Pandora papers expose how the world’s elite amass their wealth | by Rachel Fumilayo Lawal | October 2021

The idea that the rich and the global elite amass their enormous wealth through offshore tax havens and real estate investments is not new, nor surprising. The recent Pandora Papers leak, which involves countries in the Eastern Hemisphere such as Russia, Ukraine, Lebanon and Kenya, only further solidifies this notion.

The Pandora Papers were published on October 3; they are the result of the International Consortium of Investigative Journalism (ICIJ) review of over 11.9 million confidential documents exposing the wealth hoarding habits and mechanisms of over 330 global politicians, world leaders and high income celebrities. Among those appointed are former British Prime Minister Tony Blair, Kenyan President Uhuru Kenyatta, Lebanese Prime Minister Najib Mikati, Ukrainian President Volodymyr Zelensky and Colombian singer Shakira, as well as many others.

The shock of this revelation does not come from the facts of the situation itself, but rather from the hypocrisy of the politicians and leaders blamed by the leaks. Many of them represent countries that are in the throes of civil unrest over economic inequality and government corruption, issues these leaders have publicly rallied against while cutting corners and ignoring laws to keep their fortunes intact. Ukrainian President Volodymyr Zelensky is one example, having publicly condemned government corruption while using offshore banks to secretly buy three houses in London.

NYU professor of international relations Muserref Yetim said in an interview with Local that the publication of these documents will help prosecutors build a case against those who commit financial malfeasance and professional misconduct, such as tax evasion. , profit transfer, companies and fictitious accounts, shadow banking. Comparing the Pandora Papers to the impact of the 2016 Panama Papers, she added, “The publication of the Panama Papers has successfully pursued several high-profile cases.

With the names of the culprits now made public, along with the monetary value of the assets involved, all that remains is to prosecute those involved, acting on the precedent set by the 2016 leak. Investigations have begun, as the Chilean president faces possible impeachment.

This is the second time in recent history that information of this magnitude has been published. According to Yetim, the best way to fight tax evasion on a global scale is to have international legislation that goes beyond the G20, which has only 19 countries and the European Union, as a fully collaborative effort is needed to fight against tax evasion.

Yetim explained how five years ago, after the Panama Papers leaked, the EU developed the Anti-Tax Avoidance Directive (ATAD). This directive was in addition to the pre-existing framework on Base Erosion and Profit Shifting (BEPS) developed by the G20. The publication of the Pandora Papers, however, proves that implementing such guidelines is not that easy.

Yetim states that “G20 countries must redouble their efforts to bring more countries into compliance with the BEPS framework, increase overall tax transparency, find effective solutions to the use of shell companies and address the challenges posed by front companies. cryptoassets and digitization. economy. This requires a restructuring of the global tax system to end tax evasion, financial embezzlement and profit shifting. “

The global collaboration required for meaningful action has been made even more relevant due to the widespread digitization of the global economy, with cryptocurrency increasing in popularity and value on a daily basis. “Tackling the current challenges of the international tax system is beyond the capabilities of a nation-state and requires cooperation between states but also multinational companies,” added Yetim.

Due to the difficulty of taking action on a global scale, Yetim suggests pushing for legislative change as an alternative way to address these issues. “What we can do as citizens is to push our elected officials to work on closing tax loopholes, tax havens in the United States and, more importantly, I think, to push for a reform of the financing. political campaigns to reduce the influence of money in our politics. system, ”she said.

When asked if she felt the publication of these documents had an impact on working class individuals, Yetim said, “On some level we all know that, especially in the United States , the rich have ways of avoiding taxes.

Yetim stressed the importance of solving the tax evasion crisis. “The Panama Papers and other similar documents published before showing the challenges facing nation states in terms of preventing tax evasion,” she said. “If the government cannot effectively tax its wealthy citizens, it leads to an unequal distribution of the tax burden within the country. “

An example of this is seen in the United States, where billionaires and Fortune 500 companies sometimes pay little or no tax, imposing billions of dollars in tax burdens on the working and middle classes. Much of the working class is already aware of this.

Shortly after the release of the Pandora Papers, President Joe Biden announced a new initiative to give the IRS access to more banking information about working-class Americans. Proposed as a way to finance a multibillion-dollar infrastructure bill, the initiative has generated a lot of backlash: The Pandora Papers have just revealed a secret economy worth billions of dollars in the hands of the elite, yet the US government is concerned about banking transactions of $ 600 or more.

“This provision also raises a series of questions about the Fourth Amendment which protects citizens from unreasonable government searches and seizures and invasion of privacy,” Yetim said of the initiative. “Banks already report to the IRS any account that earns interest over $ 10 and any transaction over $ 10,000. If passed, it may be an example of government overtaking. “

Yetim added that the culmination of these failed tax avoidance policies and the existence of national tax havens and trusts in states like South Dakota, Florida, Delaware, Texas and Nevada will continue to weigh on the working class and the middle class, which will lead to what it claims is a bad future for democracy in the United States. “In the long run, the further squeezing out of the middle class does not bode well for the future of liberal democracy,” she said.