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[dupe] The Panama Papers: how the world’s rich and famous hide their money offshore (theguardian.com)
385 points by petethomas on Apr 4, 2016 | hide | past | web | favorite | 141 comments




I think all this talk about the legality of using such services misses the point. It's about legitimacy, especially that of state leaders. While the western media might try to use it to delegitimize some non-western leaders, the leak actually works both ways.

Any country leader who'd make a speech to tell her (or his) people she doesn't care about them or their country, would do nothing illegal, but would probably loose her power. It's the same here - the leak serves as proof that the national Elite in many countries is no longer "loyal" to its imagined community (aka nation).


Don't forget that the people that profit from selling financial services to corrupt leaders are so corrupt as them. Even if they speak flawless English and wear nice clothes.


Well this is cool.

But notice on the https://panamapapers.icij.org/ page there is a "leak to us" button, so we can share information with the journalist consortium, but no "show me the leaked data" button so they can share with us.

Where do we get the actual leaked data, so we can investigate companies ourselves, instead of relying on mass-media "analysis"?

And what about the other law firms (this is only the fourth largest, apparently)? Is it just a coincidence that Putin is implicated in this, the only leak?


They want to derive the maximum amount of exposure, page views and revenues from the leaked data in the form of web articles with ads, printed news papers with ads etc. Releasing the the actual data would be counterproductive to their own financial gains.

Somewhat ironic, I think.

(Yes, some of the 100+ news organizations are ad free, such as the mandatory tv license-paid state broadcaster/propaganda organ SVT from my country, Sweden, but they also have their own motives of wanting to control the data.)


The leak contains large amounts of personal information on people who aren't necessarily guilty of anything illegal, correct? If that's the case, releasing the full leak comes with some very real ethical concerns.


> The leak contains large amounts of personal information on people who aren't necessarily guilty of anything illegal, correct?

How do we know? That's just an assumption. It could also be that the leak contains information on some very powerful people who better not be crossed?


> "In this trove there are administrative documents that could actually be brought to public knowledge, such as records of incorporation, shareholder registers or directors or creation of bank accounts. But there is especially a lot of personal information, such as private postal and email addresses, scans of passports for internal and external correspondences Mossack Fonseca, with many private items (such as vacation rentals, electricity bills or, more sadly, the discovery of cancer)".

https://www.reddit.com/live/wp1fvdxxwb45/updates/02ec05f2-fa...


That’s not contradictory. It may well be that the leak contains that and personal information that would be literally unreasonable to publish.

That’s what ethics is all about: weighing different things against each other.

The journalists widely shared the data with other journalists and outlets to make it easier to work through the data but probably also to combat the problem of being blind in certain ways …


This is a real concern. But another one is if the media outlets are being biased on their choice of which data they choose to disclose. They haven't done a good job in showing they are being correct up to this moment, but let's give them some more time and see.


>Yes, some of the 100+ news organizations are ad free, such as the mandatory tv license-paid state broadcaster/propaganda organ SVT from my country, Sweden

Actually, at least here in Finland, the mandatory tax-paid state broadcaster is far from "ad free". They run lots and lots of ads for themselves. They also run ads for third parties (organisations, causes) that are politically suitable.


So YLE is infected by leftist activists masquerading as journalists in the same way as with SVT? That is depressing.


Yep, although it's not as bad as it was at some time. But the number (and sound volume) of these advertisements is rather irritating.


It will be released in future. They keep it that way probably to slowly leak data to increase the impact it will cause.


Where did you find that this will be released in the future? There are public persons in this batch of data and it makes sense to know this information but there must also be a lot of private information and I don't think it would be right to have them released in the while. My guess is that this is the main reason why it's not publicly released.

Edit: Le Monde has an article on the subject (French) http://www.lemonde.fr/panama-papers/article/2016/04/04/pourq..., translated: https://translate.google.com/translate?hl=en&sl=auto&tl=en&u...


Some data should be released. Not sure if all, but all data related to information published will be released, so maybe they will spare average "Joes" from it. You can find on Reddit people involved in this commenting regarding releasing data, I have seen few comments last night after release.


Some data should and will be released, but do we know how the released data was chosen?


And who decides? IMHO it's no longer legitimate to leak to "the press" if they are unwilling to properly disseminate the whole truth.


In theory the person who leaked to the press could be prosecuted for leaking information. But press has the right to protect their sources, which prevents that from happening, so you get a balance between information and privacy. That wouldn't be the case if it was leaked to the general public. You'd also leak passports, SSN etc. to the general public.


The organization responsible for investigating it. They are quite reputable for staying independent.


From Le Monde in French:

"Une partie (exploitable) de la fuite consiste en une base de données structurées des quelque 215 000 structures offshore de la firme panaméenne Mossack Fonseca avec, pour chacune, les dates de création, de dissolution, l’identité des actionnaires déclarés et leur lieu de domiciliation. Cette partie sera publiée en mai par le consortium international des journalistes d’investigation (ICIJ), qui a coordonné l’investigation."

I'm too lazy to translate it for you but basically it says that part of the leak will be released in May. They also wrote an article explaining why they don't release everything: http://www.lemonde.fr/panama-papers/article/2016/04/04/pourq...


The data isn't available because it's only for specific media outlets to report on. They would hate to incriminate anyone who isn't Putin by accident.


Scroll to the bottom: https://www.occrp.org/en/panamapapers/

Look at "Who supports our work"

It has Soros' fingerprints all over it. He's at it again: attacking nationalism (Russia, far-right parties) and promoting globalism.

