Pandora Papers: the symptom of a disease no one is trying to cure

News organisations around the world publish the “Pandora Papers” – leaked documents revealing the personal offshore dealings of the rich and powerful including world leaders, celebrities, billionaires and Tory political donors – and the hype is hysterical. Admittedly, those making the most noise are the titles that had access to the trove – it’s their scoop and they’re going to milk it.

The huge cache of 11.9m files follows on from previous data dumps which also shone a light on the lengths some people go, and can go, to avoid tax and public disclosure. It does make for fascinating reading and I’ve no doubt if I’d been presented with such a haul, I would have pored over it, same as the numerous journalists did in a substantial joint international effort, extracting every famous name and juicy detail.

Yes, but is it as shocking as proclaimed? There are individual cases, where the person’s access to large means is not immediately obvious. In all, 330 politicians including 35 country leaders are cited. Doubtless, the findings will invite questions and claims of hypocrisy and corruption.

Generally, though, not only have we been here before, with the Panama and Paradise disclosures, but it’s hard to see how Pandora will change anything. It should of course.

We’ve been down this road many times. The fact is there is a vast industry devoted to assisting clients in minimising their dues, to making certain as little as possible reaches the public purse, to keeping their financial affairs secret.

Reading the Pandora coverage, you’re forced to wonder if the authors go round London, New York and the other centres where tax and wealth experts operate, blindfolded. What do they suppose goes on behind that brass plate, why do they think the firm emphasises its discretion and proficiency in setting up trusts? How is it that the places in which there are branches are those that are also well-known as offshore tax shelters?

The former business secretary, Vince Cable, calls tax havens, “sunny places for shady people.” In his Treasure Islands: Tax Havens and the Men who Stole the World, Nicholas Shaxson, a consultant at Tax Justice Network, says: “Offshore connects the criminal underworld with the financial elite, the diplomatic and intelligence establishments with multinational corporations. Offshore drives conflict, shapes our perceptions, creates financial instability and delivers staggering rewards to les grands – to the people who matter. Offshore is how the world of power now works.”

It was a world described by the former head of the UN Office on Drugs and Crime, Antonio Maria Costa, when he posited that four pillars of the international banking system are: drug-money laundering, sanctions busting, tax evasion and arms trafficking. Putting a figure on how much they hide is impossible. But the most recurring statistic, used by the various watchdogs, is north of $20 trillion. One estimate reckons the total is $32 trillion.

Is it any real surprise, then, that now and again, a small fraction of that cash mountain should reach the public domain?

President Obama Barack Obama said of the Panama Papers in 2016: “The problem is that a lot of this stuff is legal, not illegal”. That’s the point – that an entire machinery is whirring away and every so often there is a glitch, and everyone throws their hands in the air, and forgets about it until the next time. Nothing ever changes. Having delegated their journalists to study the dropped material and having devoted acres of space and banner headlines to exposing the contents, that’s where the anger of the various news organisations should be directed.

In 1994, Gordon Brown told an enthusiastic Labour Party conference that he was going to crack down on tax avoidance. There then followed years of Labour rule and little occurring. They were succeeded by the David Cameron-led administration that made similar noises to no effect. There’s been virtually nothing since.

Accountants, lawyers, wealth managers, those whose job it is to do everything they can to bring down tax bills or ensure dealings remain hidden or both, have not seen a fall in demand for their services. Likewise, tax havens are just as prosperous as they ever were. In the case of the former, we continue to license them and regarding the latter, we continue to afford them protection.

One of the worst offenders highlighted in the Pandora pile, after previously featuring heavily in the Panama Papers, is the British Virgin Islands. The BVI is ours, we oversee the territory; similarly, Cayman, Channel Islands, Bermuda, Isle of Man. Their trade is screwing the Exchequer, yet in the building adjacent to the Treasury, there are ministers and civil servants in the Foreign & Commonwealth Office charged with guaranteeing their security and stability.

What that means is that these and other dependencies are allowed to ply their wares. They promote themselves as tourist destinations and occasionally they will make noises about being more open and transparent but the reality is that they are just immersed in peddling confidentiality as they ever were – to do otherwise would see them go out of business and cause a massive headache for their government minders and ironically, make them a burden on the British taxpayer.

In some jurisdictions, London itself is seen as a low tax, offshore bolthole, one that affords a nice line in anonymity. We’ve gone out of our way to attract overseas wealth, affording non-domicile status to many. We’ve sat back and watched as our brands have been snapped up by private equity houses registered to office buildings in Guernsey, BVI or Cayman or the like. We’ve not been bothered, too, when chunks of property have been snapped up by buyers using nominee names, again traceable to accommodation addresses in faraway locations. We’ve no clue as to who the owners are.

Tax avoidance is so common as to be expected. Indeed, it would be viewed as negligence if you were doing something that might attract a hefty tax charge not to see if it could be reduced. Indeed, some of the companies behind the very titles that are screaming about the awfulness disclosed in the Pandora Papers have themselves gone down the same route and if they hadn’t, their shareholders would have demanded an explanation.

Pandora is merely the latest expression of an underlying disease. No one though, not least political parties that rely upon private donations for their funding, is attempting to find a cure.