The Pandora Papers and the Threat to Democracy
In demonstrating how some of the world’s most powerful people hide their wealth, the Pandora Papers have exposed the details of a global system whose basic contours were already well known. Property laws have long been written by and for the wealthy, giving the public ample reason to suspect that the system is rigged.
NEW YORK – The “Pandora Papers,” a new investigation led by the International Consortium of Investigative Journalists, has fueled outrage around the world. Politicians, businesspeople, sports stars, and cultural icons have been caught in the act of hiding their wealth and lying about it. But how likely is a reckoning for the lawyers and accountants who helped them?
There is nothing new about the practices the ICIJ’s investigation uncovered. True, the sheer scale, sophistication, and legal fire power deployed to allow today’s ultra-rich and powerful to game the law may be newsworthy. But the only truly shocking revelation is that it took more than 600 journalists from around the world to expose these practices, often risking their own safety and professional futures. The difficulty of that task attests to how well lawyers, legislatures, and courts have tilted the law in favor of elites.
To hide their wealth, today’s rich and powerful have availed themselves of centuries-old legal coding strategies. In 1535, King Henry VIII of England cracked down on a legal device known as “the use,” because it threatened to undermine existing (feudal) property relations and served as a tax-avoidance vehicle. But thanks to clever legal arbitrage, it was soon replaced by an even more powerful device: “the trust.”