Pandora Papers: Massive leak of documents reveals financial secrets of Latin American politicians, tycoons, and celebrities
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Former Latin American presidents, tycoons, and entertainment stars turned to firms specializing in corporate anonymity to offshore companies far from the fiscal regulations of their home countries, according to more than 11 million documents accessed by Univision Investiga.
The Pandora Papers investigation, spearheaded by the International Consortium of Investigative Journalists (ICIJ), reveals the financial secrets of 35 current or retired presidents, some 330 public officials in more than 90 countries and territories.
The alliance united more than 600 journalists, the largest journalistic collaboration on record. Documents obtained by the Pandora Papers project reflect corporate networks linked to Mexico's great billionaires, such as Germán Larrea, president of the leading mining company Grupo México; María Asunción Aramburuzabala, owner of an investment firm; and Olegario Vázquez Raña, leader of healthcare, banking, and media conglomerate.
The files show that those implicated in some of the largest corruption scandals in the region —such as the bribes of the Brazilian multinational, Odebrecht — and convicted criminals participated in the labyrinthine secret networks of offshore finance.
The documents bring to light the business dealings of former British Prime Minister Tony Blair, the King of Jordan, Colombian singer United States.
"I guess it mostly demonstrates that the people who could end the secrecy offshore, could end what's going on, are themselves benefiting from it. So there's no incentive for them to end it," said Gerard Ryle, director of ICIJ.
While it is not a crime to own this type of business—and, according to experts, it often assuages the personal security concerns of wealthy families, it is also a mechanism that rich and influential people in Latin America have used to evade taxes or to hide funds with illicit origin.
"For governments, tracking money [from offshore companies] is quite complicated," said Mexican tax lawyer Luis Manuel Pérez Acha. "That is the negative side of these structures, and they have been abused for decades to hide corruption and colossal tax evasion," he added.
Distinguished clientele
Among the clients of the legal firms specializing in structuring offshore portfolios is the acting president of Ecuador, Guillermo Lasso; Luis Abinader from the Dominican Republic, former presidents Andres Pastrana and Cesar Gaviria from Colombia, Pedro Pablo Kuczynski from Peru, Alfredo Cristiani from El Salvador, Juan Carlos Varela from Panama and Horacio Cartes from Paraguay.
At least 3,047 customers in the Pandora Papers are Mexican citizens or people with addresses in Mexico. The leaked documents contain information on 1,913 offshore entities linked to those Mexican clients. An analysis by Quinto Elemento Lab, a non-profit journalistic organization in Mexico, found that these clients created 1,241 companies, 72 foundations, and 600 trusts.
The Pandora Papers reveal that most of the former heads of state used the services of the Panamanian firm Aleman, Cordero, Galindo & Lee (Alcogal), and Trident Trust Company in the British Virgin Islands. Alcogal controls offices and subsidiaries in a dozen countries like New Zealand, Uruguay, and the United Arab Emirates.
After the Mossack Fonseca law firm migrated their companies to the management of Trident Trust, one of the world's leading offshore service providers, the documents show. Aside from Alcogal and Trident trust, reporters also accessed records from 12 other international law firms that incorporate companies and offshore hideouts for clients generally looking to keep their financial operations in the shadows.
The finances of Corinna zu Sayn-Wittgenstein, the former mistress of Spain's king emeritus Juan Carlos de Borbon, are also involved with offshore firms. Possible corruption in De Borbon's estate is under investigation by the Prosecutor's Office of the Supreme Court of Spain.
With Alcogal's help, Abdullah II bin Al-Hussein, King of Jordan, created a portfolio of more than 30 companies predominantly used to acquire properties in the United States, the documents show.
Records also show that Latin American businesspeople and politicians also ran their business through tax havens in South Dakota and Delaware, a trend rarely investigated by the U.S. authorities.
Pandora Papers also identified companies which circumvented due diligence processes of corporate registration firms, such as those of Venezuelan-Colombian businessman Alex Saab, accused in 2018 in the United States of money laundering corrupt deals in Venezuela. Although Saab had faced investigations for fictitious exports in Colombia since 2010, he managed to the company Polmont Oil Trading S.A. and, using it, opened a bank in the principality of Andorra.
How do they operate?
Once the supplier law firms — such as Alcogal or Trident Trust — the companies, their beneficiaries use them to open bank s for acquiring real estate, yachts, and business jets. Many of the clients also hire these firms to manage their families' inheritances.