The whole operation isn't exposing anything we don't know: rich people are rich and use whatever means at their disposal to keep rich. In fact, this is a media operation more than anything to villainize Putin and anyone associated with him. The truth is, pretty much every nation and its leaders are guilty of this.


Hardly. The data was originally leaked to Süddeutsche Zeitung (SZ). They then asked ICIJ for help because they can't deal with 11.5 million documents by themselves. Details at http://panamapapers.sueddeutsche.de/articles/56febff0a1bb8d3...


Well, we all know that Russia and far-right parties are above reproach and discussion. You come across as a shill for rich people who don't like having their private tax avoidance information shared. The news articles had plenty of liberal leaders with embarrassing information leaked, such as the PM of Iceland - so your claim that this is aimed against those you are trying to protect is obviously wrong.


True, but like Snowden and the NSA, there's still a difference between cynically assuming "of course the NSA spies on everyone", and being confronted with the reality.


Pot kettle black?

"...most of the UK’s big media organisations shelter assets and cash flows offshore. Top of the hypocrites in this respect is The Guardian. They put their assets in the Caymans, and they used a Luxembourg tax shell designed by PriceWaterhouseCoopers to funnel cash flows beyond the reach of HMRC. "

"Other media organisations using offshore entities include the Huffington Post – whose journalists criticised Amazon for doing the same. The owners of the Mail, News UK and The Telegraph also have various offshore tax-efficient structures."

http://order-order.com/2016/04/04/media-organisations-using-...


The major issue with tax avoidance schemes is the effect on competition. It's kind of like the prisoner's dilemma.

If no-one uses them, great.

If everyone uses them, you have a lower effective tax rate and different policy outcomes to the ones expected, so there might be distortions.

If others use them but you don't, you're at a competitive disadvantage.

An analogy for the everyman - imagine that there's a loophole me and everyone else in my city could use as individuals to completely avoid tax. If I choose not to do so, I'm receiving, say, 20-30% less income than I would annually, putting me at a huge disadvantage when performing normal activities such as buying a home, say.

I don't think that tax avoidance is immoral, I do think it should be fixed because of the distortion (favouring large businesses, which already generally have advantages due to scale).

It's a bit like how one can be a marxist whilst also choosing to own private property. You can't exist without mimicing society to some extent.


The question is are these companies doing anything illegal?


As mentioned by another poster (who's comment is now dead?)

How is this different than when Apple, Microsoft, Cisco, Oracle, HP and Google "hide" their money offshore in places like Ireland and the Cayman Islands, which helps them avoid repatriating their profits overseas and paying taxes on them?

It isn't. The point of this is that Putin is doing it.


The difference is that those companies were/are exploiting various loopholes in laws across many countries to avoid paying the tax they ordinarily would. Immoral? Sure. Illegal? No.

I'm no tax professional, but it sounds like this leak is about a large number of wealthy people actively evading tax, by hiding their assets/source of income and other shady things. This is very illegal, and if true, I imagine some of these people can and will be prosecuted for it.

Tax avoidance is legal, tax evasion isn't.


>Tax avoidance is legal, tax evasion isn't.

I am a tax professional and this is pretty much the motto of the profession. ;)

Anyway, I don't think the significant thrust of this story pertains to tax avoidance or evasion. There are some relatively minor figures implicated by the usual offshore tax shenanigans, but the really important news is the evidence of fraud, money laundering, and corruption at the highest levels of government, business, sports, and society across the globe. This shit makes tax evasion look like shoplifting.

We all may have suspected Putin of bribery and using illicit financial assets to fund his network of cronies, but now we have direct proof. What's more, we can now see how his activities (and those of many other powerful figures across the world) contribute to a massive shadow financial system which operates utterly unbound by moral or legal principles, enabling money laundering, human trafficking, drug and arms dealing, corruption in sports, corruption in politics, and just about every other shitty, awful, poisonous human activity you can imagine. This system is monumental in scale and the evil it sustains unfathomable in scope. Sunlight is the best disinfectant, though, or at least we had better hope so.


> We all may have suspected Putin of bribery and using illicit financial assets to fund his network of cronies, but now we have direct proof.

Wild speculation and story spinning is not proof of anything - except of the complicity that bias media has in forming public opinion.


The problem is that what is legal is being lobbied by those who have the money to manipulate the law.

So the real scandal is what's legal not what's illegal.


lying on tax forms is illegal.


Not sure I'm seeing a difference..


When you put your money into a structured pension plan for your retirement then it's tax avoidance since you are avoiding paying the tax you normally would if you invested it in some other way. Tax evasion is where you break the law by hiding money that should be taxed. Quite a big difference.


I think a lot of people (myself included) tend to focus on the "how" rather than the "why".

Presumably, big corporations are not only avoiding tax via legal means, but they are creating these legal means to avoid tax. Why do it illegally, when you can bribe/buy politicians, who then pass laws and allow you to avoid all the tax you want.

It could be 100% legal (not bribery specifically, but campaign financing for example), but i don't think most people are really okay with it.

I'm perfectly okay with someone finding a legal loophole, i am not okay with them blocking said loophole, or introducing new ones.


This is, notoriously, how tax avoidance works in the UK. There's a revolving door between the big accountancy firms that work out tax avoidance schemes, HMRC, which is the UK's IRS, and policy desk's in the Treasury, which define tax policy.

HMRC has been notoriously lax in enforcing and collecting tax nominally owed by the largest corporations - most recently Google, which "negotiated" a payment of £130m in back taxes due on £4.6bn in sales.

The details of the "negotiation" have been kept confidential, so we have no way of knowing how they were calculated.


