The largest cross-border journalism collaboration ever has uncovered a giant leak of documents from Mossack Fonseca, a global law firm based in Panama. Three hundred and 70 reporters from 100 media organisations have spent a year analysing and verifying the documents.
The haul of documents has been described as “likely the biggest leak of inside information in history”. It includes nearly 40 years of data from a little-known but powerful law firm based in Panama, Mossack Fonseca.
More than 140 politicians from 50 countries, heads of state, their associates, ministers and elected officials have been implicated in the scandal
Panama law firm Mossack Fonseca denies any wrongdoing and claims it is the “victim of an anti-privacy campaign”.
In the UK, six members of the House of Lords, three former Conservative MPs and dozens of donors to British political parties have had offshore assets. Ian Cameron, father of British Prime Minister, David Cameron, had an investment fund registered in Panama by Mossack Fonseca, in spite of the fact that most of its main investors were British. To avoid becoming resident in the UK, the fund used “untraceable certificates of ownership”.
According to the International Consortium of Investigative Journalists (ICIJ) “Ian Cameron’s tax-haven history is an example of how deeply offshore secrecy is woven into the lives of political and financial elites around the world.”
It is hard to believe that David Cameron was not aware of his father’s tax dodging deals, especially when he would be the one to inherit the fortune. Which makes the whole matter even more absurd, as Cameron claimed he would be the Prime Minister to crack down on tax avoidance and evasion. In 2011 he said: “We need to shine a spotlight on who owns what and where the money is really flowing.” – in reality these were hollow promises and he can’t even stop his own members of party from hiding money offshore, on top of this he has a chancellor who hasn’t paid a penny corporation tax on his family business in the past 7 years: Cameron himself is possibly himself a beneficiary himself of tax avoidance on his family fortune.
Asked if Cameron family money is held in a tax haven fund, Downing Street said: "It's a private matter" #panamapapers
— Sam Coates Sky (@SamCoatesSky) April 4, 2016
The problem is bigger than individual investment schemes, as alluded to with George Osborne’s inclusion in the last paragraph. The City of London is at the centre of the global web of tax havens that facilitate tax avoidance. Oxfam’s head of UK policy, Richard Pyle commented “This leak highlights the key role that UK-linked tax havens like the British Virgin Islands play in allowing a privileged elite to dodge paying their fair share of tax”.
Big companies get around paying tax by using legally permitted corporate structures and complex internal transactions (known as transfer pricing schemes). The European Union estimates it is losing about one trillion euros each year due to a combination of tax avoidance, evasion, and arrears.
In Britain the reaction to the files has been fairly subdued. The shadow chancellor, John McDonnell, called on Sunday night for more to be done by both HMRC and the government “The Panama papers revelations are extremely serious. HMRC should treat this with utmost priority and urgently launch investigation. Cameron promised and has failed to end tax secrecy and crack down on ‘morally unacceptable’ offshore schemes, real action is now needed”.
HMRC claims to be coming after undeclared income tax, and has reportedly asked for access to the data from the Panama Papers. Perhaps this might be a forward step, but OECD’s new tax proposals won’t stop companies shifting profits to tax havens many experts have said – as those with money and power can be slippery. The problem seems so deeply rooted and systematic that it is near impossible to believe that anything will change.
“People in the world’s poorest countries pay the highest price for the billions of lost tax money when their governments are unable to fund life-saving healthcare such as midwives and vaccinations for children”. – Richard Pyle, head of UK policy at Oxfam.
It has also been suggested that one of the offshore firms may have supplied fuel for Syrian government jets, currently slaughtering innocent civilians in the brutal Syrian civil war.
We turned venomous on our MP’s over the expenses scandal, and the bankers after the 2008 financial crash, and more recently on Google for only paying 3% corporation tax – but this did not result in changes, and we shortly found (or were ushered towards) benefit scroungers, immigrants and other factors to blame our countries’ ills on.
The Panama leaks will make the headlines for a couple of weeks, then disappear – our attention will be shifted elsewhere.
The problem seems so deeply rooted and systematic that it is near impossible to believe that anything will change.
More than 140 politicians from 50 countries, heads of state, their associates, ministers and elected officials have been implicated in the scandal, making it easy to see that those in power and who make and shape policy are the ones that benefit from tax havens. And for that reason they will remain – because why should they pay their rightful taxes like the rest of us when they are clearly superior and more deserving?
It clearly is one set of rules for them, and another for the rest of them – especially when those that makes the rules benefit the most. If we want this to not simply blow over, then it is up to us to keep the pressure on.