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Pandora Papers: Pandora Papers in Latin America: Three active heads of state and 11 former presidents operated in tax havens | USA

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Three current and 11 retired presidents, 90 politicians in the upper echelons of power, entire religious congregations, world-famous artists, billionaires and even the governor of a central bank; in Latin America a constellation of influential figures has made use of tax havens over the years.

Despite inhabiting the region dogged by more inequality than anywhere else in the world, members of its elite have used a network of trusts, shell companies and opaque business records in places such as the British Virgin Islands and Panama to keep a substantial portion of their assets from public scrutiny.

It is a complex, obscure corporate web that the publication of the Pandora Papers will put under the spotlight. Obtained by the International Consortium of Investigative Journalists (ICIJ), the data leak is based on 11.9 million files containing the work of 14 offshore law firms. This body of information has been reviewed and analyzed by a team of 600 journalists, with the participation of EL PAÍS and other media giants such as The Washington Post, The Guardian and the BBC as well as numerous local media sites.

While the results of the investigation have a global impact, they are particularly earth-shattering in Latin America, where around $40 billion is diverted to tax havens each year. As will be published in the coming days by EL PAÍS and the other media participants, of the 35 presidents or former presidents that appear in the documents, 14 are from this region. Most are conservative. Among them are three active heads of state, who have all been wealthy businessmen: Chile’s Sebastián Piñera, Ecuador’s Guillermo Lasso and the Dominican Luis Abinader. Eleven former presidents also emerge, such as César Gaviria and Andrés Pastrana from Colombia, Pedro Pablo Kuczynski of Peru, Porfirio Lobo of Honduras, Horacio Cartes of Paraguay, and Juan Carlos Varela, Ricardo Martinelli and Ernesto Pérez Balladares, all of Panama.

Regarding the Chilean president, whose business dealings involved sectors such as airlines, banking and real estate, the investigation carried out by Chilean media outlets CIPER and LaBot has exposed a particularly controversial activity among his offshore operations – namely, the sale of the environmentally sensitive copper and iron mine, Minera Dominga, in the British Virgin Islands together with businessman Carlos Alberto Délano, one of his childhood friends.

In December 2010, when Piñera had been in the presidential residence, La Moneda Palace, for just nine months, the presidential family sold the business to Délano with a deed signed in Chile for $14 million and another in the Virgin Islands for $138 million. The amount was to be paid in three installments, with a caveat: the last payment was conditional on there not being environmental protection imposed on the mining operations area, as environmental groups were demanding.

The decision on the viability of Minera Dominga was left in the hands of the Piñera government, which failed to promote environmental protection, so the third installment was finally paid. Despite the lack of transparency, the manager of Piñera’s business affairs stated, when asked, that the president had not managed his own companies for 12 years; that he had been not informed of the process of Minera Dominga’s sale, and that the judicial investigation into the operation had been wound up.

Another president featured in the Pandora Papers is the Dominican Luis Abinader, whose successful business career was in the hotel sector. The documents link him to two companies in Panama, Littlecot Inc. and Padreso SA. Both were created before he took office and were used to manage assets in Dominican Republic. Local media outlet Noticias Sin’s investigation flags up the fact that the shares of these companies were initially “payable to the bearer,” an instrument used to hide the beneficial owner of the companies.

The president of Dominican Republic, Luis Abinader, in a file photo from December 16, 2020.
The president of Dominican Republic, Luis Abinader, in a file photo from December 16, 2020.GLADYS SERRANO

A legislative reform in 2018 obliged the Abinader family to publicly register as beneficial owners. Upon becoming president in 2020, Abinader declared nine offshore companies that he controlled through a trust. Both he and Piñera used the Panama-based law firm, OMC Group, the firm used by Colombian singer Shakira for at least three of the offshore companies the Spanish Treasury has been tracking for years.

The third active head of state who appears in the documents obtained by the ICIJ is Guillermo Lasso, a conservative millionaire and former banker who was voted president of Ecuador last year. According to the documents and the investigation carried out by local media site El Universo, Lasso ended up operating through 14 offshore companies, most of them in Panama, closing them only after former left-wing Ecuadorian premier Rafael Correa promoted a law banning candidates from being the beneficial owners of companies located in tax havens.

In his defense, Lasso claims that he opened these opaque companies because national legislation prevents bankers from investing in his country. He also claims that 10 of these companies are already inactive; he denies any relationship with or profit from the other four.