Haven't read much about this, but the two potential scenarios (for businesses or individuals) are:

1) Legal: Take advantage of different national/state tax laws, exemptions, etc. and conduct business within those territories or have money move through them in a way that you minimize your tax obligation.

2) Illegal: Just lie about what money you have. Hiding it in offshore accounts and funneling it through intermediary channels when you want to make use of it.


You don't see a difference in whether or not you're breaking the law? Even if you believe that the law is disconnected from morality (not totally true, but more true than I would like), breaking the law still means that people with guns can put you in prison.

There's a real fundamental difference between having people look down at you as a conniving scoundrel who took advantage of the law, and being behind bars.


Exactly. It's actually worrying to see so many people who express opinions like "I know it's not illegal but I don't like what you do so you should go to prison, or be thrown out of country, or stripped of assets".


I don't think these companies "hide" any money there. I am sure they are reported in their financial statements. The fact that they are legally out of reach of the US IRS doesn't mean it is hidden.


Is he ... Putin seems rather clever. The Guardian suggests he isn't named in this leak anywhere. Indeed he appears to have no wealth on paper at all.

Apparently the most likely explanation is that by enriching his friends, he wins their loyalty, and they will then buy him whatever he wants. But unfortunately having loyal and rich friends is not illegal nor tax evasion. I don't see how Putin would go down for this even if he lived in the west.


It's unlikely any power player in the west will go down for this either. I suspect its more of a play to whip Europe up into a frenzy.


There is no similarity at all. These corporations don't hide anything, although they do exploit tax loopholes.


What are the people in the list hiding (that corporations don't)?


lets not be naive. A head of state can't have $2 billion in offshore saving without illegally sourcing some of that money. So for corporations, even though they are too evading tax, their sources of income is known. For many powerful individuals sources of income ins't known (and probably illegal)


The legality can be a grey area. Say Putin has the state bank loan his company $2bn, the company invests in stocks which double and then sells them and pays back the loan, which law has he broken?


In the US he would have broken many laws doing just that, as that kind of behaviors causes depressions. I have no idea what Russian laws are on the topic.

If people discover he is doing something like that it would cause a drop in the stock market, it is extremely risky behavior.


> A head of state can't have $2 billion in offshore saving without illegally sourcing some of that money

Sure you say that now, but when President Trump comes to power is it still true?

(I have no clue how much he is actually worth, just countering that heads of state can have significant legitimate private wealth)


Sure, ones that were working on legitimate economic activity before taking office. But if someone comes into the presidency as a lifelong intelligence officer with no massive inheritance, and after 15 years in office is a multi-billionaire, it's pretty clear what's going on.


The Guardian also had articles about companies that "hide" their money in Ireland,

Google for "site:guardian.co.uk double dutch sandwich" or Double Irish

http://lmgtfy.com/?q=site%3Aguardian.co.uk+double+dutch+sand...

So to paraphrase your point:

"It isn't. The point of this is that Apple|Cisco|... is doing it."


> The point of this is that Putin is doing it.

In addition Icelandic PM and Cameron's late father.


The difference is absence of evidence of illegal activity in the case of corporations.


Come on, play along. If the masses don't revolt and overthrow Putin we're going to have to fight WW3. This is our best shot to save millions of lives.


I suspect this will end up fizzling out and not resulting in very much.

From the Guardian articles it's becoming clearer that Mossack Fonseca is not some sort of mafioso outfit. Even the Guardian's own coverage has to admit that they do have compliance staff, do perform due diligence and do report things to the authorities. And they did close down operations when they got wind of illegal doings. So any stories have to become arguments about specific cases and debates about whether they could have done more in those cases, rather than the more juicy story they clearly want, implying that MF is some sort of criminal nexus that is being taken down by the journalistic establishment.

If we look at the Swiss banking leak from a few years ago, there were thousands of account details leaked to the UK government which assigned hundreds of tax officers to investigate them. And it turned out that about two thirds of them had paid exactly the right amount of tax all along. Of the rest, actually proving criminal intent turned out to be impossible, so of the original 1000+ account holders, only one case was ever actually taken to court. The others were cleared up through fines. The resulting amount of revenue was trivial at only £135 million, probably the costs of the investigation itself consumed most of that. This wasn't UK specific, other countries also ended up finding the data was useless for prosecutions.

The same was true of another case, when the Swiss authorities agreed to start sending tax information to the UK. The government thought it was in for a windfall and wrote the expected amounts into the budget. Red faces followed when the actual amount of unpaid tax turned out to be much lower than hoped for.

Maybe the Iceland angle will result in a few heads rolling, who knows, but I'm willing to bet that most of these revelations end up having very little impact: the worst cases are all in places where the local law enforcement is too weak to prosecute presidents and other heads of state for corruption.


I think you're downplaying this more than you should. I got a very different impression listening to Nicholas Shaxson (author of [1]) on the BBC. Most if not all the world leaders involved in this leak are VERY likely trying to hide personal money from their own country, that alone is a huge deal.

[1] http://www.amazon.com/Treasure-Islands-Uncovering-Offshore-B...).


Exactly, why is Cameron's holding offshore stuff? Now he's dead and Cameron has picked up his assets, no doubt having avoided inheritance tax, is he holding these now?

Why do normal people pay these taxes yet these guys do not?

-----

to the poster below as HN throttle messages when UK corruption is raised:

I think he was mocking the UK's corruption as law.

The last part is a nod to Private Eye, the only remaining free press in the UK.


Re: Cameron Sr & Blairmore holdings use of the Panama firm.

