheap, efficient and opaque corporate structures to move their wealth seamlessly around the globe; and any attempts to rein in the fraudulent use of shell companies will inevitably cost them money ...
Politicians are perhaps counting on the fact that voters are no longer shocked by these kind of allegations (a friend texted after the Pandora papers stories dropped on Sunday to ask, “Should I care this time?”), and are counting on the complexity of the material to baffle us into silence.
As it stands, we have a choice. We can surrender to that bafflement and do nothing but await the next giant data leak, while trust in our democracy corrodes further. Or we can take the one simple step that would solve this problem once and for all: abolish anonymous companies.
The government does not need to wait for international agreement, it can simply pass legislation that the true owners of companies operating in the UK must declare themselves. This wouldn’t solve all the problems we face. It wouldn’t even solve all the problems highlighted by the Pandora papers. But it would be a very good start.
My colleague Luke Harding, who co-authored the story on the Chernukhins (see last update) has tweeted some thoughts/background.
Weeks after becoming Russia's prime minister Vladimir Putin made Chernukhin the number two at VEB, a state-run bank. He then promoted him to deputy finance minister followed by VEB chief, a Cabinet level position. Chernukhin left #Russia in 2004 for London with $350m in assets
This very #Russian tale would have ended there were it not for the fact Lubov Chernukhin began donating ££££ to the Conservatives. The #PandoraPapers suggest she is "financially dependent" on her husband's offshore fortune. She has given £2.1m to the party. Legally, Tories stress
The #Chernukhins don't give interviews and have not explained their lavish support for Boris #Johnson and Co. The leak shows their ferocious attempts to avoid scrutiny - at one point suing their own offshore agent after it shared information on their companies with tax regulators
There is no suggestion of wrongdoing. But there are legitimate questions to be asked about what checks the #Tory party carries out on its multi-millionaire donors - and whether it is appropriate for unaccountable offshore-facing non-doms to influence British politics in this way
Top female Tory donor’s vast offshore empire with husband
The Pandora Papers have shone the light on another Tory donor, this time Lubov Chernukhin, one of the biggest female donors in recent British political history.
Chernukhin, a former banker married to the former Russian oligarch Vladimir Chernukhin, reportedly donates enough to the Tories to qualify for membership of a small group of ultra-rich donors who meet monthly with Johnson and his chancellor, Rishi Sunak. What this exclusive club discusses is not made public, write Harry Davies and Luke Harding.
The Pandora papers shed a revealing light on the Chernukhins. Leaked files reveal their extraordinary reliance on the hidden offshore world, and thereby offer a clue as to their interests. The couple go to remarkable lengths to keep their wealth and financial arrangements secret, the leak suggests, instructing lawyers over a tax authority dispute that spanned France, Switzerland and the British Virgin Islands (BVI).
The papers also suggest Lubov Chernukhin’s money flows, at least in part, from her husband’s multifarious corporate structures. That raises the question over the extent to which it is Vladimir, not Lubov, who may be the ultimate source of some of the cash flowing into the Conservative party ...
In 2015, Johnson boldly stated that checks by the party had assured him Vladimir Chernukhin was not a Vladimir Putin “crony”. All checks had been carried out, he said. The leak nonethelesssuggests that Chernukhin may have in recent years remained on good terms with Kremlin-connected figures in Moscow: among them the wife of a government minister, with whom he owned a factory. At least until recently, Vladimir Chernukhin appears to have retained assets in Russia, some of them dating back to when he was a deputy finance minister under Putin and a powerful state banker.
In their response to the Guardian, the Chernukhins’ lawyers said Vladimir had not accumulated any of his wealth in a corrupt manner
South Dakota is sheltering billions of dollars in wealth, some linked to individuals and companiesaccused of financial crimes or serious wrongdoing, according to documents in the Pandora papers.
The files suggest the US midwestern state now rivals Switzerland, Panama, the Cayman Islands and other famous tax havens as a premier venue for the international rich seeking to protect their assets from local taxes or the authorities, David Pegg and Dominic Rushe write.
Wealthy foreign individuals and their families are moving millions of dollars to South Dakota trust funds, which enjoy some of the world’s most powerful legal protections from taxes, creditors and prying eyes.
