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Jordan's King Abdullah II listens during a meeting in Amman, Jordan, on May 26.POOL New/The Associated Press

Brian Milner is a former senior economics writer and global markets columnist for The Globe and Mail.

The latest leak of millions of offshore financial records, aptly named the Pandora Papers, provides yet another valuable glimpse into the murky world of international tax havens, offshore trusts, shell companies and other complex instruments designed to help the wealthy, powerful and connected protect their assets and keep their dealings secret.

Many of the hide-the-money conjuring tricks are employed legally by ordinary rich people and global companies to avoid hefty tax bills. But they also attract yacht-loads of shady cash from criminals laundering their ill-gotten gains, Russian oligarchs doing pretty much the same thing and corrupt political leaders hiding the vast sums they manage to accumulate on the job.

The question now is whether the embarrassing disclosures, which buttress growing demands from watchdog groups to put an end to a system that costs governments an estimated US$200-billion combined in lost income-tax revenue annually, will finally stir governments into the concerted action needed to stamp them out. That’s what should happen. But from what we’ve seen in the wake of previous outrages, and from what the Pandora Papers reveal, I wouldn’t take that bet.

Nearly 12 million files obtained by the International Consortium of Investigative Journalists from 14 financial services and legal firms prompted a two-year probe by more than 600 reporters in 117 countries. The ICIJ paints a depressing picture of what they uncovered: “In an era of widening authoritarianism and inequality, the … investigation provides an unequalled perspective on how money and power operate in the 21st century – and how the rule of law has been bent and broken around the world by a system of financial secrecy enabled by the U.S. and other wealthy nations.”

The data dive exposed the “financial secrets of 35 current and former world leaders, more than 330 politicians and public officials in 91 countries and territories and a global lineup of fugitives, con artists and murderers.” The full list of accountholders includes the usual crowd of celebrities, star athletes and a bevy of billionaires – including some of Russian President Vladimir Putin’s closest pals, the presidents of Ukraine, Ecuador and Kenya, and King Abdullah II of Jordan. Several of the politicians with hidden accounts have decried corruption and tax evasion in their own countries.

The immediate reaction to the third and largest such leak of tax-haven data since 2013 was predictable. Those named in the files are largely clueless or claim to be blameless, while officials responsible for protecting the public purse and safeguarding the integrity of their tax systems promise to look into the matter.

British Chancellor of the Exchequer Rishi Sunak said tax officials would examine the documents “to see if there is anything we can learn.” An unnamed senior official in the Biden administration told Politico that the U.S. President “is committed to addressing issues such as reducing offshore financial secrecy, making tax laws fairer and tightening loopholes to make it more difficult for leaders who steal from their people to hide their assets throughout the international financial system.”

I would have more faith in that assertion if I hadn’t heard similar sentiments expressed during the Obama years. Then there’s the troubling fact that although Washington gets information on assets held by Americans outside the United States, it has not signed on to the Common Reporting Standard developed by the Organization for Economic Co-operation and Development in 2014 to ensure that information on financial accounts is automatically shared with other countries for tax purposes. Which may help explain why South Dakota, of all places, has recently emerged as a major tax haven.

The ICIJ reports that when the Bahamas signalled that it would toughen its financial regulations in 2018, officials warned that Latin American clients would take their money elsewhere. One Bahamian lawyer lamented: “The winners of these new double standards are the U.S. states of Delaware, Alaska and South Dakota.” Indeed, the Pandora Papers reveal that “tens of millions of dollars” have been redirected from offshore havens in the Caribbean and Europe to South Dakota. More than a dozen other states now compete for similar business.

So, far from slowing the global flow of mainly U.S. dollars into tax havens, the modest efforts at toughening financial reporting rules and requiring greater disclosure of who owns what have merely succeeded in shifting the money to more welcoming homes, including right in the U.S. heartland.

That won’t keep politicians of every stripe and nationality from expressing genuine dismay at what’s been going on under their noses. It’s at times like these that I’m reminded of the police captain played by Claude Rains in Casablanca, who uses the pretense of illegal gambling to shutter Rick’s Café. “I’m shocked – shocked to find that gambling is going on in here!” he declares – just as a croupier hands him his winnings.

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