"The United States’ wealthiest citizens...do not appear in the document"

December 10, 2024 5:28 AM

As it was previously noted by people on Metafilter, the Pandora Papers and the Panama Papers had a strange lack of dirt on US oligarchs. Ever wonder why?

The hidden links between a giant of investigative journalism and the US government (mediapart.fr):

But there is a flip side. While the OCCRP presents itself as being totally independent, its management have placed it in a position of structural dependence upon the US government, as revealed in this investigation by Mediapart, Drop Site News (US), Il Fatto Quotidiano (Italy), Reporters United (Greece) and German public broadcaster NDR – which decided to censor its own report at the last minute. That decision was taken even though the NDR had initiated the investigation and subsequently suspended its collaboration with the OCCRP following the findings of its journalists (see more here).

Our investigation reveals that the OCCRP was created thanks to the financial support of the US Bureau of International Narcotics and Law Enforcement Affairs. Still today, Washington provides around half of the budget of the OCCRP, and has the power to veto the nomination of “key personnel” in the NGO, including Drew Sullivan.

posted by kmt (22 comments total)

As far as I can tell, the article isn't claiming censorship of the investigations, but rather the investigations themselves are selectively chosen.
posted by CheeseDigestsAll at 5:57 AM on December 10, 2024 [4 favorites]

It does sound like something discouraged NDR from running their reporting.
posted by sagc at 6:07 AM on December 10, 2024 [6 favorites]

As far as I can tell, the article isn't claiming censorship of the investigations, but rather the investigations themselves are selectively chosen.

Basically, yes. That's how the real pros do it though, isn't it? It's kind of amateur hour (looking at you RT) to write ham-handed and clearly false propaganda articles. Much more sophisticated to systematically investigate in great detail real stories elsewhere.

So the law firms where data leaked from for the Pandora and Panama papers had very few US clients, nobody made that up or removed US clients from the files, they just picked the right targets.

They also didn't have many UK clients because historically non-domiciled tax status meant there would have been very little point in using grey-zone tax tactics when you could perfectly legally park your money in a cleaner tier of offshore jurisdictions.
posted by atrazine at 6:31 AM on December 10, 2024 [15 favorites]

Here's a formal response from the OCCRP. Worth reading.
posted by senor biggles at 6:38 AM on December 10, 2024 [1 favorite]

Taken at face value, the OCCRP’s response still implies one of two things: either they’re voluntarily declining to investigate US-centric stories or they are unable to crack those cases. The third possibility, that there are no significant US corruption or tax evasion stories on which to report, beggars belief.
posted by jedicus at 7:07 AM on December 10, 2024 [19 favorites]

If you have anti-establishment leanings and a desire to be a hero reporter and expose corruption, there's a nice non-proft job with secure funding for yo, as long as you know the edge of what you can investigate.

The Compatible Left as a strategy never went away.
posted by Space Coyote at 7:12 AM on December 10, 2024 [13 favorites]

Well that makes sense.
posted by toodleydoodley at 7:12 AM on December 10, 2024 [1 favorite]

US persons can avail themselves of reasonably high-grade financial shelters without the hassle of going to an overseas jurisdiction, so it's not surprising they're underrepresented in Panama.

...South Dakota Trusts being only one example (although they are my favorite example, what with the staggering corruption and all).
posted by aramaic at 7:13 AM on December 10, 2024 [21 favorites]

So the law firms where data leaked from for the Pandora and Panama papers had very few US clients, nobody made that up or removed US clients from the files, they just picked the right targets.

Is it possible that American tax cheats just don't use Panama at all? It's not like they got to pick and choose where they get documents from, unless the theory is that they're running a APT hacking operation themselves.
posted by BungaDunga at 7:15 AM on December 10, 2024 [1 favorite]

There's a very simple answer.

US natural persons are subject to worldwide taxation, whereas European citizens are subject to territorial taxation.

A US natural person not only has no structural tax benefit from offshoring assets, they actually subject themselves to much greater scrutiny by the IRS through FACTA, CFC rules, and the like if they do so.

Europeans, by contrast, are by default not taxed by their home countries on their foreign income, so there is a tremendous structural benefit to placing assets (and, perforce, their earnings) abroad in jurisdictions that also don't tax those earnings.
posted by MattD at 7:17 AM on December 10, 2024 [31 favorites]

The pressure against NDR alleged is certainly something.
posted by BungaDunga at 7:22 AM on December 10, 2024 [1 favorite]

US natural persons are subject to worldwide taxation, whereas European citizens are subject to territorial taxation.

Yeah, people are looking for some big conspiracy but it's much more simple. The US has very low tax rates, especially for the wealthy, so the "need" to hide assets is much smaller. Furthermore, as you said, you cannot escape the reach of the IRS (unless you move to Puerto Rico, literally the only place in the solar system you don't have to pay Federal income tax). You'd be taking assets out of a low-tax regime, moving them to a less secure banking environment, possibly trigging money laundering actions, and at the same time trying to hide this from the IRS. If a wealthy American wants to hide or obscure assets, there are smart ways to do it that are perfectly legal and will probably earn you money to boot (e.g. a blind trust buying real estate or precious metals).
posted by riotnrrd at 7:28 AM on December 10, 2024 [16 favorites]

possibly trigging money laundering actions

...moreover, the US has made it fairly easy to comply with taxation/AML rules, while also making the penalties for evading those rules extremely high. Filing with FinCEN is simple; avoiding FinCEN is a gigantic pain in the ass.