In exchange for a few hundred or a few thousand dollars, offshore providers help clients incorporate companies while keeping their names off the books. For $2,000 to $25,000, they can a trust that, in some cases, allows their beneficiaries to manage their money, while spinning the legal fiction that they don't control it.
This legal maneuver becomes a creative way to hide assets from those who might seek them out, such as potential creditors, law enforcement officers, tax detectives, or ex-wigs. As Chuck Collins, author of the book The Wealth Hoarders: How Billionaires Pay Millions to Hide , sees it , millionaires need to hide their assets behind offshore companies in order to avoid taxes and evade ability.
"Secrecy puts us on a collision course with these kinds of oligarchic problems. There is no reason to have secrecy in economic property. The system would work better if people knew who the owners were; it would be a healthier form of capitalism," he said in an interview for the Pandora Papers with journalists from Spain's El País and Mexico's Proceso.
"All under the standards"
In an eight-page letter, Panama-based firm Alcogal responded that its company registration and client evaluation procedures meet all the requirements of the jurisdictions in which it operates..
"We understand that compliance is one of the main pillars of the provision of our international corporate services and have devoted considerable time and resources into developing the infrastructure to make our processes comply with standards in this area’’.
The firm expressed concern about "inaccuracies and outdated information" in questions posed by the journalistic alliance. "In some cases, the information you provided is simply incorrect. Some of the people you refer to have never been customers of Alcogal," they added.
For its part, Trident Trust responded that they do not discuss client-related matters with the media. They stated they were a firm “fully committed to compliance with all applicable regulations’’.
Mexican billionaires
Germán Larrea Mota Velasco, the second richest person in Mexico, owns the giant mining conglomerate Grupo México, controlling railroad, entertainment, and infrastructure companies. Because of his aversion to the media and his propensity to keep his emporium under the greatest secrecy, Mexican media calls him "the invisible millionaire."
The Pandora Papers have now revealed that Larrea was buying real estate in the United States while facing accusations in Mexico for payments allegedly owed to victims of an ecological tragedy caused by one of his mines.
Between 2013 and 2016, the tycoon ed nine companies in the British Virgin Islands through Trident Trust. Eight of the nine firms' assets totaled $36.9 million. Larrea used the companies to buy residences in exclusive areas of the United States, according to data gathered by reporters from El País participating in the ICIJ project.
Larrea gained international infamy in 2014 after a spill of 40 million liters of acidulated copper sulfate in the Sonora and Bacanuchi rivers, affecting thousands of residents of seven municipalities. The leak was attributed to Grupo Mexico's mine Buenavista del Cobre in Sonora, Mexico.
The Mexican Federal Attorney for Environmental Protection ordered Grupo México to create a trust of more than $135 million for the repairs. The company did not comply with the full payment to the victims, attorney general Blanca Alicia Mendoza revealed in August 2020. "There is no evidence of where the 100 million are," Mendoza warned.
In 2019, Grupo Mexico was the protagonist of another disaster: the spill of 3,000 liters of sulfuric acid from its subsidiary, Metalurgica del Cobre, in Guaymas, Sonora.
Larrea did not respond to requests for an interview.
Another Mexican tycoon, Olegario Vázquez Raña, who founded Grupo Empresarial Ángeles (GEA) and runs a healthcare and media conglomerate, also participated in offshore activity. In 2018, Mexican President Andres Manuel López Obrador named Vázquez Raña as part of his Advisory Council.
Eight years before, in 2010, Vázquez Raña used the services of Trident Trust to Ricardo Technology Corp. and Girbode Enterprises Limited in the British Virgin Islands. He is a partial shareholder in both firms. He holds 25,000 shares in each, with his wife María de los Ángeles Aldir, his daughter Mónica Vázquez, and their son, Olegario Vázquez. His son has been the CEO of GEA since 2000.
Between August and September 2011, Vázquez Raña ed six other companies in the British Virgin Islands. The Vázquez Raña family used the companies to acquire aircraft (Belamy Management Limited), yachts (Roxberg Group Limited and Aventura Holdings Limited), and real estate (Skyanna Holdings Limited), according to files examined by the Pandora Papers' Mexican team.
The documents show that, in 2016, GEA initiated procedures to withdraw all companies from the tax haven. However, U.S. Corporation records show that Northstar Corporation was used.
