The leaking 'Pandora's box'

The myth of Pandora is a virtual reality. In Greek mythology, Lady Pandora out of curiosity opened a container left in the care of her husband by somebody. This released physical and emotional curses on mankind. Pandora Papers are the result of ICIJ's curiosity into dark and hidden money of the elite of the world. Whether this will unleash the curses on the rest of the world remains to be seen. Like the Panama Leaks and the Paradise Leaks, Pandora leaks are also trillions of documented information that include the rich and the powerful. The scale itself defines how much money is overflowing from those whose money is out of bounds. That is why it needs to be stowed away in the safety of offshore accounts. Leaks portray the secrecy and hide away intent. The structure exposes the legal lacunas that need to be addressed.

Pandora leaks are bigger than the Panama leaks in scale. They are even more expansive, porting through nearly 3 terabytes of data leaked from 14 different service providers doing business in 38 different jurisdictions in the world. The records date back to the 1970s, but most of the files span from 1996 to 2020. Panama leaks, though, were more sensational as they were directly naming powerful leaders of the UK, Russia, Malta and Pakistan who had billions stowed away in these tax havens. This led to heads of state resigning or being removed through the courts. Pandora leaks are more about second tier and associates of powerful people involved. One exception is the King of Jordan. The investigation found advisers helped King Abdullah II of Jordan set up at least three dozen shell companies from 1995 to 2017, helping the monarch buy 14 homes worth more than $106 million in the US and the UK. But then kings rule the rules. Despite the shame game, very little actually happens to the people listed in this hall of leaks, as:

1. Offshore is not always off the loot-Offshore companies have become the black sheep of finance. Not necessarily. That is why when such huge data gets leaked and investigators delve into it, they simply dig out names and addresses and put them in the list of leaks. This creates headlines. Nobody really bothers to check their authenticity. Inadvertently, they do damage many legal operations that offshore companies conduct. They facilitate overseas investments, provide confidentiality, tax benefits, etc, that many businesses prefer. The problem is that these very factors are misused to hide ill-gotten money and assets. These misuses have made them notorious and have actually harmed their usage by legitimate businesses.

2. Data is old and incomplete-Another reason why Leaks remain leaks without proper persecution and results is that the data provided is not sufficient. Most data just mentions the names of the owners of these companies. And, as is the case with Pandora leaks the data may be two decades old. In the meantime, those companies may have been shut down or become defunct. Addresses may have changed. Ownership may have become dubious. Amounts may have been withdrawn. Due to the gaps in data, these leaks remain difficult to convert into valid, current and verified facts.

3. Loopholes in investigation and incrimination-White-collar crimes are tough to prove. Offshore companies are structured by tax advisors and accountants with the intent of making them safe from laws. They may be conducting unlawful activities as per the laws of the country of origin but according to the law of the other offshore country the same may be legal. That is why offshore accounts need a global uniformity of laws that is rarely present in today's fragmented international legal environment.

The looters and the loot hoarders need to be curbed through various strategies. Shell companies exist due to the need for parking questionable money. When people have too much money and that too transmitted through dark channels, the need to hide it becomes imminent. Every few years this overflowing money bursts open the dark Pandora's boxes. There is an uproar in the media, a few countries take some actions but increasingly these leaks are reduced to just media headlines. If there were strict punitive actions the tax havens would not become richer with dirty money. Steps needed to curtail this money trafficking are:

1. Sift the real culprits-For underdeveloped countries like Pakistan, the policymakers are the main culprits. Laws and policies are made to facilitate money laundering. The PML-N government made the protection of economic reforms act 1992 that allowed foreign exchange free movement unchecked. This proved a highly valuable opportunity for black market. The Panama leaks culprits, except for the then PM, were just sent some routine letters by FBR. In that context the Pandora leaks is a golden opportunity for the government to punish the culprits in an exemplary manner.

2. Make the public office offenders pay-For public office holders it is important that those who are proven guilty are then made to pay not just financially but physically too. Laws need to be amended to apprehend them and jail them. They should not be let off to flee abroad. Such steps are necessary to put a stop to this "pack the dollar bags, dodge the law" modus operandi practiced by them.

3. Global lobby for closing the tax havens-Action is needed against these money hideouts. CORPNET, an Amsterdam-based research group, published a 2017 study in Scientific Reports ranking 24 offshore financial centers. Most of these are islands like Caymen islands, Mauritius, Malta, the British Virgin Islands with money many times the size of the island's economy in offshore accounts. The global community needs to clamp down these black money store houses. Prime Minister Imran Khan is the lone voice at the global level talking about global law and needs to create a lobby of those countries who are suffering from this financial haemorrhage. FACTI, the Financial Integrity for Sustainable Development Forum, that talks about accountability and financial integrity needs to be approached through a strong lobby to push the agenda of transparency in a more vigorous and effective manner.

A divided world has seen the results of sickness and human suffering in the last year and a half. If there is one lesson that is coming out repeatedly is that till everyone is safe no one is safe. However, inequality continues. The rich may welcome stolen money coming to their hideouts but ultimately it does affect their own financial integrity too. The British Virgin Islands may have dollars stashed from the politicians of poor countries but it also has money stashed of its ex-Prime minister Tony Blair. Bad money is like a virus. It seeps into a system and corrupts the system itself. Time has come, not just for exposing leaks, but removing the very drain pipes and hoses that enable this financial cesspool.

(The writer can be reached at [email protected])

Copyright Business Recorder, 2021