Why we need to be more like France and Iceland. A conversation I had with my sister.
So, The Panama Papers are basically a leak of accurately 11.5million files from a database of the world’s FOURTH biggest offshore law firm, MOSSACK FONSECA. The leak came from an anonymous source and was obtained by a German newspaper Süddeutsche Zeitung, which then went on to share this mass pile of info to the ICIJ – The International Consortium of Investigative Journalists, who work with good ol’ chums, the BBC and the Guardian.
Sister: M-mmmossack Fonscnhe?
MOSSACK FONSECA, is a law firm based in Panama, whose services include offshore bank accounts, with a fee that is collected annually; other services include wealth management. It has more than 40 officers and about 600 workers worldwide.
Sister: WHERE IS PANAMA?
Panama is a beautiful tax haven, nestled just in between Costa Rica and Columbia in South America. Panama is known for its beautiful beaches, lush and dense rainforests, and its wealthy culture. It is now slightly more famous for this piece of news; the PANAMA PAPERS.
Sister: Uh, what’s a tax haven?
A tax haven is simply a country that has a low tax liability compared to other countries, or in some cases, no taxes whatsoever. Some countries have been known to set themselves up as tax havens in order to encourage huge, wealthy, international corporations to register themselves there. Some countries that are not tax havens have loopholes in their tax codes in order to allow certain people and companies to place some of their assets in an account in a tax haven. Tax havens also include the Isle of Man, Cyprus, Switzerland, Jersey and Guernsey!
Sister: Ok, I feel you, what’s the Panama Papers saying?
These documents have basically revealed the ways in which the rich and wealthy can and have exploited secretive offshore tax regimes. Twelve national-
Sister: Wait, can you explain the tax avoidance/evasion thing first?
Yeah, sure, ok. So we all pay taxes, those taxes fund a lot of things, specifically in the UK, things such as the NHS, our roads, police, education, fire department, environment, the list is endless.
In a nutshell; these papers show that at LEAST for the past 40 years, more than 130 rich, famous and politically powered people have hidden their fortunes in anonymous, offshore (and legal) companies, allowing them to dodge tax laws and make major money movements in the dark, where apparently, nobody can see. Basically, the rich have been secretly cheating international law – the bigger picture is WHO exactly is involved.
Sister: WHOOOOO? Tell me.
A lot of world leaders; including, Ukrainian President Petro Poroshenko, Saudi Arabian monarch King Salma, former Prime Minister of Iraq Ayad Allawi and Iceland Prime Minister Sigmunder David Gunnlaugsson – who walked out of an interview about the papers, and pretty much quit his job the very next day.
Bonus people! – Movie legend Jackie Chan, and even footie star Lionel Messi has also been named in the Panama Papers leak.
Sister: I can imagine Putin’s in there? He just seems like that type of guy.
Funnily enough, the Russian President Vladimir Putin is not directly named in any of the documents or reports, HOWEVER, the leak shows that there is a $2billion ring of accounts stretching through several of his close associates, it also shows how it funnels into Putin’s family.
Sister: Who else? What about the USA? Anyone?
Shockingly enough, not one single name from the USA was found, not even Donald Trump. No American citizens are directly tied to suspected wrong-doing.
Sister: What about the UK? WHAT ABOUT US?
Mossack Fonseca is the 4th biggest provider of offshore services, it has acted for more than a whopping 300,000 companies. Sad to say this, but there is a pretty strong connection with the UK and the Panama Papers, MORE THAN HALF of the companies registered in British-administered tax havens, as well in the UK.
It needs to be noted that David Cameron’s late father, Ian was named in the Panama Papers. Ian Cameron ran an offshore fund that avoided EVER having to pay tax in the UK, by hiring a small clan of Bahamas residents – to sign its paperwork… He was the director of Blairmore Holdings Inc, an investment fund run from the Bahamas, but is named after the family’s historic, ancestral home in the UK, which managed 10s of MILLIONS of pounds for other wealthy families. The fund was founded in the 80s, and still exists today; it has been confirmed that in 30 years, the company has not paid a single penny of tax in the UK despite its huge profits.
Sister: so did Big Dave have anything to say about this?
As much as in a speech he delivered last year in Singapore, the PM has said that only ‘the corrupt criminals and money launderers’ take advantage of the system and company structures. After the news came out about his late father’s name being mentioned, he stalled for about 3 days, and only gave vague statements, such as ‘it is a private matter’ the PM spoke saying that he DID own shares in the tax haven fund, which he did sell for £31,500 just before getting elected back in 2010. He in fact, did make a profit from this too.
Sister: Well, well, well… that’s naughty of him. Shouldn’t he resign?
Technically, what he has done isn’t actually illegal. The legal loopholes and the way the international laws work mean that what these people have done, is technically legal.
Sister: BUT IT’S WRONG.
