Pandora Papers

As The Guardian wrote, the Pandora Papers show that South Dakota “is sheltering billions of dollars in wealth linked to individuals previously accused of serious financial crimes.” Not all of the money is linked to kleptocrats, oligarchs, and shady politicians. But it’s clear that South Dakota trusts are a magnet for the kind of dirty money that corrupt leaders around the world have spent years trying to hide. A former vice president of the Dominican Republic finalized several trusts in South Dakota to store his personal wealth and shares of one of the country’s largest sugar producers, the paper said. Offshore jurisdictions tend to have no income or corporation taxes, which makes them potentially attractive to wealthy individuals and companies who don’t want to pay taxes in their home countries.

The United States of Dirty Money

But the reasons this state is now alleged to be a haven for (sometimes) nefarious global cash are fairly straightforward. South Dakota’s moves have inspired other states to “liberalise” their trust regulations, a phenomenon that helped the US overtake Switzerland in the Tax Justice Network’s 2020 global ranking of countries most complicit in helping individuals hide their finances from the rule of law. The International Consortium of Investigative Journalists (ICIJ) and the Washington Post said their analysis of the data had identified 28 trusts in the US tied to individuals or companies previously accused of misconduct overseas. A bombshell report from the International Consortium of Investigative Journalists found that some of the world's wealthiest and most powerful people are socking away billions in offshore accounts — in addition to the onshore, continental state of South Dakota. The above excerpt from the Pandora Papers documentary spotlights a South Dakota trust for Colombian textile magnate Jose Douer Ambar, who died in 2020.

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The five-bedroom Chateau Bigaud, which is owned by a subsidiary of one of Babis’s Czech companies, sits on 9.4 acres (3.8 hectares) in a hilltop village where Pablo Picasso spent the last years of his life, the group said. Has Pierre brought treasure to its population with its rich-people-friendly policy? The state budget certainly benefits from the arrangement — but, for various reasons, including the presence in the state of Indian reservations, some of America’s poorest counties are in South Dakota.

Other countries, including many in the European Union, already require trusts to report their creators, trustees and beneficiaries to a centralized registry. One held a family inheritance valued at $5 million to $10 million, the documents show. In 2012, the family of brothers William and Roberto Isaias created three trusts through the South Dakota Trust Co.

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CREW aimed to determine whether industry insiders were shaping legislation that directly benefited their company while sitting on the very committee writing those laws. The IRS believes Trident acted as an intermediary for Americans trying to avoid financial transparency, using nominee structures, shell companies, and offshore accounts in places like Nevis and Panama. Rapid City, with a 2020 population of 74,703,194 and a metropolitan area population of 144,558,195 is the second-largest city in the state. It is on the eastern edge of the Black Hills, and was founded in 1876.198 Rapid City's economy is largely based on tourism and defense spending,197 because of the proximity of many tourist attractions in the Black Hills and Ellsworth Air Force Base. Also in the state are the shorter Interstates 190, a spur into central Rapid City, and 229, a loop around southern and eastern Sioux Falls.

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But the Pandora papers – a leak of 11.9m files from 14 different offshore services providers around the world – reveal how the US is also emerging as biggest tax haven in u s south dakota says pandora papers investigation a key location for trusts, which are typically used to shelter the personal wealth of super-rich individuals rather than multinationals. The ICIJ, a Washington DC-based journalism nonprofit, is not identifying the source of the leaked documents. In order to facilitate a global investigation, the ICIJ gave remote access to the documents to journalists in 117 countries, including reporters at the Washington Post, Le Monde, El País, Süddeutsche Zeitung, PBS Frontline and the Australian Broadcasting Corporation. A study prepared for the New Hampshire Trust Council and shared with lawmakers in 2019 reported an estimated 225 to 275 people were working in the state’s trust industry. “Negligible,” the state’s banking commissioner, Gerald Little, said of the financial benefit to the state in an email to a lawmaker. The trust documents come mostly from the Sioux Falls office of Trident Trust, a global provider of offshore services.

