Thu Dec 12, 2024
December 12, 2024

 Pandora Papers: Paradise for Capitalists, Hell for the Working Class

The publishing of the Pandora Papers report is causing a lot of upheavals and, with different dimensions, may cause or deepen political crises in some countries.
by Daniel Sugasti

This is a leak of almost 12 million documents – bank statements, e-mails, copies of passports, among other confidential documents -, analysed by an extensive investigation that involved more than 600 journalists from 117 countries, in one of the most important collaborative efforts between communication companies in history. The findings, comparable to what was discovered in the Panama Papers (2016) or Paradise Papers (2017), reveal, though not in all aspects, the inherent hypocrisy, corruption and parasitism of imperialist capitalism.

It has been brought to light how more than 350 high officials (presidents, ministers, kings, princesses…), as well as famous businessmen, singers, soccer players, artists etc., hide a large part of their fortunes in tax havens to, above all, protect their wealth from public scrutiny and evade taxes. The mechanism involves, almost always, the participation of anonymous or “ghost” companies created by specialized law firms in countries such as Panama, the British Virgin Islands of the Bahamas.
Among the most well-known names featured in Pandora Papers are 35 presidents or former presidents. Also included are former British Prime Minister Tony Blair and his wife, Cherie; the Czech prime minister, Andrej Babis; former managing director of the International Monetary Fund (IMF), Dominique Strauss-Kahn; the king of Jordan, and other powerful bourgeois politicians. On the other hand, many celebrities of sports and music also show up, such as Pep Guardiola, Carlo Ancelotti, Julio Iglesias, Ringo Starr, Elton John, Shakira, etc. In sum, the investigation mentions 133 millionaires who are in the Forbes list. Pandora Papers mentions, in total, 27.000 companies created between 1971 and 2018, who have almost 30,000 beneficiaries. Nobody can doubt that both this leak and the previous one only show the tip of the iceberg. It is an enormous, complex scheme.

In Latin America, the report points to around 100 politicians and high officials of 18 countries. All of them are linked to offshore companies. Among them are three presidents: Sebastián Piñera of Chile; Guillermo Lasso of Ecuador; and the Dominican Luis Abinader. But there are also names of former presidents like the Colombians César Gaviria and Andrés Pastrana; Pedro Pablo Kuczynski of Peru; Porfirio Lobo, of Honduras; Alfredo Cristiani and Francisco Flores, of El Salvador; Horacio Cartes, of Paraguay; and Juan Carlos Varela, Ricardo Martinelli and Ernesto Pérez Balladares of Panama. In Brazil, the scandal reaches the minister of Economy of the Bolsonaro administration, Paulo Guedes, and the president of the Central Bank, Roberto Campos Neto. It is estimated that, every year, around US$ 14 billion are diverted from Latin American countries to the so-called tax havens.

A tax haven or paradise is a territory considered politically and economically stable, offering individuals or companies enormous legal and tax advantages to facilitate the transfer of part of their assets to that destination. In these jurisdictions, it is often very easy to start a business. They do not require information about the origin of the money or asset; impose little to no taxes; possess a web of laws that make it hard to identify the owners of the assets; and do not provide (or make it as hard as possible) financial information to the fiscal authorities of foreign countries. For example, a businessman may have money or property in one country, but declare this property legally in the name of a network of offshore companies, that is, companies based in other countries, where businessmen do not live, nor carry out any economic activity.

These “ghost” companies, having no offices or workers and not actually existing, are useful only to “launder” and move the deposited assets. The opaque “offshore” companies are administered by other companies that take care to provide addresses, lists of directors, or whatever is needed to keep the legal facade of the scheme. Rarely is the person behind a business known. The industry of secret fortunes moves legions of owners, lawyers, front names. It is a perverse mechanism, but one that is very useful to hide money or any other property, which often comes from crime or corruption. It is not a coincidence that they are called “paradises”… for capitalists.
This mechanism is not only known, but completely legal in bourgeois law. Possessing assets in tax havens through offshore companies violates no law. In certain cases, what is considered a fraud is not declaring, in the origin country, the accounts or assets that the individual or company possesses abroad. This is the case of many of these mentioned in the leak, though not all. Be they legal or not – and let us not forget that laws are adapted to the interests of the ruling class – what some analysts call a “conflict of interests”, when referring to politically important people, is repugnant. We are talking about people who, using the political power they have, make decisions every day and impose harsh measures that affect the lives of millions. The working class around the world must pay attention to what bourgeois politicians do, that is, study and understand, from this and other facts, how they play a double role of judge and interested part.

