The Panama Papers are an unprecedented leak of 11.5m files from the database of the world’s fourth biggest offshore law firm, Mossack Fonseca. The records were obtained from an anonymous source by the German newspaper Süddeutsche Zeitung, which shared them with the International Consortium of Investigative Journalists (ICIJ). The ICIJ then shared them with a large network of international partners, including the Guardian and the BBC.
What do they reveal?
The documents show the myriad ways in which the rich can exploit secretive offshore tax regimes. Twelve national leaders are among 143 politicians, their families and close associates from around the world known to have been using offshore tax havens.
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.
Among national leaders with offshore wealth are Nawaz Sharif, Pakistan’s prime minister; Ayad Allawi, ex-interim prime minister and former vice-president of Iraq; Petro Poroshenko, president of Ukraine; Alaa Mubarak, son of Egypt’s former president; and the prime minister of Iceland, Sigmundur Davíð Gunnlaugsson.
An offshore investment fund run by the father of British prime minister David Cameron avoided ever having to pay tax in Britain by hiring a small army of Bahamas residents to sign its paperwork. The fund has been registered with HM Revenue and Customs since its inception and has filed detailed tax returns every year.
As a libertarian and someone who believes that all tax is theft, I have some measure of sympathy and indeed support for those who go to extraordinary lengths to avoid taxation and government meddling in the private affairs of citizens, for example Facebook’s Eduardo Saverin who paid a 15% exit tax on his US assets to expatriate to Singapore in 2011.
Those who are unworthy of such libertarian acclaim are those who use illegal means to hide wealth arising from bribery and corruption or who enforce taxation on the little people, but evade it themselves.
Traditionally, this has been 3rd world dictators or the governors of oil rich provinces in Nigeria and such places who essentially steal the wealth of their own populace / electorate. So it was not surprising to find these “usual suspects” in the Panama papers.
Even Vladimir Putin is not someone that I am particularly surprised at given that he has ruled Russia as President and proxy for nearly 20 years.
The sorts of names that you don’t expect are the legislators of modern Western countries such as Iceland’s PM (but not I suspect for long), Sigmundur Davíð Gunnlaugsson. Bastards like this who illustrate Leona Helmsley’s view that “We don’t pay taxes. Only the little people pay taxes”* should face the full force of the law.
[EDIT: and as predicted, less than a day later he's quit]
For UK politicians and business leaders, it is not just tax evasion that the Panama papers might reveal, but also crimes committed under the Bribery Act 2010 and earlier criminal statutes. For example, those cosy little 3rd world arms deals so recently brought to life in the BBC’s adaptation of John Le Carre’s “The Night Manager”.
I suspect that quite a few of the worlds elite will be having sleepless nights over the revelations and since the papers go back 40-years, I expect we will be pissing on the graves of quite a few ex politicians and members of the elite as well. GOOD!
* – Leona Helmsley disputes that she ever said this.