Why evade, when it's easier to pay your pittance and move on with more enjoyable pasttimes?
posted by aramaic at 7:39 AM on December 10, 2024 [4 favorites]

Why evade, when it's easier to pay your pittance and move on with more enjoyable pasttimes?

Some rich people have a sickness that makes them want to avoid paying any tax they can get away with not paying, no matter how much trouble it causes them or how little sense it makes.

(If I had the time, I could dig up a story that Jay Leno told about trying to buy an old car from a rich guy with that sickness.)
posted by clawsoon at 7:46 AM on December 10, 2024 [4 favorites]

Why offshore when you can just avoid $8B in tax by using federal estate and gift tax loopholes? From the New York Times, hardly 21st century fucking Samizdat.
posted by lalochezia at 8:07 AM on December 10, 2024 [10 favorites]

Keep in mind as well that foreign powers would like very much to destroy the integrity of this institution.
posted by CynicalKnight at 8:46 AM on December 10, 2024 [6 favorites]

And here I thought it was because we have the State of Delaware. Isn't this the function of having Delaware?
posted by eustatic at 5:43 PM on December 10, 2024 [2 favorites]

Yeah, what MattD and riotnrrd said. I do some of this work professionally. Everyone knows the game: you start by spending some of your lifetime exemption on your appreciating assets. For example, you can gift to a GST exempt irrev trust (SLATs are big right now) in a state that’s killed the Rule Against Perpetuities, and you’re golden for the first ~28MM (if married). None of that (or any of its growth forever) will ever pay estate taxes. More money? You can use GRATs to shave appreciation and/or transfer ownership to next gen. You can use CLTs to shift wealth transfer tax-free and get a nifty charitable foundation as a side-effect. You can make a IDGT, pay the trust taxes on your end, and drive down your taxable estate while supercharging the growth of trust assets. Want to have your cake and eat it too? Look at a 678 trust. And that’s just to start. For example, you can use swap powers to kick low basis assets back in your name before death to get the step-up. Have a business? Transfer ownership with discounts for lack of marketability and lack of control.

Nobody in the US with good lawyers and a little time to plan will pay much (if anything) in estate tax.
posted by leotrotsky at 5:44 PM on December 10, 2024 [10 favorites]

This investigation has also discovered that the OCCRP does not have the right to investigate US matters with the money provided by Washington. “The policy that we have is that we don't report on a country with their own money,” Sullivan told NDR. “[…] I think the US government doesn't allow you to. But even in other countries that don't have those stipulations we don't do it because it puts you in kind of a conflict of interest, and you kind of want to stay away from those situations.”

You know, conflict of interest is usually cited as a reason to not accept money that might lead to the perception you aren't performing your mission with integrity. Seeing it used to justify selective investigations because you've already accepted the money is a radical inversion of the whole concept.

Keep in mind as well that foreign powers would like very much to destroy the integrity of this institution.

Spare me the "foreign powers" chiding, this always gets trotted out as a deflection. Either the report is true or it isn't, everything else is window dressing. Even the OCCRP's official non-denial response basically comes down to "we're telling the truth!". If a justice system selectively enforces the law (or worse, defines laws to exclude injustice from being considered as such) we'd have no problem recognizing it as flawed despite "we're enforcing the law!" as a defense, so why should an investigative outfit that presents itself as neutral and impartial while preferentially limiting their scope get a pass?
posted by ndr at 7:38 PM on December 10, 2024 [5 favorites]

Spare me the "foreign powers" chiding, this always gets trotted out as a deflection. Either the report is true or it isn't

Both can be true. The OCCRP can be truthful about foreign government corruption while turning a blind eye to domestic malfeasance, and the foreign governments in question can, as is they have many times in the past, shine a spotlight on hypocrisies like this to discredit their accusers.

Pointing that out is not a deflection. However a review of your comment history on China and Russia provides insight into why you would react as such.
posted by CynicalKnight at 8:07 PM on December 10, 2024 [1 favorite]

Just wanted to note that though it can be easy to confuse FATCA, the Foreign Account Tax Compliance Act (through which the U.S. taxes nationals with assets abroad), with FACTA, the Fair and Accurate Credit Transactions Act (which provides some transparency with credit scores, among other things), the mnemonic is pretty apt once you see it.

In my understanding, all it takes to avoid being subject to FATCA in most ordinary cases is a non-U.S. passport which, given the near-universal incentives facilitating obtaining foreign citizenship for the investor class, is not a barrier for the wealthy in the least.
posted by donttouchmymustache at 11:46 PM on December 10, 2024 [1 favorite]

all it takes to avoid being subject to FATCA in most ordinary cases is a non-U.S. passport

This is not entirely correct. If you have ever been considered a US taxpayer, it applies to you, and will continue to apply to you for as long as you have any US status regardless of how many passports you may have. FBAR even applies to indirect beneficial interests. The only way to escape it is to lose, or renounce, your US status -- which (excitingly) comes with a final tax bill of up to one-third your total assets.
posted by aramaic at 7:25 AM on December 11, 2024 [1 favorite]