Who’s paying for Panama?

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By  Sven Hugo.

The world’s richest and most influential are embroiled in a tax avoidance scandal following the biggest data leak to date, including more than 11 million files, from the Panama-based law firm Mossack Fonseca.

The so-called Panama Papers revealed that the likes of Vladimir Putin, football star Lionel Messi, British Prime Minister David Cameron’s late father, and even Zuma’s nephew  Khulubuse Zuma, among hundreds of others, may have been, and are currently involved in tax avoidance strategies carried out by Mossack Fonseca. The names of big banks like USB and HSBC also appear in these papers.

It seems that billions of foreign currency is being channeled into offshore ‘shell companies’ set up by the law firm to hide, and in some instances launder, billions of dollars of the rich, essentially enabling them to avoid tax in their own country, if not to hide money for nefarious reasons. In many instances this is totally above board, and as many of those named in the leak have mentioned, they are doing nothing illegal. The problem is, however, that by avoiding tax in their own country, the onus comes to rest with the middle class of the population to carry the majority of the tax burden. It may not be illegal, but it surely just doesn’t sit right.

According to the International Consortium of Investigative Journalists (ICIJ), “[The leaked data] allows a never-before-seen view inside the offshore world — providing a day-to-day, decade-by-decade look at how dark money flows through the global financial system, breeding crime and stripping national treasuries of tax revenues.”

Tax issues aside, in many instances the dealings of Mossack Fonseca was plainly illegal. It came to light that the company helped the, now scandalised and convicted, former Fidentia boss J. Arthur Brown launder money, belonging to deceased mineworkers’ families no less, via these shell companies. In another instance, the company helped a suspected pedophile launder money while he was on trial. Many African heads of state also make use of these tax evasion networks.

Mossack Fonseca has also been accused of backdating financial documents for its clients, the earlier the date the more the fee, to which the company again replied that it’s doing nothing illegal…

The data was originally leaked to the German newspaper Sueddeutsche Zeitung, which then called in the help of the ICIJ, who has assisted with organising the dissemination of similar leaks in the past.

The leak also comes at a time when international cybercrime is dramatically on the rise, urging companies to become increasingly vigilant of information leaks. However, some leaks seem to be more justified than others.

It’s going to be an interesting, and messy, few months ahead while journalists and crime units sift through these files. Are you not entertained?