Lasso was a client of Trident Trust, one of the largest providers of offshore entities in the world. This Swiss company is known for its discretion regarding these types of solutions and appears again and again in the operations uncovered by the data leak, together with the law firm Alemán, Cordero, Galindo & Lee (Alcogal), which has a host of clients in Latin America. Alcogal created the majority of the 78 companies used by the Venezuelans accused of hiding $2 billion from the state-owned oil company, Petróleos de Venezuela (PDVSA), in accounts in Andorra. A significant number of the Chavista hierarchy are among the beneficiaries of this scheme, according to Armando.info’s investigation.

In Brazil, the Pandora Papers shed light on the activities of the two most powerful men in the country’s economic sector: the economy minister, Paulo Guedes, and the president of the central bank, Roberto Campos Neto. Neither disclosed their offshore activities to the public before assuming positions involving decisions on these types of investments. This possible conflict of interest is particularly pertinent in the case of the economy minister who has pushed through a tax reform to reduce the pressure on private money in tax havens.

Guedes, 72, is listed as a shareholder in Dreadnoughts International Group, a company registered in the British Virgin Islands. It is what is known in financial jargon as a shelf company: firms that are opened in tax havens but can remain inactive for years, waiting for someone to give them a purpose. The documents show that Guedes, who is economic guru to Brazil’s premier, Jair Bolsonaro, and one of the country’s most controversial figures due to his connections with the financial elite, had at least $8 million invested in the company in 2014, registered in his name, that of his wife, Maria Cristina Bolivar Drumond Guedes, and that of his daughter, Paula Drumond Guedes. In response to the investigation, Guedes sent a statement to Piauí magazine pointing out that these activities “were duly declared to the tax authorities and other competent bodies, including his participation in the company Dreadnoughts International Group.” The statement also says: “His actions always respected the relevant legislation and were guided by both ethics and responsibility.”

Meanwhile, the central bank president, Campos Neto, owns two companies, Cor Assets and ROCN Limited, both registered in Panama in partnership with his wife, lawyer Adriana Buccolo de Oliveira Campos. The stated purpose of the companies was to invest in financial assets from Santander Private Bank, as a member of its executive board. The other opaque companies are Peacock Asset, managed by Goldman Sachs, and which was discovered in the Bahama Leaks investigation in 2016; and Darling Group, a “real-estate management” company.

Roberto Campos Neto.
Roberto Campos Neto.UESLEI MARCELINO (Reuters)

Like Guedes, the central bank president claims that he declared all his money abroad to the Presidency of the Republic’s Ethics Commission, as well as to the Brazilian tax authorities and to the central bank itself. He also insists that he has built his “assets with the income acquired from 22 years working in the financial sector.”

Colombia is another Latin American country where a lack of transparency in the financial dealings of the political elite has been particularly extensive. Among the public figures who appear in the leak are two former presidents: the liberal César Gaviria Trujillo, who was in office from 1990 to 1994, and the conservative Andrés Pastrana Arango, who governed between 1998 and 2002. Both men, who retain significant political influence, resorted to these obscure corporate vehicles once they had already left power.

In Argentina, the Pandora Papers shed light on the activities of Jaime Durán Barba, a political consultant who catapulted Mauricio Macri to the presidency in 2015; and Zulema Menem, daughter of former president Carlos Menem (1989-1999). Also flagged up for murky offshore dealings is the late Daniel Muñoz, secretary of former President Néstor Kirchner, as well as several key figures that feature in the lawsuit filed for the receipt of alleged illegal commissions paid by public works contractors to Peronist governments.

The results of the investigation in Mexico are significantly more far-reaching, with the documents implicating more than 3,000 people, including three of the richest business tycoons in the country: the mining magnate Germán Larrea, the heiress of the Modelo beer group, María Asunción Aramburuzabala, and Olegario Vázquez Aldir, whose group controls private hospitals, hotel chains, insurance companies and the media. Their combined fortunes amount to more than $30 billion.

Julio Scherer Ibarra.
Julio Scherer Ibarra.Victoria Valtierra (CUARTOSCURO)

All three used tax havens to create corporate vehicles through which to operate internationally. Larrea went so far as to open nine companies in the British Virgin Islands between 2013 and 2016 through which he managed the acquisition of luxury real estate in the US, leaving scarcely a trace. Aramburuzabala bought million-dollar properties in Utah and New York as well as two private planes. And Vázquez Aldir and his entourage acquired yachts, a plane and at least two mansions through eight shell companies. Neither Larrea nor Aramburuzabala have responded to questions from journalists working on the investigation while, speaking through a lawyer, Vázquez maintains that he complies with all tax and legal obligations both in Mexico and abroad.