Government authorities in at least nine countries have announced investigations into the financial activities of some of their most high-profile citizens and institutions in response to the Pandora Papers. Officials in India, Pakistan, Mexico, Spain, Brazil, Sri Lanka, Australia, Panama, and the Czech Republic promised inquiries.
Kenya’s president, Uhuru Kenyatta, has praised the leak even though it exposes the offshore fortune of his family. He promised a full response only when he returns from a trip to the Americas.
Vladimir Putin’s spokesperson Dmitry Peskov dismissed the Pandora papers as “unsubstantiated claims” and said that no hidden wealth was found in the Russian president’s inner circle. Putin does not appear in the files by name, but numerous close associates do, including his best friend from childhood – the late Petr Kolbin – whom critics have called a “wallet” for Putin’s own wealth, and a woman with whom the Russian leader was allegedly once romantically involved.
Edward Snowden, the whistleblower behind the biggest intelligence leak in history, has paid tribute to whoever leaked the Pandora papers. “Hats off to the source,” he said.
Boris Johnson has insisted that all donations to the Conservative party are vetted in accordance with rules. The leak revealed that Mohammed Amersi, a donor to his leadership campaign was involved in one of Europe’s biggest corruption scandals. Labour called on the Conservatives to return Amersi’s donations.
Rishi Sunak says it not a source of shame that London has a reputation as the tax avoidance capital of the world. He promised that the UK tax authorities would review what can be learned from the leak.
Andrej Babiš, the Czech prime minister, claimed the disclosure that he used a convoluted offshore structure to buy a mansion £13m in the south of France as deliberate attempt to damage his chances in this week’s general election. He said: “I don’t own any offshore, I don’t own any real estate in France, and all the money I lent then I got back, so let the police investigate it.”
Pakistan’s prime minister, Imran Khan, promised that his government will investigate all those mentioned in the leak.Moonis Elahi, a prominent minister in Khan’s government, contacted an offshore provider in Singapore about investing $33.7m, the leak reveals.
Jordan’s King Abdullah II claimed the leak was defamatory after it revealed he disguised his ownership of properties via a series of offshore firms. In a statement he said reports about leak “included inaccuracies and distorted and exaggerated the facts”.
The Tony Blair Institute has accused the Guardian of deliberately misrepresenting the purchase of Cherie Blair’s office premises. It says the Blairs have always paid their taxes in full and have never used offshore avoidance schemes of any kind.
Pandora Papers latest: the secretive owner of an energy company which donates to the Tory party & Tory MPs was allegedly involved in a billion-dollar fraud.
Dirty money has infected our politics. Access & influence is cheap. Our democracy is under threathttps://t.co/WMJurPDbmS
India’s finance ministry has also promised an investigation into what the leak reveals. In a statement, it said:
The Government has taken note of these developments. The relevant investigative agencies would undertake investigation in these cases and appropriate action would be taken in such cases as per law. With a view to ensure effective investigation in these cases, the Government will also proactively engage with foreign jurisdictions for obtaining information in respect of relevant taxpayers/entities. The Government of India is also part of an Inter-Governmental Group that ensures collaboration and experience sharing to effectively address tax risks associated with such leaks.
It may be noted that following earlier similar such leaks in the form of ICIJ, HSBC, Panama Papers and Paradise Papers, the Government has already enacted the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 with an aim to curb black money, or undisclosed foreign assets and income by imposing suitable tax and penalty on such income. Undisclosed credits of Rs. 20,352 crore approximately (status as on 15.09.2021) have been detected in the investigations carried out in the Panama and Paradise Papers.
Names of only a few Indians (legal entities as well as individuals) have appeared so far in the media. Even the ICIJ website (www.icij.org) has not yet released the names and other particulars of all the entities. The website of ICIJ suggests that information will be released in phases and structured data connected to the Pandora Papers investigation will be released only in the days to come on its Offshore Leaks Database.
Further, the Government has directed today that, investigations in cases of Pandora Papers leaks appearing in the media under the name ‘PANDORA PAPERS’ will be monitored through the Multi Agency Group, headed by the Chairman, CBDT, having representatives from CBDT, ED, RBI & FIU.
Tory peer did not declare secret offshore investments, leak suggests
Simon Goodley
The Conservative peer Lord Deighton, the government’s personal protective equipment tsar at the height of the pandemic, did not declare secret offshore investments that appear in the Pandora papers leak.
