By Chuck Collins, The Nation, April 5, 2016
This massive leak will boost the global movement to recapture trillions of the hidden wealth of nations.
As global wealth concentrates in fewer hands, the world’s wealthy are shifting trillions to offshore havens to escape taxation, accountability, and publicity. The just-released Panama Papers—filled with titillating details involving the shady dealings of world leaders and violent traffickers of drugs and slaves—should give a strong boost to U.S. and global campaigns to crack down on these global secrecy jurisdictions and practices.
Starting with an anonymous leak to the German newspaper Suddeutche Zietung and shared with a consortium of journalists, the Panama Papers initially identify 140 politicians and public officials using off-shore schemes.
Leaders named with offshore wealth include current and former members of China’s politburo, three members of the UK House of Lords, and the presidents of Iceland and Ukraine, and the prime minister of Pakistan. Others include movie star Jackie Chan, Argentinian soccer star Lionel Messi, and 29 billionaires from the Forbes global wealth list.
Initial media coverage in U.S. major dailies is scant, perhaps due to the conspicuous absence of U.S. citizens named in what The Guardian calls the “first tranche” of disclosures. But as more findings are revealed over the coming months, it’s hard to imagine that prominent American names won’t be on the lists.
Russian president Vladimir Putin’s close associates [sic] are heavily implicated. Kremlin spokesman Dmitry Peskov was quick to counter-attack, arguing that the motive behind the leak was political, not journalistic. “Putin, Russia, our country, our stability and the upcoming elections are the main target, specifically to destabilize the situation.” Peskov charged that former CIA and U.S. State Department had even helped analyze the documents.
The papers implicate Iceland’s Prime Minister Sigmundur David Gunnlaugsson as secretly owning millions in bank bonds during the 2008 collapse of Iceland’s banking system. He is facing calls for his resignation.
The unprecedented year-long journalistic effort involved more than 370 reporters from 100 media organizations, coordinated by the International Consortium of Investigative Journalists (ICIJ). The primary sources were leaks from Mossack Fonseca, Panamanian law firm with more than 35 offices around the world. Journalists sifted through transactions involving 214,488 off-shore corporations covering 40 years of activity.
Gabriel Zucman, author of The Hidden Wealth of Nations: The Scourge of Tax Havens and assistant professor at UC Berkeley, estimates that $7.6 trillion in individual assets are in tax havens, about eight per cent of the world’s financial wealth. He believes the use of tax havens has grown 25 per cent from 2009 to 2015. Zucman estimates that U.S. citizens have at least $1.2 trillion stashed offshore, costing $200 billion a year worldwide in lost tax revenue from wealthy individuals. U.S. multinational corporations underpay their taxes worldwide by $130 billion by engaging in corporate tax avoidance.
The Panama Papers reveal the widespread use of shell corporations in the British Virgin Islands, the Seychelles in the Indian Ocean, and Panama. Historically, North American investors prefer tax havens in the Caribbean or Panama, with an estimated 54 percent of offshore investments going to those areas. Other popular tax dodging destinations were Switzerland, Ireland, and the Channel Islands, off the coast of England.
Transnational corporations also have an estimated $2 trillion in assets hidden in offshore tax havens or stashed in subsidiary corporations in countries with minimal or no corporate taxation.
While the use of offshore systems are not always illegal, they are often abused to dodge taxation, launder funds from criminal activity, and allow public officials to conceal assets from publicity and scrutiny. As the Suddeutsche Zeitung wrote, a “look through the Panama Papers very quickly reveals that concealing the identities of the true company owners was the primary aim in the vast majority of cases.”
This publicity will hopefully bolster the global movement against tax haven abuse, including the work of U.S. networks such as Americans for Tax Fairness and the Financial Accountability and Corporate Transparency (FACT). The FACT Coalition has been advocating for transparency reforms such as disclosure of “beneficial ownership” of shell corporations and entities. It is pressing for passage of “The Incorporation Transparency and Law Enforcement Assistance Act” (H.R. 4450 and S. 2489) that would require all American companies, with a number of exceptions, to disclose the real people who own or control them when they are formed, and to keep that information updated.
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FACT Coalition member Global Witness urges U.S.-based activists to consider the considerable leverage we have in this country to change this system. The United States itself is a major tax haven, one of the easiest places to set up an anonymous shell company to move ill-gotten gains around the world.
