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Pandora Papers
The Panama Papers represent over 11 million documents that were leaked in the spring of 2016. The documents provided access to a series of financial documents – more than 200,000 offshore businesses and individuals, including attorney-client conversations and details as well. Some of the documents were recent, but others dated back to the 1970s. The papers were stolen and leaked from Mossack Fonseca – an offshore law company based in Panama.


Documents were associated with both low-profile companies and large corporations – including wealthy individuals known all over the world. Most of the data were kept private until these papers came out. Various governments took action based on these leaks – for instance, Jan Marsalek was convicted for his connections with Russian intelligence. While many companies involved were legal entities, reporters have also found shell companies that were used for illegal activities.

The Panama Papers represent the first major leak that brought all kinds of activities to the public attention. It’s not the first action of this kind though. The so-called Offshore Leaks from 2013 brought in about 2.5 million documents. The Panama Papers kicked in 2016, followed closely by the Paradise Papers, released in 2017 – about 13.4 million documents. Things have not stopped then and reporters kept digging.

Fast forward, Pandora Papers represent a leak that is at least as impressive. About 12 million documents were leaked and reveal hidden details, wealth and even money laundering associated with powerful and rich people. The story repeated itself – basically, many of the leaks targeted legal companies and actions, but some of them targeted illegal companies. There were more than 600 journalists from over 110 countries involved in this leak.

The leak is likely to affect plenty of legal companies. What journalists went after was the hidden wealth associated with some rich individuals. However, in order to get there, various leaks from legal companies also occurred. It is another direct hit aimed at the offshore market, only to point fingers at a few unscrupulous individuals. Simply put, this leak is likely to make the offshore market even more difficult, despite its legal profile.


What Pandora Papers include​

Pandora Papers bring in a bunch of documents targeting numerous companies and people. There are around 6.4 million documents leaked. While there are some rumors about them, the truth is plenty of information is still hidden and likely to come out in the following months – or even years. Then, there are about three million pictures, over a million email messages and private communication, as well as around 500,000 spreadsheets.

In theory, no one seems to care about small entities – the types of businesses established to help diversity assets or reduce the income tax. Most journalists – as well as most of the people interested in the Pandora Papers – are after the billionaires and famous figures in this scandal. Unfortunately, a few individuals have done it again – they have ruined the offshore market for everyone and made it even more sophisticated.

One of the top stories revealed so far targets a prominent Tory donor in the UK. He was also involved in a big corruption scandal in Europe, so his background is a good enough reason to raise suspicions. Then, some other documents and papers target the king of Jordan. The king has spent more than $95 million on various properties, mostly around the UK and the USA. All these purchases were made through secret companies that were run by the king in the background.

Another scandal worth some attention is about the richest family in Azerbaijan. The family is known for its incredible wealth and numerous acquisitions, but much of its value has been obtained secretly. The family has successfully hidden a plethora of investments in the UK. Investments were valued at over $545 million and were mostly aimed at the real estate market. They have been made public now, raising even more suspicions about the family’s wealth.

There are lots of documents about the Czech prime minister as well. While his background and history seem clear, it looks like the notorious politician has forgotten to declare an investment company established abroad. The company was then used to purchase various properties. Reporters have managed to find out about a few villas from France, which are estimated at over $16 million – with suspicions that there might be other properties involved.

Last, but not least, Kenyan president Uhuru Kenyatta can also be found in the papers. Many of the papers do not necessarily involve him directly, but his family. It seems his family has owned a big chain of offshore companies. The network was used for various financial activities. The family has successfully managed to run this secret network for a few decades already and the benefits associated with it are not fully revealed yet.

These are only a few examples associated with the more recent Pandora Papers. The list includes some of the wealthiest families in the world, rich and powerful individuals, as well as massive corporations. Again, many legal entities have also had their details leaked, which could pose a lot of harm in the long run. Collateral victims are often ignored though, as most reporters are focused on the 330 politicians from about 90 countries instead.

When it comes to politicians, chances are most people will not care who they are. Sure, the Czech prime minister is a concern for the people in the respective country and so on. But then, royalty is more important for the average individual. Among royalty individuals named in the Pandora Papers, Lalla Hasnaa (the princess of Morocco) and Abdulah II (the king of Jordan) are the main names to be considered.

Then, there are a lot of businesspeople named in these leaks, such as Anil Ambani, Du Shuanghua, Beny Steinmetz, the Gaisano family from the Philippines or the Echavarria family from Colombia. Again, many of these business people tend to keep a low profile internationally. Indeed, they are better known in the countries they live in, but other than that, no one seems to be bothered about them. When it comes to the actual scandal, celebrities are more likely to gain international attention.