All of this is a perfectly legal tax avoidance scheme for the rich.

The company, legitimately, never paid a penny in UK taxes because it was run by various Bahama Islanders & decision making was done in Switzerland at a ski resort.

The Guardian article suggests there is evidence that the decisions & meetings were held in the UK - if that is true then Cameron Sr. illegally evaded millions in UK taxes.

According to the Guardian, David Cameron has answered these claims by stating: 'This is family business'.

Many will recognise this classic rejoinder from the Godfather movies.

Now we are told the firm is being run from Ireland, where Google and Facebook were working the, perfectly legal, 'Dutch Irish Sandwich' tax avoidance scheme - that David Cameron rightly criticised and both tech firms apologised and paid up.

So once again this is all perfectly legal.

Perhaps a bit hypocrital given Cameron's 'tough' stance on tax avoidance and trying to put the blame on comedian Jimmy Carr.

Of course, as before, if decisons were still being made in the UK, then the company would owe many millions in UK taxes and fines for evasion - but no-one is suggesting that.

Jimmy obviously should have used the Cameron Family firm.

The, probably perfectly legal, tax avoidance scheme for the super rich is called Blairmore Holdings.

It is named after the ancestral Cameron family estate which recieves tons of money from Europe simply for the amount of land it contains.

All perfectly legal, a sort of welfare for the gentry.

If this all paints a picture of corrupt toffee nosed twits spouting lies about the poor while filling their offshore coffers then...

shurely shome mistake.

David Cameron is fully expected to give back the millions he inherited from all these decades of tax avoidance - cough or not.

http://www.theguardian.com/news/2016/apr/04/panama-papers-da...

/s


If it's ethically questionable then that's a good reason to publish this information, especially when politicians are involved.


I am editing this to a sarcasm tag and of course I agree, if he doesn't resign tomorrow then parliament is a poor joke.

Which is of course is probably also a joke, lols & nervously resumes studying UK libel laws


Correction David Cameron has declared he inherited £300,000 of onshore wealth...

http://www.theguardian.com/politics/2012/apr/20/cameron-fami...


Looks like Shaxson is a guy who writes books arguing for more financial regulation, talking to a media organisation. So that's two entities who want the story to be big.

The worst offenders like Poroshenko are already known by their people as being corrupt. It is unlikely these cases will significantly change anything for them. Perhaps there will be more cases like Iceland, although it's a little hard to know how much benefit those politicians really got from their companies.

I restate my case: the most impressive cases of corruption are in places where nothing will happen, and the cases in the west will turn out, on deeper investigation, to reveal not much of legal interest ... gaming of vague rules, at best.


I think you're misunderstanding why so many people are shocked/upset at this. I think Glenn Greenwald puts it well in his article [1]: "The deeper scandal is what's legal, not what's not."

It's the same reason why people are so angry about the NSA scandal. You can have rubber stamp courts declaring everything you do legal all day; the point is that most people don't think what's happening is ethical.

[1]:https://theintercept.com/2016/04/04/a-key-similarity-between...


And I think you're misunderstanding my posts. Where did I argue people would not be shocked or upset?

I do not think this is comparable to the Snowden leaks. Those revealed secret courts, secret interpretations of laws and showed that spy agencies are effectively above the law. Many people had no idea what those agencies had become capable of or the lengths they were going to.

But the fact that tax laws allow for offshore companies is not news. The fact that there are lots of them is not news either, these things exist in public registers. The story here is not that these things exist or that they work - which everyone knew already - it's who is using them.


> And I think you're misunderstanding my posts. Where did I argue people would not be shocked or upset?

Maybe he did misunderstand(?) your following comment: "I suspect this will end up fizzling out and not resulting in very much."


That's a prediction about what will happen (legally and politically), not a statement about how people will feel about it.


Far as I've seen they're a typical offshore consultancy that gets paid well to obstruct anyone poking around (see Nevada incident). It doesn't necessitate that their clients were doing illegal stuff, but it does heavily suggest it.

It does seem like very little will come of this in the western world, and I do agree with your last sentence.

A conspiracy theorist would note the curious timing of this high profile but low impact leak - immediately after the unaoil release implicating a lot of multinationals, even though SZ originally acquired these documents a year ago.


As far as tax law is concerned all tax havens are essentially the same - money that's in one tax haven is the same as money in another tax haven. Someone who wants to minimise their tax can choose any tax haven and get the same end result.

What that means is that if someone has chosen a Swiss bank, which are relatively open and willing to comply with the tax officials from around the world, then they're not hiding anything.

On the other hand, if someone choses Panama, a country that has completely opaque privacy standards and is totally unwilling to comply with requests from tax officials, police, governments, etc then they are very likely to be hiding something they want to keep secret.

This has the potential to be a much bigger story than the Swiss banking leak.


£135 million is a lot of money. Hundreds of tax officers to investigate them is not actually that much. Averaging 6 months from ~300 people @ £80k /year = £12million netting £123 million.

Further discouraging this type of activity likely has indirect effects dwarfing that initial £135 million.

PS: A more realistic estimate is less than 300 people for ~15-90 days to do a quick assessment and rapidly dropping to ~10 people a year out.


You have to include all the overheads, like office space, pensions, payroll taxes (does HMRC pay tax to itself? hmm), administration costs, travel expenses etc. I have been told in the past that these things roughly double (rule of thumb) the cost of an employee over their salary costs. I don't know if that's true, but that's what I was told.

But yes you're right. I exaggerated when I said most of the collected revenue would be spent on overheads. It's just some of it.

