From Tony Blair to Shakira to a mobster called the Fat One: How the rich disguise assets

  • Oops!
    Something went wrong.
    Please try again later.
·18 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Millions of leaked documents and the biggest journalism partnership in history have uncovered financial secrets of 35 current and former world leaders, more than 330 politicians and public officials in more than 91 countries and territories, and a global lineup of fugitives, con artists and murderers.

The secret documents expose offshore dealings of former British Prime Minister Tony Blair, Brazil’s economic minister, the King of Jordan, the presidents of Ukraine and Ecuador and the prime minister of the Czech Republic. The files also detail financial activities of Russian President Vladimir Putin’s “unofficial minister of propaganda” and more than 130 billionaires from the United States, Russia, India, Mexico and other nations.

The documents illuminate some of the names behind frenzied transactions propping up in South Florida’s booming high-rise condo market, deals often consummated with cash through anonymous shell companies.

The leaked records reveal that many of the power players who could help bring an end to the offshore system of shells and trusts instead benefit from it — stashing assets while their governments do little to slow a global stream of illicit money that enriches criminals and impoverishes nations.

Among the hidden treasures revealed in the documents:

A famed South Florida balladeer’s string of offshore corporations, used to hold his vast real estate portfolio; the shell company network behind one of Haiti’s richest — if not the richest — industrialists, who owns a giant mansion behind police-staffed guard gates in one of South Florida’s most exclusive communities; and the Vatican moneyman, linked to a defrocked cardinal, who purchased Miami-area high-rise units using shell companies tied to an ongoing criminal prosecution.

More than $13 million tucked in a secrecy-shaded trust in the Great Plains of the United States by a scion of one of Guatemala’s most powerful families, a dynasty that controls a soap and lipstick conglomerate that’s been accused of harming workers and the earth.

A $22 million chateau in the French Riviera — replete with a cinema and two swimming pools — purchased through offshore companies by the Czech Republic’s populist prime minister, a billionaire who has railed against the corruption of economic and political elites.

Three beachfront mansions in Malibu purchased through three offshore companies for $68 million by the King of Jordan in the years after Jordanians filled the streets during the Arab Spring to protest joblessness and corruption.

The secret records are known as the Pandora Papers.

The International Consortium of Investigative Journalists obtained the trove of 11.9 million confidential files and led a team of more than 600 journalists from 150 news outlets, including the Miami Herald, the Washington Post, BBC and The Guardian, that spent two years sifting through them, tracking down sources and digging into court files and other public records from dozens of countries.

A global team was needed because the leaked records came from 14 offshore service firms with outposts around the world, from the Caribbean to the South China Sea.

In an era of widening authoritarianism and growing inequality, the Pandora Papers investigation provides an unequaled perspective on how money and power operate in the 21st century — and how the rule of law has been bent and broken around the world by a system of financial secrecy enabled by the United States and other wealthy nations.

The findings by ICIJ and its media partners spotlight how deeply secretive finance has infiltrated global politics — and offer insights into why governments and global organizations have made little headway in ending offshore financial abuses.

The Pandora Papers investigation unmasks the covert owners of offshore companies, incognito bank accounts, private jets, yachts, mansions, and works by Picasso, Banksy and other artists. It provides more information than what’s usually available to law enforcement agencies and cash-strapped governments.

At least $11.3 trillion is held “offshore,” according to a 2020 study by the Paris-based Organization for Economic Cooperation and Development. Because of the complexity and secrecy of the offshore system, it’s not possible to know how much of that wealth is tied to tax evasion and other crimes and how much involves funds that come from legitimate sources and have been reported to proper authorities.

The Pandora Papers investigation is larger and more global than even ICIJ’s landmark Panama Papers investigation, which rocked the world in 2016, spawning police raids and new laws in dozens of countries and the fall of prime ministers in Iceland and Pakistan.

The Panama Papers came from the files of a single offshore services provider: the Panamanian law firm Mossack Fonseca. The Pandora Papers shine a light on a far wider cross-section of the lawyers, middlemen and fixers who are at the heart of the offshore industry.

Intrigue and privilege

People linked by the secret documents to offshore assets include India’s cricket superstar Sachin Tendulkar, pop music diva Shakira, supermodel Claudia Schiffer and an Italian mobster known as “Lell the Fat One.”

