The shortlist for the Fetisov Journalism Awards 2021 will shortly be announced. One of the prestigious prizes will go to investigative reporting. In this article FJA Honorary Advisor Aidan White explains why the Pandora Papers story is further proof that democracy depends more than ever on investigative journalists working together to combat corruption.
Global Corruption Can Only Be Fixed Through Global Journalism
By Aidan White
The release of the Pandora Papers on October 3 was one of the most extraordinary achievements of cross-border collaboration in the history of journalism.
The Pandora Papers involved the leak of millions of documents which expose the secret deals and hidden assets of some of the world’s richest and most powerful people.
Some of these people were breaking the law, many were not, but all of them were secretive and trying to avoid paying taxes. The most powerful of them – political leaders, heads of state, public figures from all parts of the world were subverting democracy and hiding information that people have a right to know.
In all, the leak provided 11.9m files from companies hired by wealthy clients to create offshore structures and trusts in tax havens around the world.
After forensic examination journalists revealed the secret offshore deals and assets of more than 100 billionaires, 30 world leaders and 300 public officials in more than 90 countries.
The files were leaked by a whistleblower to the International Consortium of Investigative Journalists (ICIJ) in Washington. It shared access to the information with more than 600 journalists from 150 media outlets in 117 countries.
Working together and sharing tips on how to interpret the data, the journalists painstakingly sifted through the files as part of a massive global investigation. It was a monumental task that took 18 months to complete.[1]
This vast operation provides yet more evidence that investigative journalism as practised by this week’s Nobel Peace Prize winners Maria Ressa from the Phillippines and Russian editor Dimitry Muratov is of paramount importance in the defence of human rights and democracy.
The Pandora Papers investigation was paid for by media outlets, but it could not have happened without the support of the ICIJ, an independent non-profit network which is supported by donations from a number of major global foundations and media support organisations, including the Open Society Foundation and three prominent Norwegian funds -- Fritt Ord, one of the world’s richest media support groups, Tinius Trust, owner of Scandinavia’s biggest media corporation, and Norad, the Norwegian overseas development ministry. [2]
The Pandora Papers represent the latest – and largest in terms of data volume – in a series of major leaks of financial data that have convulsed the offshore world since 2013. In 2016 the Panama papers, and a year later the Paradise papers, produced enormous amounts of data, but with 2.94 terabytes of information, the Pandora Papers is the largest of the three leaks.
The files also come from a much wider array of offshore providers than previous leaks: 14 in total. Locations range from Vietnam to Belize and Singapore, and to far-flung island nations such as the Bahamas and the Seychelles.
Setting up or benefiting from offshore entities is not itself illegal, and in some cases people may have legitimate reasons, such as security, for doing so. But the secrecy offered by tax havens proves attractive to tax evaders, fraudsters and money launderers, some of whom are exposed in the files.
The leak to the ICIJ is of confidential records of 14 offshore companies that help wealthy individuals and corporations set up or get access to shell companies, trusts, foundations and other entities to avoid paying tax at home. These entities enable owners to conceal their identities from the public and sometimes from financial regulators.
The source of the leak is being protected.
In addition to the rich, the famous and the infamous, those exposed include people who don’t represent a public interest and have not been reported by media – including small business owners and professional people out of the public spotlight.
Some files date back to the 1970s, but most were created between 1996 and 2020. They cover a wide range of matters and particularly the use of shell companies, foundations and trusts to purchase property, yachts, jets and life insurance; to make investments and to move money between banks; and to the avoidance of taxes and inheritance duties through complex financial schemes. Some documents are tied to financial crimes, including money laundering. But much of the activity is not illegal.
The Pandora Papers also reveal how banks and law firms work closely with offshore service providers but these providers don’t always know their customers, despite their legal obligation to take care not to do business with people who engage in questionable dealings.
The investigation also reports on how in the United States providers take advantage of some states’ laws that promote secrecy and help wealthy overseas clients hide wealth to avoid taxes.
In a development likely to prove embarrassing for the US president, Joe Biden, who has pledged to lead efforts internationally to bring transparency to the global financial system, the US emerges from the leak as a leading tax haven.
The files suggest the state of South Dakota, in particular, is sheltering billions of dollars in wealth linked to individuals previously accused of serious financial crimes.
But aside from criminal activity the papers expose how wealthy individuals and companies stash their assets offshore to avoid paying tax elsewhere, a legal activity estimated to cost governments billions in lost revenues.
The king of Jordan King Abdullah II, for example, according to leaked documents amassed a secret $100m property empire in Malibu, Washington and London. The king says there would be nothing improper about him owning properties via offshore companies.
In Azerbaijan, the president, Ilham Aliyev, and his wife, Mehriban Aliyeva have traded close to £400m of UK property in recent years.
In the Czech Republic billionaire prime minister Andrej Babiš faced questions over why he used an offshore investment company to acquire a $22m chateau in the south of France. Only days after this damaging disclosure Babiš suffered a surprise general election defeat, plunging the country into political crisis.
