Panama Papers

Rich and powerful caught up in the ‘Panama Papers’ scandal must explain themselves

There are valid reasons for having offshore accounts, but transparency is needed on where the money came from

PUBLISHED : Friday, 08 April, 2016, 1:08am
UPDATED : Friday, 08 April, 2016, 1:08am

Tax havens, money laundering, corruption – these are the words that come to mind at the mention of the “Panama Papers”, the 11.5 million encrypted documents anonymously spirited from the world’s fourth-largest offshore law firm that a global network of journalists has been sifting through for the past year in a quest to unravel secret money trails. The names of the rich and powerful have predictably come up, representing fields from business to sport to entertainment. Dozens of countries are involved, the scope and scale being breathtaking. But most astounding of all is that so many politicians and world leaders or their family members have found a need to hide their wealth from public scrutiny.

Hong Kong was busiest office of Panama Papers law firm

At least 143 members of the political class have so far been revealed, among them 12 national leaders. One, Icelandic Prime Minister Sigmundur David Gunnlaugsson, was a quick casualty, resigning amid claims he had failed to properly declare his assets. Investigations have been ordered or are under way into a number of the more than 14,000 individuals and 214,000 offshore entities associated with the Panama-based firm Mossack Fonseca. Being named does not equate to wrongdoing, though; there is nothing illegal about setting up companies, shell or otherwise, in places of low taxation. Offshore accounts can be used to manage inheritance and estate funds, avoid currency restrictions and keep finances out of the hands of corrupt officials and criminals. But they are perhaps better known for their role in money laundering, corruption and other proceeds of crime; intricate webs of companies and accounts are ideal for salting away illegally gotten gains and keeping them from prying eyes. Insight has been given into global financial flows that will also be useful for officials trying to close gaps to fight tax cheats.

Recent years of economic downturn and hardship have brought a perception that offshore accounts are chiefly the domain of wealthy companies and individuals eager to avoid paying tax. For the same politicians who have been calling for fiscal belt-tightening to then be listed in the leaked documents is for ordinary, tax-paying citizens, shocking. But questions have also been raised about how those who serve the public have amassed so much wealth. It is why the Kremlin has so harshly rejected suggestions that Russian President Vladimir Putin is linked to secret accounts, China has clamped down on Weibo postings and politicians in Britain, Germany, Malaysia, Pakistan and Ukraine, among others, have rushed to explain themselves. Those that cannot deserve to face outrage, inquiries and penalties.