Shakira
Shakira

The mobster, Raffaele Amato, has been tied to at least a dozen killings. The leaked records provide details about a shell company, registered in the United Kingdom, that Amato used to buy land in Spain, shortly before fleeing there from Italy to set up his own crime gang. Amato, whose history helped inspire the highly praised movie “Gomorrah,” is serving a 20-year prison sentence.

Amato’s attorney did not respond to ICIJ’s request for comment.

Tendulkar’s attorney said the cricket player’s investment is legitimate and has been declared to tax authorities. Shakira’s attorney said the singer, who has a number of homes, including one in Miami Beach, declared her companies, which the attorney said do not provide tax advantages.

Schiffer’s representatives said the supermodel correctly pays her taxes in the U.K., where she lives.

In most countries, it’s not illegal to have assets offshore or to use shell companies to do business across national borders.

But these affairs often amount to shifting profits from high-tax countries, where they are earned, to companies that exist only on paper in low-tax jurisdictions. The use of the offshore shelters is particularly controversial for political figures, because they are often a way to keep politically unpopular or even corrupt activities from public view.

Large numbers of public officials and mega-wealthy individuals — who in some cases are one and the same — use the offshore system to manage, move and, often, hide their wealth.

The system is sustained by elite institutions that serve the rich and powerful — multinational banks, law firms and accounting practices headquartered in the United States and Europe.

‘Haven of scams’

The secret files provide a layer of behind-the-curtain context to public pronouncements about wealth, inequality and offshore refuges — as governments around the world struggle with revenue crunches, a pandemic, climate change and public distrust.

In February, a commentary from the Tony Blair Institute for Global Change urged policymakers to seek, among other measures, higher taxes on land and homes. Blair, the institute’s founder and executive chairman, talked as far back as 1994, when he campaigned to become the leader of the U.K.’s Labour Party, about how the rich and well-connected shirk paying their share of taxes.

“For those who can employ the right accountants, the tax system is a haven of scams, perks . . . and profits,” he said then during a speech in England’s West Midlands. “We should not make our tax rules a playground for revenue avoiders and tax abusers who pay little or nothing while others pay more than their share.”

The Pandora Papers show that in 2017, Blair and his wife, Cherie, became the owners of an $8.8 million Victorian building by acquiring the British Virgin Islands (BVI) company that held the property. The London building now hosts Cherie Blair’s law firm.

Cherie Blair and Tony Blair in London in 2015.
Cherie Blair and Tony Blair in London in 2015.

The records indicate that Cherie Blair and her husband, who served as a diplomat in the Middle East after stepping down as prime minister in 2007, bought the offshore real estate company that owned the building from the family of Bahrain’s industry and tourism minister, Zayed bin Rashid al-Zayani.

By purchasing the company shares instead of the building, the Blairs benefited from a legal arrangement that saved them from having to pay more than $400,000 in property taxes.

The Blairs and the al-Zayanis said they didn’t initially know about each other’s involvement in the deal.

Cherie Blair said that her husband was not involved in the transaction and that its purpose was “bringing the company and the building back into the U.K. tax and regulatory regime.”

She also said that she “did not want to be the owner of a BVI company” and that the “seller for their own purposes only wanted to sell the company.” The company is now closed.

Through their lawyer, the al-Zayanis said their “companies have complied with all U.K. laws past and present.”

‘Cannot be ashamed’

In June, Brazil’s economics minister, Paulo Guedes, proposed a tax reform package that included a 30% tax on profits earned through offshore entities. Experts estimate that Brazil’s richest people hold almost $200 billion in untaxed funds outside the country.

“You cannot be ashamed of being rich,” Guedes said. “You have to be ashamed of not paying taxes.”

After bankers and business leaders objected to tax hikes in the legislation, Guedes, a millionaire former banker, agreed to remove the tax on offshore profits. Negotiations over the legislation are continuing.

The Pandora Papers reveal that Guedes created Dreadnoughts International Group in 2014 in the British Virgin Islands.

In response to questions from an ICIJ partner in Brazil, Revista Piauí, a spokesperson for Guedes, said the minister has disclosed the company to Brazilian authorities. The spokesperson didn’t provide records to confirm that claim and did not answer a question about the removal of the offshore tax from the legislation.

