Where are the US billionaires, the Wall Streeters, the Big Four tax firms Deloitte, EY, KPMG, PwC? Michael West explores the mystery of the Pandora Papers in this first of a two-part series.
In the wake of the stunning Pandora Papers data leak this week, the ABC enthused, “Even by the ICIJ’s standards, this is big. If the documents were printed out and stacked up they would be four times taller than Sydney’s Centrepoint Tower”.
Probably not. If we assume Pandora is like its predecessors Panama Papers and Paradise Papers – where less than 1% of the data was made public – that would represent a stack of documents 12.2 metres high, not 1220 metres, which would get you up to Yogurt World on Level 5 of the Centrepoint food court.
Another “biggest data leak in history”, another trove mega-leaks where billionaires, celebrities, Italian mobsters, Russian oligarchs and foreign heads of state have been outed for their links to tax havens.
But where are the US politicians? Where are the Wall Streeters? Where are the Big Four, the masterminds of global tax avoidance PwC, EY, KPMG and Deloitte?
Conspicuously absent, that’s where. Again.
Beating the B Team
Make no mistake this is fabulous, explosive stuff. The Pandora Papers, like Panama Papers and Paradise papers, are a spectacular data leak but, like the leaks before them, they have blown the lid on the world’s Tax Avoidance B Team.
And, like the others, the data has not actually been made public; not much of it anyway, maybe 1%. The rest is sitting with the International Consortium of Investigative Journalists (ICIJ) in Washington. It has been leaked to the ICIJ alone which in turn leaks bits of it, presumably a very small part of it, to its “global media partners”.
In Australia, these are Nine Entertainment’s AFR, Guardian and ABC who are themselves keeping most of it a secret. This from Guardian Australia:
“Australians who appear in the data include senior figures from the finance and property industries. The Guardian has chosen not to identify them.
“About 400 Australian names are contained in the papers, a cache of 11.9m files from companies hired by wealthy clients to create offshore structures and trusts in tax havens such as Panama, Dubai, Monaco, Switzerland, the Cayman Islands and Samoa.”
Meanwhile Julian Assange
Meanwhile Julian Assange continues to rot in London’s Belmarsh Prison, facing extradition to the US, abandoned by successive Australian governments amid reports of a CIA plot to assassinate him. His crime? Wikileaks made public US war crimes; a real leak, documents actually made public.
In contrast, the Washington-based ICIJ has consistently refused to release its data to the public, preferring instead to conduct a choreographed media circus. Its director, Australian journalist Gerard Ryle, declined to respond to questions for this story, doubly ironic given we used to work together on the newsroom floors at Fairfax and the ICIJ is a self-styled beacon of journalistic integrity dedicated to “expose the truth and hold the powerful accountable, while also adhering to the highest standards of fairness and accuracy”.
One question we put to Ryle was whether ICIJ had received a subpoena from US authorities for this incredible trove of corporate information, say the Department of Justice. If not, why not?
The questions are many, not only because of the sheer magnitude of this set of leaks but also because the effect of the Pandora Papers is to, deservedly, trash a suite of non-US tax havens such as the notorious British Virgin Islands and the upshot will be to drive global wealth towards secrecy jurisdictions in the US such as Rupert Murdoch’s preferred haven of Delaware.
So, what is going on here?
The way ICIJ works is they use a panel of 150 “media partners”, mostly large corporate media organisations around the world, to disseminate the information, or at least the bits of it they deem suitable.
In the case of Panama Papers, an anonymous source dubbed John Doe hacked Panamanian law firm Mossack Fonseca and leaked the data to German journalists who got it to ICIJ for dissemination to its band of media partners.
14 Mossack Fonsecas
This time around, there are 14 Mossack Fonsecas; that is, 14 “offshore service providers” have been hacked. This is hacking on an industrial, possibly sovereign, scale. It is possible these “offshore service providers”, from Hong Kong to the Caribbean, divulged the information voluntarily, but unlikely.
Who benefits? The US and the Big Four. Just as the Panama Papers helped to demolish Panama as a tax haven, compelling clients of Mossack Fonseca to flee to other secrecy jurisdictions to hide their money, the upshot of the Pandora Papers is that, right at this moment, the super rich who secrete their money in the British Virgin Islands, the Seychelles or Cyprus will be thinking long and hard about restructuring to hide their riches via Delaware or another onshore tax haven in the US.
They will also think long and hard about getting the Big Four global tax firms – PwC, Deloitte, EY and KPMG – to manage their affairs. The A Team.
This is of course a speculative conclusion but also, as one regulatory finance source confided to Michael West Media this week, just a matter of putting two and two together. The Washington-based ICIJ never seems to be harassed by US authorities, the Big Four are rarely named, US billionaires are rarely named, blue chip tax avoiders are rarely named, the identity of the vast bulk of wealthy Australians in the data are never named.
Foreign PEPs, mobsters and oligarchs
This is not to disparage the work of Gerard Ryle and his team. The latest mega-leak of almost 12 million documents from offshore finance firms has identified the usual high profile types: crooner Julio Iglesias, cricket star Sachin Tendulkar, pop music diva Shakira, supermodel Claudia Schiffer and “an Italian mobster known as “Lell the Fat One”.
Great headlines, and every one a worthy story, although many will have bona fide reasons for being in tax havens. Rich people avoid tax, full stop. We will discuss the mechanics of secrecy jurisdictions, how it all works and who actually benefits in the sequel to this story.
Besides the crooners, mobsters and Russian oligarchs however, the Pandora Papers have outed an array of ”politically exposed persons” (PEP); former politicians and present heads of state. From King Abdullah of Jordan, Azerbaijan’s ruling Aliyev family, the prime minister of the Czech republic, Andrej Babiš and Ukraine’s president, Volodymyr Zelenskiy, to former British prime minister Tony Blair and three current Latin American heads of state, those identified publicly in Pandora Papers have sent shockwaves around the world.
The Aussie connection
A slew of tax authorities have vowed to take action, including the Australian Tax Office which, on Wednesday, froze more than $80 million in assets and companies linked to Gold Coast property developer Jim Raptis.
Westpac director Steve Harker was also identified as a client of one of the offshore service providers Singapore’s Asiaciti. As the identities of most of the Australians remain a secret, Harker is probably feeling unfairly targeted. What of the other 400 Australians?
No doubt the draconian defamation laws in this country, laws which protect the wealthy, played a part in the decision of local media to keep the names secret. Yet this also goes to the fundamental issue with ICIJ’s arbitrary arrangements and its media partners cherry-picking the data.
If ICIJ were truly fair dinkum about transparency and public interest, it would make the data from all its leaks public so that boffins from around the world, anybody for that matter, could hop in and dig around.
Who is calling the shots? One man apparently, Gerard Ryle. In the wake of the Panama Papers, when we asked Ryle on a number of occasions for an ICIJ log-in to analyse the data, we were denied.
“My path, my call,” said Ryle. We already have our media partners, he said.
Meanwhile, the 2016 Panama Papers remain under lock and key, unavailable to the public, secreted by ICIJ. The data is getting stale now. It is six years old. It is wasted, an insult to the people who risked their lives to put it in the public domain.
In Part II: who guards the guards? The second story in our investigation of the ICIJ and its Offshore Leaks examines what is really going on with international tax avoidance.
Michael West established michaelwest.com.au to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences. You can follow Michael on Twitter @MichaelWestBiz.