The list here is quite long and includes sportspeople, musicians, models and entrepreneurs. For instance, Elton John and Shakira are among the most mentioned names associated with the Pandora Papers. Then, you have sportspeople like Pep Guardiola, Angel Di Maria, Carlo Ancelotti or Sachin Tendulkar, not to mention worldwide celebrities like Julio Iglesias, Ringo Starr, Claudia Schiffer, Miguel Bose or Swedish House Mafia.


What does a tax haven do? Simple – it allows people to diversify their assets. Then, different countries have different tax systems. Therefore, an offshore company may allow you to pay less tax on income, which is a great benefit. These are the most common reasons wherefore more and more people turn to offshore businesses, but then, these companies can also keep business owners safe – against illicit or unnecessary trials based on nothing but getting a piece of the pie.

Now, different countries provide access to different systems. Just like any other country out there, the one you choose for your offshore company may have some legal loopholes. People can end up paying less money or perhaps hiding some money. Some say it is not ethical or moral. But at the end of the day, no one cares about it when it comes to money. If it is legal and it can save you a fortune, why would you ignore such an opportunity?

Benefits associated with offshore companies go further than that and may not necessarily involve reducing tax or saving money. Instead, there are people who choose to keep their money in offshore accounts because they want an extra layer of protection against criminal attacks. When loaded, you become a target for criminals. At the same time, you become a target for people who know it and may sue you for random reasons.

Another good reason to keep or hide money abroad is the extra protection from an unstable government. Unfortunately, there are many such governments out there. Things can change overnight – look at what happened to Afghanistan after 20 years of progress. The country is back to where it was about two decades ago. Such issues can arise in many countries out there and having money abroad can give a sense of security.

Having offshore assets is perfectly legal in pretty much every country out there. Having money in an offshore account is also accepted. Having more offshore companies – whether or not they are linked – is perfectly legal too. The bad news is that such complex networks of companies may often be used for crime, such as money laundering and avoiding tax at all. Then again, there are a few people who are likely to ruin it for everyone.


Who benefits from the Pandora Papers​

To keep a long story short, the average individual is happy to see such leaks. Basically, random people read the news or watch what is going on around the world and feel happy about it, without actually benefiting from it. There is a general feeling of happiness when rich people get in trouble because their wealth is often associated with illegal activities – almost never with their brains, entrepreneurial skills or business ideas.

Different reports will come with different theories about the Pandora Papers, just like it happened before with the Panama Papers. In theory, they are right. For instance, billions of dollars avoided in tax or money laundering could have gone to education or healthcare. Your children could have had better education or more advanced medical treatments. But in reality, such amounts of money will go back to governments, which mostly consist of people in the same boat.

More countries have recovered money in tax after the Panama Papers leak. In fact, altogether, countries managed to recover over $1.3 billion in various taxes, penalties or fines. Where did all the money go? Exactly. Those money went straight to governments, which could have been done without them anyway. Different people gained access to the respective money, meaning the leak was nothing but a transfer of funds.

To all the governments involved with the Panama Papers scandal, the extra income was just a jackpot. They had no clue about the money hidden in offshore accounts. Therefore, the extra income felt like someone came over and offered them money for free – nothing else. There were no major improvements made in economies, but just a scandal that came fast and went overnight. No one is talking about it anymore.

Chances are the Pandora Papers will go in the same direction. Again, there are some famous names mentioned in the papers. Again, there are celebrities, sportspeople and politicians. Some of them will get away with it. Some others will have to pay some fines or tax that will not necessarily affect their status. Five years from this leak, no one will be bothered about the Pandora Papers anymore – the scandal will go just like the Panama Papers.

The average individual is less likely to ever benefit from such a scandal. Sure, people are happy when richer and more famous individuals are charged or asked to pay millions or even billions in tax. This is only the mentality associated with the average individual – you are happy when someone richer is in trouble. You fail to realize that having their entrepreneurial skills would have put you in the same situation. The scandal itself is attractive, but it will not benefit the average population.

Do journalists benefit from the Pandora Papers? Absolutely. Reports know that they are less likely to change anything. They come up with an investigation and reveal some potentially illegal activities from famous people – no one really cares about the small companies or less famous individuals. However, reports come up with some boom stories and this is where the money is. This is the main reason wherefore such investigations are conducted.


How the Pandora Papers affect the offshore industry​

Journalists mostly care about the money they make when it comes to altering the press – they have no ethics regarding the consequences. For instance, take the recent petrol crisis in the UK. There was no crisis. Journalists mentioned that there is a crisis and fuel cannot reach garages and stations. As a direct consequence, everyone rushed to get a full tank of petrol. The issue caused disruptions all over the UK. If no one mentioned it, everything would have been alright.

The same effect applies to the Pandora Papers. Journalists cannot be bothered about the private data associated with legal entities – and most of the entities in these papers are legal. They are only after a bunch of celebrities. Meanwhile, plenty of legit individuals and businesses will suffer. Data privacy is no longer a legal requirement, it seems. Moreover, long-term effects could target different offshore processes and procedures.