And abuses of the offshore system are increasingly convenient. For $2,500, an individual can now purchase the “Complete Offshore Package” that includes an offshore corporation in Belize, an offshore trust in the Bahamas, and offshore Bank account at the Global Bank of Commerce in Antigua, and mail forwarding for one year. After the set-up, this will only cost $1,000 a year.
Systematically confronting offshore tax havens will require legislative action, international diplomacy, and sanctions and penalties aimed at both banks and tax-haven jurisdictions. Nations must establish treaties requiring uniform disclosure and transparency, both of banks and capital flows. The United States has enormous responsibility and leverage in fixing this broken system.
The Panama Papers are a boost to the global movement to stop tax-haven abuse and recapture trillions of the hidden wealth of nations. This story isn’t going away anytime soon.
Chuck Collins, the author of ’99 to 1: How Wealth Inequality Is Wrecking the World’ and What We Can Do About It’ (Berrett-Koehler), directs the Institute for Policy Studies program on inequality and the common good. With Sam Pizzigati, he edits Inequality.Org.
Bombshell revelations from the Panama Papers show just how much we need financial transparency, by James Carden, The Nation, April 4, 2016
… Though this is a massive data leak, the American mainstream media’s reaction largely focused on Russian President Vladimir Putin. His photo accompanied the initial stories on the Panama Papers in The New York Times, The Washington Post, Time and, of course, The Daily Beast.
Luke Harding’s précis of the report in The Guardian breathlessly proclaimed that “A $2bn trail leads all the way to Vladimir Putin. The Russian president’s best friend—a cellist called Sergei Roldugin—is at the centre of a scheme in which money from Russian state banks is hidden offshore. Some of it ends up in a ski resort where in 2013 Putin’s daughter Katerina got married.” [emphasis added].
The questionable relevance of that last revelation aside, the problem here is that if the report “led all the way” to Putin, it would’ve, well, named him and not just his “associates.” In any case, the revelation that Putin and his St. Petersburg clique have for years raided the Russian treasury is about as newsworthy as revelations that Donald J. Trump is mendacious. Indeed, the shadowy $2 billion linked to Putin through his associates would seem to pale in comparison to what he has been previously accused of siphoning off. Both Harding and the Russia scholar Karen Dawisha have previously alleged that Putin is worth upward of $40 billion.
Perhaps more interesting are the revelations that British Prime Minister David Cameron’s father, six members of the House of Lords, and three former Tory MPs have been named in the Panama Papers…
Panama Papers cause The Guardian to collapse into self-parody, published in Off Guardian, April 4, 2016
The revelations are devastating for Vladimir Putin… except they have nothing to do with Vladimir Putin
How offshore banking is costing Canada billions of dollars a year, by Robert Cribb and Marco Chown Oved, Toronto Star, April 4, 2016
The hidden identities of 350 Canadians with offshore tax haven investments have been revealed in the private database of one of the world’s leading shell company registration firms, according to a Toronto Star analysis of a massive leak obtained by the International Consortium of Investigative Journalists and the German newspaper Süddeutsche Zeitung.
Obscured by figurehead directors, untraceable money transfers and anonymous company ownerships, these Canadians paid for the secrecy promised by Mossack Fonseca, a Panamanian law firm renowned internationally for establishing shell companies.
Much of this is perfectly legal. For some international business transactions, offshore company registration is a logical choice. And there are international laws and treaties facilitating the legal flow of money into tax-friendly jurisdictions. But it comes at a tremendous cost to the public interest.
Currently, Canadians have declared $199 billion in offshore tax haven investments around the world, according to Statistics Canada.But experts say that figure is a small fraction of the Canadian offshore wealth that goes undeclared. The precise annual cost to Canadian tax coffers is unknowable. But credible estimates peg Canada’s tax losses to offshore havens at between $6 billion and $7.8 billion each year.
Tax avoidance — the legal movement of wealth to offshore bank accounts in order to minimize tax burdens — is a grey area. But there is a much darker element…
Note by New Cold War.org: The Toronto Star publishes an article on April 4, 2016 titled, ‘Secret records reveal Vladimir Putin’s network of money men‘. The article is part of the newspaper’s ‘Panama Papers’ coverage. The article is authored by Jake Bernstein, Petra Blum, Oliver Zihlmann and David Thompson of the International Consortium of Investigative Journalists. Filled with speculative comments about the Russian president, the article nonetheless reports: “Nowhere in the Mossack Fonseca [Panama law firm] files is the name of the Russian president, a former KGB spymaster, mentioned.”
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