A former commercial secretary to the Treasury and the chief executive of the London Organising Committee of the Olympic and Paralympic Games, Deighton had declared his investments were all in a blind trust.
However, the offshore leak reveals how Deighton and his wife, Alison, invested in a series of undeclared startup companies via British Virgin Islands-based funds managed by the venture capital group Dawn Capital.
The couple’s shareholdings included one stake acquired directly by Deighton, and four by his wife, in five startup companies between 2011 and 2013. One investment the Deightons had previously kept hidden from the public was Lady Deighton’s holding in the controversial former payday loan company Wonga.
The SNP’s finance spokeswoman, Alison Thewliss MP, said the leak is an opportunity for radical reform.
The Tories are sinking in a sea of sleaze and corruption, with the Pandora papers merely the latest in a seemingly never-ending series of embarrassing revelations for the Conservatives.
But it provides the UK government with an opportunity for radical action – I am urging them to take it. Otherwise, they will continue to be responsible for perpetuating corruption and potential tax criminality.
Rishi Sunak must ensure that rigorous regulation is brought forward to create a tax-system that works for everyone, including cracking down on the abuse of Scottish Limited Partnerships and properly resourcing Companies House to carry out appropriate enforcement – something that the SNP has been calling for for years.
It is time the Tories turned hollow rhetoric into action and started holding to account those who continue to exploit offshore tax havens.
I won’t hold my breath however, given we have already endured years of cronyism where – it seems – a free pass is given to anyone willing to donate to the Tory party.
"Pandora Papers: How can Ireland be a large source of foreign investment in Uzbekistan?"
Czech Prime Minister and leader of the ANO movement, Andrej Babiš at television debate for the parliamentary elections Photograph: Martin Divíšek/EPA
Andrej Babiš, the beleaguered Czech prime minister, has cast the disclosure that he used a convoluted offshore structure to buy a mansion £13m in the south of France as a deliberate attempt to damage his chances in a general election due this week.
The former tycoon struck a defiant yet defensive pose on Monday when appearing on Czech Television, to address the revelations in the Pandora Papers.
Four days before voters go to the polls in an election to be held on Friday and Saturday, Babiš depicted an expose scrutinising the financial arrangements of a wide range of international public figures in political and personal terms applying predominantly to himself, suggesting that its publication had been specifically timed to damage his re-election prospects.
He said:
In 2017, I was accused of not having enough money for the bonds. Of course, the police investigated it, of course nothing turned up, so it is timed before the elections to influence the public again and to damage me – a 12-year-old thing. I don’t own any offshore, I don’t own any real estate in France, and all the money I lent then I got back, so let the police investigate it.
Surveys show Babiš’ ANO (Action for Dissatisfied Citizens) party, the biggest grouping in a minority governing coalition, holding a narrow lead over opposition factions in the run-up to the poll. Analysts have doubted whether the revelations will affect the electoral outcome but the fall-out could complicate the prime minister’s prospects of forming a new coalition in any post-election negotiations with other parties.
Babiš admitted that the arrangement for buying the French property were inappropriate for a politician but pointed out that it took place before his formal launch of ANO in 2012, an initiative he marketed at the time as a crusade to stamp out corruption in Czech politics.
“Of course a politician cannot afford to do that, but I did the transaction twelve years ago,” he said.
And he denied suggestions that the arrangement was a money laundering scheme and said he had been advised by an estate agent to use offshore structures, according to the Czech news server, Seznam Zpravy. Babiš said:
They say it is suspected money laundering. I sent the money from a Czech bank as a loan, the money was taxed, I can show you that, and the money was returned before I went into politics.
Czech police’s organised crime unit is to investigate the disclosures relating to Babiš as well as those linked to around another 300 Czechs named in the papers, a spokesman said.
Kenya’s President Uhuru Kenyatta attends the Generation Equality Forum Photograph: Ludovic Marin/AFP/Getty Images
Kenya’s president, Uhuru Kenyatta, is coming under pressure to explain why he and his close relatives amassed more than $30m of offshore wealth, including property in London.
Kenyatta and six members of his family have been linked to 13 offshore companies, the BBC reports.
