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The Pandora Papers: Secret files from 14 law firms reveal more than 700 offshore companies linked to Spain | USA

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The Pandora Papers.
The Pandora Papers.

More than 330 politicians from 90 countries, 35 current or former heads of state (14 in Latin America alone), 133 Forbes billionaires whose combined fortunes exceed €500 billion and 46 Russian oligarchs. This is just the tip of the iceberg from an investigation that has been analyzing nearly 12 million documents from a total of 14 offshore service providers in opaque jurisdictions. The Pandora Papers reveal new information and prove that the offshore sector remains in rude health, despite the Great Recession and the toll that the most recent crises have caused to Western welfare states, which have been decimated by a series of law firms that are specialized in taking advantage of the opacity of tax havens the world over.

Their clients could sell shares in a mining company, as the family of Chilean President Sebastián Piñera did, or get paid for consulting work from disreputable companies without paying tax, as is the case of former International Monetary Fund (IMF) director Dominique Strauss-Kahn. Another option was to use the British Virgin Islands to set up a real estate empire on Miami’s Indian Creek Island, aka the “Billionaire Bunker,” as Spanish crooner Julio Iglesias has done, or, try to hide an account in Andorra, like soccer manager Pep Guardiola did.

Over the course of two years, more than 600 reporters from 117 countries have worked on the Pandora Papers, an international journalistic investigation coordinated by the International Consortium of Investigative Journalists (ICIJ), and set up to analyze 11.9 million internal files from 14 offshore service providers, such as Alemán, Cordero, Galindo & Lee (Alcogal), Trident Trust and Asiaciti, all specialized in opening companies in opaque jurisdictions. Prior to the investigation, the names of some of these firms were already under the scrutiny of several national tax authorities for their role in fomenting tax fraud and money laundering schemes around the world. The corporate tangle that, according to the Spanish Treasury, was used by Shakira to avoid paying €14.5 million in taxes, and the companies that are at the root of Real Madrid coach Carlo Ancelotti’s problems with the taxman are among the 29,700 offshore companies exposed by this data leak.

Five decades of records, between the 1970s and 2020, have made it possible to reconstruct the financial dealings of politicians, billionaires, criminals and elite athletes in countries and territories that afford anonymity and low tax rates to foreign capital.

In Spain, a team from EL PAÍS and La Sexta TV network has analyzed the leak to flag up Spaniards in the public eye who have taken advantage of the most opaque jurisdictions in the world. The data throws up 601 people with Spanish nationality and 751 offshore companies linked to either individuals or companies with addresses in Spanish territory. In addition to dozens of public personalities, there are at least 54 linked to ongoing court cases. In most instances, they have used Andorran and Spanish lawyers as intermediaries to create opaque corporate vehicles in the most secretive tax havens in the world, including Belize, the British Virgin Islands, the Bahamas and the Cook Islands.

Using an offshore company is legal, as long as the owner declares it to the tax authorities in the country where they reside. These companies benefit from low taxation, anonymity and the absence of records of the accounts or the real owners in the jurisdictions where they are registered, and have no real activity.

In the eyes of the authorities, the problem is what is being hidden behind them. According to an estimate by the European Commission, EU citizens alone divert the equivalent of 10% of Europe’s gross domestic product (GDP) through these corporate vehicles, amounting to €46 billion a year in lost revenue – that’s eight times the annual budget of the Education Ministry in Spain. The Organization for Economic Cooperation and Development (OECD) estimates that at least €9.7 trillion is stashed offshore worldwide.

As Christoph Trautvetter, a tax expert who has advised both governments and multinationals, explains, “the laws that allow it are not democratically approved laws, but created under the influence of an industry of lawyers and service providers who benefit from the secrecy of countries where they operate and where it is legal.” The actions of that industry are reflected in the Pandora Papers documents. The Alcogal firm helped banks around the world create at least 3,926 offshore companies for their clients in various countries. In the case of financial services giant, Morgan Stanley, it set up another 312. Based in Panama, Alcogal sent more than 5,400 letters to the specific addresses of lawyers around the world containing corporate documents: the country that received the most letters was Andorra which, with 2,245 pieces of correspondence, had more than half the total.

