
Panama Papers: Mossack Fonseca was unable to identify company owners - neom
https://www.bbc.com/news/world-latin-america-44553932
======
BLKNSLVR
The only way I can understand how widespread this is, is that a majority of
the powerful string-pullers in the world are participating in the scam.

If a company has an international ownership structure that's complex enough
that makes it difficult or impossible to follow the trail of ownership /
leadership / directorship, then the company shouldn't be allowed to operate.

All the fuss and bluster in various countries about multi-nationals dodging
their local tax responsibilities, and yet this is allowed to go on. There were
a couple of such companies that have Australian Government contracts that were
revealed to have opaque international ownership.

In the current environment of growing suspicion about foreign ownership and
its relationship to national security, you'd think these issues would be a
priority. How do you curtail foreign ownership and Chinese / Russian influence
if you can't work out who's ultimately responsible? Maybe that's just talk to
distract us non-string-pullers?

~~~
Iv
I found it pretty illuminating, in another leak, the Paradise papers, to see
that the Queen of England, who is also the head of the state in Bermuda, where
this leaked came from, had huge investments in off-shore companies:

[https://www.telegraph.co.uk/news/2017/11/05/paradise-
papers-...](https://www.telegraph.co.uk/news/2017/11/05/paradise-papers-queen-
bono-kept-money-offshore-funds-leaked/)

It is no secret that Juncker, the head of the European Commission, was the
leader of Luxembourg when it established itself as a tax haven power house,
and blocked any serious EU reform to curb tax evasion.

The various leaders of the world are the first to use these services. Theses
funds allow them to finance campaigns, bribe officials, and maintain the statu
quo. Of course they use political power to maintain this situation.

I don't often say nice things about GWB's administration but one thing that
came out of their terrorist paranoia was that they managed to basically kill
the tax haven status of Switzerland, where some funds transited. But it took
all the weight of the USA while it was in berserk mode to shut down such a
thing. There is dozen more to go.

~~~
wahern
> I don't often say nice things about GWB's administration but one thing that
> came out of their terrorist paranoia was that they managed to basically kill
> the tax haven status of Switzerland

That seems like it could have been a counter-productive strategy. Better that
your enemies use a well-understood banking system with [theoretically]
reliable and consistent bookkeeping than for those transactions to shift to a
more disperse, more chaotic international system. Even if Swiss accounts were
nominally secret, AFAIU the CIA and NSA had developed a fairly reliable system
for snooping around.

There's a reason New York and London continue to be world leaders in
processing financial transactions--the governments have been intentionally
tolerant of shady characters, shady businesses, and shady nations as long as
the transactions nominally followed the law. Among other benefits, that puts
you in a good position to keep track of the bad guys and, when it really
counts, to take them down. If you police too heavily all that activity goes
somewhere else.

But it does leave you open to accusations of aiding & abetting bad behavior.
There's a limit to what can be politically and legally tolerated in New York
and London. But you can structure the international system to channel those
intolerable transactions to the least worse alternatives.

Like so much with the War on Terror, the better approach would be to improve
HUMINT and investigatory resources, rather than pushing the activity further
underground and playing a game of whack-a-mole.

~~~
Iv
To be fair I take this as a gain as I see tax haven as a much more harmful
thing than Al-Quaeda ever was. It is an enabler not only of terrorism but of
several crimes that causes a countless amount of death globally.

And no, I don't buy the "we tolerate it so that we could watch it". Too much
private money is at odds there. The truth is that this still exists because
otherwise there would be no channel for the Saud family to fund the Bush one
or for Russian oligarchs to pay up GOP members.

~~~
wahern
Except the crackdown has arguably led to faster evolution of tax havenry. Over
the past 15 years the traditional tax havens have lost considerable business
to new jurisdictions offering more complex and cheaper havens (e.g. trusts and
property schemes), attracting smaller customers (e.g. small-time multi-
millionaires) who previously couldn't have afforded to indulge in these
activities. The market has grown. That was inevitable to some extent but when
your achilles heel is your ability to respond to change (which government
agencies suck at) it's a risky strategy to shake-up the system.

~~~
Iv
It is natural that it tries to evolve, this is an enemy with more resources
than the US army. We wont kill it with one attempt. We need to keep continue
still.

In my opinion, leaks have been the best tool so far: it adds a risk to tax
evasion that is kind of new. Every added cost or added risk is welcomed.

And people usually hate when I mention that, but I am fairly convinced that
most of the value of bitcoin comes from people desiring to move huge funds
discreetly and efficiently between accounts. It probably made the whole
industry move faster than countries' regulations.

------
mrleiter
I didn't understand for quite some time why prosecutors couldn't go after and
find tax perpetrators who they knew had offshore structures. Until I finally
found out how simple it is. One of two or both reasons:

1)As laid out in this article by the BBC, there simply is no record of the
true beneficial owner.

2)The jurisdictions have no legal agreements with western countries to hand
over their records.

Example: Person A in western country X has an offshore structure going through
countries Y and Z, both of which have no legal agreement with country X. Now
through some leaks and witnesses, prosecutors in country X know that person A
is hiding something in Y and Z, but they cannot prove it. They cannot obtain
those records legally, if there even are any.

That's what must be tackled.

