The Pandora Papers: Tax Havens and Global Corruption

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Earlier this week, we learned what has been known to many worldwide: The rich are getting richer while the poor are getting poorer. Of course, that is not all that was revealed this week, as the recently leaked Pandora Papers show that part of that problem is due to the offshore industries’ manipulative tactics to help wealthy elites avoid their taxes. And while no American presidents are identified in these documents, the role of America’s rising tax havens is far from absent.

The papers, released by the International Consortium of Investigative Journalists, identifies multiple participants in this international network of tax avoidance, including 35 world leaders and 300 public officials. Among some of the leaders discovered is King Abdullah II of Jordan, who has a $100 million property empire spanning the United States, including a house in Malibu, California. Despite not having its government officials exposed, America’s influence in this market of avoidance is strong. 

States like South Dakota have seen their lax tax laws luring corrupt officials and business owners from around the world. Despite federal warnings about trusts, the state’s assets in trusts have increased to $360 billion in the last decade. One such trust is Trident Trust. Trident, which has an office in Sioux Falls, South Dakota, was one of the main sources of information about the offshore trust industry. Its influence, being extensive, is symbolic of the rising tide of secretive trusts in America. 

Already states like Nevada, Alaska, and Delaware are likely to do the same thing despite the lack of transparency. Critics have warned that due to the private nature of these trusts, there is a serious risk of human rights abusers using these trusts to avoid sanctions or legal penalties for their actions.

The potential for corruption within the government is also a massive risk. The UK’s Prime Minister, Boris Johnson, is facing intense pressure to return a donation from a conservative donor involved in a bribery scheme involving Uzbekistan’s president. In response to the allegations, Johnson said, “But all I can say on that one is all these donations are vetted in the normal way in accordance with rules that were set up under a Labour government. So, we vet them the whole time.” If true, then this would suggest that Johnson knew of the bribes and accepted the donation. Or perhaps their vetting is so flawed that they didn’t notice. Either way, the conservatives have made a massive mistake.

It was only because of the leaks that these donations came to light, and it was only because of these leaks that Boris is facing any consequences or push back. If anything, there are probably more examples of corrupt donations like this that haven’t been found. Imagine how much money and power are influencing our political system. So long as these trusts remain in their current condition, they will continue to maintain the power of the rich and powerful while the average person continues to suffer. 

The best hope for change is a national and international effort to curb these offshore trusts from spreading further. But that can only come when leaders are forced, by the people, to acknowledge the dangers of these trusts’ continued existence. And for that to happen, people need to mobilize.

Correction: A previous version of this article said that Trident Trust was based in South Dakota. That is one of their offices, not their headquarters.

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