A political figure in Mexico whose activities have featured big in the investigation is Julio Scherer Ibarra, who was legal advisor to president Andrés Manuel López Obrador up until a month ago. In 2017, he was listed as the sole owner of a firm based in the British Virgin Islands with assets valued at $2 million from his work as a private lawyer. The firm owned a company in the US that had a luxury apartment in an exclusive area of Miami. The business in the Virgin Islands became inactive in 2019, 11 months after Scherer joined the Mexican government, but the company in the US still owns the Miami apartment. Asked about these activities, the former presidential advisor has pointed out that on the dates he made the investments he was not a public official but an independent professional.

The Pandora Papers also show how there was a proliferation of people close to certain centers of Mexican power making intensive use of offshore financial services. This was the case in circles close to former president Enrique Peña Nieto (2012-2018) and also with large suppliers linked to the Mexican public oil company Pemex, an energy giant that is currently in debt to the tune of almost $114 billion.

EL PAÍS reporters Georgina Zerega, Elías Camhaji, Zorayda Gallegos, Eliezer Budasoff, Federico Rivas, Carla Jiménez and Inés Santaeulalia contributed to the reporting for this article.

The Pandora Papers investigations in Latin America counted on reporting from journalists at the following media outlets: La Nación, elDiarioAR, Infobae, El Deber, Agência Pública, Metrópoles, Poder360, Revista Piauí, Ciper, LaBot, CLIP, El Espectador/CONNECTAS, Costa Rica Noticias, Proyecto Inventario, Noticias Sin, El Universo, El Faro, Plaza Pública, Contracorriente, Proceso, Quinto Elemento Lab, Univision, Confidencial, Grupo ABC Color, Convoca, IDL-Reporteros, Centro de Periodismo Investigativo, Armando.info.

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Belgium goes into three-week ‘lockdown light’

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Belgium is to go into a three-week ‘lockdown light’, following a meeting of federal and regional governments on Friday (26 November).

“We have to admit that we have been ambushed by the virus and that the situation is much more serious than we saw a few weeks ago”, Belgian prime minister Alexander De Croo told a lunchtime press conference.

De Croo added that “the pressure on our hospitals is seriously increasing and that the situation is not tenable. We have to action now.”

The Belgian concertation committee of federal and regional governments decided that social life will be restricted in a variety of ways for the next three weeks.

Nightclubs will be closed, and indoor concerts where people are not seated will be cancelled. This measure will go into effect on Monday (29 November).

Bars, restaurants and night-shops will need to close their doors at 11PM. The number of people on one table in restaurants will be restricted to six, except for families larger than six. These measures will go into effect on Saturday (27 November).

Private parties will be forbidden, with an exception for weddings and funerals. However, it is still allowed to have guests at home.

At work and school, on the other hand, there are no upgraded restrictions. The last committee decided that teleworking is mandatory four days a week, and that people can only go to the office one day a week.

Schools will remain open, as will universities.

De Croo reiterated that these “measures will only makes sense if everyone follows them.”

The committee decided to accelerate the vaccination campaign. Regional governments will organise test centres where people can get tested for free.

The committee decided to meet urgently after hospitals and doctors said they could no longer handle the situation. From 16 to 22 November, on average 16,100 people tested positive for Covid daily. On 22 November that number was already 25,365 .

Currently, 669 intensive-care beds are filled with Covid patients, well over the emergency threshold of 500, and in the worst-case scenario, 1,250 intensive-care beds, a maximum capacity, would be filled by Christmas.

Belgium has not been able to organise roll-out of the booster jab in time to prevent the fourth wave. De Croo announced that on Saturday (27 November) a plan will be made to accelerate the booster jab for every adult.

Before the Belgian governments met, European Commission president Ursula von der Leyen announced the bloc will take the initiative to block all air travels from Southern Africa, where a new variant of Covid-19 has been found.

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Interpol’s president: alleged torturer rises as symbol of UAE soft power | Global development

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Maj Gen Ahmed Nasser al-Raisi’s ascent through the ranks of the interior ministry in Abu Dhabi is associated with the United Arab Emirates’ transformation into a hi-tech surveillance state.

His personal achievements include a diploma in police management from the University of Cambridge, a doctorate in policing, security and community safety from London Metropolitan University and a medal of honour from Italy.

Now, in a big soft-power win for the UAE and its attempt to legitimise its policing methods internationally, he has been elected the president of the global policing organisation Interpol – to the dismay of human rights defenders.

