Policy & GovernanceEconomyInvestmentMoneyPoliticsPandora Papers Leakage

Kennnedy MuturiFebruary 1, 202361210 min
source: www.guardian.com

The Pandora Papers leak contains 6.4 million documents, including three million photos, over a million emails, and nearly 500,000 spreadsheets.

So far, the following stories have been revealed:

  • The owners of almost 1,500 UK properties purchased through offshore companies, including persons accused of corruption
  • The Qatari royal family that dodged paying £18.5 million in tax on a London mansion
  • After selling the BHS retail chain, Sir Philip and Lady Green went on a property buying spree, which caused the senior Tory donor who was implicated in one of Europe’s greatest corruption scandals to go bankrupt.
  • Jordan’s King Hussein spent £70 million purchasing properties in the UK and the US through secretly-owned corporations.
  • The concealed involvement of Azerbaijan’s ruling family in property deals worth more than £400 million in the United Kingdom
  • The inability of the Czech prime minister to register an offshore investment firm used to purchase two French homes for £12 million.
  • How Kenyan President Uhuru Kenyatta’s family secretly held a chain of offshore corporations for decades.

The documents reveal how some of the world’s most prominent people, including more than 330 lawmakers from 90 nations, utilize hidden offshore businesses to hide their wealth.

According to Lakshmi Kumar of the US think tank Global Financial Integrity, these individuals “can funnel and drain money away and hide it,” typically through the use of anonymous corporations. The Pandora Papers expose complex cross-border networks of companies, resulting in disguised possession of money and assets.

For example, someone may possess a property in the United Kingdom but own it through a network of corporations situated in other countries or “offshore.”

These offshore governments or territories include:

It is simple to establish a business.

There exist restrictions that make it extremely difficult to identify the proprietors of businesses, and there is little or no corporate tax.

The locations are frequently referred to as tax havens or secrecy jurisdictions. There is no official list of tax havens. However, some of the most well-known include British Overseas Territories such as the Cayman Islands and the British Virgin Islands and countries such as Switzerland and Singapore.

Although this is typically regarded as unethical, legal loopholes allow people to lawfully avoid paying some taxes by shifting their money or establishing corporations in tax havens. According to the UK government, tax evasion “involves functioning within the letter, but not the spirit, of the law.”

There are also various valid reasons why people may want to keep money and assets in foreign countries, such as protection from criminal attacks or protection from unstable regimes. Although clandestine offshore assets are not unlawful, establishing a complicated network of private corporations to shift money and assets is ideal for concealing criminal proceeds.

There have been recurrent calls for politicians to make it more difficult to dodge taxes and hide assets, particularly in the aftermath of earlier leaks such as the Panama Papers. Mr. Ryle, on the other hand, claims that the Pandora Papers reveal that “the people who could end the secrecy offshore are benefiting from it.” As a result, they have little reason to finish it.

All you must do is establish a shell business in one of the countries or jurisdictions with strong degrees of confidentiality. It is a firm that exists in name, with no employees or a physical location.

However, it is not free. You pay a specialist firm to set up and administer a shell company on your behalf. These companies might provide an address and the names of paid executives, leaving no trace of who is behind the enterprise.

It is difficult to say for certain, but the ICIJ reports that estimates range from $5.6 trillion to $32 trillion. According to the International Monetary Fund, the use of tax havens costs governments up to $600 billion in missed taxes throughout the world each year.

Ms. Kumar believes it is harmful to society as a whole: “The capacity to hide money has a direct influence on your life…it affects your child’s access to education, access to health, access to a home. “The United Kingdom has been chastised for allowing anonymous companies to own property in the country.

In 2018, the government announced draft legislation requiring the ultimate owners of UK properties to be declared. However, it has yet to be presented to MPs. According to a 2019 parliamentary investigation, the UK system attracts persons “including money launderers, who may desire to use property to conceal unlawful profits.” According to the report, criminal investigations are frequently “hampered” since authorities cannot see who ultimately owns properties.

source: freepick.com

The government elevated the danger of laundering money through the property from “medium” to “high.”

It says it is cracking down on money laundering with stricter rules and enforcement. When legislative time allows, it will establish a register of offshore firms owning UK property.

The Pandora Papers are about 12 million leaked documents and files, revealing the hidden assets and dealings of international leaders, politicians, and billionaires. The data was gathered by the International Consortium of Investigative Journalists in Washington, DC, and it has resulted in one of the most extensive global investigations ever conducted. More than 600 journalists from 117 countries investigated the secret fortunes of some of the world’s most influential people. In the United Kingdom, the inquiry was led by BBC Panorama and the Guardian.

Kennnedy Muturi

Ken is a Quantitative Trader with experience in investments, quantitative finance, financial modelling and algorithmic trading in Global Investable Markets (GIM). He enjoys using Bayesian Statistics, Time Series and Machine Learning in developing Robust consistent Alphas in Equities Market, FX, ETPs and Derivatives instruments. He enjoys deep dives in understanding High Frequency Trading infrastructures and improving how the African financial markets work. He holds a Bachelor's in Actuarial Science from Strathmore Institute of Mathematical Sciences : An Executive Program in Algorithmic Trading (EPAT) certificate in Algo Trading from QuantInsti : A current MSc student in Financial Engineering at World Quant University.


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