Uncovering the Secret Offshore Accounts of the Global Élite

In an age of rising populism, the International Consortium of Investigative Journalists is exposing the hypocrisy behind the hidden wealth.

If you are a rich and powerful person who chooses to hide money and assets overseas, then what you fear is exposure. In theory, the tax agency of the country where you live is interested in your offshore assets, but their investigative resources are generally limited and their officials are not always inclined to pursue the most powerful people around. In recent years, when billionaires and politicians have had their secret accounts exposed, it has usually come through leaks of offshore banking files, sent not to governmental authorities but to journalists. Quite often, to the very same group of journalists: the International Consortium of Investigative Journalists (I.C.I.J.), a network of reporters at media outlets around the world, which specializes in coördinated investigations that have brought down government leaders and led to simultaneous headlines in hundreds of outlets.

In 2013, the I.C.I.J. published findings from a database called Offshore Leaks, which revealed how plutocrats close to the governments of Russia, China, the Philippines, and many other nations hid their wealth offshore. In 2016, the I.C.I.J. organized the publication of the Panama Papers, a large cache of documents—associated with the Panamanian firm Mossack Fonseca—that identified secret offshore accounts maintained by influential figures, including the sitting heads of state of Ukraine, Saudi Arabia, and the U.A.E. In 2017, the Paradise Papers documented the offshore entanglements of multinational corporations, the British monarchy, and Wilbur Ross, who was then Donald Trump’s Secretary of Commerce. These leaks, and the efforts to prevent them, took place in the cloak-and-dagger milieu of a spy game, only one that has little to do with the advancement of national interests: the protagonists are journalists on one side, global oligarchs on the other. And, in this world, there is no news more dramatic than when the director of the I.C.I.J., a veteran Irish Australian journalist named Gerard Ryle, has got his hands on a new leak.

In the fall of 2019, as the I.C.I.J. was busy with U.S. Treasury documents that exposed the role of global banks in money laundering, Ryle received a trove of documents. He won’t say exactly when or how, but it took until the Christmas holiday for him to find time to begin searching through them. There were five million files in all, many of them from a Panamanian law firm called Alcogal—early on, Ryle could see messages from offshoring clients telling their advisers that they didn’t want to end up in the next version of the Panama Papers. Once the cache of files had been rendered searchable, Ryle entered three letters into the search box: “PEP.” A world opened up. “Prime Ministers, Presidents,” Ryle said. “I literally couldn’t stop looking at them. I was addicted. I was supposed to be taking a break with family. Every hour of every day I was in there looking at these documents.”

The offshore world can seem, from afar, like a pirate ship—constructed by scofflaws and plutocrats who plan to raid the rest of us. But up close it is deeply legalistic; law firms and financial institutions are working to keep their clients on the right side of the law, or at least to have plausible deniability when they cross it. The first clues that appear within this world are often left by professionals trying to comply with regulation or to protect themselves. “PEP” is a code used to identify an account belonging to a “politically exposed person,” someone who has control over public resources and whose funds might be subject to a higher level of scrutiny.

Ryle, who is fifty-six, with white hair and a lilting Irish accent, made his name as an investigative reporter in Australia, where he published a series of exposés of a businessman named Tim Johnston, who had sold the public on a chemical pill that could be dropped into a car’s gas tank to reduce emissions. The investigation led Ryle to the world of offshore financing. Slightly rumpled, equipped with a phone whose number he doesn’t know (not for any clandestine reason, he insists, but simply because he travels so much that, for budget reasons, it is cheaper to just switch SIM cards), Ryle can leave the impression that he is slightly offshore himself. Having served as an editor at the Canberra Times, and the head of the investigative unit at the Sydney Morning Herald, Ryle took over the I.C.I.J. in 2011. “Some stories are too big, too complex, and too global for lone-wolf muckrakers or even individual news organizations to tackle,” Ryle has said. “We believe collaboration is the wave of the future in global journalism.”

