The Panama Papers Syndicate

In what has gone down as the largest data revelations in modern times, the Panama Papers is perhaps an event and not just an activity of any sort. The Panama Papers data leaks involve a total of 11.5 million documents in form of emails, pdf files, photo files and excerpts from the database of an international law firm, Mossack Fonseca, situated in Panama Island and whose associates are Jorgen Mossack and Ramon Fonseca. The data on Panama Papers is touted to be 2.6 terabytes in size, dwarfing the total combination of other data leaks that have occurred in recent times such as the famous Wiki Leaks which was 1.7GB and occurred in 2010, the Offshore Leaks 260GB in 2013, the Luxembourg Leaks 4GB in 2014 and the Swiss Leaks 3.3GB in 2015.

The Panama Papers showcase on how corruption networks and systems function globally, with indications on how the global financial system and the global tax system are manipulated to benefit a few individuals and to impoverish the masses. The aforementioned syndicate has revealed on how ‘dirty’ money has ostensibly been hidden for several years in one of the world’s most sought after tax havens or offshore financial centres. A tax haven or an offshore financial centre refers to a geographical region(s) in the world in which the taxes levied on the financial transactions carried out within that particular region are either very low or non-existent. These tax havens also highly regard and prioritize a high level of secrecy in their banking operations.

These tax havens are normally islands and they include, among them, the Panama Island, the Bahamas, the British Virgin Islands, the Macao among others. Due to the very low taxes charged on the financial transactions and the guaranteed secrecy on banking transactions and operations, these offshore financial centres are deemed as the ideal places where money that has been acquired through fraudulent means is hidden. This can be the financial proceeds obtained from activities such as drug-dealing and corruption. In so doing, these tax havens act as mechanisms for the perpetuation of tax evasion and money laundering.

Fast forward, the Panama Papers data leaks came into being after the information was provided to one of the leading newspapers in Germany, Suddeutsche Zeitung, by a source which remains unnamed. This particular scandal orchestrated by Mossack Fonseca involves about 215,000 non-existent companies and 14,153 clients. These companies that are non-existent are usually referred to as shell companies.  A shell company is a firm that outwardly appears to be a legitimate business entity but it is just empty, a shell for that matter, tasked with the management of the money and/or wealth received without revealing who the real owners are.

Mossack Fonseca is claimed to have aided in the setting up of several shell companies and various offshore accounts for individuals who are believed to be influential either globally or in the geographical regions where they hail from. These individuals include politicians, officials of the football world governing body FIFA, drug barons, athletes and even celebrities among other high profile individuals. 

Some of the individuals who have been named in the Panama Papers include the immediate former Prime Minister of Iceland Sigmundur David Gunnlaugsson, President Mauricio Macri of Argentina, President Petro Poroshenko of Ukraine, Prime Minister Nawaz Sharif of Pakistan, King Salman of Saudi Arabia, Hamad bin Khalifa al-Thani a former Emir of Qatar, former Prime Minister of Qatar Hamad bin Jaber al-Thani, world’s soccer superstar Lionel Messi, the current FIFA President and former UEFA Secretary General Gianni Infantino, Sergei Roldugin who is a very close ally to the Russian leader Vladimir Putin, Gonzalo Delaveau Swett the President of Transparency Chile which is a branch of Transparency International. 

Those ones whose names have been mentioned in the leaks and hail from Africa include Khulubuse Zuma who is a nephew to Jacob Zuma, Kenya’s Deputy Chief Justice Kalpana Rawal, Ian Kirby who heads Botswana’s Court of Appeal, Jaynet Desiree Kabila a twin sister to DRC’s President Joseph Kabila, Angola’s oil minister Jose Maria Botelho de Vasconcelos, Mamadie Toure a widow to former Guinean President Lansana Conte, Kojo Annan a son to Koffi Annan, John Addo Kufour a son to John Kufour a former president of Ghana and Mounir Majadi the personal secretary to King Muhammed the Sixth of Morocco.

How Mossack Fonseca Operates

Mossack Fonseca carries out its operations by providing a number of offshore firms located in different parts of the world. This Panamanian law firm usually establishes shell firms in some of the world’s famous cities and disposes them to clients at negotiable prices. Normally, the shell companies are sold at US$1000 but the client can pay extra amounts of money so that Mossack Fonseca can be able to provide a fake director(s) and this hides the identity of the true owner of the firm and the subsequent business activity that the firm carries out. 

Implications

Following the revelations of the Panama Papers syndicate, several resignations have taken place including the one by the Prime Minister of Iceland Sigmundur David Gunnlaugsson and the resignation by the President of Transparency Chile Gonzalo Delaveau Swett. I foresee many more resignations happening with regards to this event especially in countries whose laws on corruption are strict. 

On the account that the world’s football governing body FIFA and Europe’s football body UEFA have been mentioned in this particular scandal leaves a lot to be desired. Last year, the then president of FIFA Sepp Blatter and UEFA’s boss Michel Platini resigned due to allegations of corruption that are believed to have originated from the activities mentioned in the Panama Papers. The involvement of the Qatari Prime Minister and a former Emir of Qatar, FIFA and Sepp Blatter in this scam is an absolute coincidence that the awarding of the 2022 world cup hosting bid to Qatar might have happened under conditions fuelled by corruption. Of course, the 2022 world cup hosting bid has been shrouded with a lot of controversies. And don’t forget the 2018 world cup hosting bid that was awarded to Russia. The Panama Papers document the involvement of Russian power players in great length and breadth and I have a conviction that the Russian heavyweights might have bought their way to hosting this global event. This conjecturing of coincidences cannot be whisked away.

Global Governance Going Forward

The Panama Papers reveal the existence of an intricate and intrinsic web of corruption in the world. The tax havens or the offshore financial centres have led to the development, complication and sophistication of the global corruption networks and the manipulation of the global tax systems and financial systems. 

The offshore financial centres are not illegal in the first place but the major challenge that they pose is the hiding of the identity of the owners of the various firms and accounts that are found in these tax havens. This act of concealing the identity of the shareholders of the companies and the accounts is what has largely contributed to the breakdown of the global governance system by propagating the acts and activities that involve money laundering, looting of public resources and drug-dealing. 

As a result, such activities have led to the increase in the incidences of tax avoidance or evasion. As a matter of fact, it is highly possible that some of the multinational corporations, especially those involved in mining activities, could be engaging in such vices which have led to massive capital flight from the developing countries and this has consequentially starved them of the necessary capital required for investments in order to engender rapid economic growth and development.

The Panama Papers is just one of the many unknown global syndicates that exist in the various tax havens that are located around the world. I’m pretty sure that other similar networks actively operate in the other offshore financial centres. Such networks only seek to worsen the inequality gap in the world and even undermine the gains of democracy if not to annihilate democracy itself and its related aspects. A research carried out by the Tax Justice Network in 2012 estimated that these tax havens hide wealth amounting to between $21 trillion and $32 trillion, a clear indication on how they enhance and worsen the global inequality rates.

It is high time that laws meant to deal with the offshore financial centres are formulated through multilateral institutions such as the United Nations Organization. Who knows that may be even these tax havens provide a fertile ground for terrorism to thrive? Sanitizing the financial transactions and banking operations of these tax havens will definitely reduce the intensity of some of the global challenges. But as for now the emergence of a global spring on global governance is imminent, to specifically champion for the formulation of legal frameworks to combat these offshore financial centres.