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Panama Papers illuminate international issue

By Optimist Editorial Board
Posted on April 8, 2016 | Editorials,Opinion | Comments Off on Panama Papers illuminate international issue

Just days ago, a massive leak of documents, titled the Panama Papers, exposed the way the world’s richest utilize tax havens to hide their money and evade taxes. The leak was the largest in history, consisting of 11.5 million documents from the Panamanian law firm Mossack Fonseca. The 2,600 gigabytes of files detail how Mossack Fonseca allegedly set up shell companies which allowed the world’s elite to hide their wealth.

But as a typical ACU student, you may be wondering what the Panama Papers actually means and what exactly is Mossack Fonseca.

Mossack Fonseca is a law firm in Panama and one of the world’s most secretive companies. They specialize in forming shell companies, which are used to anonymously hide billions of dollars in assets. Their clients include current and former world leaders and celebrities like soccer superstar Lionel Messi.

A shell company is an inactive company used as a vehicle for various financial maneuvers or kept inactive to be used in the future. They can be used legally, but they can also be used to launder money and evade taxes. Many clients of Mossack Fonseca were allegedly using their shell companies illegally.

The leak began in late 2014 when an unknown source initiated contact with the German newspaper Suddeutsche Zeitung. After they acquired all of the files, they shared them with the International Consortium of Investigative Journalists, a nonprofit organization in Washington D.C. that coordinates cross-border reporting.

The documents have not been released to the public, and the ICIJ said they don’t plan to. However, they report the documents implicate at least 143 government officials from around the world that had shell companies through Mossack Fonseca.

Notable government officials include the Icelandic prime minister who resigned after pressure from parliament, the Ukrainian president and the Pakistani prime minister. Several of Russian President Vladimir Putin’s closest friends and associates used the shell companies to transfer over $2 billion from Russian banks to offshore banking enterprises. Additionally, the ICIJ said the documents suggest more corruption within the international soccer federation, Fédération Internationale de Football Association (FIFA).

The fallout from the Mossack Fonseca leak will continue for a long time, but one thing that is still hazy is what legal reform the leak will inspire. One of the big problems with reform is that it would not be enough for just the U.S. to take action. Because offshore banking is an international practice, Europe and Asia would both have to take action, too. The next move for the U.S. is still in the works, but the U.S. Department of Justice said Monday that they are reviewing the documents.

The leak will not only reinvigorate debates about corruption among the world’s elite, but it also means that the leaking of companies’ and governments’ dirty data is not going to stop anytime soon. 

avatar Posted by Optimist Editorial Board on Apr 8th, 2016 and filed under Editorials, Opinion. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.  - This post has been viewed 2810 times.

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