Among the names that he found with his “PEP” search was Cherie Blair, the wife of the former British Prime Minister, who was an owner of a company in the British Virgin Islands. Another was Uhuru Kenyatta, the President of Kenya, who had come to office on an anti-corruption platform, and whose family had established several overseas companies. The information in the documents served as only a starting point. But Ryle noticed a pattern: “The hypocrisy of the various leaders who could have done something about this system and instead benefitted from it.” He started assigning staffers to follow up on the file, a project the I.C.I.J. soon code-named “Aladdin.”

The I.C.I.J.’s power comes from its network of affiliates—hundreds of reporters around the world who are invited to share in an investigation. But the organization itself employs fewer than forty journalists, many of them based overseas and dedicated to developing databases to manage the leaks that they handle. Its global headquarters, on the eleventh floor of a skinny office building just south of Dupont Circle, in Washington, D.C., are not much to look at: a lobby under construction, a security guard who waves you upstairs, a water fountain that expels a single liquid bullet toward your eye and then stops entirely. On a normal day, there might be a half-dozen employees here; when I visited, there were four, each of whom played a central role in the Aladdin project. Besides Ryle, there was Fergus Shiel, the I.C.I.J.’s soft-spoken managing editor, who oversees the databases and the partnerships with affiliates; Will Fitzgibbon, a self-effacing Australian who had his bike next to his desk; and Scilla Alecci, an alert Italian journalist who has done extensive investigative reporting in Japan and other parts of Asia. No televisions were on; no phones were ringing; no reporters were racing out the door; no one was fighting Twitter wars. The I.C.I.J. is a newsroom in the same sense that a medieval monastery was a publishing enterprise.

The stakes are higher than the setting suggests. Shiel showed me the secure portal that the I.C.I.J. had created for journalists from its partner organizations to share information, tips, and clues. The thousands of names in the Aladdin files were sorted by nationality. Shiel invited investigative journalists from those countries and elsewhere to scrutinize the files and to explain, for instance, which among several dozen Argentinean names were most significant. When it came to Russia, the largest file, someone from I.C.I.J. had posted a U.S. Treasury list of more than two hundred of Putin’s top allies, to compare against the Aladdin database. A Russian investigative journalist jumped in. “He said, ‘That list is rubbish,’ ” Shiel recalled, chuckling. Only two of the U.S. Treasury names were really important, and there were dozens more that the Russian journalist thought worth pursuing. “So we had local expertise,” Shiel said.

Many of the cases were transnational: tracking down the Blairs’ holding company, which turned out to have been created to buy the headquarters for Cherie Blair’s London law firm from a prominent former minister from Bahrain, saving the Blairs three hundred thousand pounds in tax, required not just journalists in the U.K. but also in the Middle East. (Blair later told the Guardianthat there was “nothing unusual or underhand in any of this.”) “We had seventeen Russian journalists working on this, and sixteen of them have had to leave the country,” Shiel said. “Our reporter in Belarus would travel to Lithuania every week to work, and then return home on the weekend.”

Another case involved Czech President Andrej Babiš, a right-wing populist media billionaire (and allegedly a former Cold War spy) who, during his tenure as finance minister, had participated in discussions with other E.U. ministers on how to reform offshoring rules. In the Aladdin files, Alecci discovered his name in a report that the Panamanian law firm working on Babiš’s offshore accounts had sent to regulatory authorities in the British Virgin Islands. Babiš had used a series of secret shell companies to transfer money from the British Virgin Islands to Washington, D.C., to Monaco, in order to buy an estate in the South of France. “It’s a very complicated route just to buy luxury property,” Alecci said. It was particularly striking to her that the trail of offshore shells had run through the city that was supposed to be policing much of this activity. Alecci said, “He wasn’t the only one. There were a few people who used a Washington, D.C., L.L.C.”

It took more than two years to prepare the stories, now collectively called the Pandora Papers, for publication. “You’re kind of, like, living with a secret,” Ryle told me. The initial leak of five million files grew to nearly twelve million, from the same source, and the work of sorting through it was laborious. Russian names were notoriously difficult, since the spelling was so variable; Chinese, Korean, and Arabic names were tricky to track, too. Shiel recalled to me that the King of Jordan, a major target, was referred to in some of the documents as “the Jordanian” and in others merely as “you-know-who.”

