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Sensemaker: Pandora’s cave

Sensemaker: Pandora’s cave

What just happened

Long stories short

  • The US condemned China for sending nearly 100 military aircraft into Taiwan’s air defence identification zone in three days.
  • The whistleblower behind a series of Wall Street Journal Facebook exclusives was identified as 37-year-old Frances Haugen, a former product manager who said she didn’t hate Facebook but wanted to save it. 
  • A Russian actress and film director prepared to blast off to the International Space Station to spend a week there making a film.

Pandora’s cave

Another enormous data dump on the hidden wealth of the global elite dominates news coverage this morning in outlets that were privy to it, and doesn’t in those that weren’t. There are no earthshaking scoops from the material so far, but…

  • that doesn’t mean there won’t be – 11.9 million records will take years to study properly;
  • the Pandora Papers identify 330 politicians including 35 country leaders privately involved in a running battle between wealth and tax; and
  • they shine a light on one particular corner of the Caribbean – the British Virgin Islands.

The main stories so far:

King Abdullah of Jordan collects real estate like kids collect Pokémon cards, and wishes people didn’t know. He’s used shell companies to buy up large parts of a mansion block near Buckingham Palace in London, flats with views over the Potomac in DC, and, most strikingly, three adjacent oceanfront properties on the most desirable road in Malibu. The total cost – $106 million – is modest by billionaire standards but will concern Jordanians and development economists, who know better than most that Jordan’s main source of income is aid to help it support more than a million Syrian refugees. Jordan received $1.5 billion last year from the US alone. Where does the king get his money from?

Tony and Cherie Blair saved £312,000 in stamp duty on a London office for Mrs Blair by buying an offshore firm that owned the £6.45 million property, instead of the property itself. A representative said they’ll eventually have to pay more in capital gains tax than any savings in stamp duty – but that would only be the case if they sold the property. 

Mohamed Amersi, a noted donor to the British Conservative Party, was involved as a lawyer in a payment to the daughter of Uzbekistan’s dictator that the US called “a $220 million bribe”. Amersi’s client at the time (2010), the Swedish telecoms firm Telia, was fined $965 million by an American court. Anyone inclined to swat this aside as a long time ago and a long way away should bear in mind that the dictator in question, Islam Karimov, was one of the true ogres of the post-Soviet era. He wrecked the lives of millions and had dissidents boiled alive. His daughter, Gulnara Karimova, is thought to have been detained under house arrest by the current Uzbek regime, and subsequently jailed.

Svetlana Krivonogikh, allegedly a former lover of Vladimir Putin’s, has thrived since their alleged relationship. In 2003, when she was 23, she acquired a flat in Monaco worth €3.6 million through a layer-cake of shell companies including one, Radnor Investments, that also acquired a superyacht and other baubles for Putin’s good friend Gennady Timchenko. Forbes puts Timchenko’s net worth at $28 billion. The Guardian values Krivonogikh’s assets – including the Monaco flat, properties in Moscow and St Petersburg and a yacht of her own – at $100 million. 

So what? The Pandora Papers coverage is heavily caveated with acknowledgements that most of the money-hiding they reveal is legal. None of the 35 national leaders they mentioned is likely to be toppled. But as Barack Obama said of the Panama Papers in 2016, “the problem is that a lot of this stuff is legal, not illegal”. 

One of the most frequently-cited tax havens in the papers is the British Virgin Islands, a British Overseas Territory that proved enormously useful to the Panamanian law firm Mossack Fonseca before its demise following publication of the Panama Papers. Under pressure from London, the BVI has promised to publish a register of beneficial owners of the millions of shell companies it creates… by 2023. We’ll see.

Belonging identity, society, beliefs, countries

The people v Bolsonaro
Anti-Bolsonaro protesters took to the streets in 84 Brazilian cities on Saturday to demand the impeachment of a president they say is trashing the Brazilian economy after presiding over one of the world’s worst Covid responses. The demonstrations were led by trade unions foursquare behind Bolsonaro’s most potent challenger in next year’s presidential election, Luiz Inácio Lula da Silva (Lula). Thousands more protesters were there specifically to remember the nearly 600,000 Brazilians who have died from Covid. If elections were decided by street protest numbers Bolsonaro could take heart from the 125,000 who came out for him in São Paulo last month. He can still pull a crowd. But his approval ratings have slumped to 22 per cent compared with 44 for Lula, not least because of numerous investigations of his administration ordered by Brazil’s Supreme Court for spreading false information about the virus. 