~~~
kisstheblade
How does the "beneficial owner" benefit from the ownership if he can't prove
he's the owner? How do they get their money out? And can't we tax them at this
point? Yes I understand these are difficult schemes but can't you just freeze
accounts you don't know who the owner is and see who comes out of the
woodwork. Just freeze all accounts until paperwork X is signed, problem
solved?

~~~
mrleiter
Usually through trustees and fiduciaries in yet again different jurisdictions.
Until you prove beyond a reasonable doubt who the beneficial owner is, it's
really legally ambiguous to enforce any laws or regulations.

There are efforts aiming at this [1], but it will take time.

[1] [http://www.oecd.org/tax/automatic-
exchange/](http://www.oecd.org/tax/automatic-exchange/)

------
pjc50
This kind of thing is making me think that more effort should be made for
realistic land/property taxation; not only is that where a lot of the wealth
ends up being kept, but it's fundamentally impossible to hide.

It needs proper cadastral property registration and a link to the tax system.
It can even be privacy-preserving; the system doesn't need to care _who_ owns
the land, just that the taxes are paid.

For the UK I'd happily swap out council tax + stamp duty for a 1-2% annual
property tax.

~~~
cascom
You might have to rethink your math, here in the U.S. property taxes average
1.15% already, and would need to go up to like 8.2% just to account for
personal income tax (not including payroll taxes, social security,
Medicare/Medicaid, and corporate taxes)

1\. [https://www.thebalance.com/current-u-s-federal-government-
ta...](https://www.thebalance.com/current-u-s-federal-government-tax-
revenue-3305762)

2\.
[https://www.usatoday.com/story/money/personalfinance/2017/04...](https://www.usatoday.com/story/money/personalfinance/2017/04/16/comparing-
average-property-taxes-all-50-states-and-dc/100314754/)

~~~
pjc50
I wasn't proposing a total replacement of income tax! Certainly not overnight.

------
tomkat0789
If they don't know who the owner is, what's to stop anybody from dressing as a
shady businessman, walking up to one of these guys and saying, "yeah, I'm the
owner of whatever Corp. I'd like a billion dollars, please."?

I'm sure there are extra details that'd require extra snooping, but how much
extra detail is needed if they can't find owners even with a frantic internal
investigation?

~~~
cascom
It’s not that they don’t know who the owner is, they just don’t know who the
owner’s, owner’s, owner’s owner is

------
qaq
If you want to know the beneficiaries you want to look at banks. Due to all
the pressures from US pretty much all banks require to know the end
beneficiary regardless of company structure and "appropriate" authorities in
US generally have access to this info.

~~~
jonhendry18
That's the idea but in practice there are still gaps.

~~~
qaq
Honestly I don't think there are

------
merinowool
If taxes were not set too high and states didnt abuse their power, people
wouldn't have to resort to such tools.

~~~
lolc
There will always be cheaters. In this case, rich cheaters.

The people "resorting" to Fonseca were the privileged. They must not get any
clemency in their transgressions. I'm happy to see there's at least some
fallout from all of this. I expected less.

~~~
cascom
100% - except what’s extremely frustrating is the [willful] ignorance of the
press in reporting on the issue. There are some people in these documents that
should be named shamed (and probabaly prosecuted) but most of the “celebrity”
clients seem to be undertaking perfectly legal/normal tax planning activities.

E.g. just about every U.S. university invests their endowments through
offshore vehicles, and are not doing anything remotely seedy

------
bcheung
Privacy should be considered a right. Just because someone wants privacy
doesn't make them guilty of money laundering.

When there is a reasonable expectation of foul play, subpoenas are the
appropriate route.

A lot of damage can be done by exposing people's financials. They become
targets to predatory litigation and other forms of crime.

~~~
losteric
Privacy is a right. Hiding behind corporations is not a right, otherwise the
implication is the right deserve more rights than the rest of us.

Anything that enables tax evasion, subversive campaign influence, or otherwise
inhibiting the general public's fundamental rights should be banned.

~~~
Steve44
> Anything that enables tax evasion .... should be banned

Do you know the difference between evasion and avoidance?

Tax evasion already is illegal. Paying your car mechanic in cash and it not
going through the books is evasion and is illegal.

Tax avoidance is not. When you used to buy the under £15 DVDs from Jersey you
were avoiding paying the VAT you should have been but was perfectly legal.

