The simple rule of the world’s economy is that the rich build enough wealth to survive and stay at the top whereas the low-income and middle-class, unable to make more money get burdened by debt and are eternally stuck at the bottom of the food chain.
One way the rich stay at the top is by using anonymous shell companies and offshore accounts in tax havens to hide money away from soon-to-be-ex-wives, dodge sanctions or evade taxes. But the authorities (and frustrated ex-wives) finally caught a break. Over a year ago, an anonymous source contacted journalists at a German newspaper outlet, Süddeutsche Zeitung (SZ), and the International Consortium of Investigative Journalists(ICIJ) along with them leaked 2.6 terabytes of data (11.5 million documents) from Mossack Fonseca, a Panama-based firm suspected of selling financial secrecy to politicians, fraudsters, drug traffickers, billionaires, celebrities and even sports stars. The cache of documents constituted emails, banking details and client records dating back 40 years including offshore holdings of current and former world leaders namely Iceland’s Prime Minister Sigmundur David Gunnlaugsson, friends of Russian President Vladimir Putin, Argentina President Mauricio Macri. Celebrities such as Emma Watson, Lionel Messi and even the infamous Donald Trump were mentioned. Shockingly, quite a handful of people from the Forbes-listed billionaires including George Soros were also named in the leak.
The aftermath of the aforementioned accusations saw far-reaching ramifications on the world’s political sphere. Iceland’s Prime Minister and part of his cabinet resigned as soon as the leak was made public; Mossack Fonseca refused to discuss cases of alleged wrongdoing on the premise of client confidentiality but vehemently denied the violation of already existing anti-money-laundering laws. According to them, thorough diligence was carried out on all its clients and they cannot be blamed for the incompetence of intermediaries such as banks and accountants.
Several countries have opened up investigations into the offshore holdings checking their legality. It is fact that among significant tax havens, the Central American country has been the slowest to adopt change thus it is mandatory for them to enforce stricter anti-money laundering laws. On another note, this particular event triggered much needed urgency into a global anti-corruption summit which was held earlier this May in London, pretty ironic considering David Cameron’s father was mentioned multiple times in the leaked documents. Also, the ineptitude of the intermediaries is an issue which needs to be dealt with swiftly. On paper, slipping hard disks full of data highlighting shady happenings of companies to the media seems wrong but the justification that it takes one illegal act to expose another one is a necessary evil in this war on financial secrecy.
Source – International Consortium of Investigative Journalists (ICIJ).
– Adityan Suresh