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BILLIONS HIDDEN BEYOND REACH PANDORA PAPERS A GLOBAL INVESTIGATION BILLIONS HIDDEN BEYOND REACH


From top, Sebastián Piñera, Uhuru Kenyatta, King Abdullah II and Andrej Babis. (Washington Post illustration; with photographs by, from the top, Sebastián Vivallo Oñate/Agencia Makro/Getty Images), Tolga Akmen/WPA Pool via Getty Images, Jabin Botsford/The Washington Post, Wojtek Radwanski/AFP/Getty Images


A massive trove of private financial records shared with The Washington Post exposes vast reaches of the secretive offshore system used to hide billions of dollars from tax authorities, creditors, criminal investigators, and — in 14 cases involving current country leaders — citizens around the world.

The revelations include more than $100 million spent by King Abdullah II of Jordan on luxury homes in Malibu, Calif., and other locations; millions of dollars in property and cash secretly owned by the leaders of the Czech Republic, Kenya, Ecuador, and other countries; and a waterfront home in Monaco acquired by a Russian woman who gained considerable wealth after she reportedly had a child with Russian President Vladimir Putin.

Other disclosures hit closer to home for U.S. officials and other Western leaders who frequently condemn smaller countries whose permissive banking systems have been exploited for decades by looters of assets and launderers of dirty money.

Read key takeaways from the Pandora Papers investigation

The files provide substantial new evidence, for example, that South Dakota now rivals notoriously opaque jurisdictions in Europe and the Caribbean in financial secrecy. Tens of millions of dollars from outside the United States are now sheltered by trust companies in Sioux Falls, some of it tied to people and companies accused of human rights abuses and other wrongdoing.

The details are contained in more than 11.9 million financial records that were obtained by the International Consortium of Investigative Journalists (ICIJ) and examined by The Post and other partner news organizations. The files include private emails, secret spreadsheets, clandestine contracts, and other records that unlock otherwise impenetrable financial schemes and identify the individuals behind them.

A trove of secret files details the financial universe where the Global Elite Shields riches from taxes, probes, and accountability. (Sarah Hashemi, Luis Velarde/The Washington Post)

The trove, dubbed the Pandora Papers, exceeds the dimensions of the leak that was at the center of the Panama Papers investigation five years ago. That data was drawn from a single law firm, but the new material encompasses records from 14 separate financial-services entities operating in countries and territories including Switzerland, Singapore, Cyprus, Belize, and the British Virgin Islands.

The files detail more than 29,000 offshore accounts, more than double the number identified in the Panama Papers. Among the account owners are more than 130 people listed as billionaires by Forbes magazine and more than 330 public officials in more than 90 countries and territories, twice the number found in the Panama documents.

Press Enter to skip to end of carousel Key questions to better understand the offshore system What is the offshore system? The offshore financial system offers privacy, which provides an opportunity to hide assets from authorities, creditors and other claimants, as well as from public scrutiny. Why is it called “offshore” finance? This system is known as offshore finance because the countries that popularized this method of sheltering wealth were often in island or coastal locations, but today “offshore” signifies anywhere that is not a customer’s country of residence. Is this legal? Offshore providers are typically established according to the laws of the country where they are located. But some clients have used offshore services in ways that are not legal. Read more Read key takeaways, about the investigation and more questions and answers about the Pandora Papers. End of carousel

As a result, the Pandora Papers allow for the most comprehensive accounting to date of a parallel financial universe whose corrosive effects can span generations — draining significant sums from government treasuries, worsening wealth disparities, and shielding the riches of those who cheat and steal while impeding authorities and victims in their efforts to find or recover hidden assets.

“The offshore financial system is a problem that should concern every law-abiding person around the world,” said Sherine Ebadi, a former FBI official who served as lead agent on dozens of financial crimes cases.

Ebadi pointed to the role that offshore accounts and asset-shielding trusts play in drug trafficking, ransomware attacks, arms trading, and other crimes. "These systems don't just allow tax cheats to avoid paying their fair share. They undermine the fabric of a good society,” said Ebadi, now an associate managing director at Kroll, a corporate investigations and consulting firm.