For instance, there is a decent chance for offshore company registration procedures to become more complicated. Even if there is nothing illegal about it and your intentions are right, the approval process might become more difficult. This is not a catastrophe though – you can still find local company formation and registration services out there. At the end of the day, you are less likely to be familiar with the laws and regulations from another country.

Then, KYC (Know Your Customer) policies may also become a bit more difficult. For instance, you might be asked to bring more papers and show more evidence regarding your company and financial plans. Again, this is totally doable and understandable – a bit of extra work, but this is pretty much it. All these little things will not really make a difference for millionaires, celebrities or politicians who have lots of power anyway.

Instead, these changes will affect the average individual who is trying to diversify some assets, save some money, get ready for retirement or gain some protection against an unstable or corrupt government. Things are likely to become more difficult for all those people who use offshore entities for legal purposes, rather than the world's most powerful people. You will struggle a little more with various procedures, but the world's richest people will find these changes irrelevant.

There will not be any major changes – there are no doubts about it. After all, all the people turn to politicians, bankers and governments to change something. But as the Pandora Papers clearly reveal it, these are actually the people who benefit the most from such offshore entities – be it legally or illegally. Sure, they will make a few changes here and there. Some of them will pay fines or extra tax, but this is just part of the game.

Such changes must occur for the average population to keep cool with the scandal. They will find joy and happiness in seeing the rich in trouble, but they fail to realize that this trouble is only apparent. Behind the curtains, all these rich people are still shoveling money and gold like never before. Instead, the average businessperson with an offshore company is more likely to suffer some consequences – nothing major, of course.


Finding solutions for the Pandora Papers scandal​

There is nothing to do until any actual changes kick in. Meanwhile, those involved legally with offshore businesses can mind their business operations with no issues at all. Some of them have been affected by the leak, yet many reporters have ignored them because they do not pose too much interest. At this point, it is simply too early to provide solutions for a scandal that has just started. Chances are celebrities and wealthy individuals affected should worry more than average business people.

These papers clearly represent a coordinated attack against the offshore industry for westerners mostly – before anything else. It is a political attack aimed at the opposition. Whoever is in charge has pushed the attack towards the other party – simple as that. At some point or another, whoever orchestrated this attack will most likely benefit from offshore operations as well – if they are not already doing it behind the curtains.

The worst thing that could happen would be some extra strictness regarding rules, from registering a company to using an accountant, filing for taxes or getting a bank account. Solutions imply some extra documents and care. People will most likely waste some more time trying to get all the required documentation. At times, certain services may also cost a bit more – such as accounting. But other than that, there is nothing to be concerned about.

It might be pretty obvious, but it is worth mentioning that such issues are mostly associated with particular companies. It is not about certain countries or jurisdictions. Mossack Fonseca & Co. was the name associated with the Panama Papers. When it comes to the Pandora Papers, there are 14 offshore service providers associated with it. It is fairly simple to understand – there are more famous names with offshore assets (both legal and illegal) out there, but they were lucky to be involved with different services.

Conclusion​

Bottom line, there are a few different conclusions to draw from the Pandora Papers. First of all, it is obvious that tax authorities try to make their life easier by slowly killing the offshore industry – which is not too secret anyway. Then, the more important thing to remember is the fact that money never lies. People do lie and these leaks make it obvious. If presidents, politicians, kings and ministries of the economy keep their money hidden in offshore accounts, something is sketchy.

If the richest people in the world keep their money in better and safer places, you should ask yourself – are you paying too much tax? People who decide the tax are hiding their money, so why would you be the sheep then? This recent leak is a serious warning. People involved with offshore services have figured it out already. Those who are still considering it should move fast, as the economy is clearly going in the wrong direction.
 
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boomy

Mentor Group Gold
Another good share. I have read about Pandora papers here, there and everywhere. They don't stop, these journalists! :(
 

tyrexoid

Active Member
Nice summary. But what is the chance that it's a human factor (nature of people, to be greedy, as a survival instinct), and not a sign that the world economy is broken? Just to clarify to myself that I understand the meaning of "the economy heading in the wrong direction" do you mean the current global economy, and the way fiat money is managed by banks and governments?
 

tacokai

Mentor Group Gold
Bottom line, there are a few different conclusions to draw from the Pandora Papers. First of all, it is obvious that tax authorities try to make their life easier by slowly killing the offshore industry
agree, there is so much black money in this world they want to get rid off. The question is if cryptocurrencies will take over that part and where it will end.
 

burden

Mentor Group Gold
You nailed the point. it's like dancing you need to learn the moves to be a good dancer. So it is with business, if you don't want to take your time to learn it you will fail!
 

uplana

Corporate Services
Mentor Group Gold
Do we all expect this was the last time we have seen such papers? I mean, is there more left to report or haven't they all been reported already and found by the journalists ?
 

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