He has previously portrayed himself as an enemy of corruption. In 2018 he said: “Every public servant’s assets must be declared publicly so that people can question and ask: what is legitimate?”
In an initial response to the leak he said the documents will “lift the veil of secrecy” but he said he will offer a full response only when he returns from a trip to the Americas.
His Excellency President Uhuru Kenyatta’s attention has been drawn to the ongoing media coverage of the International Consortium of Investigative Journalism (ICIJ) Pandora Papers leaks and would like to make the following intervening response:
My attention has been drawn to comments surrounding the Pandora Papers. Whilst I will respond comprehensively on my return from my State Visit to the Americas, let me say this:
That these reports will go a long way in enhancing the financial transparency and openness that we require in Kenya and around the globe. The movement of illicit funds, proceeds of crime and corruption thrive in an environment of secrecy and darkness.
The Pandora papers and subsequent follow up audits will lift that veil of secrecy and darkness for those who can not explain their assets or wealth. Thank you.
🇰🇪 Kenyan President Uhuru Kenyatta issued a statement praising the #PandoraPapers, which exposes the offshore fortune of him and his family.
As Kenyans died of hunger, Ngina Kenyatta, Uhuru Kenyatta's mother and her 2 daughters, held shares in Milrun International Ltd., which they used to buy a London apartment in the upscale Westminster neighbourhood. Dirtier than skunk! #PandoraPapers
Government authorities in at least eight countries have announced investigations into the financial activities of some of their most high-profile citizens and institutions as the world begins to react to the Pandora Papers, the International Consortium of Investigative Journalists reports.
Officials in Pakistan, Mexico, Spain, Brazil, Sri Lanka, Australia and Panama quickly promised inquiries while global watchdog groups demanded action in the wake of stories revealing how billionaires, politicians and criminals exploit a shadow financial system that covers up tax dodging and money laundering.
Authorities in the Czech Republic tweeted on Monday that they will investigate those named in the Pandora papers, including the prime minister, Andrej Babiš , who is in the midst of a re-election campaign.
Pakistan’s prime minister, Imran Khan, vowed to investigate all citizens named in the investigation and to “take appropriate action” if wrongdoing is found.
The sheer size of the leak is hard to fathom: 11.9m files making up 2.94 terabytes of data, making it the largest such project handled by the International Consortium of Investigative Journalists, with whom the Guardian partnered, by volume.
If you were to download the combined Wolf Hall trilogy by Hilary Mantel you would use up 6.8MB on your Kindle: 2.94TB is more than 400,000 times that. It is 220,000 times the storage required for Shakespeare’s complete works and 990,000 times bigger than the storage capacity required for the Bible.
Although no one knows for sure how much money is hidden in tax havens, of which the British territories make up a significant chunk, the figures involved are so vast that academics at the Transnational Institute in the Netherlands have described them as “the backbone of global capitalism”.
Seen this way, the constitutional flexibility of the British state isn’t just some post-medieval hangover. It’s a hyper-modern tool in an era of global surveillance capitalism, where the rich can flit around offshore while the rest are forever trapped by borders.
Through its empire, the British state played a key role in inventing modern capitalism. Now, the UK is helping reinvent capitalism once more, by extending the protection of a constitution designed by the powerful, for the powerful, to the billionaires, oligarchs and criminals of the world.
The Czech national organised crime headquarters said Monday it was launching a probe.
But Babiš insisted he has “never done anything illegal or wrong” and slammed the allegations as a smear campaign against him and his ANO (YEs) party that is tipped to win an election later this week.
“Laundering hundreds of millions via tax havens? YES!” read a parody of Babiš’s ANO (YES) party posters posted by Pirate party chief Ivan Bartos on his Facebook page.
“Andrej Babiš collects (criminal) cases like Pokemons,” tweeted Marketa Pekarova Adamova from the centre-right Together grouping.
Jan Hamacek, whose left-wing Social Democrats form a minority government with ANO, said he hoped Babis “does not preach water in the Czech Republic while drinking wine in tax havens”.
Analysts said the scandal was unlikely to sway Babis’s base and so torpedo his expected victory in the election, dominated by the economic fallout of the Covid-19 pandemic.
“Babiš fans have forgiven him on many occasions, and this will be another one,” Otto Eibl, a political analyst at Masaryk University in Brno, told AFP.
