THE PANAMA PAPERS: Breaking the Story of How the Rich and Powerful Hide Their Money
BASTIAN OBERMAYER and FREDERIK OBERMAIER
Oneworld, 2016, 366 pages
Review by Phil Shannon
‘Only the little people pay tax’ was the gloating boast of the American billionaire property tycoons, Harry and Leona Helmsley. Like this happy couple, write the Munich-based investigative journalists, Bastian Obermayer and Frederik Obermaier in The Panama Papers, wealthy tax cheats have a particular liking for off-shore tax havens.
Their book recounts the release in April 2016 of the greatest ever leak of confidential data (2.6 terabytes, 11 million documents) - the entire internal database of Mossack Fonseca (MF), a major Panamanian law firm which specialises in providing shell companies in notorious tax bolt-hole countries to enable the secretive rich to dodge paying tax on the income generated from their wealth.
Shell companies are dummy, paper entities which are impenetrable to government financial and criminal investigators through hiding the identities of the real owners of financial and property assets behind anodyne company names fronted by pro-forma ‘nominee directors’. MF’s go-to glorified company director was a lowly-paid MF employee who was, on paper, in charge of over 25,000 shell companies but whose job was to robotically sign any bit of paper required to keep MF’s famously shy clients out of the tax headlights.
Like its founder, a wartime SS officer turned CIA informant to save his Nazi hide, MF is not fussy about the company it keeps. MF knowingly helps, or prefers not to know about, those amongst its tax-averse clients such as gun-runners, drug dealers, Mafiosi, people-traffickers, child prostitution racketeers and other out-and-out criminals whom MF demurely refers to as its more ‘ethically challenged’ customers.
MF’s more ‘respectable’ clients include the Lesser Rich (real estate agents, dentists, etc.) and the Greater Rich such as the embezzling dictators, despots and heads of state; government ministers and their close circle; film directors and movie stars; chess grand masters and Formula 1 racing-car drivers; top-end football club owners, managers and star players like FC Barcelona striker, Lionel Messi; and bucketloads of other billionaires.
The tax haven rort is technically legal, note the authors, though the distinction between lawful tax minimisation and illegal tax evasion is easily lost on poor working saps who can not opt out of the tax game because they lack the will (believing, as they do, in such antiquarian notions as tax fairness), the opportunity (because they are compulsorily taxed at source each payday) and the means (adequate capital to be able to afford their own lawyer-accountant enablers or the fees charged by shell company providers like MF).
As the MF leak source (known as ‘John Doe’, for safety’s sake) said, ‘what is legally allowed is [itself] scandalous’. What is legally allowed could easily be disallowed, he adds, were it not for the fact that ‘tax evasion can not possibly be fixed while elected officials are pleading for money from the very elites who have the strongest incentives to avoid taxes’ like the ‘high net worth’ individuals that MF caters to or the multinational corporations serviced by other shell company providers.
Thus, Jean-Claude Juncker (Luxembourg’s former Prime Minister and now President of the European Commission) defends his country’s tax haven status. Thus, the UK is compromised as a tax enforcer by hosting a tax haven in the British Virgin Islands, as is the US by accommodating tax haven rat-holes in Nevada, Wyoming, Delaware and Florida. The wealthy have little to fear from governments of and for the wealthy.
The ‘half century of political failure to address the metastasizing tax havens spotting Earth’s surface’, lamented by Mr. Doe, looks set to continue if left up to rhetoric-rich but action-poor politicians. Any push must come from the 99%, amongst whose ranks will be those remaining journalists of integrity, motivated by an outraged sense of financial justice.
The Panama Papers was the result of a global collaboration involving four hundred journalists from eighty countries. Whilst the Western journalists’ greatest fear was of being ignored, other journalists faced the opposite problem of being noticed only too well by trigger-happy criminals and autocrats. All the journalists rose to the challenge, however, to lift a corner on the lid of the great tax haven swindle.