The Message of the Panama Papers

The publication of the Panama Papers—a leak of over 11 million documents detailing a worldwide network of offshore companies that enable financial secrecy—illustrates that independent oversight and accountability are essential to monitoring financial flows. Without them, vast amounts of wealth can be furtively moved around the world—sometimes at the expense of the public.

Effective monitoring of these flows depends on norms and regulations at the international, regional, and national levels providing citizens with information and legal protections to scrutinize public resources. Yet the work by the International Consortium of Investigative Journalists (ICIJ) on the Panama Papers highlights glaring deficiencies in these monitoring mechanisms.

For instance, the leaked records in this case came from a Panama-based law firm called Mossack Fonseca, one of the world’s most prolific creators of shell companies. At present, laws in the vast majority of countries do not require public officials to disclose assets held by such shell companies. In other words, in most countries, a prime minister not disclosing assets (a luxury property, for example) that are held by a shell company on their behalf would not be breaking the law.

Regardless of legality, many of the “undeclared assets” discussed in the Panama Papers still have the power to shock, and the resulting public outcry is already ousting political leaders. While this may seem like progress, it actually hits at the heart of the problem: though it may not always be illegal, hiding assets in the shadows of international finance patently subverts the purpose of asset disclosure rules in principle.

On a regulatory front, this is a loophole that we at the Open Society Foundations are working to close. It is our hope that the exposure of records like the Panama Papers will catalyze efforts to do so. This summer, a landmark summit in the UK will address the challenge of corruption and its role in holding back progress in creating economic growth and open, inclusive societies.

In addition to closing the gaps in asset disclosure laws worldwide, the upcoming UK summit also presents an opportunity to extend progress on making public the secret owners of anonymous shell companies like those highlighted in the Panama Papers, thus curtailing their ability to move money around the global financial system. As the Wall Street Journal pointed out this week, while much has been made about the tax evasion and avoidance implications illustrated by the Panama Papers, less attention has been paid to where foreign officials got these exorbitant amounts of cash to begin with, and why it is so easy to move that money around the world with hardly any oversight.

In 2013, the UK committed to creating a public registry of the ultimate owners of UK-registered corporations, and Norway and Denmark have followed suit. In addition, a recent amendment to the EU's anti-money laundering directive—which Open Society Foundations grantees Financial Transparency Coalition and Tax Justice Europe contributed to securing—further mandated that beneficial owners of shell companies be made known, at a minimum, to law enforcement, if not the general public.

The big missing pieces of this puzzle are the UK overseas territories—the world's leading offshore financial centers like the Cayman Islands and the British Virgin Islands, which impose low to zero income taxes and offer financial secrecy—and the United States, where registering an anonymous shell company is easier than obtaining a driver’s license or registering to vote. A recent Global Witness investigation that aired on 60 Minutes demonstrates the lucrative business that lawyers, accountants, and financial agents have built around professionally enabling financial crime, with no fear of consequences.  

President Obama has committed to addressing America’s role in all this. Yet every legislative effort to promote transparency around beneficial ownership has been shot down by members of Congress, who seek to protect the income that banks, a cottage industry of lawyers and accountants, and states like Delaware and Nevada generate from the anonymous shell company industry.

Recent reporting by New York Times on the abuse of shell companies to facilitate opaque luxury real estate deals in New York City with the wealth of foreign officials from countries like Russia, Malaysia, and Kazakhstan led the U.S. Treasury to announce in January that it will begin requiring real estate companies to disclose the names behind cash transactions in Manhattan and Miami for the first time. 

David Cameron is expected to introduce similar beneficial ownership requirements for luxury real estate purchases at the UK’s anticorruption summit in May. These are important additional steps that can make it that much harder for kleptocratic leaders and money launderers to park their stolen wealth abroad, as well as make it more difficult for High Net Worth Individuals and multinationals to evade taxes from the jurisdictions where their income was earned.

But even more substantial would be to require British territories and crown dependencies to publicly disclose the true owners of those companies. They could start with the British Virgin Islands, where half a million companies are registered on a smattering of tiny tropical isles that boast only 28,000 residents. Such a move would be a massive blow to financial secrecy and could help end America’s political stalemate, as well.

It’s time for the world’s leaders to ensure that no one—whether public official or private citizen—can use the financial system to cover up what they’d prefer no one sees.

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Good article to initiate global steps to combat corruption.

La ciudadanía tiene el derecho y el deber de exigir transparencia en la gestión pública y privada. Del mismo modo que los ciudadanos tenemos que tener acceso al presupuesto público deberíamos tenerlo a la contabilidad de las empresas.

Secrecy is starting to reveal the dark and evil actions behind the secrecy.

"...sometimes at the expense of the public"?! You have to be kidding. It's ALWAYS at the expense of the public. Why do you think they do it?

"Cowardice asks the question - is it safe? Expediency asks the question - is it politic? Vanity asks the question - is it popular? But conscience asks the question - is it right? And there comes a time when one must take a position that is neither safe, nor politic, nor popular; but one must take it because it is right". Dr. Martin Luther King, Jr.
"The things that will destroy us are: politics without principle; pleasure without conscience; wealth without work; knowledge without character; business without morality; science without humanity; and worship without sacrifice": Mahatma Mohandas K. Gandhi

It is about time--there no places to hide, there are no secrets any longer.