The building where the offices of law firm Alemán, Cordero, Galindo y Lee are located in Panama City.
The building where the offices of law firm Alemán, Cordero, Galindo y Lee are located in Panama City.Tarina Rodriguez

Law firms: the key to accessing the offshore world

The offshore service providers at the center of this investigation represent the main cog in the machinery that moves money outside conventional circuits. According to Spanish tax inspector José María Pealáez, “they are essential intermediaries for tax havens to function: without them and the banks, it would be unthinkable to take money to the Bahamas and the Virgin Islands.” Without them, it would not be so easy to hide assets such as those unearthed in the Pandora Papers: bank accounts, private jets, yachts, mansions and works of art by Picasso or Banksy.

The Alcogal firm is where most references to Spanish and Latin American citizens can be found. Based in Panama, it contains at least 253 companies linked to Spain either because the client themselves or their intermediary is Spanish – that is, the firm that is in contact with Alcogal. Among its top-level clients are the ruler of Jordan, King Abdullah II, and the prime minister of the Czech Republic, Andrej Babiš. In the case of the Jordanian King, the investigation has identified a link between him and more than 30 companies; in the case of the Czech premier, it has revealed a trust he set up to pay $20 million (€17.2 million) for a villa in a French village near Cannes. There are also a number of Spaniards whom EL PAÍS and La Sexta will be putting under the spotlight in the coming days.

Alcogal’s internal files also afford an insight into the lack of control that this kind of firm has over the companies it helps set up. Between 2007 and 2018, its employees filled out 109 Suspicious Activity Reports (SARs). These are reports that law firms have to submit to a country’s authorities when they detect something unusual or something that suggests illegal activity. Seventy-four of these reports were made because the offshore company or its client was involved in a high-profile judicial investigation. Two out of three reports (72) were completed after the 2016 publication of the Panama Papers, a similar leak of documents that shed light on the illicit activities of thousands of companies previously unknown to the public.

Among other cases to be published by EL PAÍS, this new investigation has uncovered the ghost company that the Neapolitan Camorra mafia boss, Raffaele Amato, used to buy land in Spain. It has also revealed details about the network of companies that the Malaysian financier, Jho Low, created with the help of leading US law firm Baker McKenzie for the embezzlement of more than $4.5 billion (€3.89 billion) from a Malaysian economic development fund.

But the entity the Pandora Papers has most information on is Trident Trust, a service provider that opened its first offices in the Channel Islands in 1978. Its name recently became familiar to Spaniards when the Madrid public prosecutor accused Real Madrid soccer club coach, Carlo Ancelotti, of failing to pay just over €1 million in taxes in 2014. The two companies through which the Italian former soccer player’s image rights abroad were paid were part of a structure set up by Trident employees. Trident also created a family trust for Javier Trias, former mayor of Barcelona, as exposed in another ICIJ investigation. These types of trusts are particularly opaque because there is usually no public record of their existence and because they add an additional layer of obscurity that conceals the true owner of the company’s assets.

In Latin America, the king of these offshore service providers is a company based in Panama, called OMC Group, which is less well known in Europe. Chilean President Sebastián Piñera, and Luis Abinader, his counterpart in the Dominican Republic, are among its elite clients. The company was also used by the Colombian singer Shakira to set up at least three of her offshore companies, firms that the Spanish Tax Agency has been tracking for years.

The fallout from the Panama Papers

Based on the 2016 investigation of internal files belonging to the world’s fourth-biggest offshore law firm, Panama-based Mossack Fonseca, the Panama Papers represented an inside look at the system of shell companies in tax havens for the first time. The Pandora Papers are now the box that, when opened, reveals all the evils of that world, as was the case in Greek mythology when Pandora, the first human woman created on the instructions of Zeus, was unable to resist temptation and opened the box entrusted to her. Tax avoidance is no longer about just one rotten apple; it is systemic. In this new leak, the investigation involves more political leaders and public figures than the Panama Papers and provides more than twice as much information on the ownership of offshore companies.

The Panama Papers ended up changing the whole concept of tax havens. As if to confirm this, a partner of a large tax advisory firm in the center of Madrid says they are now the first to avoid suspicious corporate vehicles. “Nowadays, when a client comes to us and says ‘I have a trust, a foundation, a company that is offshore,’ we tell them to regularize that structure before there are problems,” he says.