In 2014, as shareholders of Northstar, Vazquez Aldir and his wife bought two properties in Vail, Colorado. The residences are in the Ritz-Carlton condominium; one is worth $4.7 million, and the other $5.3 million. Between February and November of 2016, Northstar transferred the title of one of the houses to the couple, and they sold it for $8.5 million seven months later.
The Vázquez Raña and Vázquez Aldir family responded that the companies "comply with all their tax and legal obligations both in Mexico and abroad through their lawyer Héctor Álvarez." They added that the sale of real estate was made at market prices and in compliance with legal and tax obligations in the United States and Mexico.
Hinojosa returns
Mexican businessman Juan Armando Hinojosa, founder of the Higa Engineering and Construction Group, was central to one of the worst corruption scandals in the government of Enrique Peña Nieto.
In 2014, the Mexican news outlet, Aristegui Noticias, revealed that the then-Mexican first lady, Angelica Rivera, purchased a $7 million mansion from Grupo Higa, a company favored by Peña Nieto when he was governor of the state of Mexico.
Hinojosa is not a stranger to the offshore world. Univision Investiga revealed in its Panama Papers series in 2016 that Hinojosa ed the Mossack Fonseca law firm to help him validate a "donation" to his mother and mother-in-law for $100 million, which were in s of six companies in tax havens.
Now, the Pandora Papers have revealed linkages between the businessman and four well-known firms, as well as a new one whose finances do not seem to reflect the luxury of his past offshore entanglements past. This new company is Paradice Services Limited, ed in the British Virgin Islands on April 19, 2010, by Trident Trust. One of Paradice's shareholder firms is Bienes Raíces H&G, owned by Hinojosa.
The company has a history of non-compliance, based on correspondence with the resident agent. In an email chain dated 2014, Trident Trust employees wrote that Hinojosa's firm was "not in good condition," and payment of fees was needed to restore it to "good standing."
In July 2016, Trident Trust notified a Morgan Stanley agent that no annual leave fees had been paid for that year, which could result in a penalty of 10 percent.
"If payment is not made by October 31, the company will be removed from the Companies Registry," the letter reads. In response, the Morgan Stanley agent informed Trident Trust that Hinojosa was no longer their client.
The oases of the USA
The U.S. government has aggressively encouraged greater transparency in tax havens abroad and advocated for identifying the ultimate beneficiaries of offshore companies. But the government has said little about the lax tax laws of Delaware and South Dakota, states which also function for corporations as oases of secrecy. In these states, legislation protects the identity of companies' shareholders through various veils, such as trusts or contracts to transfer money, assets, or rights.
The Pandora Papers have exposed the individuals who use such veils.
According to El País's findings, María Asunción Aramburuzabala, the richest woman in Mexico, chose this option for several of her businesses. Through different trusts, she purchased in 2006 a house of about $6.8 million in The Colony of Park City, an exclusive destination for skiers in Utah; a plot of land in the same area in 2009 for $1 million and an apartment in New York in 2019. With the fiduciary, Sky Fiat Chariott, he has bought and sold business jets, one of them at the price of at least $45 million.
Sky Fiat Chariott’s offshore portfolio includes a firm in Scotland (Deer Valley Crest Ltd), which controls another limited liability firm in Delaware under which the subsidiaries DC 16 Inc and Whitepine 16 Inc operate.
Aramburazabala, founder of the investment firm Tresalia Capital, derived her fortune from the sale in 2013 of her family company Grupo Modelo SAB to Anhe-Busch InBev, for about $20,000 million. The businesswoman has created a considerably active conglomerate in both the private and public sectors.
SixSigma, through its KIO Networks brand of computer technology, won millionaire contracts with the istration of Enrique Peña Nieto in Mexico. In 2015, SixSigma's bonds were rated "junk" by Standard and Poor’s Global Ratings. Squared Capital bought KIO Networks in 2021.
When the investigative team of journalists asked Aramburuzabala about the aircraft, the million-dollar residences, the multiple offshore companies, and whether she disclosed necessary details of her financial dealings to the competent tax authorities, she did not respond.
Federico Kong, a member of one of Guatemala's wealthiest dynasties, also chose South Dakota as a place to his corporations. He is linked to a company that produces wax for floors and lipsticks. In 2016, Kong moved $13.5 million into a Sioux Falls trust, and some of the money came from the family business.
For decades, the Guatemalan press has reported the family's ties to the political world. In the 1970s, press reports identified the family as an essential ally of General Carlos Manuel Arana Osorio, the then-governor of Guatemala known as the Jackal of Zacapa.