The global political situation has changed in the decade or so since Ryle first began working on the files that became Offshore Leaks. The global populist shock of the mid-twenty-tens has neither entirely upended the existing political order nor been smothered to extinction; instead, you can now find overtly populist traits in most major political parties. For journalists, the risk is mundanity. In 2016, when the Panama Papers revealed that the Prime Minister of Iceland secretly owned an offshore company with multimillion-dollar claims on the country’s failed banks, there were mass demonstrations and he almost immediately stepped down. But, by this most recent I.C.I.J. investigation, the fourth batch of leaks, the offshoring scandal was familiar, and populist politicians have learned to blame the stories on a hostile or partisan press, or simply ignore them. “I think maybe a lot of them have become more sophisticated in the reaction,” Alecci told me.

At the same time, many of these politicians were more vulnerable to charges of hypocrisy, since they had often come to office decrying corruption or the global élite. Wopke Hoekstra, the Dutch finance minister, for instance, had campaigned against tax havens. And yet, in 2009, he had used a shell company in the British Virgin Islands to invest in a friend’s safari company. (He sold the shares a week before becoming finance minister, in 2017). Paulo Guedes, the Brazilian finance minister and another anti-offshoring campaigner, had more than nine million dollars in secret family accounts. (In a statement, Guedes’s lawyers said the minister had recused himself from the offshore investment before joining the government, in 2019.) “These aren’t rogue outliers,” Ryle said. “This is mainstream.” The geography of the offshore world now took in Washington, D.C., and the City of London. Its principals ran the finance ministries of major Western countries, and campaigned against offshore corruption. If, during the Trump years, the leaks had detailed a system of global oligarchy that seemed to form an opposing force to liberal democracy, then the Pandora Papers emphasized the oligarchy that had taken root within liberal democracies themselves.

Will Fitzgibbon focussed on much of the U.S. file. For years, tax-advocacy groups had identified South Dakota, where disclosure laws are particularly loose, as one of the most problematic tax havens in the world: one report had suggested that the amount of money held in trusts in South Dakota had grown from two billion dollars in 2007 to three hundred and sixty billion dollars today. “It’s excruciating work, where at first I’m just like a monkey typing in ‘South Dakota’ and ‘Sioux Falls’ to search these documents, and then going through the thousands of files that come up,” Fitzgibbon said. He noticed that many of the people hiding money in South Dakota came from Latin America—Brazil, Colombia, Ecuador, Mexico, El Salvador. “I don’t speak Spanish; I don’t speak Portuguese,” Fitzgibbon said. “But the first Google result for two of them was quite literally ‘involved in a money laundering ring’ and ‘involved in a settlement with the U.S. government.’ ”

Fitzgibbon travelled to Sioux Falls, where he met with a whistle-blower, researched the lawyers who had pushed legislation limiting scrutiny of trusts to the state legislature, and checked out the office building that housed a group called Trident Trust. The scene in South Dakota was phenomenally mundane. Hundreds of billions of unreported dollars were being hidden in the same place that processed receipts for grain. “The problems, the inequalities, and the wrongdoing enabled by the offshore system isn’t just because there’s a few Mr. Burns-like figures sitting at their desks wrapping their fingers together,” Fitzgibbon said. “There is no evidence that there’s some evil mastermind in Sioux Falls unscrupulously soliciting foreign wealth.” He noted that, in addition to South Dakota, Alaska, New Hampshire, and Nevada have become U.S. hot spots for tax evasion. “It’s often specifically because they are small jurisdictions with part-time legislators, small populations and failing economies, and, therefore, in the eyes of trust lawyers, ripe for persuasion.” It turned out that Latin American billionaires moved their offshore wealth from the Caribbean to South Dakota, as the British Virgin Islands and others tightened some regulations in the aftermath of the Panama Papers. Fitzgibbon said, “Same wine, different bottle.”