If the true overheads are more like 24-25 million, then you get a bit more than 100 million recovered, which is about 0.1% of one years deficit. Profitable but not going to shift the needle in any noticeable way.


Overhead really depends on the type of work. But, HMRC is not forced to be located in high cost areas which really brings down costs.

Anyway, you should get into the right ballpark just looking at there budget. From: https://en.wikipedia.org/wiki/HM_Revenue_and_Customs £4.09bn budget, 56,000[1] FTE = ~£73,000 per FTE including all overhead except possibly unfunded pension liabilities.


That's a good way to calculate it, fair enough. I concede the point.



Completely agree. While I'm very interested in the data and I'm sure there is a significant amount of implied evil deeds going on, I think notion that there is a conspiracy to protect the 1% is sophomoric enthusiasm at best (and idiocy at worst).

People move money around for a variety of reasons. Tax fraud, sure. Capital flight for protection of assets from instability or fears of nationalization (Cyprus, for example) is another completely valid reason and I don't see anything wrong with that. At different scales of wealth, a shell company isn't that different from hiding cash in the mattress.

Now, if you're talking about dictators in resource rich banana republics siphoning off riches of their country, then by all means, let those be prosecuted... But how likely is that?


These keywords have been censored in Chinese microblog services, along with all news mentioning Panama Papers removed, due to obvious reasons.


Nobody from the US mentioned? This doc was definitely scrubbed.



I saw another post elsewhere saying that that's planned for the future, this was just the first round initial release


No, it was created by George Soros with the help of some US institutions.


I think its probably a hit job to smear Putin once again, especially because of rising conflicts in Azeribaijan and Armenia.

"Big Leak of Data" but doesnt actually make the data public. I mean, seriously???


> I think its probably a hit job to smear Putin once again

I thought "smear" was the same as "defame". If he is actually tax-evading and stealing Russia's money, it's, at worst, exposing some of the skeletons in his closet.


The FSA in Syria also broke the ceasefire just 2 days ago to the dismay of John Kerry and others, and the Russians still have great intel:

Russian presidential spokesman Dmitry Peskov says that some mass media are preparing an outspoken pre-planned media attack against Putin and his entourage, according to Russian news agency TASS. http://www.unian.info/world/1302754-kremlin-some-mass-media-...


Does anyone know how such a thing was pulled off? I mean, it is not like taking a paper clip from office. This is mind boggling amount of information - how can someone copy so much info and send it to a newspaper etc without setting off red flags? This is incredible.


A single HDD worth of content isn't a mind boggling amount of information.


True, but collecting it isn't (unless it was all in one place, which I doubt). And taking it out of the firm isn't (unless they have zero security).


It could be quite accessible by someone like the IT and e-mail administrator.


Tax avoidance in the UK is a big problem. We can't pay for our infrastructure because of these guys avoiding tax.

But it's not just working people in the UK - working people all over the world are being denied services thanks to UK tax havens.

Who is causing more problems for working people? Sparse terrorist attacks or day-in, year out tax avoidance depleting spending and raising land costs?


Tax avoidance in the UK is a big problem. We can't pay for our infrastructure because of these guys avoiding tax.

Tax avoidance is undefinable so this sort of statement is meaningless. The UK can't pay for its infrastructure due to a massive structural deficit. Even if you start defining legal behaviour as immoral and try to grab more money from targeted companies or individuals, the amounts of revenue collected would be trivial compared to the size of the problem - and it'd be a one off hit. Once a country demonstrates that the rule of law is optional, investors start to flee. And that's the sort of avoidance that you can't tackle with any law.


The exact line drawn between tax efficiency and immoral tax avoidance is hard to pin-point, but I'm certain that I know a bunch of crooks filling their boots when I see it.

These off-shore companies are not fair. Do your work, pay tax on it like the rest of us.

As for the rule of law being optional. I pay my taxes yet these guys choose not to by using loop-holes. That is not the spirit of the law.

I reject this kind of argument, it's very popular but it doesn't hold any weight with me.

They could stop this kind of rubbish but they don't want to because people like Cameron are using it.

Let's have land value tax now and stop this international hide and seek.

We don't want these "investors" in the UK. UK banking funnels dirty money into property which ramps the price for workers. Banks they "help" by lending us insane amounts which absorb all our income (and require ultra low rates forever). None of this is of any help to the normal working person who is doing stuff of actual use that makes the world turn, like food production, doctors, etc. These guys are taking and giving nothing back. Tax them!


"I know it when I see it" is not a basis for a legal system.

Look at it like this. You live in a country, you work there. Now imagine you go on holiday to a sunny destination. Whilst there, you open your work email and reply to a few mails.

If you are then arrested by the local police and told you are doing business in that country without paying taxes, and thus must now pay a big fine or be prosecuted for tax avoidance, would you be happy about that? I think not.

What if the locals didn't like your kind of people and thought your treatment was totally fair? "I know crime when I see it", they say. Would you roll over and meekly accept it?

No, you wouldn't. You'd extricate yourself as quickly as possible, and then leave and never go back. And you'd tell all your friends to stay the hell away from that banana republic.

Well, that behaviour applies to companies too. If you want them to employ people in your economy, there must be clear rules and those rules must be followed predictably.

I quite agree that interest rates are being artificially kept far too low around the world and this is driving property bubbles in places like Manhattan and New York. The solution to that is not to tax people who are just trying to shield themselves from inflation. The solution is to abolish central banks.


They lobby to add loopholes to the legal system because the banks control our "democracy".

Both major parties are captured by the banks. We have first-past-the-post system to keep it 2 party.

We need people to actually put their foot down.