In 2016, the family's luxury hotel in the capital gifted a 100-night package to then-President Jimmy Morales. The Guatemalan press suspected that this gift corresponded to the payment of "political favors."
The family conglomerate has been questioned for labor abuses of employees in its palm plantations. Kong did not respond to an interview request from the investigative team.
Those close to power
The Pandora Papers reveal the financial movements of individuals who have been close to power during Mexico's last two presidential .
The files show that Ricardo Pierdant, a Venezuelan-born businessman, Mexican citizen, and close friend of former President Enrique Peña Nieto, ed three companies in the British Virgin Islands: Thassos Holdings Limited, ed in 2009 with an unknown objective, as well as Hesperos Marketing and Hamza Development, both in 2012 to serve as an "investment vehicle."
Pierdant was a neighbor of Peña Nieto in a luxury condo in Key Biscayne, a key a few miles from Miami. In 2016, Univision Investiga and reporter Marcos Martinez revealed that Pierdant paid taxes on an apartment next to his. The other apartment belonged to Angelica Rivera, Peña Nieto's wife at the time. Some Mexican media reported that Pierdant did not pay taxes to the Mexican treasury for more than $96,000. Peña Nieto responded that they were friends, and the payment was just a favor.
Pierdant also appeared in the Bahamas leaks, another file revealed by ICIJ. Pierdant was ed with the corporations Grantley Ventures Ltd. and Crimson Worldwide Ltd.
As for the Pandora Papers, Pierdant said that its companies "were constituted with adherence to the law, but did not have the slightest use," and maintained that he had no relationship with Peña Nieto.
Julia Abdala Lemus is a Mexican businesswoman. Her partner for 20 years is Manuel Bartlett, current head of the Federal Electricity Commission. She owns the company Roybell International Inc, ed in Panama by Alcogal in 2012. The purpose of the firm is unknown.
Bartlett failed to mention in his 2019 estate statement his relationship with five companies and 25 of Abdala's properties. After the scandal, he claimed that he was not obliged to do so because he did not have a marital relationship with Abdala.
After some Mexican media published the unreported properties, the Secretariat of the Civil Service launched an investigation into Bartlett to determine later that "there was no corruption."
Mexican President Andrés Manuel López Obrador defended Bartlett, arguing that there was no wrongdoing. One of Abdala's companies, Digilogics, S.A. de C.V., was excused from paying taxes between 2015 and 2019, according to non-profit organization Fundar.
Julio Scherer is a Mexican lawyer who, from December 2018 to September 2021, was the legal advisor to Lopez Obrador. Before becoming a high ranking official, he was the legal representative of the food company La Cosmopolitana, owned by the Landsmanas family. According to Quinto Elemento Lab, this family has multiple offshore firms through Grupo Corporativo Kosmos, a food products conglomerate that has won hundreds of public contracts in Mexico for more than $1 billion dollars between 2002 and 2019.
The Landsamanas offshore firm documented in the Pandora Papers is 3202 Turn Limited, ed in 2011 in the British Virgin Islands. That July, the Landsmanas transferred 50,000 shares of the company to Scherer. In a document dated 2017, Scherer appears as the company's beneficiary, and "work-legal practice" is indicated as the source of the money. The company has two million dollars in assets, the Trident Trust documents show.
The Landsmanas ran 3202 Turn Limited until March 2017, when they appointed “Sertora Investments as its new director. Sertora is a Panamanian firm which has been suspended for unpaid taxes in that country, Quinto Elemento found.
Scherer omitted to report 3202 Turn Limited as part of his wealth in his four assets declarations as a public servant. Instead, he ed luxury cars, credit cards, expensive jewelry, works of art, and two apartments in Mexico.
According to the leaked documents, 3202 Turn Limited owns a limited liability company in Florida. In 2008, 3202 Turn LLC was ed in Miami. Its first manager was Elias Landsmanas, the director of Corporativo Kosmos. In 2008 the company purchased a condo in Miami Beach for $1.2 million.
Using a Miami-Dade county public database, Univision Investiga established that, although Scherer is not listed as the owner of the Miami Beach apartment, he paid property taxes on the condo from at least 2013 to 2016.
Scherer replied to the Pandora Papers journalists that, during the transactions documented, he was not a public official but an independent professional.
"I have always conducted myself following the law, my principles, and I will continue to do so," he said.