I know. See, as soon as the leak came about, Iceland’s Prime Minister was named, thousands upon thousands on the tiny isle gathered in protest outside parliament, with the movement of a no-confidence vote against their government and their Prime Minister. Now, the 2008 global financial crisis hit Iceland, REALLY, REALLY HARD. However, since then, Iceland has a hugely successful recovery, and their economy has gained strength once again. For something like this to happen, their own country’s leader, it sparked anger. Within the day of the leak of the Panama Papers, the PM stepped down.
However, David Cameron hasn’t done anything illegal; however, it does bring questions about what he knew about these offshore accounts even when he was an MP.
It raises further questions about his own transparency as a politician, not only him, but everyone that is named on the huge 2.6TB worth of data.
Sister: Is this like a WikiLeaks thing?
Yes, extremely similar, however, the sheer size difference between the Panama Papers and the WikiLeaks files is insane. To put it simply; imagine the WikiLeaks files are in proportion to country size, so WikiLeaks is the size of the UK, right? The Panama Papers data roughly would equate to the size of Canada, USA, the whole of South America and maybe throw in Africa in the combo.
Sister: Can I find these files?
The good ol’ boys and girls at ICIJ are actually going to release the leak’s database on the 9th May 2016; revealing all the secrets of the offshore companies and the people that are behind them.
Sister: This world depresses me even more.
Oh yep, it’s awful. These papers even have a connection with the crisis in Syria.
Over the past 3 years, Syria’s air force rained down missiles and barrel bombs onto 21,000 civilians, onto homes, businesses and even hospitals. These events, as we all know, have been very well documented, but not so much in regards to offshore finance. Some companies mentioned in the Panama Papers, have been accused of selling fuel to the Syrian air force, which in result; pretty much a war crime. In 2014, the USA and the UK issued bans on doing any business with these companies, but now, this Mossack Fonseca have shown just how these businesses operated. Over 300 journalists worked day and night to go through these documents, highlighting a list of clients that have been involved in bribery, tax evasion, financial fraud, and even drug trafficking.
Sister: Oh Jesus. (We were raised Catholic) Are there victims of all this?
You betcha! Documents show that in Russia, businessmen would kidnap young girls, some as young as 13-years-old, raped them and sold them onto others. One of the alleged ringleaders of this, was named in the Panama Papers, however, Mossack Fonseca did find about their client, and found him to be a paedophile, they decided that they were not legally obliged to report his investments and offshore businesses with the authorities.
Example 2: In Uganda, an oil prospect and oilfields company paid Mossack Fonseca to assist with avoiding paying $400million in taxes. It was easy. All they did was change one tax haven’s address to another. Uganda is a country, where on average, most families live off LESS than $1.25 a day, Uganda fought for years to prosecute the company, but nothing really came about of it. Meaning hospitals that were next to the oilfields lacked funds for basic equipment, patients had to sleep on floors, and even having to ask patients to bring their own medicine to the hospital.
Sister: That’s actually insane. It’s not right and it’s not fair.
I know, I know. It does raise the question of morality. According to the US economist Gabriel Zucman an estimated £5.3trillion is stashed in tax havens. The loss of global tax revenue is at about $200billion per year. It has been said that these sort of figures could solve a lot of the world’s problems, such as world hunger.
Sister: UGH. I am going to go watch Harry Potter to cheer myself up.
Funnily enough, Mossack Fonseca often used fake names for accounts, including ‘Harry Potter.’
Sister: Great. Thanks for that. I am gonna discuss this all when I get to college in the morning, I’m sick of the girls talking about Kimmy K.
Discussions such as this one that I had with my younger sister are generally quite uncommon amongst young people within the UK. It is sad to think that it is a rarity to have a philosophical conversation amongst peers, let alone approach the topic of Politics.
This is so different compared to what happens in Paris on a nightly basis. Since the end of March, hundreds gather every evening in the Place de la Republique in the city, with a self-styled ‘popular assembly’ in which all those attend share views about politics and the state of what the world is in. It is called Nuit Debout (or Up All Night); speakers stand in line patiently, and quietly and take it in turns to take up the microphone for an allotted time of five minutes. Before them sits 100s of people sat on the floor when the sun has gone down, where the young audience occasionally responds with a cheer or boo. The majority of speakers and listeners tend to be students, feminists are often in a large huddle and there is even a TV crew (TV Debout!)
The talks don’t necessarily change anything within French politics, however, the people who are running Nuit Debout are seriously representing what a young, political engaged generation should be like. It is the essence of democracy. It is the movement of discussion of not only politics but values, philosophies, thoughts, feelings, and ideologies. It is just the beginning of a wider discussion that is yet to happen, it is the refusal to sit and just accept what happens, despite whether you are angered by it. It brings communities together, and no discrimination or prejudices are welcome. It is the most determined movement that has been seen in years, and I am quite frankly appalled at the lack of engagement within the UK in comparison to what happens in Paris on a NIGHTLY basis, when we can’t even get more than half of 18-24-year-olds to vote in the General Election.
Be like Iceland, and be like France. Wake up people.
There is an accompanying podcast to help with any loose ends I may not have covered in this article. Hosted by me, Siobhan Bowater, with my co-presenter Alex Thompson, where we question what is morally right, and we give you a timeline of the Panama Papers scandal.