For example, Paulo Guedes, minister of Economy of Brazil, appears in the report as the owner of an offshore company created in 2014, Dreadnoughts International, “headquartered” in the British Virgin Islands. This character – although we could mention a president, ex-president or high-ranking officer on the list – not only administers privileged information, he also takes measures that directly impact tax rules. In July, Guedes sent a bill to the Congress of his country that provides for an exemption from the tax on profits for owners of offshore companies.

He also played to increase the limit of deposits abroad that are exempt from declaration. Measures that evidently would benefit him personally and an entire sector of the Brazilian bourgeoisie. Since Guedes became minister, the dollar exchange rate in Brazil increased 39%. This, for the working class and for most of the middle classes, means hunger, loss of quality of life, and deprivation. But for the handful of businessmen that operate on tax havens, it is the best thing that could happen. It is estimated that just this difference in the exchange rate has increased Guedes’ wealth to around 14,5 million in Brazilian Reais.

While the governments and the IMF are squeezing the working and middle class like a lemon, with taxes on bread, milk, clothes, shoes, in short, on consumption; while they pick our pockets with taxes and attacks of all types, the rich, bourgeois politicians, bankers and CEOs evade taxes and profit from the devaluation of local currencies compared to the dollar.

If a worker, of the owner a small business, does not pay their taxes, severe penalties certainly await them. If a worker asks for a loan, all sort of sworn statements are demanded and every little detail is investigated. But nothing is asked of the wealthy. The same bourgeois class, which uses its State to suck and beat down workers through taxes and legal sanctions, flees even from the taxes over profits they obtain from the exploitation of these same workers. And they are accountable to none, since due to the nature of these operations, it is almost  impossible to calculate how much money is hidden in tax havens. The International Consortium of Investigative Journalists, responsible for the Pandora Papers investigation, estimates that between US$ 5,6 billion and US$ 32 billion are hidden offshore. Specialists ensure that around 10% of the world’s GDP is concealed in these tax havens, veritable black holes of the capitalist system. The IMF has state that the use of tax havens costs governments up to US$ 600 billion in unpaid taxes. What the Fund has not pointed out, obviously, is that one of its own former directors is among these evaders. The non-governmental organization OXFAM puts this figure in at least US$ 427 billions per year around the world.

The Pandora Papers are only a sample of how capitalists and their political representatives act. It does not matter whether (their) legislation considers this money laundering and tax evading mechanism illegal or not, if it is considered “corruption” or not. The fact is that, while billions of human beings try to survive without jobs, hungry, without access to decent education or healthcare, being humiliated every day in a thousand different ways, a handful of millionaires not only grows richer but, dishonestly, do all they can to avoid even paying taxes over what they call a public thing.

These tax havens store a large part of the resources, obtained lawfully or not, that are not destined to improving the life of workers, that are not destined to schools, hospitals, to fighting the pandemic, or to anything that could alleviate the unbearable material situation that we endure.

But the resources are not only abroad, but in every big company, in each large estate, in each bank that operates in our own countries. Because while the bourgeoisie operates in broad daylight “legally”, it is a class that accumulates by taking possession of the wealth produced by human labour through economic mechanisms (salaries, adjustment plans, etc.) that are nothing but “legalized” theft.
Capitalism was born through robbery and is kept by robbery. We must destroy an economic and social system in which they have their tax paradises and drown us in a hell of hunger and misery.

[translated by Miki Sayoko]

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