Panama Papers expose corruption

Shana Levine

Shana Levine

Oliver McIntosh, Staff writer

“Hello. This is John Doe. Interested in data?”

In early 2015, an anonymous message was sent to the German newspaper Süddeutsche Zeitung. This was the beginning of the groundbreaking report known as the Panama Papers.

This historic data leak exposed a secret underworld of law firms, banks, and offshore companies working for decades to help some of the world’s most powerful people conceal income and avoid taxes. When it was first made public on April 3, dozens of journalists worked to make sense of the 11.5 million leaked documents spanning from the 1970s to 2015. These papers were from a law firm, Mossack Fonseca, based in Panama City, and mention several prominent world leaders, politicians, and businesspeople. Those named in these Mossack Fonseca internal documents include close associates, friends, and family of Russian President Vladimir Putin, British Prime Minister David Cameron, Chinese President Xi Jinping, executives of the world soccer association FIFA, and Middle Eastern kings, among others. These papers discuss tax evasion, foreign shell companies, and suspicious financial transactions. As one leaked Mossack Fonseca document notes, “95 percent of our work coincidentally consists in selling vehicles to avoid taxes.”

These implications are the latest and largest revelations in the matter of secrecy and corruption in the business dealings of the rich and powerful. Tax havens and money laundering have long been keywords in gangster movies, but in reality, it is estimated that billions of dollars of undeclared revenue flow unrestricted all over the world each year, with the United States alone losing 3.09 trillion dollars in federal revenue to tax evasion since 2001. Much of this undeclared income could likely be traced to illegal activities, such as drug or arms trades, organized crime, and corruption. The global drug trade and other illicit markets bring in hundreds of billions of dollars yearly, concealed with the help of companies like Mossack Fonseca. Often shell corporations with no real product or business are set up in hospitable countries, such as Panama or the Cayman Islands, where income is then funneled through. Whether the money in question is from illegal trades or clients who simply do not want to pay taxes on their income, law firms such as Mossack Fonseca help whitewash this cash through shell companies and offshore trusts and then deposit it into various bank accounts, free of any taxes or incriminating trails.

Global reactions to the Panama Papers leak have been significant and swift. Influential government officials moved quickly to denounce the contents of the leaks, and implicated officials were left to deal with the aftermath. Notably, the Icelandic Prime Minister, Sigmundur Davio, announced his resignation two days after the leaks along with a Reykjavik City Council member, who resigned earlier in the day.

I believe that the Panama Papers are an important exposé on the global issue of tax evasion and money laundering and may well just be the tip of the metaphorical iceberg. This widespread global tax evasion paints an unsavory picture of an elite class unconcerned with a greater world community and seems indicative of a flawed society. These actions greatly exacerbate world issues such as economic inequality and poverty, and exemplify a flagrant lack of empathy and responsibility among some of the world’s leaders. As we remain enthralled by and focused on media cycles, presidential elections, and short term issues, we would be wise to occasionally remember that beyond electoral rhetoric and media hype loom the greater, more important world issues such as those illuminated in the Panama Papers.