Often photographed smiling, Raisi is the longstanding inspector general for the interior ministry, responsible for the supervision of detention centres and policing. Multiple former detainees accuse him of using this position to green-light abuses, including torture.

“Raisi’s rise to the Interpol presidency legitimises the role and conduct of security forces in the UAE,” said Matthew Hedges, a British academic and expert on the Emirates who was detained there for seven months on espionage charges. Hedges, who was eventually pardoned, says Raisi was responsible for his arrest and also oversaw the torture he says he suffered in detention.

“This translates to a green light for states to continue acting in a way that abuses accountability and human rights, legitimises the dilution of rule of law and emboldens authoritative and abusive systems of detention,” Hedges said. “This is really a warning to the international community that cross-border abuses can and will occur.”

The Gulf state has previously said Hedges was not subjected to any physical or psychological mistreatment during his detention. On Thursday its interior ministry heralded Raisi’s win as “recognition of the vital role of the UAE all over the world”.

“The UAE,” it said, “is now at the helm of this international organisation working in the fields of security and policing and will do its best to make the world a safer place.”

In an unusually public campaign for the role, Raisi boasted of technological transformations that overhauled policing and surveillance in the UAE. These included the introduction of iris and facial scanning technology, and the creation of the interior ministry’s first “general directorate of happiness”.

His domestic policing changes underpin Abu Dhabi and Dubai’s status as two of the world’s most surveilled cities. One system, called Falcon Eye, deploys thousands of cameras to monitor not just traffic violations but also “behavioural issues like public hygiene and incidents like people gathering in areas where they are not allowed to”, according to a report by the state news agency WAM.

The rise in surveillance has been accompanied by a crackdown on domestic criticism and dissent. Human Rights Watch has said: “The government’s pervasive domestic surveillance has led to extensive self-censorship by UAE residents and UAE-based institutions; and stonewalling, censorship, and possible surveillance of the news media by the government.”

Abdullah Alaoudh, from the Washington DC organisation Democracy for the Arab World Now, said the UAE had been applying a two-pronged approach epitomised by Raisi’s Interpol win: “Cracking down hard on every voice of dissent, while investing in public relations like lobbying, soft power, sports and entertainment.”

Christopher M Davidson, the author of a book on statecraft in the Middle East, described Raisi as an example of “high-performing technocratic members of UAE political society” who had found success under Crown Prince Mohammed bin Zayed Al Nahyan.

“The key to the regime of Mohammed bin Zayed has been to get things done, to stamp out corruption. Despite all criticisms levelled at the UAE and Abu Dhabi today, it is a far less corrupt place than it was 15 years ago. These were the people entrusted to clean up ministries,” said Davidson.

Stamping out corruption has, at times, included arresting the wealthy and critics. Khadem al-Qubaisi, a former adviser to the royal family and a businessman who said he was “scapegoated” by the Abu Dhabi authorities for embezzling millions, is detained in Al Wathba prison. The prison, overseen by Raisi, also holds the human rights defender Ahmed Mansoor.

Riyaadh Ebrahim, who spent more than a year in the prison, said he witnessed torture there. “There is wrongful imprisonment, no application of the rule of law. People are being persecuted for crimes they did not commit,” Ebrahim said. He said he was “totally appalled” by Raisi’s victory in the Interpol election race.

Davidson said the UAE was using its wealth and resources to buy reputational shortcuts on the international stage.

“Policing in the UAE still has its problems, but this is a way of saying to the world that [they] are credible and respectable,” he said. “Obtaining the presidency of Interpol symbolises moving in the right direction.”

Jalel Harchaoui from the Geneva-based organisation the Global Initiative Against Transnational Organized Crime said Raisi’s election highlighted the struggle between liberal and illiberal nations within international institutions such as Interpol, and was a victory for anti-democratic countries.

“On the surface, Abu Dhabi – thanks to excellent soft-power outreach – markets itself as a modern state, which happens to be a dependable friend to all the major western democracies,” he said. “In reality however, the Emiratis, whose governance style has been partly inspired by China’s strict form of authoritarianism, always campaign against liberalism and its key principles.”

A spokesperson for the UAE embassy in London did not respond to a request for comment.

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France reminds Poland on law in Paris meeting

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French president Emmanuel Macron urged Polish president Mateusz Morawiecki to solve a rule-of-law dispute with the EU, while voicing solidarity on the Belarus migration crisis, in a meeting in Paris on Wednesday. Poland should “find a solution that safeguards the core values of the European Union”, Macron’s office said. Russian president Vladimir Putin told EU Council president Charles Michel by phone extra EU sanctions on Belarus would be “counterproductive”.

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