I'm happy for every single one of these parasites to leave and never come back. The wealth of the UK is not in these guys with their paper it's in people doing actual work. If we need to issue more currency to facilitate this then fine, it's fiat.

Their paper is not facilitating work. We have smart people who are getting up in the morning and can do things. Their paper in fact allows them to claim a slice of the working man's labour.

I've seen these arguments on "what if". These guys are guilty, we all know it. We need tax payments to have a democracy, it's these guys who are breaking the law and undermining our country.

We do not need these shysters.


The UK is not a two party system. Right now the dominant parties in the UK Parliament are the Conservatives, Labour and the SNP. The previous government was a coalition with the Lib Dems.

The banks do not control democracy. Governments control banks. I know this may be painful to hear, but just go talk to people who work in banking about how many of their banks staff work in "compliance" i.e. implementing the wishes of all the various government agencies. You will be amazed at how many thousands of people (in some big banks, tens of thousands) do nothing all day but implement various regulations.

I'm happy for every single one of these parasites to leave and never come back.

You say that now, but you wouldn't be. The UK has a very narrow tax base. That means most tax is paid by a tiny number of people.

http://www.economist.com/news/leaders/21618784-taxes-are-bes...

In the UK the top 1% of earners pay about 30% of all income tax. In the USA the statistic is even worse, 1% of all earners pay 50% of the income tax. These figures have been going up over time.

In short, the government is paid for by ever fewer people, who pay ever more tax. This makes countries very vulnerable to them just leaving. That's the underlying reason why the British government fights so hard to defend the city, and why Osborne was willing to take the political hit of reducing corporation tax in his last budget. If the big earners leave, then any chance of ending austerity within the next 20 years is gone for good. The UK would need to start doing actual, serious austerity - like shutting down large parts of the NHS.

If we need to issue more currency to facilitate this then fine, it's fiat.

All that does is tax people through inflation instead of direct payments. The UK has been there before, in the 1970's. It resulted in the country going to the IMF for a bailout, Greece style. If you think people buying houses just to protect their wealth is a big problem now, a few years of trying to fund a massive deficit through money printing would show you what's truly possible when people get desperate.

These guys are guilty, we all know it.

That's right. Burn the witches. Worry about the consequences later.


These people are deriving enormous economic rent. Many land owners are subsidised.

The UK works by enough people getting up to provide food, education, medicine etc, not due to paper circulating.

How are 1% of people providing 30% of "value" to the UK each day? They don't. They are using their paper claim to claim the labour done by others.

The USA has the same problem.

Let's flush these parasites out.


Slogans, inciting hate. That is no basis for healthy economic policy.


>"I know it when I see it" is not a basis for a legal system.

It's the only basis for a legal system. All legal concepts and constructions are judged and implemented by human beings. Asserting that you have to be able to explain things without ever invoking intuitive concept classifications is unreasonable, since that basically can't be done yet.


> All legal concepts and constructions are judged and implemented by human beings.

But they have to be judged against written law. Your answer reduces to a situation where we can rip up all statutes and tell the judges "Don't worry about tax evasion. You'll know it when you see it."


> how the world’s rich and famous hide their money offshore

It shouldn't be just the rich and famous. These schemes don't cost much. I'm sure many internet entrepreneurs use them, because they 're easy to setup and to do accounting (plus low taxes, ain't that sweet?). People have already stopped acting surprised when they read about big corp. dodging taxes. We live in a financially globalized world, but taxation has not been globalized. The main issue here is whether the companies are laundering money or used for illegal purposes. The tax evasion issue is too hard to solve with data exchange (which now exists). These people are always going to be finding new ways to avoid taxes. Perhaps governments should start acting smarter, like moving more to indirect taxation.

Perhaps if this "leak" had happened a few years ago, when panama was still a tax haven it would have some real meat. Right now it seems like it will be used to divert attention.


Well team, we now know what DAVOS ( World Economic Forum ) is all about, cover for tax avoidance or evasion and a collection of customers for Mossack Fonseca LLC - Our job now is to see how much economic harm has been done by them not paying their fair share of taxes. (think Flint Water, EPA Supper Fund, and Higher Education fund etc. ) Based on this claw-backs of all or part of the taxes. And for Mossack Fonseca ( it has now to be part of the FCPA regulation with full reporting requirements to the CCB/ECB and the IMF ) - Without investment in people, innovation is cut off and people revert to the most primordial jobs and actions - we can have better with real education and distributed know-how where people work for the betterment for humankind.


The government structures are completely broken from the inside out. We badly need a disruption in this sector. Digitally decentralized democracy, blockchain government, ethereum-based economy! Not sure. These are random thoughts, but I would love to see at least some baby steps towards this direction. Not an expert on this topic, but I can see there are potential opportunities for the world as a whole and, what's most important, its economy. I'm sure there is an emerging field coming soon around this niche. Most likely, it's just a matter of time.


The internet does make direct democracy more feasible. One can engage public libraries to ensure everyone has internet access.

This would need to be checked and balanced, but it effectively makes lower houses (House of Representatives, for example) obsolete.



Am I the only one to find the reporting on this to be rather one sided? Sure we all know Putin is a shady character to say the least, but none in the US or the UK being directly reported on? Germany? France? Instead we get a token gesture in the way of Iceland's PM being implicated.

The Guardian is losing a hell of a lot of credibility in my opinion for having this biased view being published.

I say make all the documents available to the entire world. That is the only way it will be less media propaganda and more a true leak.


http://www.theguardian.com/news/2016/apr/04/panama-papers-da...

The Guardian reports the UK Prime Minister's father used the firm.


