A charred forest before being bulldozed in Bolivia
Panama Papers investigation has revealed that the Bolivian
agribusiness sector, long plagued by illegalities, has made extensive use of offshore
accounts to avoid paying taxes.
Twenty Bolivian agribusinesses set up offshore companies
between 1994 and 2015, outstripping any other sector of the country’s economy.
Analysis by Earthsight shows
that the use of offshore companies was accompanied by a dramatic rise in
illegal deforestation in the department of Santa Cruz, where all twenty of the
firms were based. The use of secrecy jurisdictions, while not in itself
illegal, may have exacerbated the expansion of illegal agriculture by reducing
tax burdens and increasing the profitability of the sector.
Growth in the use of offshore firms was triggered by two
circumstances: the election of self-described socialist Evo Morales; and rising
commodity prices, especially soy.
According to data
from Bolivia’s Economy Ministry, soybean prices first peaked at $554 per
ton in 2007, then peaked again at $623 per ton in 2012. This mirrors the years
during which the largest number of offshore companies were created.
Not only were agribusinesses earning more money during this
period, but they were facing intensified pressure to pay their taxes. Following
the election of Morales in 2006, Bolivia’s tax authorities began auditing the
past affairs of companies, resulting in a 24% increase in tax receipts in 2008. Between 2010 and 2011,
receipts grew by a further 34%.
Earthsight’s own analysis reveals that a rapid rise in
illegal deforestation accompanied the increased use of offshore companies by
According to the Bolivian forest enforcement agency ABT,
118,000 hectares (ha) were cleared illegally in 2012, 158,000ha in 2013, and
a further 118,000ha in 2014. During that three-year period, 85% of all deforestation in Bolivia was illegal. 70% of the illegal
deforestation took place in the department of Santa Cruz.
2016 witnessed a four-fold
spike in the number of land fires recorded by the agency, commonly
used to clear land for cattle and crops.
More recently, a 2017 investigation by
US NGO Mighty Earth documented several instances of deforestation for
industrial soy planting in Santa Cruz, finding “massive, out-of-control fires
raging through the landscape.”
The Panama Papers investigation, conducted by the
International Consortium of Investigative Journalists in conjunction with
Bolivian newspapers El Deber and Los Tiempos,
found that 127 offshore companies were set up by Bolivian related companies
between 1994 and 2015. 93% were established after Morales came to power
in 2006. After agribusiness, 18 were dedicated to importing goods, 15 to
mining, and 11 to insurance and banking.