An a priori refusal such as this used to be far less frequent. When, in 2012, the Finance Ministry obliged taxpayers with income or assets abroad exceeding €50,000 to file an informative declaration, €2 out of every €3 of that first batch of declarations entered the Spanish coffers from territories considered tax havens by Spain or the European Union.

It was after the Panama Papers scandal that Panama agreed to sign the protocols that allow tax authorities in the rest of the world access to its tax and corporate data. “They were singled out at an international level to embrace the automatic exchange of information,” says Alfredo García, an expert in tax law at the University of Valencia. “It had already been clear since the financial crisis that secrecy could not be maintained and a window had to be opened onto the public treasuries.” A study on these financial-data-exchange protocols estimates that they have reduced international deposits in tax havens by 11.5%. The Panamanian government itself has explained that as part of its efforts to reduce tax evasion and money laundering, it has suspended 385,415 of the 762,709 companies that figured on its Public Registry.

In the new files, it can be seen how, in the wake of the Panama Papers, Trident Trust incorporated nearly a hundred clients who opted to transfer their companies from Mossack Fonseca to this new supplier. In a statement, Trident added that “the numbers ultimately accepted by Trident represented less than 5% of the Mossack Fonseca book of registered office and registered agent (’RORA’) business in the BVI.”

A year after the publication of this information, Spain’s financial intelligence unit, Sepblac, was able to access information on 209 Panama companies that had been kept under lock and key until then, including those that allowed the diversion of public funds in the Defex case when the Spanish state-owned firm was hauled up over bribery for arms contracts. The Spanish tax authorities were able to recover at least €140 million after opening inspections on 244 taxpayers; worldwide, at least €1.2 billion was recovered. In all of these cases, companies that were not in fact illegal in principle were used. As former US president Barack Obama noted in 2016 when calling world leaders to action in the wake of the Panama Papers, “That’s the problem – a lot of this stuff is legal.”

The version of the providers

The service providers that have been contacted as part of this investigation all agree on their main message: a commitment to the laws of the country in which they operate. That was the statement from Alcogal, which was very similar to that sent by Trident Trust, which also underlined that “Trident routinely cooperates with any competent authority which requests information”.

OMC, meanwhile, points to its “robust” program of compliance with the laws, which includes due diligence policies and procedures. And Asiaciti, which says it has similar processes, admits that there is a margin for error. “No compliance program is foolproof,” the company says. “When we identify a problem, we take the measures necessary for our relationship with the client and we notify the regulatory agencies.”

English version by Heather Galloway.

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Polish TV sabotages Tusk press briefing

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Polish opposition leader Donald Tusk clashed with Polish propaganda outlet TVP in Warsaw Tuesday. A TVP reporter asked him why Tusk’s party wanted Poland to leave the EU. “This is beyond imagination … I won’t answer such absurdities,” Tusk, whose Civic Platform party is pro-EU, said, before a prickly exchange ensued. TVP also muted MEPs who said Poland should face EU rule-of-law sanctions in its coverage of a Strasbourg debate.

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Odyssey Marine Exploration: Spanish court shelves case against US treasure hunters that looted ‘Mercedes’ frigate | USA

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The history of the Spanish frigate Nuestra Señora de las Mercedes includes two grievances and one victory. The first of the former was when the British Navy sunk it and its 275 crew members on October 5, 1804, off Portugal’s Algarve coast. The second offense came in May 2007, when the US treasure-hunting company Odyssey Marine Exploration scooped up its cargo of 500,000 silver and gold coins from the shipwreck at the bottom of the sea.

Triumph came when the US justice system confirmed that the treasure belonged to Spain, in a ruling released in February 2012. But there was one more affront to come: a Spanish court has just definitively shelved a case into alleged crimes committed by the US treasure hunters as they were removing the coins. After a tortuous 14-year investigation, a courtroom in Cádiz has been left with no option but to let the probe die, albeit admitting its “bafflement” and “anger” over what it considers “unusual proceedings.”

At the same time as the legal process began in Florida to determine who was the rightful owner of the rescued treasure, Odyssey or Spain, a court in La Línea de la Concepción, in the southwestern Spanish province of Cádiz, began investigating whether the then-CEO of Odyssey Marine Exploration, Greg Stemm, and his team had committed any criminal offenses when they removed the haul from the shipwreck. Among the potential crimes were damaging an archeological site and smuggling.

