Making it complicated


According to the Pandora Papers - an international journalistic investigation into offshore activities by the world's rich and powerful - Corinna Larsen named Spain's former king Juan Carlos as a beneficiary, in case of her death, of an initiative set up in 2006 called the Spanish-Saudi Investment Fund (SSIF). The latest development, which apparently shows that Larsen made plans in 2007 for Juan Carlos to receive 30% of the fund's income, raises questions about the true purpose of the Spanish-Saudi concord: was it merely a front for offshore finances, or genuinely intended to improve infrastructure in Saudi Arabia and North Africa?

A former government minister involved in setting up the SSIF has told El País newspaper that it collapsed in 2010 because Saudi Arabia wasn't providing sufficient funds. But cash wasn't a problem in 2008, when the Saudi royal household transferred 100 million US dollars to a Swiss bank account held by a Panamanian company called Lucum, the key beneficiary of which was Juan Carlos. The emeritus monarch is then said to have transferred 65 million of this to Larsen in 2012, who then used part of the money to purchase and refurbish apartments in London and Switzerland. Was this money laundering, or entirely legitimate use of a very generous gift?

The question arises - if the Spanish-Saudi Investment Fund was meant for developing infrastructure in Saudi Arabia and North Africa, to the mutual benefit of recipient countries and Spanish lenders, then why was 100 million dollars donated by the Saudi royal household to a private account linked to a Panama firm of which Juan Carlos was the prime beneficiary?

It was the multi-layered complexity surrounding this mysterious payment that aroused the suspicions of Swiss and Spanish tax authorities: the fact that the money wasn't declared in Spain, that the SSIF was registered in the ultra tax-competitive Channel Islands and that the Saudis, supposedly unable to meet their end of the original financing deal, nevertheless made a 100 million dollar payment to Juan Carlos via Panama and Switzerland, a chunk of which was later transferred to Larsen.

"Ah well," you might think, "this was such a long time ago. Does it really matter anymore?" This is the main reason why Spanish investigators are apparently preparing to shelve their enquiries into the country's former king, citing the statute of limitations and the fact that the alleged misdemeanors occurred when Juan Carlos, as reigning monarch, had legal immunity.

The key point is that no one had a clue what was going on at the time, that no one even suspected anything untoward was happening when Juan Carlos was on the throne. And that's why the offshore finance industry - a shadowy realm in which opacity and complexity are the key commodities - is such big business.