Liz Curran-Groome ’19
The International Consortium of Investigative Journalists (ICIJ) had over 300 journalists review 11.5 million files including invoices, email chains and paper trails that reveal an insidious network of offshore companies that finance some of the world’s darkest business ventures while simultaneously affording their owners a loophole for taxes. Who is holding it all together? The Panamanian law firm Mossack Fonseca.
By setting up front companies in tax havens where there is very low or no taxation in a location other than the owner’s home country, Mossack Fonseca enables its clients to avoid taxation and scrutiny by the tax agencies in their own countries. These front companies act as a shield, concealing the often illegal sources and destinations of money, allowing clients to collect untaxed income.
When ICIJ journalists released stories concerning the papers on April 3, they revealed that countless of the world’s most powerful and wealthy were failing to report immense amounts of their income to their home tax agencies. From financing the Syrian Airforce’s bombing of its civilians to the drug trade, arms and human trafficking, this money represents not only a violation of tax laws but a contribution to some of the world’s most heinous crimes.
And some of those implicated are among the most powerful politicians in the world. The Prime Minister of Iceland has stepped down due to his ownership of an offshore company which he had denied as recently as March and failed to report income from. The current Presidents of Argentina, the UAE and Ukraine as well as the King of Saudi Arabia have also all been revealed as owners of offshore companies and tax evaders in the very nations that they lead. David Cameron, Prime Minister of the UK, apparently has ties to ownership of offshore companies as well. Current leaders with family members implicated by the papers include the President of China, Russian President Putin, Syrian President Bashar Assad, the British Prime Minister, Pakistan’s Prime Minister, Malaysia’s Prime Minister and the list goes on.
“But what about Americans?” You may ask. Just because Americans have not yet shown up in the Panama Papers does not mean that the wealthiest of America are not doing it. They most certainly are doing just this to scam the IRS and every resident of the U.S. from collecting on their gross and excessive wealth for the betterment of our most important services and programs. All it means is that Americans aren’t using Mossack Fonseca to mediate this process of establishing a front company in a tax haven.
So, perhaps we, in this most contested election season, should demand honesty from some of the wealthiest candidates. Obama, after all, was so ludicrously required to give proof of birth in the United States. Would it be ludicrous for us to demand Clinton’s and Trump’s tax returns, proof of income or bank statements? While the U.S. Treasury’s attempt to require banks to identify those behind shell companies has been in the works for years, the unveiling of the Panama Papers has spurred this initiative into fervent action. Such legislation will, however, certainly not be passed prior to the election of our next president and congress.
The Panama Papers serve as an urgent reminder that the world-over has political systems based upon corruption. Constituents are lied to and failed by their politicians and, yet, these politicians remain in power. In America we are afforded a representational democracy in which we can vote a failing representative out of office yet time and again constituents re-elect their politicians despite a better alternative contesting the re-election race. We have the privilege of a vote, and we do our representational democracy disrespect when we vote blindly for the most familiar name.
It’s time for a change, for a demand of integrity from those who wish to represent us and for an overhaul of those who have failed us and who would use their gross wealth to exploit our political system.