Isanka Perera sheds light on the importance of the Pandora Papers and the need to police offshore finances to protect the global economy

Pandora in Greek mythology had a box that once opened, and unleashed all manner of misery and evil known to humankind. The ancient myth has yet again instigated an avalanche of controversy as the International Consortium of Investigative Journalists (ICIJ) exposed almost 20 million records amounting to about 2.9 terabytes of data, offering us a peek into the hidden wealth of nations and people alike.

The findings are the result of a massive global investigation conducted by more than 600 journalists from 160 media organisations in 117 countries. Building on the legacy of the Panama and Paradise Papers, the Pandora Papers are considered the largest data leak and biggest journalism partnership in history.

The ‘data tsunami’ of confidential documents unveils the offshore financial operations of present and former world leaders, politicians, public officials and their closest associates, as well as celebrities and other high net worth individuals – including people in Russian President Vladimir Putin’s and Pakistani Prime Minister Imran Khan’s inner circles.

Therefore, this disclosure of information relating to cross border financial operations is largely in the public interest.

From Sri Lanka for example, a former Deputy Minister of Water Supply and Drainage (who is a cousin of the president) and her husband have been mentioned.

The allegations are that the couple set up shell companies and trusts in offshore jurisdictions to buy luxury apartments, pursue investments and obtain lucrative consulting contracts from foreign companies working with the Sri Lankan government.

However, they have claimed to be innocent of any wrongdoings in a statement to the Commission to Investigate Allegations of Bribery or Corruption (CIABOC).

Merely establishing a business offshore isn’t illegal. However, tax havens or offshore financial centres (OFCs) are essentially financial jurisdictions outside one’s own nation that offer minimal tax rates and a high degree of financial secrecy – entailing legal systems and regulations that make it easier for people to conceal their wealth from the prying eyes of the jurisprudence and general public back home.

As such, the economy of the offshore financial world is largely disconnected from the mainstream economic milieu. Due to this, it’s not possible to know how much is connected to tax evasion, money laundering and other shadow economic activities or relocated with legitimate motives.

Consequently, the corrupt are able to exploit offshore tax regimes. Though it may be beneficial to the host economy, offshore operations cost these account holders’ home economies enormous sums of money each year.

At least US$ 10 trillion in global financial wealth was sitting in these tax havens last year, according to OECD estimates. It is a scandal that flourishes in the gaps and holes of international finance.

Following the Panama Papers exposé, Oxfam publicly denounced secretive tax havens with the endorsement of 300 reputed economists, stating that these hubs serve no economic purpose apart from warping the global economy.

The policing of offshore operations cannot be undertaken by one country or region alone. Oxfam calls on governments to set up a public register on the real owners of bank accounts, trusts, shell companies and assets, which would require individuals and corporations to publicly report on their operations in the form of accounts.

Indeed, previous ICIJ exposés on offshore tax havens have repeatedly blown the whistle on fraudulent public officials’ malfeasance and led to hundreds of investigations worldwide, resulting in some of them being forced out of high office.

Governments from host and home economies alike publicly detest tax evasion and money laundering. Despite this however, they have rarely walked the talk, which is not unsurprising given how some people in power are direct or indirect beneficiaries of these schemes.

If anything, the Pandora Papers are further proof that as long as those who are supposed to fix the system choose to exploit it under the illusion that they’re above the law, the loopholes will remain.