The offshore schemes of the wealthy are like a many-headed beast that wraps around the world. Every few years, when there’s another leak, we’re reminded of just how hard it is to kill.
The latest leak, poetically called Pandora Papers, exposed 400 leaders who use these schemes. Ukraine has the dubious distinction of being the home of 38 of them — more than any other country.
We already know that our powerful people like taking money and parking it overseas. But why are we in the lead? Are our people just that much worse at covering their trail? There are much bigger, more sophisticated kleptocracies out there, where every other dollar gets siphoned into some island bank, before becoming a piece of London real estate.
Either way, one of our 38 is none other than President Volodymyr Zelensky, the man who said he would end these schemes and Ukraine’s domination by oligarchs. Instead, he followed their example, even before he entered politics.
If Zelensky had any integrity remaining after his first two years in office, the Pandora Papers are diminishing it. How bittersweet the news must have read to former President Petro Poroshenko, who lost his re-election after being exposed for doing the same thing.
But, as the number 38 shows us, it’s not just Poroshenko and Zelensky. Oliver Bullough’s excellent book Moneyland shows us that the powerful are adept at exploiting loopholes and ambiguities across dozens of jurisdictions to get away with tax evasion and money laundering on a grand scale.
Our failure to stop them is the fault of both Ukraine and every other country in the world. As offshore schemes evolved, every country has failed to evolve with them, and failed to do enough to slow them down. In fact, many jurisdictions have deliberately adopted trust laws that guarantee excessive secrecy and ask too few questions about the origins of the money simply to attract these lucrative investments. Tax collectors have no idea if the wealthy are paying taxes if they don’t even know the money exists, where it can be found and to whom it belongs.
A consortium of hundreds of journalists around the world are doing their best to try to help expose these schemes to maintain the glimmer of hope that they can be at least partially reined in.
Ukraine must do more to prevent these schemes, from both ends. First, it must find ways to make it harder for Ukrainians to siphon money overseas. But it must also shut down the rapacious courts and raiders that drive some businesses to seek offshore sanctuaries. The glaring lack of rule of law and protection of property rights and safety from raider attacks — endemic in Ukraine’s 30-year history — makes offshoring a normal business practice for the political elite and the rich.
But the other countries of the world must also do more to make it harder to squirrel money away in havens like the British Virgin Islands, Cyprus, Belize and many others.
This monster cannot be slain. It can only be driven into the sea. And we must always watch the waves for its return.
