Pandora’s Shell Company
Happy new year!
While thirty percent of Americans continue to believe there was widespread voter fraud in the 2020 presidential election, and a QAnon fringe holds vigils in Dallas’s Dealey Plaza expecting John F. Kennedy, Jr. to rise from the grave and proclaim himself Donald Trump’s vice presidential running mate in 2024, most people have shrugged off or failed to notice empirical evidence of a massive conspiracy that harms us all.
The empirical evidence I refer to is the Pandora Papers — 6,406,119 documents, 2,937,513 images, 1,205,716 emails, 467,405 spreadsheets, and some 887,000 other files — released by the International Consortium of Investigative Journalists (ICIJ) in October 2021. Along with ICIJ’s previous troves, the Panama Papers (2016) and Paradise Papers (2017), the Pandora Papers prove beyond a reasonable doubt that across the world — and here in the US — a secretive cabal helps the rich protect their wealth from disclosure, taxation, and law enforcement.
If you’re a corporation or individual with more money than Croesus, you can ship it to financial service providers in low- or no-tax places like the Cayman Islands. They’ll create virtually anonymous shell companies and trusts for you, and voila! You’re free to wheel and deal without having to worry about taxation, regulation, or public scrutiny. Here’s a hypothetical from ICIJ:
A big pharmaceutical company, for example, might set up a new entity in Bermuda or the Netherlands, and “sell” that entity a patent for a profitable drug. The parent company might then pay a big licensing fee to the offshore company, which in turn would allow it to record lower profits at home — and pay a lower tax bill.
According to a December 2017 study co-authored by UC Berkeley economist Gabriel Zucman, ten percent of the world’s Gross Domestic Product is held in tax havens, depriving governments across the world of more than $800 billion in annual revenue.
On one level I can understand why super-rich individuals would use the cabal. Ringo Starr, a hero of my last post, is worth an estimated $400 million. If you knew Ringo was interested in buying your house, wouldn’t you jack up the price? The extra money would mean nothing to him but a lot to you. Ah, but Ringo’s no fool. He’s set up two real estate companies in the Bahamas, and he used one of them to buy his Los Angeles mansion. He probably saved hundreds of thousands, if not millions, of dollars purchasing it through MopTop Associates (or whatever the company’s called) rather than in person.
And there’s another understandable reason mega-corporations and super-wealthy individuals use the cabal: it’s legal. A landmark 2014 study by Martin Gilens of Princeton and Benjamin Page of Northwestern finds that “economic elites and organized groups representing business interests have substantial independent impacts on US government policy, while average citizens and mass-based interest groups have little or no independent influence.” (Shocker, right?) As a result, there are few meaningful restrictions on moving capital to the cabal. A few states have even decided to join the cabal, including Joe Biden’s Delaware (a corporate haven for decades), Nevada, South Dakota, and Wyoming.
But there is some encouraging news. In 2020 Congress overrode a veto by the former president — you know, the purported billionaire who sides with the forgotten people and reviles the elites — and passed the Corporate Transparency Act, which requires greater disclosure of who owns shell companies and trusts. And Treasury Secretary Janet Yellen is campaigning for a global minimum corporate tax of fifteen percent. In October 2021, 136 countries signed on to the concept, and in December 2021, the Organisation for Economic Cooperation and Development published model rules for implementation.
It’s a start. How much easier finishing would be if truthers mobilized against proven conspiracies like this one with the same dedication they wait for JFK Jr. to reappear.