The situation in Nigeria is peculiar, Civil Society Organizations need to be stronger and bolder to demand more transparency and efficient use of resources. Freedom of information, the need to make public and question sources of wealth and ownership of properties is necessary. We demand that government should act on available information and prosecute all culprits

If you want want corruption on a local and sate level, you should look into Lansing, Michigan.

The corruption needs to stop everywhere.

It's time to fight for the creation of the International Government which would be able to provide World Security: wars, terrorism, financial, economical, Cyber Wars, etc. UN is not able to do that.

In my doctoral studies, I have run across another area of vulnerability-the use on NGOs and non-profits to launder money. The Financial Action Task Force (FATF) of the G-20 group has worked on this for years.

We should look to the U.S.A. first, then Mexico and Central America. We give a lot of aid to these countries that often goes into someone's pocket, also Iraq, and Afghanistan.

Hello,its a bad news that most of money are in afew peoplebin the world. Sorry to hear that.

Expose the members of Congress who are blocking needed legislation and where they hide their questionable funds.

Legitimised corruption. In such manner, capitalism eats itself, sows the seeds of it's own demise as it flees to gated communities, leaving a pot noodle or two for the rest of us.

We must make all offshore tax evasion a crime.

At the time when many children are dying because of war, created by those who just want to make business on it. Even more children and widows are living in poverty. Vulnerable members of societies are struggling to survive; richest are getting richer on those people' tragedies. Junior doctors which delegate their lives to save ours forced to fight to their wellbeing/ But those who stolen money and bringing their countries to troubles just found paradise in the UK. I am telling you - these bloody money won't make any good. They will bring only a bad fortune.

I support the views outlined in the article.

I would like to know what this causes to developing economies like those in Africa. How are they affected?

We hope that God is using Open Society Foundation to calming down the false powers of some world leaders and authorities that have done and doing and treating peoples' lives everyday.

Every country should have stringent laws relating to investment in banks in foreign countries. Indians who have not disclosed such deposits in their income tax returns have committed an illegality. Stringent and exemplary punishment is in public interest to name and shame.

Not to take all the other benefits of transparency lightly, but if it cuts down on ugly, mindless, often money-laundering construction in Manhattan that would be a great thing, and should be extended to Brooklyn, Queens and northern New Jersey.

A great take on the issue/s. The first report on the Panama Papers that I have read which questions where the money comes from in the first place. We also need to be identifying the Top 3 as I understand Mosack Fonseca is the number 4 player in this sordid industry.

Shame for the so called leaders and rich people who are involved in illegal wealth cumulation and than start talking about poverty, human rights, children & women rights etc.This is a global crime against humanity and this crime should be handled by International Court of Justice. It’s time for the world’s leaders to ensure that no one—whether public office holder, a religious and political leaders or business tycoon or any citizen—can use the financial system to cover up what they’d prefer no one sees. This money is used for terrorism and generating more illegal business opportunities. If we all together failed to regularize the global financial mechanism, we will lost all together. The world is leading toward an extinction and now one will be safe here.

The hoarding of money is equivalent to hoarding food during a famine or water in a drought. To expect the wealthy and powerful who benefit from current law to 'reform' the system is as naive as waiting for turkeys to vote for christmas.

If the mass of taxpayers want their money back they shall have to take it.

The only real democratic voice came from Iceland. Only one day after the announcement 10.000 people spontaneously organized a rally to protest against the prime minister to have been just nominated inside the Panama Papers. One day after he resigned... When will we start to strongly pretend ethic behaviors from politicians, entrepreneurs, actors, etc.?

Expose the self fish hawks including those in Nigeria.Nigeria is one country where political leaders have connived to milk the country dry without impunity and mercilessly relentlessly unapologetic


Code of Conduct Bureau is a foremost ethical institution in Nigeria. The aim of the bureau is to promote integrity, transparency and consistency of standard among public officers. Under the Code of Conduct Bureau and Tribunal Act (herein after referred to as the ‘Act’), the class of public officers prohibited from opening foreign accounts are limited. The practice is that those excluded employ those included to operate the accounts. The instruction to operate the accounts on their behalf is most time given as an official directive seeing that the officers inadvertently allowed to operate foreign accounts are junior in rank. It is also strange to see that all judicial officers are not barred from operating foreign accounts. The lists include; president, vice president, governor, deputy governor, members of the National Assembly and State Houses of Assembly or any other public officers as the National Assembly may deem fit. See par. 3 of Pt 1, 5th Schedule to the Constitution of Federal Republic of Nigeria 1999. A law like this should be amended to include all categories pubic officers because of the access they have to the national pulse.