A trust is an agreement typically involving three parties: A settlor places something valuable in the care of a trustee for the benefit of a beneficiary. Scroll to continue You may have heard of trusts like this: A wealthy grandparent might set one up with an uncle for a grandchild, giving the grandchild an allowance every month, rather than a lump-sum inheritance. But not all trusts are as straightforward. Trusts are flexible. Each party to the trust might be an individual, a group of people, a company or a combination. The trust’s assets could be cash, shares of a company, real estate, artwork — any type of property. Each trust can have different rules for how it functions. This flexibility can open the door to abuse. In some American states trust lawyers and companies, backed by lawmakers who supported industry-friendly laws, have designed elaborate trust structures that can shield assets from tax authorities, creditors and investigators.

One key feature is that assets held in a trust exist in a kind of limbo. The settlor has given them away. The trustee may own them under the law but has no right to use them. And the beneficiary has yet to receive them. If someone owes a debt, each of the three parties can argue that they do not control the assets. Trusts can provide impenetrable secrecy. High-profile people can set up trusts to own shell companies in tax havens, obscuring the true extent of their property from tax authorities, criminal investigators, and the public. Few jurisdictions require public registration of the people who ultimately control and benefit from trusts. The Pandora Papers investigation — based on millions of documents from offshore financial firms — pierced that secrecy, revealing in unprecedented scope and detail how some criminals, politicians, and wealthy people have shielded their assets by the use of trusts and other offshore instruments.

The Post is publishing eight articles, as well as video and audio pieces, based on material in the Pandora trove. Stories being published today focus on revelations about Abdullah and Putin. Stories tomorrow will more closely explore U.S. aspects of this system, including the harm caused by U.S. tax havens and how Americans accused of wrongdoing can escape financial consequences by using offshore entities. In subsequent days, stories will examine the looting of Asian artifacts, survey the hidden wealth of billionaires who appear in the files, and trace the impact of U.S. sanctions on Russian oligarchs.

These are part of a global package of stories based on the Pandora Papers — a project involving 150 news organizations in 117 countries and territories. The package includes reports by the BBC and the Guardian that reveal new details about foreign donors contributing millions to British Prime Minister Boris Johnson’s Conservative Party. The ICIJ has collaborated with foreign partners on stories about a scandal-plagued Catholic order in Mexico, millions of dollars held offshore by members of Pakistani Prime Minister Imran Khan’s government, as well as the secret holdings of leaders from Europe to Latin America. Some political players of note mentioned in the Pandora Papers