In Cyprus, president Nicos Anastasiades will be asked to explain why a law firm he founded was accused of hiding the assets of a controversial Russian billionaire behind fake company owners.
Ukraine’s president, Volodymyr Zelenskiy, who was elected in 2019 on a pledge to clean up the corrupt economy, is also named. Zelenskiy transferred his 25% stake in an offshore company to a close friend who now works as the president’s top adviser, the files suggest.
In Russia, president Vladimir Putin does not appear in the files. But numerous close associates do, including his best friend from childhood – the late Petr Kolbin – and a woman the Russian leader was allegedly once romantically involved with.
In Pakistan, Moonis Elahi, a minister in the government of Imran Khan, will be asked to explain why he contacted an offshore provider in Singapore about investing $33.7m.
Kenya’s president, Uhuru Kenyatta, is also named in the papers. Kenyatta, who has portrayed himself as an enemy of corruption will come under pressure to explain why he and his close relatives amassed more than $30m of offshore wealth, including property in London.
Not everyone named in the Pandora Papers is accused of wrongdoing.
In Britain, the former Labour Prime Minister Tony Blair and his wife, the prominent lawyer Cherie Blair, saved themselves £312,000 in property tax when they purchased a London building partially owned by the family of a prominent Bahraini minister.
They bought a £6.5m office by acquiring a British Virgin Islands (BVI) offshore company. While the move was not illegal, it’s not a good look for a politician called “the vicar” by Britain’s leading satirical magazine Private Eye because of his self-righteous demeanour when in power.
On the other side of the political divide a prominent Tory donor who has also helped pay for Boris Johnson's rise to power was found to be caught up in one of Europe's biggest corruption scandals.
Leaked papers show that Mohamed Amersi, who has given nearly £525,000 to the Conservative Party, was shown to have worked on a series of controversial deals for the Swedish telecoms company Telia that was later fined £700m in a US prosecution.
The BBC reports that his donations have included more than £100,000 towards the 2019 general election campaign and £10,000 to the prime minister's leadership bid.
The Pandora Papers gathered information on more than 27,000 companies and 29,000 so-called ultimate beneficial owners from 11 of the providers, or more than twice the number of beneficial owners identified in the Panama Papers.
ICIJ eliminated duplications in the data and identified key elements, such as nationality of the owner, country of residence and place of birth. Passport data was an invaluable asset in this process.
This led them to discover, for example, nearly 3,700 companies with more than 4,400 beneficiaries who were Russian nationals – the most among all the nationalities in the data.
The figure includes 46 prominent Russian business people, or oligarchs, who made their money in the years immediately following the break-up of the Soviet Union.
Journalists used the latest data-mining technology including machine learning and other tools, including the Fonduer and Scikit-learn softwares, to identify and separate specific forms from longer documents.
Once information was extracted, the reporters used graphic platforms (Neo4J and Linkurious) to generate visualizations and make them searchable. This allowed reporters to explore connections between people and companies across providers.
Potential stories in the data were matched with other data sets: sanctions lists, previous leaks, public corporate records, media lists of billionaires and public lists of political leaders. For example, ICIJ’s partner in Sweden, the national broadcaster SVT, generated spreadsheets containing data extracted from passports found in the Pandora Papers.
Not all the journalists and editors were as tech-savvy as they needed to be and training sessions were also organised to ensure that they had the skills needed to analyse and understand the information.
Gerard Ryle, the director of the ICIJ, told The Guardian he expected the Pandora Papers to have a greater impact than previous leaks, not least because they were arriving in the middle of a pandemic that had exacerbated inequalities and forced governments to borrow unprecedented amounts to be shouldered by ordinary taxpayers. “This is the Panama papers on steroids,” Ryle said. “It’s broader, richer and has more detail.”[3]
At least $11.3tn in wealth, equivalent to around half the annual GDP of the entire United States, is held offshore, according to a 2020 study by the Paris-based Organisation for Economic Co-operation and Development (OECD). “This is money that is being lost to treasuries around the world and money that could be used to recover from Covid,” Ryle said
The papers not only exposed corruption in public life on a grand scale but also demonstrate why, when democracy is under threat and when autocrats are in charge and when unimaginable trillions of wealth is being is amassed by elite centres of power, we need to nurture ethical media and in particular those courageous, patient, sensitive and tough reporters and editors engaged in investigative journalism.
This journalism not only exposes the secrets of the rich and powerful, it holds them to account. It also shows where society is going wrong. By keeping us informed of unfairness, inequality and corruption it gives us a chance to put things right.
[1] For full background go to https://www.icij.org/investigations/pandora-papers/about-pandora-papers-leak-dataset/
[2] For a full list of donors go to https://www.icij.org/about/our-supporters/
[3] https://www.theguardian.com/news/2021/oct/03/pandora-papers-biggest-ever-leak-of-offshore-data-exposes-financial-secrets-of-rich-and-powerful?CMP=Share_AndroidApp_Other