Strangely, the Act did not prevent the wife or wards from operating a foreign account, what the law requires is that if the family of a public officer is operating a foreign account, the declaration of assets must carry with specificity the amount and the location of the bank. It is a known fact that across the border account will facilitate the transfer and lodgment of corruptly acquired resources, and make the work of international cartels and syndicates who engage in fraudulent businesses with public officers easy and difficult to track. Where public officers operated foreign account before assuming office, the public officer has the option of closing such account with an option of transferring it into a disclosed unit trust or shell companies operating in Nigeria. In doing this, a public officer places the investment under an independent control locally recognized.

There are few cases on foreign accounts against some public officers that may be of interest. One of the charges against D.S.P. Alamieyeseigha as the Governor of Bayelsa State was that he maintained and operated a foreign personal bank account contrary to par. 7 of the Act. Also in FRN v. DR. ORJI UZOR KALU (Charge No CCT/NC//ABJ/KW/03/3/05/M) the case against the accused an ex-governor of Abia State, Nigeria is that he operated a personal foreign account while in office. In a similar vein, a case was made against the erstwhile governor of Lagos State Ahmed Bola Tinubu for operating ten (10) foreign accounts between 1999–2007.

Another area calling for intervention is in the area of foreign properties. There is no provision in the Act that restricts the acquisition of property in foreign jurisdictions. For instance, a former Nigerian Minister of Petroleum was alleged to have fraudulently purchase some properties in France and he could not be charged to court for breach of code of conduct for public officers. The properties acquired included a chateau in Northern France, another apartment in Paris and a luxurious villa in the chic Paris suburb of Neuilly.
There is a ‘satanic’ privacy rule under the Act that enables the bureau to receive declarations from public officers, verify disclosure and prosecute defaulters without any private or public intervention. Privacy rule in a democratic setting is unacceptable and the uppermost standard is an open register. A public officers’ declaration is a public document and ought to be accessible on application. It is only when every citizen becomes a watchdog in possession of a watch list that Panama leak will be the last. In the case of Registered Trustee of Unemployed Youth Initiative v Code of Conduct Bureau & Anor (Suit No: FHC/BC/CS/192/2015) which I am currently handling, the unemployed youths dragged the Code of Conduct Bureau to Court to allow public assess to assets declaration by public officers on the ground that thievery public servants has pummeled their unemployment ordeal. The Court is yet to deliver her judgement. The attitude of the court with respect to these mentioned cases leaves much to be desired. This is mainly accounted for by lack of political will in their trial period, which ‘amazingly’ rubs off on the judiciary. We suspect that the time as changed.

UK summit will be a positive step in the right direction

It is now public knowledge that these quasi legal loopholes exist and are faclitated by interested party -there must no longer be excuses for failing to bring this tax evasion and money laundering under control by responsible governments that have paid only lip service to the enforcement of tranparency on the owners of assets

I recall my historcial study about French Revolution and how People Turn against King Louie XIV as he lived in Luxury while common peope were starving. It is a shame that millions of people starving and our democratically elected leaders were involved such a huge financial scerecy by cheating the public. It is time to act to save the poor around the world by brining all the money in the hands respect government treasury. And utilize the money to allevaite povery and hunger and generate more employment opportunities amog the youh.

I am proud of your trans boundary effects! Prepared is OSF to bit hunger and poverty Sustainably. Your substantial investments in community empowerment through education and building strong Civil Societies is tremendous! Keep it up, brave, good job!

Dear Aynalem,
Many thanks for ur fast moving and moral boosting message. Thereby, u prove the worth of ur Doctoral assignment already accomplished.
Good wishes,
Dr. Behera
A Ph.D. guide in Management

Dans le monde et surtout en Afrique, beaucoup de leaders politiques vident tous les jours les caisses de l'Etat pour stoker des masses d'argent dans des banques ou dans des sociétés de blanchiment d'argent surtout au Panama, au Népal, au Pakistan ou dans certains pays d'Europe continentale. Cela a un impact négatif sur la qualité de la vie des populations et surtout sur les activités de la société civile, notamment, en R.D. Congo. Il serait intéressant que des nations éprises du bien-vivre-ensemble de tous les hommes puissent se pencher sur ce genre de questions, limiter les dégâts et promouvoir l'internationalisation du quotidien. C'est de l'internationalisation du quotidien que dépend, à mon avis, la limitation des intentions d'immigration.

It's about time!

Your view requires that the government has a right to carry out an act of aggressive against you and I which if carried out by you and I against someone else would be considered immoral, dispicable, and lead to jailtime. It begås the question: If stealing 100 % of the product of someones labour is slavery, at what percentage is it not slavery?

For my opinions (panama papers) are a westeren conspiracy and blackmail against mr Vladimir POUTIN that the wesrerns powers do not like for killing theyr influences

Im krishnanad bhatta as a print n tv journalist. I will want participate in this programme from south asian mt.everest country Nepal.

Such "illegal" practices have resulted in injustice and social gaps in developing countries such as Indonesia. We do need strong political will from the government to enact a law preventing such bad practices.

Is there an African perspective in the Fiscal Governance program? We in Kenya are grappling with the institutionalization of devolution against weak financial oversight and management. What could the Open Society do, towards improving the oversight role at both the national and county level?

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