Odyssey workers hoisting a cannon from the 'HMS Victory' shipwreck in 2009.
Odyssey workers hoisting a cannon from the ‘HMS Victory’ shipwreck in 2009.

The fact that the 500,000 pieces of silver and gold were returned to Spain in February 2012 – nearly 17 tons of material, which are now held in the ARQUA underwater archeology museum in Cartagena – is proof that the legal battle in the United States ended well for Spain. But the latest decision in the Spanish case, to which EL PAÍS has had access, leaves no doubt that the investigation into potential crimes has definitively been shipwrecked.

The three judges who were responsible for the case found that the shelving, which cannot be appealed, is based principally on the fact that the potential offenses have now exceeded the statute of limitations in Spain for trial. And the slow process of the probe, according to the judges’ writ, was due to the failure of the US justice system to respond to the letters rogatory sent in 2013, and that were needed if Stemm and the rest of the suspects were to be questioned by investigators.

“In terms of the lawsuit over the coins, the United States was on Spain’s side,” explains Ángel Núñez, a public prosecutor who specializes in cultural heritage and who was in charge of the case until 2009. “But it is true that when it comes to targeting one of their own nationals, they are not so willing to collaborate. And given that these were US citizens who are not at the disposal of the Spanish courts…”

The Spanish court probe into Odyssey had already entered into a tailspin before this latest ruling. In December 2016, another judge in La Línea dismissed the case. The private prosecution, which was brought by the company Nerea Arqueología Subacuática, appealed the decision but it was rejected. In a new attempt to not let the legal process die, archeologist Javier Noriega, one of the heads of this small company based in Málaga, took the case to the High Court of Cádiz province, in La Línea, the one that has definitively shelved the proceedings.

In their ruling, the judges add that they share “with the appellant his surprise, confusion and even anger for the, shall we call it, unusual proceedings with this case, at least since the year 2013.” The magistrates do not go so far as to specify what prompted them to feel this way.

Spanish Civil Guard officers watching the "Ocean Alert," a vessel owned by Odyssey Marine Explorations, near Gibraltar in 2007.
Spanish Civil Guard officers watching the “Ocean Alert,” a vessel owned by Odyssey Marine Explorations, near Gibraltar in 2007.ANTON MERES (REUTERS)

Archeologist Javier Noriega believes that he knows all too well what they are referring to. He and his colleagues decided to take up the case – represented by the attorney José María Lancho – as a “professional and moral obligation.” They have since seen how “all of these years can be summed up by the end: exceeding the statute of limitations.” “They avoided entering into the substance of what happened to Spain’s cultural heritage,” the expert complains.

These unusual proceedings in the investigation which the judges mention and that Noriega suffered first-hand were reported on in the Spanish press. In March 2012, a former legal representative for Odyssey, with no authority, entered the courtroom when the judge was absent and persuaded court workers to photocopy the entire findings of the legal investigation so far, as was reported by the Spanish daily Abc at the time. According to Abc, such an action would have allowed Odyssey to prepare a defense against the findings of Civil Guard investigators and decide whether or not to actually take part in the trial.

The actions of the representative were very serious, taking into account that the probe was counting on a protected witness: a diver who had been threatened for having denounced Odyssey, given that he had knowledge of some of its activities in Spanish waters.

Now Noriega, 46, is gloomy about the end of a process that has occupied a significant part of his career. “As people who love our profession, it’s frustrating,” he explains. “It ends up being a defeat for all of us, for culture and for society. And if as well as that, the person responsible has gone unpunished, because of the statute of limitations, that’s very sad.”

Despite the legal setback, the archeologist argues that the court probe contains “evidence of all kinds, archeological, from witnesses, technical, juridical, and a ton of resounding questions that deal with what supposedly happened with an overwhelming truthfulness.”

The expert believes that an opportunity has been missed by Europe to convey “a clear message to the thieves who have spent years destroying the history of those shipwrecks from the modern era all over the world.”

Odyssey Marine Exploration never had any interest in the Spanish frigate beyond the cargo of silver and gold that it was carrying. That was made clear by the destruction caused by the company in the archeological area where the remains of the 275 people killed in the attack in 1804 lay. “When an archeological site is plundered, it is destroyed forever,” states Noriega.

