Most of us remember the Pentagon Papers. It was a top-secret document commissioned by then U.S. Secretary of Defense, Robert McNamara, to examine the US involvement in Vietnam from the end of World War II until the ‘present day’, which at that time was 1968. Daniel Ellsberg, who was a strategic analyst for the Rand Corporation and worked with the Department of Defense on this effort, became disillusioned with what the public was being told about the war, copied large portions of the document and eventually leaked this document to The New York Times in 1971 when he was a senior researcher at MIT. There were all kinds of ramifications and it eventually led to a major Supreme Court case where the court ruled in favor of the New York Times and allowed them and others to publish the Pentagon Papers. Daniel Ellsberg was portrayed as both a hero and a villain. He and an accomplice were indicted by the US government but the charges were dismissed when the infamous Watergate ‘plumbers’ broke into the office of Ellsberg’s psychiatrist to get dirt on him.
Why is this relevant today? This past Sunday an organization called the International Consortium of Investigative Journalists (ICIJ) published something they are calling the ‘Pandora Papers’. This consists of almost 12 million financial documents that exposed the secret offshore accounts of 35 world leaders, including current and former presidents, prime ministers and heads of state as well as more than 100 billionaires, celebrities, rock stars and business leaders. Publishing this document is just the tip of this particular ice berg. There will be a lot of fallout.
I have been following this organization, ICIJ, for some time. They first came to prominence when they published the Panama Papers in 2016. Those papers exposed a huge network of offshore companies created by Panamanian law firm Monssack Fonseca, for very wealthy and well-known clients from numerous countries. Some of those shell companies were used for money laundering and tax evasion. The scandal around the publication of these documents led to the dissolution of Monssack Fonseca and launched a number of investigations.
More recently, ICIJ published the Luganda Leaks which exposed the corruption that made Isabel dos Santos Africa’s wealthiest woman and left oil – and diamond – rich Angola as one of the world’s poorest countries. A number of investigations have been launched and many of her assets have been frozen pending these investigations.
And now we have the Pandora Papers. One of the most interesting things brought to light in the Pandora Papers is the fact that our very own South Dakota is ranking right up there with some of the most notorious offshore tax havens in the world because of its banking and trust secrecy laws. You always read about how the United States is trying to crack down on US citizens being able to use offshore tax havens to shelter income and avoid taxes and we have one of the most notorious right in our own back yard. I’m sure that’s a fact that Kristi Noem, the governor of South Dakota, is very aware of and very proud of. (And she wants to run for president – think about that!)
“The state of South Dakota has joined the likes of familiar offshore tax havens, including the British Virgin Islands, Seychelles, Hong Kong and Belize with South Dakota trusts quadrupling in size in the space of ten years to $360 billion.”1
So, why should you care? A few days ago, I talked about how the United States is already an ‘entitlement state’, it’s just that the entitlements are for the rich and not the average American. This publication of the Pandora Papers just confirms that. Remember, every dollar in tax that wealthy individuals don’t pay, all of the rest of us pay.
The IRS chief said that there is an estimated $1 trillion of uncollected taxed every year. A lot of that money lives in places like trusts and shell companies constructed in places like South Dakota. I don’t begrudge anyone being rich and successful. However, I get really angry when these same people talk about an ‘entitlement state’ at the same time they are able to avoid paying their fair share of taxes through both legal loopholes they have available and by shadier means such as using offshore (or South Dakota) tax havens, shell companies and secret trusts.
A robust democracy is dependent upon transparency. It is important for these journalists to continue this work until there is no longer anywhere for wealthy people around the world to hide huge sums of money and avoid paying their fair share of taxes. When these issues are brought to light, it is incumbent upon the involved governments to launch investigations, pass laws to end these practices and prosecute those involved in illegal activities. Failure to do so undermines the whole concept of a government ‘for the people’ – not that the uber wealthy really care. The bottom line is that if ‘we the people’ want a robust democracy, we will have to work for it.
When Supreme Court Justice Potter Stewart issued an opinion on the ruling in the case of the Pentagon Papers, he summed it up nicely:
“In the absence of the governmental checks and balances present in other areas of our national life, the only effective restraint upon executive policy and power in the areas of national defense and international affairs may lie in an enlightened citizenry—in an informed and critical public opinion which alone can here protect the values of democratic government.”2