Lebanon politicians own most offshore companies in the world, Pandora Papers find

Lebanese politicians have been found to have the most offshore companies in the world, followed only by the UK and Iraq.

After a leak of millions of confidential files, the International Consortium of Investigative Journalism (ICIJ) published a breakthrough investigation named the Pandora Papers yesterday, revealing the vast network of politicians and elites who have been hiding wealth in offshore tax havens where they registered companies and accounts.

Over 330 politicians and officials in 91 countries were discovered to have links to the offshore havens, where they invested their money and evaded tax, including 35 current and former leaders.

Dominating those figures were those from Lebanon, most prominently the recently-appointed Prime Minister Najib Mikati and the Central Bank Governor Riad Salameh. According to the papers, the billionaire Mikati owns a Panama-based offshore company which he used for the purpose of purchasing $10 million worth of property in Monaco.

Mikati’s son Maher was also implicated in the investigation, as he owns two companies in the British Virgin Islands which enabled him to purchase an office for the family’s international investment company – the M1 Group – in central London.

In a statement Mikati responded to the leaks by assuring that his family business and all of his financial dealings were in line with international law, that his fortunes were amassed prior to his involvement in politics and that the M1 Group and its subsidiaries “have upheld a separation between public and private.”

Insisting that the business was “compliant with global standards,” he said that auditors were regularly consulted and that his assets were disclosed to the Lebanese Constitutional Council.

How did Lebanon’s financial meltdown happen?

The misunderstanding, the prime minister claimed, was with the Pandora Papers providing the notion that all or most of the figures are suspicious simply “by the mere fact of being listed in there.” He condemned that viewpoint, saying that it “goes against the free-market business practices and good governance…principles that the Mikati family defends.”

Maher told Al Jazeera that “using offshore entities could be considered as forms of tax evasion for US and EU nationals but this is not the case for Lebanese nationals.” He echoed that point to the ICIJ, claiming that in Lebanon it is considered a normal practice and is done “due to the easy process of incorporation” instead of the desire to evade taxes.

Among other prominent Lebanese figures who were listed in the leaks were the former prime minister Hassan Diab, former MP Neemat Frem, former minister and chairman of Al-Mawarid Bank Marwan Kheireddine, and the former Central Bank Deputy Governor Mohammad Baasiri.

Despite not being illegal under international law, the fact that offshore companies and accounts are often tied to tax evasion and the hiding of wealth makes it an indirect form of corruption. The revelations of the Lebanese politicians’ and figures’ widespread use of the practice comes at a time when the country is undergoing a series of political and economic crises.

Following the Beirut blast last year and political turbulence, Lebanon’s currency has plummeted sharply and shortages of essential goods such as fuel have ravaged the country. The current is suffering from what the World Bank has described as one of the sharpest depressions in modern times. According to the United Nations, almost three quarters of the population in Lebanon are now living in poverty.

The Pandora Papers are seen by many as further proof of the Lebanese political class’ involvement in rampant corruption as much of the country suffers.

By ignoring Lebanon’s fuel crisis, the Gulf States let Hezbollah lead the way