What do the Pandora Papers Teach Us?

Adam Smith, ISL(RCIT in Israel/Occupied Palestine), 09.10.2021

The rich and powerful in virtually every country have been named in the Pandora Papers, a leak that showed how offshore companies can be used to evade taxes and transparency requirements. Let’s talk a look at some:

In Jordan:

“Jordan’s King Abdullah II amassed about $100m worth of property in the United States and United Kingdom through secret companies. They were purchased between 2003 and 2017 via firms registered in tax havens and include properties in Malibu, southern California, and Washington and London.

DLA Piper, a London law office representing Abdullah, told the ICIJ that he had “not at any point misused public monies or made any use whatsoever of the proceeds of aid or assistance intended for public use”.

The royal palace said in a statement on Monday that the king’s ownership of private properties in the UK and the US was not a secret, adding that privacy and security reasons were behind not disclosing it.” [1]

Jordan is a kingdom with very limited human rights for its citizens (where not even the royal family is protected from that), but little is heard in Western media as it is on the “right side” – aka an ally of Israel and the US.

“According to The Washington Post, Hamzah was placed under restriction at his Amman palace amid an alleged plot to unseat King Abdullah II.

“The move followed the discovery of what palace officials described as a complex and far-reaching plot that included at least one other Jordanian royal, as well as tribal leaders and members of the country’s security establishment,” the report said.

The official Jordanian media initially reported that Hamzah has been placed under house arrest.

Later, however, a Jordanian official was quoted as saying that “His Royal Highness, Prince Hamzah bin Hussein was not under house arrest or detention, contrary to reports in the media.”

Hamzah is the elder son of the late King Hussein and his American-born wife, Queen Noor. He was named Crown Prince of Jordan in 1999, a position he held until his half-brother, King Abdullah II, rescinded it in 2004.

Hamzah, an outspoken critic of corruption in Jordan, had called for holding those responsible to account.” [2]

At that time, the King, in order to prop up his failed and corrupt rule and to distract from those issues, didn’t give permission for Netanyahu to fly over Jordan to the UAE, after Israel demanded that Israeli guards accompany the prince for the prayer in Al Aqsa. But this will not fool any one, the King has no discontinued economic agreements with Israel as demanded in the Jordanian parliament or taken any real steps against Israel.

In Russia:

“The Washington Post said Russian woman Svetlana Krivonogikh became the owner of a Monaco apartment via an offshore company incorporated on the Caribbean Island of Tortola in April 2003, just weeks after she gave birth to a girl.

At the time, she was in a secret, years-long relationship with Russian President Vladimir Putin, the Post said, citing Russian investigative outlet Proekt.

The report also revealed Putin’s image-maker and chief executive of Russia’s leading TV station, Konstantin Ernst, got a discount to buy and develop Soviet-era cinemas and surrounding property in Moscow after he directed the 2014 Winter Olympics in Sochi.

Ernst told the organisation the deal was not secret and denied suggestions he was given special treatment.” [3]

It seems that Putin gives away assets for his corrupt friends also to try and avoid Western sanctions against him.

In Austria:

“The tourism project in Bigova Bay in the city of Couture in Montenegro was launched in 2006, but did not get up to this day. The local landscape – mountains that are covered forests falling into the Adriatic Sea through countless crisps – looks like a perfect background to a resort site that can attract well off tourism. The investments of the same period in Balkans and Eastern European countries also contributed to the attraction of the area. To establish the venture, a company opened with its name. The Company was accompanied by 20 million euros from an Austrian Bank named Hypo Alpe-Adria, and began to purchase land in the intended area. The acute economic crisis of 2008 shuffled the cards. Beyond his influence on land prices, the crisis also led to the collapse of the lender’s bank, to his nationalization and the flow of an extraction package in billions of the Austrian taxpayer. As part of the nationalization, the Bank’s banking license was canceled. It became a company called HETA Asset Resolution, aimed at returning the value of the remaining assets and returning as much as possible to the Austrian finance fund.

Five years passed from the crisis without material progress in Bigube Bay. In 2013, in an attempt to save the company from collapse, a triangular transaction which was signed by Robert Plachuk Holdings, owned by the Austrian multimillionaire Martin Schlaff, which is recognized by the Israeli public for his connections with local politicians, and who held the casino operating in Jericho and the fact that he had been involved in a police investigation. His part in the transaction of Heta (former bank) was another loan to Bigube Bay, this time a total of 22 million euros. In other words, the company’s company received the lands purchased on the picturesque site, but also a debt of 42 million euros.

Immediately after the agreements were signed, Ramon began to ask for a haircut for the obligations. In September 2016 Ramon’s company sent to Heta a significant reduction in debt and attached an assessment of Shamai. This opinion evokes additional questions; For example, it exceeds that a decade after the project has been launched, conducted a legal struggle on some of the lands for which it acquired, and they were the only property in its portfolio. The scheduled date for the beginning of the work, according to the document, was not clear.