New things technology, science, engineering

Wine robots
What happens in an advanced west European economy when the supply of cheap east European labour is curtailed by Covid and other factors? Do local workers fill the shortfall and local employers reward them with higher wages? Not in the Italian wine business. It’s investing heavily in grape-picking robots instead. The WSJ has a story about Tuscany’s Mirko Cappelli, who’s spent €85,000 on a grape harvester that saves him the bother of wondering whether his human pickers are going to show up. “It was a very hard decision for a small farm like ours,” he says. “But now when the grapes are ready I can go pick them. We don’t have to worry about finding workers.” Last month British fruit farmers started planning smaller harvests for next year after having to leave unpicked strawberries and broccoli to rot in fields for want of pickers.

The 100-year life health, education, living, public poliCY

Covid in Russia
​​The pandemic may be easing in parts of Europe but in Russia it has never been worse, despite a reasonably efficient vaccination programme. Last week the official daily death toll was at record levels four days in a row. It went up again on Saturday, to 890, and down only slightly today, to 883. The excess death figures – which are likely linked to Covid but not necessarily directly – are far worse. In August they were running at roughly 2,000 excess deaths a day. At some points last year Russia’s excess death numbers were running at five times its official Covid death numbers, while the disparity in European countries was negligible. Underreporting of Russian Covid deaths will deserve its own chapter in the history of the pandemic. 

Our planet environment, natural resources, geopolitics

EVs rule, almost
We are at an odd point in the conquest of the planet by electric cars. Everyone agrees it’s coming, but they still only account for 1 per cent of cars on the road. In certain affluent streets – in London, LA, Oslo – they’re in every parking spot. Head out into the real world and you can go days without seeing one, let alone a charging point. “The revolution is finally here,” the FT screams, and yet it isn’t. So what gives? Well, the FT is looking at projections, not present reality. And the projections are remarkable. Within four years a quarter of new cars bought in China and 40 per cent of those bought in Germany are expected to be battery electric. Car makers have invested $100 billion in electrification since the start of last year and expect to invest another $330 billion by 2026. Those that don’t make the switch are not expected to survive. We’re at an inflection point, the experts agree; precisely the point when the difference between change and rate of change is biggest. So who’s going to be the first EV Kodak?

Wealth investment, fairness, prosperity

Business Day
It’s Business Day at the Conservative Party conference. Rishi Sunak, the chancellor, will promise an extra £500 million to help people coming off furlough find jobs. That is 0.75 per cent of the total amount spent furloughing workers since the start of the pandemic. It won’t go far, or magic away the supply chain problems that are still causing queues at petrol stations and shortages of a range of consumables, from pasta to dog food. But why should it? To say government should set the terms of business and leave business to adapt to them is a perfectly coherent version of conservatism, and one this cabinet seems to favour. More substantial and potentially effective than the £500 million stopgap is the £2 billion Kickstart programme announced last year, which aims to subsidise 250,000 new jobs for young people by the end of this year. Mims Davies, parliamentary under-secretary of state for employment, says 76,900 people now have Kickstart jobs and another 196,300 jobs are available. Here’s the list by sector. It would be interesting to see what the 15,400 jobs approved for subsidy in ‘Creative and Media’, for example, actually consist of.

The week ahead

04/10 – army begins delivering fuel to petrol stations; new international travel system takes effect across the UK; 16 men appear in court charged with Halifax child sexual exploitation offences; trial begins for Dennis Hutchings, armed forces veteran charged with attempted murder of unarmed man during the Troubles, 05/10 – health secretary Sajid Javid addresses Conservative Party conference; Royal College of Midwives conference, 06/10 – Boris Johnson addresses Conservative Party conference; temporary weekly uplift to Universal Credit ends; Tesco plc issues half-year results, 07/10 – court hearing takes place in Derry/Londonderry for two men charged with murder of journalist Lyra McKee; ONS releases quarterly data on UK labour productivity, 08/10 – court hearing for former footballer Ryan Giggs, charged with assault and controlling behaviour, 09/10 – Co-operative Party holds annual conference

– jury trial begins in Ohio case against pharmaceutical companies over opioid pandemic; OECD publishes annual Latin American Economic Outlook, 05/10 – Facebook whistleblower, Frances Haugen, testifies at Senate hearing on protecting kids online; Russian Soyuz MS-19 due to launch to ISS with civilian participants including a movie director and actress filming The Challenge; 10 years since death of Apple co-founder Steve Jobs, 06/10 – Hong Kong chief executive Carrie Lam gives annual address; EU-Western Balkans summit, 07/10 – Tesla holds annual shareholder meeting, 08/10 – Nobel Peace Prize winner announced; Czech Republic parliamentary elections; Draconid annual meteor shower takes place worldwide, 09/10 – Donald Trump holds rally in Iowa; International Astronomy Day, 10/10 – Iraq parliamentary elections

Thanks for reading, and do share this around.

Giles Whittell

Xavier Greenwood

Produced by Phoebe Davis and edited by Xavier Greenwood. 

Photographs Panorama/BBC, Royal Hashemite Court, Ivan Abreu/SOPA Images/LightRocket, Yegor Aleyev\TASS via Getty Images