Earlier this year, President Joe Biden pledged to lead an international effort to clean up the dirtiest corners of the world’s financial system. It turns out he may have to start in the American midwest.
The Washington Post revealed the extent of American hypocrisy this week when the paper published findings from a year-long investigation into more than 11 million confidential documents dubbed “The Pandora Papers.” The records—leaked from financial institutions around the world—show how foreign politicians, business tycoons, and billionaires “moved money and other assets from long-established tax havens to U.S. trust companies.”
The story starts seven years ago in South Dakota, where “a little-known financial firm [Trident Trust] … extended an invitation to the world’s elite.” Among those who answered the call were people “accused of fraud, bribery or human rights abuses in some of the world’s most vulnerable communities,” the story states.
In the paragraphs that follow, writers detail the heartbreaking offenses committed by some of Trident’s most prominent clients—a Colombian textile magnate, an orange juice mogul, and (indirectly) a sugar producer in the Dominican Republic.
Although there is no evidence in the Pandora Papers that these individuals were hiding money generated from criminal activity, “It has become abundantly clear that our national interests are really dependent on keeping that kind of money out,” Josh Rudolph, a member of the National Security Council staff in the Obama and Trump administrations, told the Post.
“We fortify thugs and crooks, fail to uphold our values, and fuel popular resentment against America.”
The Post also describes how citizens of the United States have benefited from the nation’s flexible and secretive trust laws. About midway through the story, one father recalls his unsuccessful fight to get child support payments from his ex-wife, whose money was held in trust by Trident.
In America’s decades-long race to relax financial regulations, South Dakota emerges as the clear winner, with 81 trusts sheltering more than $360 billion. But Florida, Delaware, Texas, and Nevada are also among the nation’s worst culprits, with a heap of relaxed laws that helped America overtake Switzerland last year in a ranking of countries “most complicit in helping individuals to hide their finances from the rule of law.”
The Post describes how the expansion of the trust industry began in the 1980s and ’90s, with state legislators leaping at the chance to enact more permissive financial regulations, partly as a way to help boost local economies. The writers go on to describe how trusts “can be complex legal instruments with a limited paper trail and strict secrecy rules,” subject to limited oversight and few state or federal rules.
It might come as a surprise to some Americans that our country is just as guilty as the Cayman Islands when it comes to hiding the money that’s claimed by the one percent. But the Post’s incisive reporting leaves no room for doubt. Perhaps, after reading the multitude of Pandora Paper stories, we’ll all be more willing to question the “shining city upon a hill” narrative.
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Follow Staff Writer Jasmine Gallup on Twitter or send an email to [email protected].