The Pandora Papers investigation highlights how Baker McKenzie, the largest law firm in the United States, helped create the modern offshore system and continues to be a mainstay of this shadow economy.

Baker McKenzie and its global affiliates have used their lobbying and legislation-drafting know-how to shape financial laws around the world. They have also profited from work done for people and companies tied to fraud, corruption and authoritarian regimes, reporting by ICIJ has found.

The people the firm has done work for include Ukrainian oligarch Ihor Kolomoisky, who U.S. authorities allege laundered $5.5 billion through a tangle of shell companies, purchasing factories and commercial properties across the U.S. heartland.

Ihor Kolomoisky
Ihor Kolomoisky

Baker McKenzie also did work for Jho Low, a now-fugitive financier accused by authorities in multiple countries of masterminding the embezzlement of more than $4.5 billion from a Malaysian economic development fund known as 1MDB. ICIJ’s reporting found that Low relied on Baker McKenzie and its affiliates to help him and his associates build a web of companies in Malaysia and Hong Kong. U.S. authorities allege they used some of those companies to shift money looted from 1MDB.

A spokesperson for Baker McKenzie said the firm seeks to provide the best legal and tax advice to its clients and strives “to ensure that our clients adhere to both the law and best practice.”

The spokesperson didn’t directly address many questions about Baker McKenzie’s role in the offshore economy, citing client confidentiality and legal privilege. He said the firm performs strict background checks on all potential clients.

‘You know who’

For a few hundred or a few thousand dollars, offshore providers can help clients set up an offshore company whose real owners remain hidden. Or, for perhaps $2,000 to $25,000, they can set up a trust that, in some instances, allows its beneficiaries to control their money while embracing the legal fiction that they don’t control it — a bit of paper-shuffling creativity that helps shield assets from creditors, law enforcement, tax collectors and ex-spouses.

Offshore operatives don’t work in isolation. They partner with other secrecy providers around the globe to create interlocking layers of companies and trusts. The more complex the arrangements, the higher the fees — and the more secrecy and protection clients can expect.

Jordan’s King Abdullah II
Jordan’s King Abdullah II

The Pandora Papers show that an English accountant in Switzerland worked with lawyers in the British Virgin Islands to help Jordan’s monarch, King Abdullah II, secretly purchase 14 luxury homes, worth more than $106 million, in the United States and the U.K. The advisers helped him set up at least 36 shell companies from 1995 to 2017.

In 2017, the king bought a $23 million property overlooking a California surfing beach through a company in the BVI. The king paid extra to have another BVI company, owned by his Swiss wealth managers, act as the “nominee” director for the BVI company that bought the property.

In the offshore world, nominee directors are people or companies paid to front for whoever is really behind a company. Application forms sent to clients by Alemán, Cordero, Galindo & Lee (also known as ALCOGAL), the Panamanian law firm working on the king’s behalf, say that the use of nominee directors helps “preserve privacy by avoiding the identity of the ultimate principal . . . being publicly accessible.”

Internal emails show ALCOGAL and the Swiss adviser also discussed how to avoid disclosing the monarch’s name to authorities in the British Virgin Islands.

In emails, offshore advisers used a code name for him: “You know who.”

U.K. attorneys for the king said that he is not required to pay taxes under Jordanian law and that he has security and privacy reasons to hold property in offshore companies. They said the king has never misused public funds.

The attorneys also said that most of the companies and properties identified by ICIJ have no connection to the king or no longer exist, but declined to provide details.

ALCOGAL said that the firm “complies with all laws in the jurisdictions in which it operates” and that it fully cooperates with government authorities.

‘Coalition of the corrupt’

Imran Khan, a Pakistani cricket superstar turned anti-corruption politician, was elated when ICIJ’s Panama Papers investigation came out in April 2016.

“The leaks are God-sent,” he said.

The Panama Papers revealed that the children of Pakistan’s prime minister at the time, Nawaz Sharif, had ties to at least three offshore companies. This gave Khan an opening to hammer Sharif, his chief political rival, on what Khan described as the “coalition of the corrupt” ravaging Pakistan.

