Everything You Need to Know About the Massive Paradise Papers Leak
Dark Money

Everything You Need to Know About the Massive Paradise Papers Leak

Sunny beaches and shadowy financial institutions.

VICE News Tonight on HBO presents an hour-long special offering the inside story behind one of the biggest global scoops of the year. With unique, year-long access to the investigative journalists and news organizations behind the Paradise Papers.

A vast new trove of 13.4 million leaked documents dubbed the Paradise Papers have been published by the International Consortium of Investigative Journalists (ICIJ) exposing the offshore banking activities of more than 120 politicians around the world. Included in the leak are documents of the children of former president Gen. Suharto and Gerindra Party chairman Prabowo Subianto.

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The leak is the latest to draw back the curtain on the shadowy world of offshore banking where shell companies allow the wealthy, kleptocrats, or anyone else with something to hide to conduct business largely in secret in known tax havens. This trove, which comes largely from Bermuda-based Appleby law firm, reveals offshore ties of politically connected figures from across Asia, including prominent members of the Chinese Community Party, Malaysian Prime Minister Najib Razak, and the former prime minister of Japan.

The documents very much resemble the massive Panama Papers leak of 2016, and were obtained much the same way: an anonymous source leaked them to the German newspaper Suddeutsche Zeitung, which shared them with the International Consortium of Investigative Journalists and several other news organizations which published their reports simultaneously Sunday afternoon.

Like the Panama Papers, the new trove of documents will provide source material for investigations that may last for months. It's likely to have long-last reverberations worldwide. The release comes at an awkward time for the administration of US President Donald Trump as Special Counsel Robert Mueller's team is issuing indictments and Facebook and Twitter are facing questions of how they were used as tools by Russian interests to influence the 2016 election.

Here are the big takeaways:

TAX AUTHORITIES INVESTIGATING SHELL COMPANIES ALLEGEDLY TIED TO PRABOWO, SUHARTO'S CHILDREN

Indonesian tax authorities have launched an investigation into whether the children of former president Gen. Suharto and opposition party chairman Prabowo Subianto violated the country's tax codes by allegedly owning off-shore bank accounts and companies, according to Bloomberg News.

It's not illegal to own an off-shore bank account or company, but it is against the law to use such a company as a tax haven to avoid paying Indonesian taxes. The administration of President Joko Widodo tried to get Indonesia's millionaires (and billionaires) to declare their hidden funds with a national tax amnesty program. That nine-month program hoped to "repatriate" some Rp 4 trillion ($296 billion USD) in funds by allowing citizens to declare their hidden assets and pay a small penalty.

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By the end of the program, some Rp 4.86 trillion in previously unknown funds had been reported to the government's tax office. But that figure still only represents a small percentage of the country's total adult population—about 35 million out of 165 million potential tax payers.

Tax authorities will now check the assets reported by Prabowo and the Suharto children—Tommy Suharto and his sister Mamiek Suharto—against the data listed in the Paradise Papers report. According to the report, the Suhartos were listed on two now-closed companies, both of which were registered in Bermuda through the law firm Appleby Global Group Services Ltd.

Both were questioned about the off-shore companies by the investigative magazine Tempo, but neither chose to comment on the matter.

Prabowo was linked in the papers to a company called Nusantara Energy Resources—which ceased operations in 2004. Gerindra officials denied that Prabowo had any connection to the company. Gerindra deputy chairman Faldi Zon also told Bloomberg that Nusantara Energy wasn't established as a tax haven and that it remained inactive for the entire time it existed.

FACEBOOK, TWITTER WERE PARTLY FUNDED WITH RUSSIAN MONEY

The Paradise Papers link the Russian government to investments in Facebook and Twitter through the firm of Russian-American billionaire and Silicon Valley impresario Yuri Milner.

Records indicate that two Kremlin-controlled entities — VTB Bank and the energy conglomerate Gazprom — partnered with Milner's investment fund DST Global to acquire sizable chunks of Facebook and Twitter. VTB bank paid $191 million USD for a stake in Twitter in 2011, and a Gazprom subsidiary financed a company that worked with DST Global on the Facebook deal.

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Milner, Gazprom, and VTB Bank all made a killing on the deals, selling their stakes after Facebook's 2012 initial public offering and when Twitter went public in 2013. Milner's funds, the New York Times notes, controlled more than 8 percent of Facebook and 5 percent of Twitter before the stakes were sold off.

Though the Russian government appears not to have used its stakes to affect the decision making at Facebook or Twitter, the revelation comes amid growing scrutiny of how Russian agents used the social networks to influence the 2016 election.

Facebook, Twitter, and DST Global did not immediately respond to requests for comment from VICE News. In interviews with ICIJ, Milner stressed that the Russian government entities were passive investors and that "it never even occurred to me back then that VTB Bank was not just another investor for us."

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