Exclusive
Status: 03.10.2021 6:30 p.m.
The Pandora Papers also reveal questionable offshore deals by 35 former and current heads of state and government. One of them is Czech Prime Minister Babis, who bought a piece of land in France.
In 2009, Czech Prime Minister Andrej Babis acquired a mansion and three hectares of land in the southern French town of Mougins on the Cote d’Azur through an opaque offshore construction. That comes from the “Pandora Papers”. According to this, Babis used three letterbox companies to buy the property.
Babis is considered one of the richest men in the Czech Republic and has been the country’s prime minister since 2017. Contrary to existing Czech regulations, Babis, as a politician, apparently did not disclose his involvement in letterbox companies. The revelation comes at an inopportune time for Babis, as parliamentary elections are taking place in the Czech Republic next week. Babis had publicly presented himself in the past as an advocate of transparency and as a fighter against corruption.
“Pandora Papers”
The “Pandora Papers” are a huge data leak from the world of shadow financial centers. The data shed light on the real owners of more than 27,000 offshore companies. The data includes politicians, the super-rich, oligarchs, criminals and celebrities. The 11.9 million confidential records include letters of incorporation from letterbox companies and trusts, emails, accounts and other documents.
The data were analyzed in a secret research by more than 600 journalists from 117 countries. Media such as the “Washington Post”, the BBC, Radio France, the ORF, “El País” and “Aftenposten” were involved. In Germany, journalists from NDR, WDR and SZ at the data leak.
The data set was leaked to the International Consortium for Investigative Journalists (ICIJ) from an anonymous source. The ICIJ shared the data with the partner media and coordinated the research. The ICIJ has conducted global research on shadow financial centers, including the Panama Papers, the Paradise Papers and the Luxembourg Leaks.
The confidential documents come from 14 offshore providers, i.e. from companies that help their customers to set up letterbox companies, trusts, etc. Often, letterbox companies are legally located in countries that are internationally noticeable due to weak money laundering controls, non-transparent financial practices and particularly low tax rates.
Owning a mailbox company is not illegal. Offshore firms can also be used for legal purposes. Often, however, such company structures serve money laundering, tax evasion or tax structuring.
Babis does not comment
The non-transparent purchase of real estate raises numerous questions. According to confidential documents, Babis let three offshore companies Blakey Finance Ltd. (British Virgin Islands), Boyne Holding LLC (Washington) and set up another company in Monaco. He then provided one of the companies with around 15 million euros. This passed the money on to the other companies in order to purchase the Chateau Bigaud estate and land.
The “Pandora Papers” do not reveal where the money for the purchase of the luxury property comes from. Tax experts and former financial investigators said NDR, WDR and “Süddeutscher Zeitung”, the construction chosen carries “all the typical warning signs for money laundering”. Of course, the presumption of innocence applies, says Christoph Trautvetter, financial expert from the Tax Justice Network. There is no evidence of this. However, the procedure is “clearly an attempt to disguise these cash flows”.
Babis is already under public pressure. The newly established European Public Prosecutor’s Office (EPPO) is dealing with a possible conflict of interest at Agrofert, which Babis controlled for many years. Agrofert is said to have received unlawful EU subsidies. Babis denies this. Despite several written inquiries, he did not want to comment on the results of the research. Already accredited journalists from the ICIJ network and several ARDLast week, he had reporters unloaded at short notice from election campaign events.
Promise transparency, use offshore companies
Babis is not the only top politician who appears in the “Pandora” files with questionable deals. The presidents of Ecuador and Gabon as well as the former presidents of El Salvador, Panama, Paraguay and Honduras can also be found in the data set. In some cases, the confidential data reveals a blatant disparity between what politicians publicly promise and what they actually do to protect shadow financial centers.
Kenya’s President Uhuru Kenyatta publicly advocated disclosing the assets of public servants in order to enable more transparency. But Kenyatta and his family also own numerous offshore companies, including in Panama. Some of the firms have assets in excess of $ 30 million. Kenyatta and his family left a request about the incident unanswered.
The example of Brazil clearly shows how problematic the proximity of the political elite to the offshore system can be. Brazil’s Minister of Economic Affairs, Paulo Guedes, recently dealt with a tax reform on profits from tax havens, but initially withdrew the plans after protests by business people. The “Pandora” research now shows that Guedes has owned an offshore company himself since 2014. When asked, a spokesman said the mailbox company was known to the authorities. However, he remained guilty of evidence that Guedes actually reported them.
The King of Jordan, Abdullah II, also officially believes in transparency. A prize is awarded in his name that recognizes the corresponding commitment. In the wake of the corona crisis, the country’s prime minister spoke out in favor of taking rigorous action against tax evaders who hid their assets in shadow financial centers.
The “Pandora Papers” now show that Abdullah was also involved in offshore business on a large scale. Between 2003 and 2017, the monarch acquired a total of 14 luxury properties in the USA and Great Britain through letterbox companies. The equivalent of the investment is more than 106 million US dollars. It is unclear where the money comes from. When asked, a law firm on behalf of the monarch stated that most of the offshore companies in question no longer existed, and that not all of the properties mentioned belong to the king.
In recent years, international reporters have repeatedly analyzed huge data leaks from tax havens, including the “Panama Papers” and the “Paradise Papers”. In the course of the publications, numerous politicians around the world declared war on the hustle and bustle in the tax havens. The new leak, the “Pandora Papers”, shows that “we still have a long way to go to fight tax fraud and money laundering via mailbox companies,” said financial expert Sven Giegold in an interview. Giegold sits for the Greens in the European Parliament. “If we now see how many politicians are really closely connected with this system and benefit from it, then perhaps it also explains why the political fight against shadow financial centers is so arduous.”