(Washington Post illustration; Photograph by Jabin Botsford/The Washington Post)King Abdullah II King of Jordan King Abdullah has been Jordan’s ruler since 1999. Offshore companies associated with the king have spent more than $106 million on lavish homes in Malibu, Calif., Washington, D.C., and London. Nearly $70 million was spent on three adjacent homes overlooking the Pacific Ocean, according to Pandora files and other documents, forming one of the largest bluff-top complexes in Malibu. The king’s lawyers said he has not misused public monies or used the proceeds of aid or assistance meant for public use. Read more about King Abdullah II (Washington Post illustration; Photograph by Erika Santelices/AFP/Getty Images)Luis Abinader President of the Dominican Republic Luis Abinader was elected last year as president of the Dominican Republic and is its wealthiest public official. Pandora files show that Abinader co-owns one Panamanian company with family members and is a shareholder with those relatives in another. When he became president, Abinader complied with disclosure laws and declared both companies and at least seven other offshore companies grouped under a revocable trust. He told the International Consortium of Investigative Journalists (ICIJ) that he holds offshore entities because the Dominican Republic, until recently, did not have an efficient corporations law needed for local companies to do business abroad. Read more about Luis Abinader (Washington Post illustration; Photograph by Issouf Sanogo/AFP/Getty Images)Patrick Achi Prime minister of Ivory Coast Patrick Achi is a key adviser and potential successor to Ivory Coast’s president, Alassane Ouattara, who named him prime minister in March. Achi has had a long career in politics and was elected to parliament in 2011. In 1998, Achi became the owner of a Bahamas-based company, Allstar Consultancy Services Ltd., Pandora documents show. Achi owned the company’s shares through a trust arrangement, obscuring his ownership. Achi did not respond to ICIJ requests for comment. Read more about Patrick Achi (Washington Post illustration; Photograph by Wojtek Radwanski/AFP/Getty Images)Andrej Babis Prime minister of the Czech Republic Andrej Babis is the billionaire founder of agricultural conglomerate Agrofert. He later served as the Czech Republic’s finance minister and in 2017 he was elected prime minister on a populist platform. In 2009, Babis secretly paid $22 million for a chateau in a French village near Cannes. He routed the money through shell companies in the British Virgin Islands and Washington, D.C., and a real estate management firm in Monaco, according to Pandora documents. Babis did not respond to ICIJ requests for comment. Read more about Andrej Babis (Washington Post illustration; Photograph by Gints Ivuskans/AFP/Getty Images)Milo Djukanovic President of Montenegro Milo Djukanovic has dominated Montenegro’s politics for 30 years. He has repeatedly served as prime minister and was most recently elected president in 2018. In 2012, a Swiss fiduciary firm helped create two trusts in the British Virgin Islands, Pandora files show. One named Djukanovic as the beneficiary; the other named his son. The elder Djukanovic told the ICIJ that he established his trust at a time when he was not in public office and was engaged in his own business affairs. Read more about Milo Djukanovic (Washington Post illustration; Photograph by Tolga Akmen/WPA Pool/Getty Images)Uhuru Kenyatta President of Kenya Uhuru Kenyatta belongs to one of Africa’s most powerful families. He was elected president in 2013 and re-elected in 2017. Kenyatta is linked to a Panama foundation, and his mother and siblings set up at least six offshore businesses and foundations to manage their assets. Most of the family's companies were created before Kenyatta became president, and the businesses hold assets worth more than $30 million, documents show. The Kenyattas did not respond to ICIJ requests for comment. Read more about Uhuru Kenyatta (Washington Post illustration; Photograph by Franklin Jacome/Agencia Press South/Getty Images)Guillermo Lasso President of Ecuador Guillermo Lasso was elected president of Ecuador this year after holding other national and provincial positions. Pandora documents show that Lasso has had ties to more than 10 offshore companies and trusts in Panama, South Dakota, and Delaware. Lasso authorized the transfer of companies to two new trusts created in South Dakota in 2017. He said he does not have “any relation regarding property, control, benefit or interest of any type” with those trusts and has always complied with Ecuadoran law. Read more about Guillermo Lasso (Washington Post illustration; Photograph by Anthony Wallace/AFP/Getty Images)C.Y. Leung Former chief executive of Hong Kong C.Y. Leung was elected Hong Kong’s chief executive in 2012. Before he stepped down, he was elected vice-chairman of China’s top political advisory body. Pandora records show that Leung used shell companies to own shares in the subsidiary of a British real estate firm operating in Japan. In 2017, while still Hong Kong’s top leader, he was listed as the owner of two companies in the British Virgin Islands. Leung did not respond to ICIJ requests for comment. Read more about C.Y. Leung (Washington Post illustration; Photograph by Bandar Algaloud/Saudi Kingdom Council/Handout/Anadolu Agency/Getty Images)Mohammed bin Rashid al-Maktoum Ruler of Dubai and prime minister of the United Arab Emirates Mohammed bin Rashid al-Maktoum has been one of the most prominent figures in Middle East politics since he became ruler of Dubai, and prime minister and vice president of the United Arab Emirates, in 2006. The Pandora Papers show he was a shareholder of three companies registered in the Bahamas and the British Virgin Islands via an Emirati company partly owned by his investing conglomerate Dubai Holding. Maktoum did not respond to ICIJ requests for comment. Read more about Mohammed bin Rashid al-Maktoum (Washington Post illustration; Photograph by Sebastián Vivallo Oñate/Agencia Makro/Getty Images)Sebastián Piñera President of Chile Sebastian Piñera was first elected Chile’s president in 2010 and again in 2018. Documents show that his businesses funded two companies registered in the British Virgin Islands and that a mining company in which Piñera and his family owned a 33.3 percent stake used a British Virgin Islands shell company to sell their shares to his close friend’s BVI company. An associate who manages the family’s investments told ICIJ that Piñera didn’t participate in the sale and is not currently in control of any company incorporated in the BVI. Read more about Sebastián Piñera (Washington Post illustration; Photograph by M A Pushpa Kumara/EPA/Shutterstock)Nirupama Rajapaksa A former minister in Sri Lanka Nirupama Rajapaksa is a cousin of Sri Lanka’s president and former parliament member. Her husband, Thirukumar Nadesan, has worked as a consultant and hotel entrepreneur, according to his company website. They controlled a shell company used to buy luxury apartments in London and Sydney and make investments, according to Pandora files. The documents also show that Nadesan set up other offshore companies to obtain consulting contracts from foreign companies. Rajapaksa and Nadesan did not respond to ICIJ questions about companies. Read more about Nirupama Rajapaksa (Washington Post illustration; Photograph by Anna Moneymaker/Getty Images)Volodymyr Zelensky President of Ukraine Volodymyr Zelensky played Ukraine’s president on a sitcom before successfully running for that office in 2019.

