Inside the ‘Pandora Papers’

Massive document leak exposes ties between global offshore industry and members of Putin’s inner circle

What are the Pandora Papers?

On Sunday, October 3, the International Consortium of Investigative Journalists (ICIJ) published The Pandora Papers, an investigation involving more than 600 journalists from 150 media partners across 117 countries — including reporters from the Russian investigative outlet iStories. The ICIJ obtained close to 12 million files (nearly three terabytes of documents) from 14 companies that provide offshore services. This massive data leak is even bigger than the Panama Papers, which contained documents from just one law firm. The ICIJ and its partners spent nearly two years combing through the documents and have thus provided an unprecedented look inside the offshore finance industry and its global reach.

Connections to Putin’s inner circle

The files leaked to the ICIJ link a number of people close to Russian President Vladimir Putin to the offshore industry.Among others, this includes Russian millionaire Svetlana Krivonogikh — Putin’s alleged secret mistress, who is supposedly the mother of his third daughter; Channel One CEO Konstantin Ernst; the family of Rostec CEO Sergey Chemezov; Putin’s Chief of Staff Anton Vaino; and Alexander Vinokurov, the son-in-law of Russian Foreign Minister Sergey Lavrov.

Journalists uncovered that Svetlana Krivonogikh used an offshore shell company to purchase a luxury apartment in Monaco worth 3.6 million euros(more than $4 million by today’s exchange rate).

In turn, iStories connected Konstantin Ernst to an offshore company in the British Virgin Islands that allowed him to become a secret partner in a deal to buy Soviet-era cinemas from the city of Moscow and turn the properties into shopping centers. What’s more, the deal was financed by Russian state-owned banks. For example, according to the ICIJ, Ernst’s stake was funded using a $16.2-million loan from a Cyprus bank partly owned by Russia’s VTB Bank.

The journalists also discovered that Sergey Chemezov’s 34-year-old stepdaughter and her grandmother (the Rostec CEO’s mother-in-law), own 22 billion rubles (more than $302 million) in assets — including a luxury yacht and villa in Spain — also via offshores in the British Virgin Islands.

In addition, journalists uncovered that Alexander Vinokurov owns six offshores in the British Virgin Islands, along with another one in Panama, and that he has Israeli citizenship.

Global revelations

The leak also exposed the offshore dealings of other world leaders,including Pakistan’s Prime Minister Imran Khan, Czech Prime Minister Andrej Babis, Jordan’s King Abdullah II, family members and close associates of Azerbaijan’s President Ilham Aliyev, and Ukrainian President Volodymyr Zelensky.

Several of the politicians mentioned in the Pandora Papers — for example the Czech Republic’s Babis and Ukraine’s Zelensky — were elected on promises to combat corruption and the enrichment of elites.

The leaked documents reveal that Babis — who is in the midst of campaigning in the Czech Republic’s parliamentary elections (set to take place on October 8–9) — used offshore companies to secretly purchase a $22-million estate on the French Riviera in 2009.

Meanwhile, Zelensky and his partners in the television production company Kvartal 95 were linked to a network of offshore firms registered in the British Virgin Islands, Cyprus, and Belize. Zelensky’s associates also used these offshores to purchase luxury real estate in downtown London. In the midst of his 2019 election campaign, Zelensky transferred his stakes in these offshore firms to his current chief advisor Serhiy Shefir. However, journalists believe there’s an arrangement that allows for the offshore to keep paying dividends to Zelensky’s family through a company owned by his wife.

The Kremlin’s spokesman responds

Putin’s spokesman Dmitry Peskov dismissed the revelations from the Pandora Papers as a “set of groundless claims.”“Honestly, we have not seen any ‘hidden riches of Putin’s inner circle.’ It seems that [more documents] will continue to be published but so far we have not seen anything special,” Peskov told reporters on Monday, October 4.

Putin’s spokesman also underscored that there “cannot be and should not be grounds for any inspection” based on the reports. “If there are some serious publications that are based on something, that refer to something specific, then we’ll study [them] with interest. While so far we don’t see the need,” he claimed.

“Probably, the only thing that really catches the eye is the demonstration of which state is the world’s largest offshore and tax haven. And this is, of course, the United States,” Peskov concluded.

Ionov weighs in

Earlier, pro-Kremlin activist Alexander Ionov announced on Facebook that he plans to file a complaint against the ICIJ with the Russian Attorney General’s Office over the Pandora Papers.Ionov, who spearheaded the campaign to get Meduza designated as a “foreign agent,” claimed that the investigation was based on a “large leak from the American intelligence services.” “Tomorrow morning I will draw up an appeal to the [Attorney General] and to this organization [ICIJ], since it conducts its activities on the territory of our country, including through individuals performing the function of a foreign agent,” Ionov maintained.

In another Facebook post, Ionov wrote that he also plans to appeal to the Russian Attorney General’s Office to designate the OCCRP (the Organized Crime and Corruption Reporting Project, an ICIJ partner) as an “undesirable organization.” As noted by Dozhd television, Ionov originally wrote that he planned to file a complaint on “declaring OCCRP (ICIJ) an undesirable organization,” apparently confusing the two organizations. Ionov later edited his post, removing the mention of the ICIJ.

The OCCRP announced its withdrawal from Russia on September 15, citing risks for local journalists.

The global response

Authorities in at least eight countries have announced investigations in response to the Pandora Papers, the ICIJ reported on Monday. This includes officials in Pakistan, Mexico, Spain, Brazil, Sri Lanka, Australia, and Panama.

Police officials in the Czech Republic tweeted that they will investigate those named in the document leak, including Prime Minister Andrej Babis.

Ukraine’s Prosecutor General Irina Venediktova said on Monday that the revelations from the Pandora Papers “did not come as a surprise” to law enforcement officials and have long been “under the microscope.” She then proceeded to criticize journalists from Slidstvo.Info, the ICIJ’s Ukrainian partner in the Pandora Papers investigation, for allegedly “hinting” at inaction on the part of the Prosecutor General’s Office.

In turn, Mykhailo Podolyak, an advisor to Zelensky’s chief of staff, underscored that the journalists’ findings are connected to the period before the president’s time in office. “It’s very significant that the journalists haven’t ‘dug up’ anything from the period after Zelensky’s inauguration in 2019, and the material itself contains a lot of assumptions and conspiracy theories,” Podolyak told Interfax Ukraine on Monday. “This clearly shows that President Zelensky complies with all anti-corruption legislation perfectly. This is key.”

Summary by Eilish Hart