In the opinion of the appraiser, the Company’s assets were estimated at 14.4 million euros – less than one third of its duties, as reported to the Registrar of Local Companies in Montenegro. “Therefore,” Ramon’s society wrote to Heta, “We express our concern that a significant reduction in Heta’s claim is inevitable to achieve a settlement quickly.” [4]

In other words, fictitious assets with no value are sold to a company which is supposed to recover debt paid by the Austrian government, or a bailout in other words. If there is money to fund failed banks and tycoons, not a single cent should be cut from the public pension! It should be noted that the mentioned Haim Ramon is a former Israeli brass general and a convicted sex offender (this fact hasn’t stopped Tel Aviv University from letting him teach a course [5]).

The defenders of capitalism say that it is legal-which could be true, since they get to write the laws – and that this industry creates jobs/raises revenue for the state, but once again this is at the expense of another state in a race to the bottom.

Offshore companies also allow for the evasion of local workers’ and environmental protections.

“On a cold December day in 2005, a lab analyst named Pietro Mancini descended into the basement of an aging chemical factory in the northern Italian town of Spinetta Marengo, where he discovered something curious: a coating of yellow dust on the walls and floor, left behind, apparently, by melted snow that had flooded the room.

In a storeroom in a separate building, he found sludge — also yellowish — oozing from a crack in a baseboard. He took a sample. A test revealed that the substance was brimming with hexavalent chromium, a heavy metal known to cause cancer.

When Mancini complained about the health threat to workers, his plant manager and his lab chief downplayed the risks, Mancini later testified. “They told me not to worry … that it wasn’t my business,” he said.” 

In the case of the de Laguiche family, the hidden wealth included millions of dollars worth of shares in Solvay, which owns chemical plants with long-standing pollution problems. The records show that some of their assets were shifted from Switzerland, which was improving its transparency standards, prompting financial advisors to recommend more secretive locales.

Over the past two decades, dozens of Solvay workers and people living near Solvay facilities have sued the company over water and soil pollution, the loss of farmland and a range of maladies including mesothelioma, a cancer caused by asbestos. During that time, the company has paid at least $74 million in court awards for environmental violations, an ICIJ review of public records found. The company said it has spent more than $55 million to clean contaminated areas globally.

“It’s the middle class and the poor who are paying for everything, because the wealthy have found a way not to pay their fair share,” said Eric Kades, a professor specializing in trusts and wealth inequality at William & Mary Law School. 

De Laguiche was later acquitted. He declined to comment on the legal case and the management of his family’s assets, but said he didn’t move wealth offshore in response to the Italian investigation or to avoid taxes.” [6]

The art market is another good example of favorable tax rules and games with assets valuation:

“Critiques of the art market’s rise often revolve around anxieties about art’s commodification: What happens to the notion of art as a public good when its value is primarily measured in dollars? But that isn’t the only thing at stake. In the book’s final section, Adam examines the ways in which the notoriously secretive art business, coupled with lax regulatory oversight, has enabled vast sums of money to change hands without public scrutiny. She cites a number of high profile scandals involving money laundering, stolen property, and shady self-dealing. There is, for instance, the so-called “Bouvier Affair,” a legal dispute between the Russian oligarch Dmitry Rybolovlev and the Swiss “Freeport King” Yves Bouvier, the owner of an art shipping and storage empire, which is still unfolding in multiple international jurisdictions.

Yet the most troubling examples of the exploitation of art for financial gain are perfectly legal. As Adam outlines, collectors and their agents have continually found creative ways to use their art holdings to defer paying taxes, including the establishment of private museums and foundations, storing artworks in offshore freeports where they can be exchanged without incurring customs duties or VAT, and loopholes in the tax code such as “like-kind” exchanges. Originally set up in the 1920s to aid farmers by enabling them to defer taxes on livestock trades, “like-kind exchanges” are now regularly invoked by art collectors in order to avoid paying taxes on the sale of artworks: So long as a collector uses the proceeds of the sale of one work to purchase another within 180 days, the tax obligation can be perpetually kicked down the road.

Moreover, the question of where the money comes from and where it ultimately goes is only a passing concern here. It’s no coincidence that the world’s most prominent art collectors include Walmart heiress Alice Walton; the Sackler family; Poju Zabludowicz, whose family fortune has its origins in arms dealing; and hedge fund founder Daniel Och, whose firm paid millions of dollars in bribes to government officials in several African countries in exchange for mining rights. No doubt they’d rather be remembered for their patronage of the arts than for profiteering off human misery.” [7]

In conclusion, while the conservatives have no problems raising the income tax year after year, including for the lower brackets, and cutting benefits, they stash away their money in offshore accounts and find creative ways to avoid paying virtually any taxes. To tackle this, a global approach is needed.

Demand transparency – an end to secret offshore companies!

Oppose cuts for public spending – for taxing the rich!


[1] https://www.aljazeera.com/news/2021/10/4/pandora-papers-some-of-the-names-listed

[2] https://www.jpost.com/breaking-news/jordanian-royal-detained-for-plot-against-king-abdullah-report-664003

[3] Ibid

[4] https://www.themarker.com/law/.premium-1.10263091

[5] https://13news.co.il/item/news/domestic/education-society/haim-ramon-186662/

[6] https://www.icij.org/investigations/pandora-papers/solvay-italy-new-jerey-chemical-plants-offshore/

[7] https://newrepublic.com/article/147192/modern-art-serves-rich

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