Pandora documents show that Zelensky owned a stake in a British Virgin Islands *firm described as holding shares in film production and distribution companies. A month before he was elected president, Zelensky transferred his shares to Sergiy Shefir, a friend and business partner. Zelensky and Shefir did not respond to ICIJ requests for comment.

Read more about Volodymyr Zelensky End of carouselReporting by ICIJ

The vast majority of the documents are marked with dates indicating they were created between 1996 and 2020, though some date to the 1970s. With many documents dated as recently as last year, the cache illuminates how the offshore system — a term from the time when remote islands were the principal havens for hiding cash — has endured the scandals and efforts at reform that followed prior investigations.

The records include dozens of memos and messages discussing ways to defeat new transparency laws, erect more ironclad shelters for assets, and, ironic as it may sound in this context, avoid being exposed by another leak.

Executives at a politically connected Panama City law firm, for example, mentioned in a 2016 email “numerous requests from clients to confirm the security of our information systems” after the Panama Papers stories, according to documents. The executives scrapped plans to convert paper records to digital storage, hoping to reassure wary clients.

Nevertheless, internal records from the Alemán, Cordero, Galindo & Lee firm, known as “Alcogal,” represent one of the largest caches in the Pandora collection, exposing more high-profile clients than documents from the other 13 firms and accounting for some of the trove’s most significant revelations.

In a statement, Alcogal said, “We have always acted according to the law, and have cooperated in all respects with competent authorities.”

Types of files included in the Pandora Papers investigation The trove of financial records unlocks otherwise impenetrable financial schemes and identifies the individuals behind them. 11.9M TOTAL FILES = 5,000 files 2.9M images 6.4M documents Including scans of passports, diagrams of trust schemes, logos of trust companies Including trust contracts, beneficial owner profiles, risk assessment results, and more 1.2M emails Including mail between clients and trust companies 467K spreadsheets Including data listing beneficial owners of trusts 887K other file types Including audio and video files

High stakes for leaders

The Panama Papers stories five years ago led to the resignations of the leaders of Iceland and Pakistan. There could be political stakes for some of those named in the Pandora documents.

Andrej Babis, the Czech prime minister, who is up for reelection this week, is a billionaire politician who has cast himself as a populist adversary of Europe’s elite. But the documents show that in 2009 he purchased a $22 million chateau near Cannes, France, with a cinema and two swimming pools, using shell companies that hid the identity of its new owner. Babis did not respond to requests for comment.

In Kenya, President Uhuru Kenyatta has cultivated the persona of a determined foe of corruption, saying in 2018 that “every public servant’s assets must be declared publicly.” But Pandora documents show that he and several close relatives set up at least seven entities offshore that hold money and real estate worth more than $30 million. Kenyatta did not respond to requests for comment.

[Documents tie woman allegedly in secret, years-long relationship with Putin to luxury Monaco apartment]

Other world leaders linked to offshore accounts found in the Pandora trove include President Milo Djukanovic of Montenegro, President Sebastián Piñera of Chile and President Luis Abinader of the Dominican Republic. There are revelations about the offshore holdings of Sri Lankan power couple Thirukumar Nadesan and Nirupama Rajapaksa; and Dubai ruler Mohammed bin Rashid al-Maktoum.

But the newly revealed details about offshore assets held by King Abdullah of Jordan, a long-standing U.S. ally, are particularly striking. Documents show that he used a constellation of shell companies to conceal purchases of luxury properties in California, London and the Georgetown neighborhood of Washington, D.C.

The disclosures come as Abdullah is facing political turmoil, including an alleged coup plot this year, in a kingdom that depends on billions of dollars in aid from the United States and other countries. DLA Piper, a law firm representing Abdullah, said that “any implication that there is something improper about [his] ownership of the property through companies in offshore jurisdictions is categorically denied.”

The U.S. uber-rich

The Panama Papers leak was particularly revelatory about Russians’ use of the offshore system. One story reported that a Russian cellist, who had been friends with Putin since childhood, was secretly linked to offshore accounts holding up to $2 billion.

Putin called that leak a “provocation,” insinuating that U.S. intelligence agencies were involved as part of an effort to discredit the Russian financial system and punish the Russian leader by targeting his inner circle. U.S. officials denied the allegation.

This time, although Russians account for a disproportionately large share of those exposed in the Pandora files, the records are more wide-ranging, laying bare the hidden riches of U.S. adversaries and allies alike.