Nawaz Sharif
Nawaz Sharif

“It is disgusting the way money is plundered in the developing world from people who are already deprived of basic amenities: health, education, justice and employment,” he told ICIJ’s partner, The Guardian, in 2016. “This money is put into offshore accounts, or even western countries, western banks. The poor get poorer. Poor countries get poorer, and rich countries get richer. Offshore accounts protect these crooks.”

Ultimately, Pakistan’s top court removed Sharif from office as a result of an inquiry sparked by the Panama Papers. Khan swept in to replace him in the next national election.

ICIJ’s latest investigation, the Pandora Papers, brings renewed attention to the use of offshore companies by Pakistani political players.

This time, the offshore holdings of people close to Khan are being disclosed, including a top financial backer and the family of his finance minister. The documents also show that Khan’s water resources minister, Chaudhry Moonis Elahi, contacted Asiaciti, a Singapore-based offshore services provider, in 2016 about setting up a trust to invest the profits from a family land deal that had been financed by what the lender later claimed was an illegal loan. The bank told Pakistani authorities that the loan had been approved due to the influence of Elahi’s father, a former deputy prime minister.

Asiaciti records say that Elahi backed off from putting money into a trust in Singapore after the provider told him it would report the details to Pakistani tax authorities.

Elahi has not responded to requests for comment. Through a spokesperson, Khan did not directly answer a question about members of his inner circle holding offshore entities. The spokesman said Khan’s administration has made accountability and transparency a high priority, increasing the number of government officials required to disclose their financial assets.

‘Pandora’s box’

In December 2018, the Bahamas enacted legislation requiring companies and certain trusts to declare their real owners to a government registry. The island nation was under pressure from larger countries, including the United States, to do more to block tax dodgers and criminals from the offshore financial system.

Some Bahamian politicians opposed the move. They complained the register would discourage wealthy Latin American clients from doing business in the Caribbean. “The winners of these new double standards are the U.S. states of Delaware, Alaska and South Dakota” — states that allow corporate secrecy — one local attorney said .

Months later, a confidential document indicated that the family of the Dominican Republic’s former vice president, Carlos Morales Troncoso, had abandoned the Bahamas as a go-to sanctuary for their wealth.

For their new refuge, they chose a place 1,600 miles away: Sioux Falls, South Dakota.

The lobby of a building in the heart of downtown that houses Trident Trust Co. in Sioux Falls.
The lobby of a building in the heart of downtown that houses Trident Trust Co. in Sioux Falls.

The family set up South Dakota trusts, leaked records show, to lay away various assets, including shares they’d held in a Dominican sugar company. The family did not respond to questions about the assets moved from the Bahamas to South Dakota.

The Pandora Papers provide details about tens of millions of dollars moved from offshore havens in the Caribbean and Europe into South Dakota, a sparsely populated American state that has become a major destination for foreign assets.

Over the past decade, South Dakota, Nevada and more than a dozen other U.S. states have transformed themselves into leaders in the business of peddling financial secrecy. Meanwhile, most of the policy and law enforcement efforts of the world’s most powerful nations have stayed focused on “traditional” offshore havens such as the Bahamas, the Caymans and other island paradises.

The United States is one of the biggest players in the offshore world. It is also the country best situated to bring an end to offshore financial abuses, thanks to the outsize role it plays in the international banking system. Because of the U.S. dollar’s status as the de facto global currency, most international transactions flow in and out of New York-based banking operations.

U.S. authorities have taken action over the past two decades to force banks in Switzerland and other countries to turn over information about Americans with overseas accounts.

But the United States has been more interested in forcing other countries to share information about Americans banking offshore than in sharing information about money moving through U.S. bank accounts, companies and trusts.

The United States has refused to join a 2014 agreement supported by more than 100 jurisdictions, including the Cayman Islands and Luxembourg, that would require American financial institutions to share information they have about foreigners’ assets.

Year after year in South Dakota, state lawmakers have approved legislation drafted by trust industry insiders, providing more and more protections and other benefits for trust customers in the United States and abroad. Customer assets in South Dakota trusts have more than quadrupled over the past decade to $360 billion. One of the state’s largest trust companies says it has clients from 54 countries and 47 U.S. states, including more than 100 billionaires.

“As a citizen, I’m so sad that my state was the state that opened Pandora’s box,” Susan Wismer, a former lawmaker, told ICIJ.