Yes I saw that however you cannot have the mention of his father be seen as adequate reporting on the misdeeds of the elite.


Yes Cameron answered all allegations regarding this in 2009 so it will make him look tough - storm in a teacup.

Greenwald cites this tweet as evidence of no US or Israel links https://twitter.com/adamjohnsonNYC/status/716718478577823744

captured from : https://panamapapers.icij.org/the_power_players/

unclear teaser denial by icij chief : https://twitter.com/mathewi/status/716771686482202625

* Greenwald https://theintercept.com/2016/04/04/a-key-similarity-between...


From what I've read, there will be much bigger news related to Western figures coming out of this leak in the near future.

puts on tinfoil hat: However, with that said, the organizations behind the release could very well have a hidden agenda as they don't seem to have any intention of releasing the full leak.


I really hope that this does happen. I would like to see unbiased reporting about all of the information instead of selective reporting.


David Cameron's father is frequently mentioned in the news reporting I've seen.


That is true however it is a very far cry from adequate unbiased reporting. We get lengthy pieces on the "usual suspects" but a mere token gesture for the elite of other countries.


Give it time.


And nothing will happen to them. In Canada the rich get an amnesty and just have to repay some taxes.

http://www.cbc.ca/news/business/canada-revenue-kpmg-secret-a...

And they mention all these dictators. Why on earth Putin & Co will try to evade taxes and hide his money? Putin owns Russia, he is the taxman and the hangman. He doesn't have to hide anything.


> Why on earth Putin & Co will try to evade taxes and hide his money?

There's plenty in Russia who believe that while his cronies live off bribes and embezzlement, Putin himself is a Platonic father of the nation. One argument you hear often is he doesn't need to steal anything because he could have everything. This has certain moralistic beauty of a man one with his country. It also provides a way for an average broke Russian to identify with the sacred figure.

Finding out he earmarked some just in case undermines that and suggests Putin himself might not be so certain in near future. And while this revelation will have no immediate social consequence and indeed will be feverishly denied by his supporters, with time it will still sink in.


Why on earth Putin & Co will try to evade taxes and hide his money?

Why would the anti-russia media focus on one powerful rich person as being bad?

Gee, I wonder...


Putin's record speaks for itself, really.


His record of not funding Arab militants to overthrow country leaders in the Middle East in the last decade speaks for itself as well.


I'm not sure to what leader you're thinking about. If you're thinking about the US, you probably mean Syria, in which case I'll need a lot of convincing that events down there would have evolved differently without US involvement, considering the agendas of the local players.


"he is the taxman and the hangman. He doesn't have to hide anything."

I bet that the last Tsar followed the same logic..


The laundering could be for a whole sets of reason. Two offhand examples; having money available for barred transactions due to sanctions[0] or having untraceable money available for intelligence or other related illicit activities. Some people rather have a gun and not need it than need a gun and not have it.

[0] https://en.wikipedia.org/wiki/International_sanctions_during...


I'm surprised there is no American figures on the list. If some don't appear as more info is released, I'll seriously question the motivations behind this leak.


Let's say it is biased, does it make it any less true these people used shell companies to obfuscate their holdings? Or, are you saying this behavior is okay and in which case it would not matter?

If you look more carefully it does list some less known Americans.


If the leaked documents implicate important US figures, but the reporting of the leaks do not mention them, then the public will interpret that as "see, US figures are not engaging in this activity!".

In other words, the reporting of this leak can be used to shame / reputation smack anyone who is on the current Western hit list while masking that behavior for anyone that the Western media outlets want to protect.


Yes, that's one take. Another take is exposing some is better than exposing none.

This is like saying, hey the news mainly shows when white cops beat up on black suspects, but it doesn't much show when white cops beat up on white suspects, (or any other combination) so they should not show any.


Anyone know how this tax sheltering works? The article mentioned "One leaked memorandum from a partner of Mossack Fonseca said: 'Ninety-five per cent of our work coincidentally consists in selling vehicles to avoid taxes.'" That would lead me to believe the "vehicle" for transferring wealth offshore might be selling vehicles - like selling yachts? Just a guess though.


See the third definition here:

http://www.merriam-webster.com/dictionary/vehicle

They're generally referring to legal entities, investments, and particularly the interplay of a network of the above which exercises various features of countries' tax laws in advantageous ways.


"Vehicle" in this context just means legal entity. It's the jargon of the space, it doesn't mean a mode of transport.

The principle of offshore tax shelters is very simple. Countries tax activity that happens in their jurisdiction. Only America tries to tax activity that happens outside of America, and it's attempts to do so have caused huge problems for Americans everywhere (whilst raising trivial amounts of revenue). All other countries recognise that legitimate taxation is inherently region specific: a country that raises taxes from other countries is more properly called an empire.

So countries tax things that happen inside their borders, and countries can set tax rates independently, and the world is full of small countries that don't require much revenue to operate. Hence, if you can shift your business activities from a high tax jurisdiction to a low tax jurisdiction, you can legally pay the lower rates of tax.

Essentially all discussion of tax "avoidance" you may encounter revolves around the inherent difficulty of figuring out where a business actually is. For a person it's easy. A person is where their body is, and simply counting days spent in a country is sufficient to decide on tax residency. For a company it is not so easy because a company can do things in many places simultaneously. The rules that try to resolve this conundrum are extremely vague and thus, easily gamed.

The case of the UK PM's father is instructive. His company had most of its meetings outside of the UK. This allowed them to argue that it wasn't a British company and thus shouldn't pay British taxes. If the British tax collectors want some of that revenue they'd need to argue that actually the business was done in the UK, really. That's a tricky argument.

