When Billionaires Try To Hide Their Money: 5 Things You Need To Know About The Pandora Papers Revelations

Over the weekend, the International Consortium of Investigative Journalists began to distribute 11.9 million leaked documents to selected media outlets that detailed secret financial transactions involving world leaders, corporate leaders and celebrities. The documents, collectively known as the Pandora Papers, highlights as much as $32 trillion that is being hidden from taxation in offshore entities, shell companies and trusts.

The data in the Pandora Papers was pilfered from 14 offshore service providers. The ICIJ didn't reveal the sources of the leaked documents, which the organization dubbed as the “largest investigation in journalism history exposes a shadow financial system that benefits the world’s most rich and powerful.” The same organization was responsible for the similar Panama Papers leak in 2016.

Rather than invite our readers to sift through 11.9 million documents, which covers 2.9 terabytes of data, here are five key highlights from the Pandora Papers that deserve primary attention.

1. Who’s In The Spotlight? No American has yet to be identified in the leaked documents, although the international line-up is rather stellar with three reigning monarchs — a Jordan’s King Abdullah II, Qatar’s Emir Tamim bin Hamad Al Thani, and Dubai’s Sheikh Mohammed bin Rashid Al Maktoum — plus Spain’s former King Juan Carlos II, Morocco’s Princess Lalla Hasna and Bahrain’s Sheikh Khalifa bin Salman Al Khalifa.

Current government leaders named in the Pandora Papers include Ukraine’s President Volodymyr Zelensky and Lebanon’s Prime Minister Lebanon Najib Mikati, along with former British Prime Minister Tony Blair and his wife Cherie Blair.

Outside of politics, the most recognizable names to surface in this data dump are entertainers Julio Iglesias, Elton John, Shakira and Ringo Starr.

2. What’s All The Talk About South Dakota? One of the most surprising revelations of the Pandora Papers involves the use of South Dakota as an offshore destination for the world’s wealthiest people to hide their money.

“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 U.S. and abroad,” said the ICIJ. “Customer assets in South Dakota trusts have more than quadrupled over the past decade to $360 billion.”

Florida and Nevada were also named as U.S.-based tax havens in the report. However, the Washington Post, which was one of the media partners in this endeavor, noted that South Dakota “now rivals notoriously opaque jurisdictions in Europe and the Caribbean in financial secrecy."

3. What Does It Mean For The Biden Administration? The Pandora Papers represent an unexpected challenge to President Joe Biden, who issued his “Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest” in June.

“When leaders steal from their nations’ citizens or oligarchs flout the rule of law, economic growth slows, inequality widens, and trust in government plummets,” the memorandum stated, adding that, “Corruption threatens United States national security, economic equity, global anti-poverty and development efforts, and democracy itself. But by effectively preventing and countering corruption and demonstrating the advantages of transparent and accountable governance, we can secure a critical advantage for the United States and other democracies.”

However, the Biden administration has yet to address the publication of the Pandora Papers, nor is it clear what immediate action it can take because the state laws in South Dakota, Florida and Nevada encouraging offshore financial services have been in place for several years and have never been challenged by the U.S. Department of Justice.

4. Will This Impact Global Economies? For the most part, it will not. No current head of state within the major Western and Pacific Rim economies is named in the Pandora Papers. Roberto Campos Neto, president of the Central Bank of Brazil, was identified in the trove, but he lacks the influence of his U.S. counterpart Jerome Powell.

5. What Does This Mean For The Financial Markets? The most prominent corporate executives named in the Pandora Papers are Masayoshi Son, founder and CEO of Japan’s SoftBank Group Corp. SFTBY and Anil Ambani, founder and chairman of Indian’s Reliance Group. Neither has issued a public comment on the disclosures.

But since no corporate executive with a U.S.-based publicly traded company is named in the Pandora Papers, this has made zero impact in today’s NYSE and NASDAQ stock trading. For traders who are wondering what the brouhaha is all about, all we can say is to take a tip from the Anglo-inspired memes: keep calm and carry on.

Photo: Scrooge McDuck, a billionaire not named in the Pandora Papers, courtesy of Disney.