By 2020, 17 of the world’s 20 least-restrictive jurisdictions for trusts were American states, according to a study by Israeli academic Adam Hofri-Winogradow. In many cases, he said, U.S. laws have made it more difficult for creditors to put their hands on what they are owed, including child support payments from absent parents.

Using documents from the Pandora Papers, ICIJ and the Washington Post identified nearly 30 U.S.-based trusts linked to foreigners personally accused of misconduct or whose companies were accused of wrongdoing. Among them is Guillermo Lasso, a banker and former Ecuadorian provincial governor who was elected president in April.

Leaked records show that Lasso set up trusts in South Dakota four years ago amid media reports that he’d used offshore companies to conceal his interests in a bank. Lasso was not charged with a crime.

Lasso said that his past use of offshore entities was “legal and legitimate” and that he complies with Ecuadorian law forbidding public officials from owning offshore companies.

Billionaires with a B

“Clearly the U.S. is a big, big loophole in the world,” said Yehuda Shaffer, former head of the Israeli financial intelligence unit. “The U.S. is criticizing all the rest of the world, but in their own backyard, this is a very, very serious issue.”

The billionaires in the Pandora Papers come from 45 countries, with the largest number from Russia (52), Brazil (15), the U.K. (13) and Israel (10).

The American billionaires mentioned in the secret documents include two tech moguls, Robert F. Smith and Robert T. Brockman, whose trusts have been the targets of investigations by U.S. authorities. The two men were clients of CILTrust, an offshore provider in Belize operated by Glenn Godfrey, a former attorney general of Belize.

Robert F. Smith
Robert F. Smith

Smith agreed last year to pay U.S. authorities $139 million to settle a tax probe. A U.S. grand jury indicted Brockman, Smith’s mentor and financial backer, in what prosecutors described as the biggest tax fraud in U.S. history.

Robert T. Brockman
Robert T. Brockman

Smith declined to comment. Brockman has pleaded not guilty.

Neither CILTrust nor Godfrey have been accused of wrongdoing. Godfrey did not respond to requests for comment.

This article has been updated.

Contributors: Scilla Alecci, Michael W. Hudson, Will Fitzgibbon, Agustin Armendariz, Sydney P. Freedberg, Margot Gibbs, Malia Politzer, Delphine Reuter, Serdar Varder and Pelin Ünker (DW Turkey), Elyssa Christine Lopez and Karol Ilagan (Philippine Center of Investigative Journalism), Pavla Holcová (Investigace, Czech Republic), Hala Nassredine (Daraj, Lebanon), Allan de Abreu (Rivista Piauí, Brazil), Leo Sisti (L’Espresso, Italy), Simon Goodley (The Guardian, U.K.), Ritu Sarin (The Indian Express), Nassos Stylianou (BBC, U.K.), Francisco Rodriguez and Enrique Naveda (Plaza Pública, Guatemala), Debra Cenziper (Washington Post, U.S.), Emilia Díaz-Struck, Gerard Ryle, Ben Hallman, Dean Starkman, Fergus Shiel, Jelena Cosic, Spencer Woodman, Brenda Medina, Maggie Michael, Richard H.P. Sia, Kathleen Cahill, Joe Hillhouse, Mia Zuckerkandel, Asraa Mustufa, Hamish Boland-Rudder, Miguel Fiandor Gutiérrez, Pierre Romera, Madeline O’Leary, Tom Stites, Kathryn Kranhold, Margot Williams, Antonio Cucho Gamboa, Soline Ledésert, Miguel Fiandor, Bruno Thomas, Anne L’Hôte, Madeline O’Leary, Maxime Vanza Lutaonda, Denise Hassanzade Ajiri, Jesús Escudero, Marcos García Rey, Mago Torres, Karrie Kehoe, Sean McGoey, Anisha Kohli, Fakhar Durrani, Carlos Monteiro, Douglas Dalby and Laura Bullard.

*******

Kevin G. Hall, who worked for the Miami Herald at the beginning of the project but is now employed by the Organized Crime and Corruption Reporting Project, also contributed.

The Pandora Papers is a global collaboration between the Miami Herald and the nonprofit International Consortium of Investigative Journalists. If you like journalism like this, please make a donation to ICIJ to support it.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting