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Pandora Papers Overview:
- Who: Experts have targeted the UK government with criticism after the recent release of an investigation into the financial dealings of the ultra-rich, called the Pandora Papers.
- What: The government has not done enough to prevent the ultra-rich from laundering and hiding their money offshore after the Pandora Papers exposed the extent of the illegal behaviour, experts say.
- Where: The United Kingdom.
The government has not done enough to prevent the ultra-rich from laundering and hiding their money offshore, experts say, after the recent publication of the Pandora Papers exposed the disturbing extent of the illegal behaviour.
On Oct. 3, the International Consortium of Investigative Journalists published the Pandora Papers, its investigation into a leaked 2.94 terabyte data trove that it says “exposes the offshore secrets of wealthy elites from more than 200 countries and territories.”
The nearly 12 million files were obtained from 14 firms located around the world. The investigation revealed that hundreds of politicians, celebrities, religious leaders and drug dealers have used shell companies and other financial tactics to hide their wealth and investments in property, yachts and other assets, the journalists say.
Now, calls are growing in the UK for an end to the financial secrecy that has allowed many of the world’s richest and most powerful people to hide their wealth from tax collectors.
In an analysis published the day after the Pandora Papers were revealed, Open Democracy points to several specific actions the British government should be doing to prevent tax evasion and other financial crimes of the mega-rich.
2018 Law To Reveal Hidden Assets Described in Pandora Papers Shelved
In 2018, the UK government published draft legislation on setting up a register of overseas entities and their beneficial owners. However, since then, the legislation has not been reviewed or enacted, Transparency International UK Lead Researcher Steve Goodrich told Open Democracy.
“It’s been five years since the UK government committed to shining a light on who owns UK property via secretive offshore companies, yet this reform is yet to move beyond a draft bill,” he said.
However researcher Richard Smith said the legislation may need further work to make it useful. For example, register as it stands would allow companies to be listed as owners of UK property, avoiding the need for individuals to reveal their assets.
Also, under the proposed register, a beneficial owner would have to meet a threshold of 25 percent control. This makes it easy for company ownership to be divided between companies, allowing individuals to avoid declaring ownership, Open Democracy reports.
Pandora Papers Highlight Need to Reform Companies House
The UK government has plans to reform Companies House, the UK’s corporate registry, but there is currently no timeline set for it, say the experts.
Companies House also has no means of verifying who owns UK-incorporated companies.
The agency relies on and relies on companies declaring their beneficial owners themselves, Open Democracy reports, but these often turn out to be nominee directors or even holding companies.
If there are reforms, the government plans to give the agency investigatory and verification powers.
Rarely Used Unexplained Wealth Orders Should Become More Common, Say Experts
Unexplained Wealth Orders (UWOs) — a type of court order issued by a British court to compel the target to reveal the sources of their unexplained wealth — were introduced in 2018, but have rarely been used, Open Democracy reports.
Spotlight on Corruption Executive Director Susan Hawley said there were initial successes with UWOs, but those who went down were easy targets.
Experts also say UK law enforcement resources for dealing with financial crimes are stretched and splintered. For example, there are 25 different professional bodies that cover professions with anti-money laundering requirements, Open Democracy reports.
Meanwhile, there is also a lack of oversight for the professionals who serve the ultra-rich: lawyers, bankers, accountants and other corporate professions.
The professional bodies meant to supervise the professions have been found to “fail to ensure” timely action on correcting gaps in their members’ anti-money laundering practices, Open Democracy reports.
Meanwhile, last year, a group of 371 investors started a £1.3 billion class action lawsuit against HSBC in a claim related to a Disney film financing scheme. HM Revenue & Customs has determined the scheme was a tax avoidance mechanism.
What do you think needs to be done in the wake of the Pandora Papers? Let us know in the comments.
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