How heads (of state) roll

Transparency International


15/10/2021

In January it was already clear that 2021 was going to be a rough year for some unscrupulous heads of state. 

Now 35 leaders find themselves in hot water for reportedly offshoring their wealth through anonymous companies. The Czech Prime Minister Andrej Babiš – whose party narrowly lost last week’s parliamentary election – may have been the Pandora Papers’ first political casualty but likely not the last.  

In Chile, the Pandora Papers have caused a political earthquake a month before the general election as new details about the offshore business dealings of President Sebastián Piñera have emerged.
 

Chilean President Sebastian Piñera. Image: Matias Baglietto / Shutterstock

This week, a group of parliamentarians initiated impeachment proceedings against President Piñera over his role in a controversial 2010 mining deal. This comes on top of last week’s announcement that the public prosecutor’s office will investigate the President for corruption and tax-related offences.  

Thanks to the Pandora Papers investigation, we now know that in December 2010, nine months into his first presidential term, Piñera’s family sold their stake in the Dominga mining project to a close friend and business partner, Alberto Délano. The leaked documents reportedly show that the parties signed two contracts: one in Chile for US$14 million and another in the British Virgin Islands for US$138 million.  

The prosecutors now say the second contract signed in the British Virgin Islands was not previously disclosed when the Dominga deal was under a judicial investigation in 2017. Perhaps as a result, Piñera was acquitted. 

What’s more, the leaked documents show that the amount was to be paid in three instalments and that the third payment came with an alarming condition: the government cannot strengthen environmental protections in the


Dominga mining operations area.
 
Protest against the mining company Dominga. Image: altus_viaj / Shutterstock

The allegation that the President assured a personal friend and business partner that the proposed mining area would not be designated as a nature reserve – thereby advancing his own financial interests – points to possible misconduct and regulatory capture.  

The role of anonymous companies in cross-border corruption and money laundering is well-established. But as this case shows, secretive corporate structures can also enable private interests to capture policy- and decision-making and cause further harm to the environment.  

What more evidence do we need before making it impossible for public officials and businesspeople to hide behind anonymous shell companies?  

Several countries in Latin America have committed to or have already taken steps towards creating beneficial ownership registers, which would help prevent such abuses. Our colleagues at Chile Transparente are urging the Chilean government to follow suit.  

We remain convinced that a new global standard that requires public registers of beneficial ownership is urgently needed. 

Next week, the Financial Action Task Force (FATF) will convene for a plenary to discuss possible revisions to the standard on company ownership, among other things. We know that proposals like ours will generate heated debates – but we’re staying optimistic. Should the FATF heed civil society’s repeated calls, the revised standard would also prompt the Chilean government to finally take action.  

We’ll be watching the outcomes of these deliberations very closely. If the FATF’s voting members needed yet another nudge, the Pandora Papers should be it. What do you think? Let us know @anticorruption.



RECOMMENDED READING

Pandora Papers: 10 countries that urgently need to act From Lebanon to Nigeria, from Australia to the United Kingdom, Transparency International chapters call on national governments to act upon the findings of the Pandora Papers.

 

What the global standard on company ownership should look like: Five key fixes  The global fight against corruption, tax evasion and corporate secrecy cannot be won as long as the corrupt and criminals can hide behind anonymous company structures in even one country. The Financial Action Task Force members are now finally open to suggestions on the ways to revise the global standard on beneficial ownership transparency.
 

When company ownership information is out in the open: How public registers advance anti-corruption Cases from the United Kingdom and the European Union show that beneficial ownership registers represent a trove of information for investigators, media and civil society. Beneficial ownership registers are the tool that allows them to lift the veil of opacity and connect the dots. The release of the Pandora Papers further strengthens the case for public beneficial ownership registers to become the norm everywhere. 

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