• As the explosive Pandora Papers investigation revealed, the world’s ultra-wealthy employ complex schemes in order to avoid taxation.
• (Other states seem to have some residual shame about such a practice.) After a couple of years, the assets of the trust are safe from creditors of any kind.
• Pascrell countered that stronger oversight would protect taxpayers as well as families who legitimately rely on trusts and other financial tools.
• Transparency Gaps – No public registry, minimal federal oversight, or enforcement.

Secrecy vs. Oversight – South Dakota trusts enable global elites to hide assets with little scrutiny. Department of Justice filed a legal action to issue a John Doe summons on Trident Trust and its affiliates. The aim was to identify unknown U.S. taxpayers who used Trident between 2014 and 2023 to evade taxes or conceal offshore wealth. The effect of rural flight has not been spread evenly through South Dakota, however. "South Dakota now rivals notoriously opaque jurisdictions in Europe and the Caribbean in financial secrecy," the Washington Post reported.

• But the Pandora papers – a leak of 11.9m files from 14 different offshore services providers around the world – reveal how the US is also emerging as a key location for trusts, which are typically used to shelter the personal wealth of super-rich individuals rather than multinationals.
• Before the release of the Pandora papers, a Khan spokesperson told a news conference Khan had no offshore company, but ministers and advisers “will have to be held accountable” for their individual acts.
• While regulators in the past two decades focused on the banking industry’s roster of questionable customers, they largely left trust companies alone, free to grow client lists with customer-friendly offers that include tax protection for generations.

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In 2012, he criticized a well-known Roman Catholic priest who had reported to the U.S. that the country’s sugar cane workers were subjected to harsh and inhumane treatment. The company said its review process for clients is “thorough, comprehensive, continuous and exceeds minimum requirements,” with clients screened for legal or regulatory concerns, as well as criminal activities. Trident and a New Mexico firm acting as trust protector opted to end child support payments. In sealed court documents, obtained by The Post and ICIJ, Trident argued that South Dakota law prevented the payments and that Pallanck was “not a good steward of his children’s finances.” The trust provides $1,500 a month for general expenses, Pallanck said. The groundbreaking law spurred other states – locked in competition to grow the industry – to advance trust legislation that would draw customers from around the world. Democrats in Congress have floated the idea of scaling back trusts and other tax-avoidance measures as part of an expansion of the federal social safety net.

U.S. routes 12, 14, 16, 18 and 212 travel east and west, while U.S. routes 81, 83, 85 and 281 run north and south. South Dakota and Montana are the only states sharing a land border that is not traversed by a paved road. A growing population in the Dakota Territory caused political dissatisfaction between northern and southern territory residents, with the southern half being always more populated. Following the territorial capital being moved from Yankton to Bismarck in the northern part, calls for dividing the territory increased.

One of those schemes involves stashing wealth in the state of South Dakota, has become a  popular place for multimillionaires and billionaires around the world to stash their money in vehicles known as trusts. Trusts are common tools of wealth management, but they can be abused to generate massive dynastic wealth. For example,  a recent Institute for Policy Studies brief details how a multimillionaire or billionaire can create a dynasty trust, in which money can grow almost entirely protected from estate and transfer taxes. In every case identified by The Post and ICIJ, details about criminal charges or other allegations were accessible through public records, media accounts, court documents and government reports. With little transparency in the industry, it’s nearly impossible to determine whose money is being managed by trust companies. While regulators in the past two decades focused on the banking industry’s roster of questionable customers, they largely left trust companies alone, free to grow client lists with customer-friendly offers that include tax protection for generations.

The data release revealed that Azerbaijan’s ruling Aliyev family traded around $540 million worth of U.K. Property in recent years, reported the Guardian, one of the ICIJ’s media partners. Queen Elizabeth II’s Crown Estate bought one property worth almost $91 million from the family, and is currently in the middle of an internal review into the purchase, the Guardian said. “Given the potential concerns raised, we are looking into the matter,” a spokesperson for the Crown Estate told the paper, which added the Aliyevs declined to comment.