The Real Scandal Behind the Panama Papers
After the leak of more than 11 million documents detailing sensitive, and often terrifying, information about offshore financial and legal activities, the Nobel-laureate economist Joseph Stiglitz was enlisted to help Panama reform its practices. But nothing could have prepared him for what came next.
I'll confess that my jaw dropped when I looked beyond the headlines about the Panama Papers last spring and began to read the fine print. “Panama Papers” is shorthand for the widely publicized report of the International Consortium of Investigative Journalists, originally published on April 3, 2016. The story broke simultaneously on the I.C.I.J. Web site and in newspapers around the world and detailed what had been going on behind a cloak of secrecy. An enormous leak of 11.5 million documents from the Panamanian law firm Mossack Fonseca provided the investigative journalists with a trove of information about 200,000 entities incorporated in offshore havens—companies whose real owners were difficult or impossible to trace. The newspaper Süddeutsche Zeitung had obtained the documents; realizing that to analyze the data was beyond its own capacities, it enlisted the help of the I.C.I.J., which worked for a year through 107 media organizations in 80 countries before breaking the story.
Panama is but one of a large number of “offshore” corporate havens, which include the British Virgin Islands, Cyprus, and the Cayman Islands. Often, the owners of a corporation in one secrecy haven will be a web of corporations incorporated into another. Why the secrecy and the dizzying complexity? In many instances, it is to throw law-enforcement agencies, tax collectors, and investigative journalists off the scent.
The range of alleged activities encompassed by the Panama Papers was broad—from tax evasion and tax avoidance to money laundering associated with a variety of nefarious activities. The range of public figures who made an appearance in the documents was equally impressive. The publicity brought down the Icelandic prime minister, and forced Britain’s prime minister at the time, David Cameron, to explain why his father’s name appeared in the documents. The prominence of Putin associates in the Panama Papers led to accusations (from Moscow) that the revelations were a Western plot. China, too, had its share of prominent people represented.