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 US and global campaigns to crack down on these global secrecy jurisdictions and practices.
Starting with an anonymous leak to the German newspaper Süddeutsche Zeitung 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, the president of Ukraine, and the prime ministers of Iceland and 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 US major dailies is scant, perhaps due to the conspicuous absence of US 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 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 US 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 8 percent of the world’s financial wealth. He believes the use of tax havens has grown 25 percent from 2009 to 2015. Zucman estimates that US citizens have at least $1.2 trillion stashed offshore, costing $200 billion a year worldwide in lost tax revenue from wealthy individuals. US multinational corporations underpay their taxes worldwide by $130 billion by engaging in corporate tax avoidance.