The Pandora Papers went public on October 3rd. The release was extraordinary in its scale: stories from media outlets in a hundred and seventeen countries appeared simultaneously, naming twenty-nine thousand offshore accounts held by, among others, more than a hundred billionaires and thirty-five current or former heads of state, containing hidden assets totalling somewhere between five trillion and thirty-two trillion dollars. But, by the standards set by the Panama Papers, the response was muted. There were no mass demonstrations. In Kenya, where the I.C.I.J. and its partners had identified thirty million dollars that President Kenyatta’s family had hidden in offshore accounts, Kenyatta eventually issued a statement welcoming the scrutiny and calling for greater transparency. In Pakistan, where the I.C.I.J. had linked millions in offshore accounts to key associates of Prime Minister Imran Khan, the Prime Minister issued a similar statement. This was in keeping with Alecci’s observation that politicians increasingly pretended that they weren’t implicated in the I.C.I.J.’s revelations.

Still, there were detectable ripples. Together with her Czech and French colleagues, Alecci had identified the twenty-two-million-dollar château near Cannes that Babiš, the Czech President, had bought through a shell company. The Czech parliamentary elections were held the same week as the release of the Pandora Papers, and Babiš, who had denounced the report and denied any wrongdoing, was still expected to win. “Until the very end, I thought he was winning,” Alecci said. “And then all of a sudden the results changed by a tiny fraction.” A poll would eventually suggest that eight per cent of voters in Babiš’s party had turned against him because of the offshore revelations. Babiš failed to win enough seats to form a government. It was a quieter effect than the mass demonstrations that had brought down the Prime Minister of Iceland. But Babiš soon conceded that his party would not share in the next Czech government. The man who had been compared to the Hungarian autocrat Viktor Orbán was out.

Slowly, Ryle began to see the investigation’s impacts elsewhere. In Chile, where the Pandora Papers had suggested that President Sebastián Piñera might have used an offshore company to conceal the proceeds from the sale of a mine, the opposition began impeachment proceedings. In Ecuador, the legislature opened hearings into the President, an ex-banker named Guillermo Lasso. “We’re now being inundated by governments looking for the documents—Europol, police forces, tax offices,” Ryle told me, when I visited. “It’s a slow burn.”

It seemed to me that Ryle’s team was attempting two different approaches to taking on oligarchs in the post-Trump era. The first was structural. Ryle’s team had devoted considerable effort to detailing the history of Baker McKenzie, a Chicago-based international law firm that the reporters had pinpointed as a critical player in creating the offshoring system. “It’s the banks and the accountancy firms that are driving this world,” Ryle said. But this story hardly seemed to catch fire—there was no cascade of news coverage of Baker McKenzie that followed the original piece, and the firm posted a public statement on its Web site (“Get the facts about our global tax practice”) and released a statement to The American Lawyer declaring that the I.C.I.J. report was “highly selective, contains inaccuracies and is speculative in nature.” Perhaps, eventually, there will be some real consequences for firms that assist in offshoring, or a movement for structural reform, but certainly nothing like that is happening yet.

The second approach, though less high-minded, was more immediately successful. In naming Babiš, Piñera, Lasso, the Kenyatta family, and Imran Khan’s advisers, the I.C.I.J. had armed each figure’s domestic opposition with a plausible allegation (that the sitting head of state was corrupt) and forced these Presidents and Prime Ministers to deny the allegations. For many of the billionaires and politicians who use offshore accounts, Ryle suggested, the reason has less to do with material tax advantages than with privacy—certain transactions might be embarrassing to them, or undermine the public image they sought to cultivate. The Pandora Papers didn’t have the satisfying technical resolution that Ryle might have hoped for—a multinational political campaign to close offshore accounts, for instance—but they did demonstrate a more elemental power. However insulated the oligarchs might seem, the leaks could still pressure governments, shift elections, and freak out the powerful. If shame worked, then investigative journalism still worked.

Of course, that power was conditional on investigative journalism’s ability to survive. Shortly after the Pandora Papers were published, Ryle had to lay off some freelancers he had hired to help get the project over the line. When I visited the I.C.I.J. office, he was leaving the following day to try to raise money in Michigan, and then, the following week, in New York. “We’ve virtually spent our entire budget on this project,” Ryle said. He sounded rueful, but also proud. “We’re trying to do this with, you know, rubber bands and paper clips.”

All Rights Reserved for enjamin Wallace-Wells

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