You may have heard the term, “The Panama Papers,” a lot lately in the news and online. In fact, that’s the name of a financial scandal that has transcended international borders, political philosophies, and even governments, exposing the biggest and most powerful nexus of wealth that the world has ever seen. But most people still don’t know all of the facts about the Panama Papers – and why it’s such a big deal. Here are twenty facts that will fill you in on the financial scandal that is sure to grow in magnitude.
- The Panama Papers refers to a recent event where 11.5 million private financial documents were made public after an anonymous whistleblower – thought to be a bank employee – leaked them to the International Consortium of Investigative Journalists (ICIJ), who then released the information to more than 100 news outlets all over the world.
- The documents (encompassing a massive 2.6 terabytes of data) were from a law firm in Panama called Mossack Fonseca that specializes in setting up secretive tax shelters and shell companies for ultra rich and powerful clients, allowing them to evade paying taxes in their home countries.
- After being tipped off, Panamanian prosecutors – most likely with the help of outside foreign agencies – raided the offices of the law firm Mossack Finseca, seizing the documents, computers, phone and financial records, etc.
- The Panama Papers so far have exposed 12 current or former world leaders and heads of state, as well as politicians and public officials around the globe, and more are being revealed almost daily as armies of tax experts, law enforcement personnel, accountants, and media members pour over the documents.
- Already one international leader, Iceland’s Prime Minister Sigmundur Gunnlaugsson, has been ousted from power after being outed as someone who places his wealth in offshore tax havens. In fact, the documents showed that his wife owned an offshore firm with big claims on Iceland’s collapsed banks. Although he officially resigned, the protests and uproar in Iceland over Gunnlaugsson’s involvement was so rampant that his decision to step down seemed preemptive.
- British Prime Minister David Cameron is also in hot water after the Panama Papers showed that his deceased father ran an offshore investment fund that sheltered UK wealth, which Cameron participated in. There have been huge protests and calls for Cameron to resign in the light of the scandal.
- Although the majority of those involved did not technically breach the law, there is a massive moral outcry and breach of public trust that the wealthy in office and positions of power were basically using their privilege to play by different rules than their citizens, sending their money offshore in these shadowy tax havens to prevent paying their fair share per their country’s tax codes.
- For instance, Iceland’s Prime Minister Sigmundur Gunnlaugsson has based his political platform on a nationalist Iceland-first economic policy of capital controls, keeping businesses in Iceland and protecting the country’s banking and financial system – despite the fact that his wife was enhancing her personal wealth by placing their personal money offshore. And UK Prime Minister David Cameron has been ripped for his abject hypocrisy, since he has called for tax reform and financial transparency in his own country recently, and is set to host a global anti-corruption summit in London next month.
- Cameron has released the last seven years of his personal tax returns and insists he legitimately paid taxes on all of the funds from his father’s offshore investment company shares, an attempt to stem the tide of public outcry that has kept him in office – for now.
- Part of the indicting public sentiment about those parties named in the Panama Papers is due to the shadowy and ill-reputed governments and world leaders named as law firm clients, including nations like Georgia, Iraq, Jordan, Qatar, Sudan, Saudi Arabia, the United Arab Emirates, Ukraine, Azerbaijan, Syria, Egypt, Pakistan, Ghana, Morocco, the Palestinian Authority, Cambodia, and Kazakhstan.
- The names of organizations, nations, companies, and individuals named in the Panama Papers demonstrate a spiders web of wealth that reaches every corner of the world, including Russia, China, The European Union, soccer’s international governing body, FIFA, and even plenty of participants in the United States, including a strange degree of scrutiny on involvement coming from Cheyenne, Wyoming.
- Not surprisingly, Russian president Vladimir Putin’s inner circle and trusted business partners have been implicated as active conspirators in the law firm and international tax havens – most likely as a means to park wealth they siphoned off from the country and launder illicit wealth. The only response from the Kremlin so far is a statement that called the ties to Putin “a series of fibs” aimed at discrediting him before the Russian elections.
- The Chinese government has also been proven to play a prominent role in the funneling of wealth offshore, and in fact, twenty-nine per cent of all active companies represented by Mossack Fonseca were set up by its Chinese offices.
- The individual who originally blew the whistle has still managed to remain anonymous, but came forward because they “claimed to be concerned about what he or she saw in the documents. Of course, the documents started as a trickle but turned into a flood, a torrent in the end.” That person also feared for their life if their identity is ever revealed. “The person claimed that their life was in danger if they ever became known as the source of this material because of course there are so many powerful people that are being revealed here.”
- An Irish bookmaking website (similar to Vegas odds makers), Paddy Power, released their odds for various world leaders resigning in the wake of the Panama Papers scandal and Iceland’s prime minister’s resignation.
According to Paddy Power, here are the odds of these heads of state not surviving the scandal:
8/1 Mauricio Macri (Argentina)
10/1 Nawaz Sharif (Pakistan)
12/1 Petro Poroshenko (Ukraine)
20/1 David Cameron (United Kingdom)
33/1 Francois Hollande (France)
33/1 Xi Jinping (China)
33/1 Vladimir Putin (Russia)
80/1 Justin Trudeau (Canada)
66/1 Queen Elizabeth II (United Kingdom)
66/1 Angela Merkel (Germany)
66/1 Barack Obama (United States)
66/1 Robert Mugabe (Zimbabwe)
100/1 Alexis Tsipras (Greece)
100/1 Kim Jong-un (North Korea)
100/1 Khalifa bin Zayed Al Nahyan (United Arab Emirates)
- While the law firm Mossack Fonseca is being slammed mercilessly in the international media, it released a statement saying: “Our industry is not particularly well understood by the public, and unfortunately this series of articles will only serve to deepen that confusion. The facts are these: while we may have been the victim of a data breach, nothing we’ve seen in this illegally obtained cache of documents suggests we’ve done anything illegal, and that’s very much in keeping with the global reputation we’ve built over the past 40 years of doing business the right way, right here in Panama. Obviously, no one likes to have their property stolen, and we intend to do whatever we can to ensure the guilty parties are brought to justice.”
- Members of the European Union are particularly peeved at the involvement of some of its member countries and their leaders. Pierre Moscovici, European Commissioner for Economic and Financial Affairs said he was “outraged and furious” with what was leaked in the Panama Papers.
- Aside from the United States officials, the governments of Iceland, Britain, France, Australia and Mexico have promised to start comprehensive investigations to get to the bottom of possible tax evasion and any criminal enterprise. Soccer governing body FIFA seems to have their fingerprints all over the scandal (to add to ever-growing scrap heap of their bribery and corruptions scandals.) Australia’s Bill Shorten was named in the crackdown even though he’s been a proponent of cleaning up corporate tax avoidance in his country, and the Panama Papers also revealed that Argentina’s President Mauricio Macri failed to disclose links to a company involved with this tax haven pilfering in his official asset declaration.
- Time Magazine is saying that the Panama Papers scandal “could lead to capitalism’s great crisis,” and the respected UK Guardian is saying that the leak represents, “the corruption of our democracy”.
- The biggest talking point about the Panama Papers seems to be the complete lack of transparency and accountability among those politicians, business and community leaders, and public officials named in the leak. After all, if they are charged with imparting financial regulations and fair dealings in our respective economies, but then shuffle off to hide their own personal wealth in this secretive network, it’s hard for the rest of us to place our trust in any financial system.