The Tax istration Service does not know the offshore firms' beneficiaries or audit their assets unless they are voluntarily declared.
"They established a section called Refipre, for residents of low taxation jurisdiction," Rojas Dosal explained.
Of the 330 politicians who appear in the leak, more than 90 are from Latin America. Of the 35 presidents and former presidents listed in the data, about 14 are from the region, too, said Emilia Diaz Struck, ICIJ's director for Latin America.
Offshore Presidents
In an interview with Univision Investiga in May 2014, the U.S. cigarette importing company owned by then-Paraguayan President Horacio Cartes itted that the DEA had investigated the company and its holding firm in Paraguay for money laundering.
William Cloherty, then president of Tabacos USA, explained that for 30 days, agents from the DEA and the Bureau ofAlcohol, Tobacco, Firearms, and Explosives Control Agency inspected "every single sheet" of company documents. According to him, the agents "did not find any problem." The agencies refused to release the audit to journalists.
A Wikileaks cable revealed that, in December 2009, U.S. federal agents investigating money laundering through the sale of cigarettes in the Triple Frontier border region between Paraguay, Argentina and Brazil, identified Cartes as a "priority target" of the investigation.
The U.S. government requires companies importing cigarettes to declare whether their owners or investors have been charged with a crime or deprived of their freedom anywhere in the world. But Cloherty confessed that when he filled out the Treasury Department's permission to import the cigarettes, he unintentionally omitted Cartes' arrest in his country for million-dollar fraud.
Cartes was arrested in Paraguay in the mid-eighties for a $34 million fraud on charges that he created shell companies with other partners and submitted documents of fictitious imports of agricultural machinery to obtain government funds at a preferential exchange rate.
This arrest, as well as other murky episodes of Cartes’s past have not prevented him from continuing to use offshore networks. An investigation by ABC Color, a Paraguayan paper, member of the journalistic alliance, found that Cartes and his three children are listed as beneficiaries of Dominicana Acquisition S.A., a corporation ed in Panama in 2011 through OMC Group. The firm appeared in 2017 as the owner of several assets, including an apartment in Miami.
In a response signed by the law firm Palacios, Prono & Talavera, former President Cartes explained that Dominicana Acquisition S.A. was created "as a vehicle to purchase an apartment for his family in the city of Miami, Florida." The acquisition of real estate in Florida or other jurisdictions through these corporate structures "was in 2011—and still is today—an absolutely legal and widely used modality because it streamlines the process of buying and selling the underlying assets," the letter adds.
The current president of Ecuador, Guillermo Lasso Mendoza, is another active of the offshore world. The name of the 65-year-old conservative politician, owner of the Bank of Guayaquil, came up in the Panama Papers leak in 2016, in the Paradise Papers in 2017, and now appears again linked to several companies ed abroad in the Pandora Papers.
Among Lasso's companies are Fundacion Bienes Raices, the Bretten Holdings, Bernini Foundation, Tintoretto International Foundation, and Pietro Overseas S.A., most managed by Alcogal, according to El Universo of Ecuador.
In response to a questionnaire by El Universo, Lasso said that the firms no longer exist legally, in compliance with an Ecuadorian law that prohibits candidates and public servants from maintaining offshore companies.
"I want to emphasize the fact that, in my case, the past use of any international entity was perfectly legal and legitimate," Lasso wrote.
Former President Andrés Pastrana ed in Alcogal the family business Vanguard Investment Inc, where the only shareholder appeared as the Colombian company Salatina Puyana y Cia. S. en Co.. According to the investigations of the El Espectador-Connectas alliance, the documents did not reveal the beneficiaries of Vanguard Investments, which deposited $600,000 in a financial institution in the United States.
Pastrana told reporters that "there has never been a concealment of information.Like Colombian investments abroad ... it sought to convert pesos into dollars to internationalize assets," he said.
Salatina Puyana y Cia, the Colombian firm that owns 100 percent of Vanguard Investments Inc, declared the investment to Colombian tax authorities, the former president added.
"The identity of directors, dignitaries, and beneficiaries has never been concealed," he said.
Margarita Rabin from Univision Investiga, Andrea Cárdenas from Quinto Elemento Lab, Elías Camhaji from El País, Mathieu Tourliere from Proceso and Mabel Rehnfeldt from ABC Color, Paraguay, collaborated to this report.
Translation by Peniley Ramírez and Julia Frankel