After the site was looted, ARQUA led a scientific excavation that was carried out in three campaigns – from 2015 to 2017 – in which the remains of the shipwreck were documented and the items that the treasure hunters left behind were removed. These included cannon, cutlery and other everyday objects from life on board. The expedition also achieved the challenge of descending 1,130 meters underwater, the maximum depth achieved until that point during a subaquatic arqueological mission by a European country.

While the damage done to a historical site such as the Mercedes shipwreck will not result in a trial or convictions, Núñez believes that the consequences of the process “were positive, from a legal and global point of view.” Noriega goes even further: “Spain and its coasts are, today, possibly the best protected and safest in the world with regard to the protection of cultural heritage against looting.”

Since the Odyssey case, the classification of offenses against historical heritage in Spain has improved, new archeological maps have been created, there is better coordination between administrations, and there is greater social awareness about this kind of offense. It was precisely these weaknesses that the treasure-hunting company Odyssey made use of to make off with the coins. In fact, the activity has presumably lost its appeal not just in Spain but also elsewhere, given that the American company has since abandoned its treasure-hunting activities and is now focusing on underground mining.



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Colombia found responsible for 2000 kidnap and torture of journalist | Colombia

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The Colombian state has been found responsible for the kidnap, torture and rape of a prominent journalist who was abducted while reporting on her country’s civil war, in a landmark ruling from the inter-American court of human rights.

Jineth Bedoya, who has been pursuing justice for over 21 years and now campaigns against sexual violence, was recognised by the court on Monday as having suffered “grave verbal, physical and sexual aggressions” for which the state was responsible. Before now, only three of her attackers had faced justice, receiving sentences in Colombian courts in 2019.

Following the announcement, while her legal team also celebrated the news, Bedoya tweeted on Monday evening: “18 October 2021 goes down in history as the day when a fight – which began over an individual crime – led to the vindication of the rights of thousands of women who are victims of sexual violence, and of women journalists who leave a part of themselves in their work.”

Jonathan Bock, director of Colombia’s Foundation for Press Freedom (FLIP), which has provided legal assistance to Bedoya, said: “This ruling sets a precedent that will remind governments that it is not possible to ignore violence against the press, and less that they can be tolerant of state agents who are perpetrators.

“This ruling gives society and female journalists the tools to make gender violence visible.”

Bedoya was abducted on 25 May 2000, outside the Modelo prison in Bogotá, where she was due to interview an incarcerated paramilitary leader. She was drugged and driven hours outside the city, where she was tortured and gang-raped.

“It’s difficult to understand what happened, all I know is that I wanted to die,” Bedoya told the Guardian in 2019.

When authorities failed to properly investigate the attack, Bedoya began probing independently, eventually securing the support of Flip and the Centre for Justice and International Law (Cejil).

The inter-American court of human rights, which has jurisdiction over most Latin American states, ruled on Monday that Colombia was “internationally responsible for the violation of the rights to [Bedoya’s] personal integrity, personal freedom, honor, dignity and freedom of expression”.

The court also ruled that the Bedoya’s attackers could not have carried out the abduction and assault “without the acquiescence and collaboration of the state”, and that the government failed to protect Bedoya and her mother, Luz Nelly Lima, from threats and persecution in the years after the attack.

When the court heard Bedoya’s testimony in March, the Colombian government withdrew its representatives and called for the recusal of five of the six judges attached to the case. After a widespread backlash, the government later resumed its participation.

A peace deal signed in 2018 with the Revolutionary Armed Forces of Colombia (Farc) leftist rebel group formally ended five decades of war that left 260,000 dead and displaced more than 7 million, with state-aligned paramilitary groups and other leftist rebel armies contributing to the bloodshed.

Sexual violence, though widespread, was often obscured by other atrocities and tended to be ignored or met with impunity. Between 1985 and 2016 alone, more than 13,500 women were victims of sexual violence during the armed conflict, according to a report by the National Center of Historical Memory.

“Jineth Bedoya has been tirelessly seeking justice for more than 20 years,” read a statement from Cejil posted on Twitter. “The decision of the court is dignifying for Jineth, for female journalists who face gender violence, and for the thousands of victims of sexual violence of Colombia’s armed conflict.”



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