What are the Pandora Papers, and why do they matter?
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| Image ICIJ |
The Pandora Papers are 11.9 million leaked documents
(comprising 2.9 terabytes of data) that were published by the International
Consortium of Investigative Journalists (ICIJ) beginning on 3 October 2021. The
news organisations of the ICIJ described the document leak as their most
expansive exposé of financial secrecy yet, containing documents, images, emails
and spreadsheets from 14 financial service companies, in nations including
Panama, Switzerland and the UAE, surpassing their previous release of the
Panama Papers in 2016, which had 11.5 million confidential documents. At the
time of the release of the papers, the ICIJ said it is not identifying its
source for the documents.
These are 11.9 million leaked files from 14 global corporate
services firms which set up about 29,000 off-the-shelf companies and private
trusts in not just obscure tax jurisdictions but also countries such as
Singapore, New Zealand, and the United States, for clients across the world.
These documents relate to the ultimate ownership of assets
‘settled’ (or placed) in private offshore trusts and the investments including
cash, shareholding, and real estate properties, held by the offshore entities.
What do the Pandora Papers reveal?
The Pandora Papers reveal how the rich, the famous and the
notorious, many of whom were already on the radar of investigative agencies,
set up complex multi-layered trust structures for estate planning, in
jurisdictions which are loosely regulated for tax purposes, but characterised
by air-tight secrecy laws.
The purposes for which trusts are set up are many, and some
genuine too. But a scrutiny of the papers also shows how the objective of many
is two-fold: i) to hide their real identities and distance themselves from the
offshore entities so that it becomes near impossible for the tax authorities to
reach them and, ii) to safeguard investments — cash, shareholdings, real
estate, art, aircraft, and yachts — from creditors and law enforcers.
How is Pandora different from the Panama Papers and
Paradise Papers?
The Panama and Paradise Papers dealt largely with offshore
entities set up by individuals and corporates respectively. The Pandora Papers
investigation shows how businesses have created a new normal after countries
have been forced to tighten the screws on such offshore entities with rising
concerns of money laundering, terrorism funding, and tax evasion.
The Pandora Papers pierce the corporate veil and reveal how
trusts are prolifically used as a vehicle in conjunction with offshore
companies set up for the sole purpose of holding investments and other assets
by business families and ultra-rich individuals. The trusts can be set up in
known tax havens such Samoa, Belize, Panama, and the British Virgin Islands, or
in Singapore or New Zealand which offer relative tax advantages, or even South
Dakota in the US, the biggest economy
What is a trust?
A trust can be described as a fiduciary arrangement where a
third party, referred to as the trustee, holds assets on behalf of individuals
or organizations that are to benefit from it. It is generally used for estate
planning purposes and succession planning. It helps large business families to
consolidate their assets — financial investments, shareholding, and real estate
property.
A trust comprises three key parties: ‘Settlor’ — one who
sets up, creates, or authors a trust; ‘trustee’ — one who holds the assets for
the benefit of a set of people named by the ‘settlor’; and ‘beneficiaries’ — to
whom the benefits of the assets are bequeathed.
A trust is not a separate legal entity, but its legal nature
comes from the ‘trustee’. At times, the ‘settlor’ appoints a ‘protector’, who
has the powers to supervise the trustee, and even remove the trustee and
appoint a new one.
This article appeared in Indian express ; Written by P
Vaidyanathan Iyer (credit)
update- Header image and introduction added by blueplanet
Read More :Indian express
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