Those named in the trove are as varied as former British prime minister Tony Blair, Colombian pop star Shakira, members of China’s elite, and figures in Saudi Arabia’s royal family.

The United States’ wealthiest citizens — including Amazon founder Jeff Bezos, who owns The Washington Post; Tesla founder Elon Musk; Microsoft billionaire Bill Gates; and billionaire investor Warren Buffett — do not appear in the documents.

Financial experts said the uber-rich in the United States tend to pay such low tax rates that they have less incentive to seek offshore havens. But their absence from the files also may mean that very wealthy Americans turn to different offshore jurisdictions — including the Cayman Islands — and different companies than those represented in the Pandora documents.

There are files pertaining to former President Donald Trump’s involvement in a Panama hotel project. But the Pandora documents do not appear to reveal significant new information about his finances.

Robert F. Smith, who is often described as the United States’ richest Black person, is perhaps the wealthiest American whose offshore holdings are detailed extensively. Smith agreed last year to pay a fine of $139 million and admitted hiding funds offshore and submitting false tax records as part of a non-prosecution agreement with the Justice Department. The agreement calls for Smith to cooperate in a separate case against Robert T. Brockman, a Texas billionaire who backed Smith financially and has been charged with hiding $2 billion in income. Smith declined to comment for this story.

The files also help to illustrate how even respected U.S. institutions can become entangled in allegedly tainted transactions. The documents trace how an art trader accused by the Justice Department of trafficking in looted Cambodian antiquities used an offshore trust in transactions involving those items. The trader, Douglas Latchford, died last year, but relics that he or his associates moved to remain on display at the Metropolitan Museum of Art in New York City and other museums.

Perhaps the most troubling revelations for the United States, however, center on its expanding complicity in the offshore economy. South Dakota, Nevada, and other states have adopted financial secrecy laws that rival those of offshore jurisdictions. Records show leaders of foreign governments, their relatives, and companies moving their private fortunes into U.S.-based trusts.

In 2019, for example, family members of the former vice president of the Dominican Republic, who once led one of the largest sugar producers in the country, finalized several trusts in South Dakota. The trusts held personal wealth and shares of the company, which has stood accused of human rights and labor abuses, including illegally bulldozing houses of impoverished families to expand plantations.

Greater concealment efforts

Despite the scandals and reforms triggered by previous revelations like those in the Panama Papers — which led to new transparency laws in the British Virgin Islands and other tax havens — the Pandora trove highlights the enduring demand for mechanisms to hide money and the continuing abundance of firms to provide them.

Trident Trust, a firm that operates in more than a dozen offshore jurisdictions, mounted an effort in 2016 to recruit account holders fleeing Mossack Fonseca, the Panama City law firm that collapsed after its internal records and client lists were exposed in the Panama Papers case, according to Pandora documents.

In a statement, Trident said it “does not discuss its clients with the media” but “is fully committed to compliance with all applicable regulations.”

Alcogal touts itself online as a “top tier” practice with high ethical standards. It was founded in 1985 by Jaime Alemán, who attended private high school and universities in the United States, served as Panama’s ambassador in Washington, and wrote a book titled “Honesty Is Priceless.”

The firm has become a major purveyor of services that help elite clients hide wealth offshore. Nearly half of the politicians whose names surfaced in the Pandora trove were clients of Alcogal, the documents show. Among them are former Panamanian presidents, the president of Ecuador, a leading candidate in next month’s Honduran election, and Abdullah.

Despite international standards calling on firms to apply extra scrutiny when they take on politicians, government officials, or those close to them as clients, intake forms show that Alcogal at times did not mark even country leaders as “politically exposed persons," or PEPs.

In its statement, Alcogal said it was inaccurate “to imply that we have not classified certain individuals as PEPs, where in fact we have." The firm declined to address specific cases. Overall, the company said, “We have always acted according to the law, and have cooperated in all respects with competent authorities.”

At times, financial advisers pushed Alcogal to do even more to protect the identities of their clients.

Jurg Wissmann, a Swiss lawyer who has represented Putin associates and used Alcogal to set up at least 150 companies in Belize and other tax havens, warned officers at Alcogal never to store any of his clients’ names on computer systems, according to documents.

“You are obliged to keep secrecy for our clients,” he wrote, “and to not make feasible at all a second Panama Papers story.” Wissman did not respond to requests for comment.

Only a few of Wissmann’s clients are named in the Pandora documents.

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