In the case of companies like Apple or Google, they set things up so their business is done in Ireland. They do this because the Irish people have repeatedly opted to allow very low (effectively zero) rates of corporation tax in order to attract skilled employment to a part of the world that would otherwise be fairly unattractive. Whilst technically Irish corporation taxes are not zero, their rules define the location of a business differently to some other countries, which means arrangements like the Double Irish become possible and that allows for moving profit out of Ireland essentially untaxed. The Irish people know this and allow it, because it has been a very powerful strategy for them and has made Dublin a business center of Europe. Some other countries like to complain about this, stating it's unfair competition, but all countries compete to attract businesses in various ways - often with direct subsidies rather than low tax rates. So their complaints ring somewhat hollow.

In practice the money these big companies stash in the Bahamas will eventually get taxed anyway, because taxes apply when the money moves, and eventually that money will move. Probably back into the USA if/when a 'tax holiday' becomes politically acceptable.


You're a bit wrong in the beginning. Most countries tax activity that happens outside, but almost all only do it for their residents (UK is an exception, it doesn't even tax it's residents, if they're foreign born). Only the US (and another two or so third world countries) attempts to tax its citizens for all activity even if neither the citizen nor the activity is in the US.


Yes, sorry, I was talking about corporate taxation. Yes if you live in a country then all of your activity is assumed to have 'happened' in that country even if the money was raised abroad. But that's easy to enforce, as you are physically in their jurisdiction.


In the Cameron Sr. case the Guardian suggests that if they did have any UK decision meetings then Blairmore Holdings would be due UK taxes.

http://www.theguardian.com/news/2016/apr/04/panama-papers-da...


That's far from accurate. Many and possibly most countries tax overseas investment income. https://en.wikipedia.org/wiki/Tax_treaty

The normal way this works in you can deduct foreign taxes from foreign income to avoid double taxation and that's about it.

Tax havens are the exception not the rule.


Why are there sovereigns listed? If you have your own country, and it's not known for the rule of law, why do you need a shell company in Panama? Aren't you above the law?


My guess is that people who currently have their own country that's not known for the rule of law want an escape hatch with assets that are secured by the rule of law, in case it turns out that in the future, their country is had by someone else.


The hypocrisy of these politicians attacking tech companies for not paying more tax all the while they're using offshore tax havens to hide their money.


Without more context, the information here is titillating but not ultimately all that useful.

Let's generalize the content so you can see what I mean:

"A massive trove of documents was just leaked from a law firm that helps companies and individuals create and operate shell companies in [jurisdiction X]. We don't know what those shell companies are used for, but they could be used for wrongdoing! And this law firm was suspiciously focused on protecting its clients' identities, which further suggests wrongdoing."

Jurisdiction X in this case in Panama. Ok, it sounds dubious to us 'Muricans.

What if jurisdiction X was Delaware? Would you think the law firm was setting up shell companies for "wrongdoing", or because starting and operating a business is complicated and there are a variety of practical reasons to base your corporate in entities in Delaware rather than (say) Maine? Would you think the law firm is protecting its clients identities because of an effort to conduct fraud, or because law firms generally err on the side of preserving the sanctity of attorney-client privilege whenever possible?

Now let's say Jurisdiction X is Ireland. Are the companies that use Irish shell companies engaged in wrongdoing? Or are they responding to the bizarre and complicated world of international regulation and taxation as any rational actor would? Certainly secrecy is not the goal - everyone, including the IRS, knows everything about how e.g. Apple uses Irish entities to conduct business.

Now let's say Jurisdiction X is Cyprus. Are the shell companies for tax avoidance in the home country, or for the reasonable avoidance of double-taxation? One reason investment firms use structures based in Cyprus (or the Caymans, or BVI, or Luxembourg) is that these countries have mutual tax treaties with most Western nations, while the US does not. Those tax treaties ensure that the investor will end up paying taxes only in their own domicile, not the nation they invest in AND their own domicile. For US persons investing in (say) Poland through a Cyprus entity, they end up paying their full slate US taxes (NOT avoiding them - in fact they usually pay higher US taxes than they otherwise would, because for technical reasons the Cyprus blocker often results in paying ordinary income tax rates on what would otherwise be treated as capital gains) but they avoid having to pay BOTH Polish taxes AND US taxes. This is akin to the reasons why many/most private US businesses are set up as pass-through entities rather than corporations - avoiding double taxation is not the same as dodging taxes.

*

I'm not an expert on Panama, or international tax for that matter - I just have some experience dealing with these issues. So I can't say for sure in what specific purposes using a Panama entity is equivalent to using a Delaware entity or a Cyprus entity, vs. a blatant attempt to dodge taxes.

All I know is that, from my own experience, there is a huge gap between the public PERCEIVED reasons why companies and individuals establish overseas shell corporations (tax avoidance! money laundering! bribery!) and the ACTUAL reasons they do so (procedural efficiency, clear legal rules, full payment of taxes but not OVERpayment of taxes, etc.).


An interesting take from a commenter on my Facebook feed:

"It's all good. Taxation is stealing, hiding wealth in off shore accounts is the only recourse left to the little man against large government greed."


I don't think the juvenile arguments of Internet Libertarians really qualify as interesting.


This is why Facebook recently added a variety of new ways to illustrate your disappointment on posts.


Curiously they left off "rolleyes"


Seems to be a technique beloved of billionaires, not 'little men'.


In the eyes of those "Internet Libertarians" it is your own fault if you are not a billionaire.




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