The tension in the corridors of power in many countries across the Continents is almost palpable. Governments, leaders – some of them heads of state – bureaucrats and multinationals stand implicated in what has come to be the biggest financial scandal in history.
‘Panama Papers,’ as they are called, relate to more than 11.5 million documents including emails and other electronic data that reveal for the first time how money was moved around and hidden by at least 33 people and companies blacklisted by the United States of America for allegedly doing business with rogue states, terrorists and drug barons. The sums involved are huge; so are some of the names.
Leaked documents are the sort of beasts that are hard to fathom and even harder to accept; but not this one.
The identity of the leaker has not yet been established but that is not the point.
Dangerous trend
The fact that the leaked documents have been investigated by the Washington based International Consortium of Investigative Journalists (ICIJ), a Project of the Centre for Public Integrity, adds credibility to the belief that those in charge of defending the world against the undesirables were their patrons. This in itself is a dangerous trend and there are possibilities of more sinister undertakings of people in power coming to light in the coming months and weeks.
The leaked documents deal with allegations that more than 140 politicians and officials have offshore holdings of unaccounted money. Among are stated to be 12 current and former Presidents, Prime Ministers and Monarchs.
The law firm
At the heart of the fiasco is Mossack Fonseca, a law firm in Panama that specialises in setting up offshore companies. It has denied wrongdoing. Curiously, this is not the first time that leaked documents have caused a stir; although the earlier one was less toxic.
Leaked documents are the sort of beasts that are hard to fathom and even harder to accept; but not this one.
Three years ago, ICIJ published a series of reports on tax havens based on leaks of confidential documents. Some nervous clients of Mossack Fonseca asked if their secrets were safe. The law firm told them not to fret; its data centre was ‘state- of-the-art’ and its encryption algorithm was ‘world class.’
“Whoops,” said a Leader in the Economist.
Tax havens
“Friends of Vladimir Putin, the Russian President, have shuffled US$ 2 billion through a network of banks and offshore firms, the ICIJ claims. The brother-in-law of China’s President, the children of Pakistan’s Prime Minister and the cousins of Syria’s President Bashar Al Assad, all did business with Mossack Fonseca. So did Ian Cameron, the late father of David Cameron, Britain’s Prime Minister,” the publication said.
Graft in high places
Browsing through the data that the ICIJ has so far disclosed, it is striking how rich the cronies and relatives of some politicians have become. The daughters of Ilham Heydar oghlu Aliyev, Azerbaijan’s President appear secretly to control gold mines. A nephew of South Africa’s President, Jacob Zuma, has done nicely out of oil contracts in the Democratic Republic of Congo, where South Africa has sent more than 1000 peacekeepers.
Ordinary citizens are incensed. Mr Zuma faced impeachment proceedings this week over allegations that he misappropriated public money to build himself a palace and refused to pay it back. Furious protests forced Sigmundur David Gunnlaugsson, Iceland’s Prime Minister to resign, after his wife was revealed to have secret offshore investments with claims on the country’s failed banks.
Inequitable world
Corruption makes the world poorer and less equal. When politicians steal, they reduce the amount of public cash left over for roads or schools. When they give sweetheart contracts to their chums, they defraud taxpayers and deter honest firms from investing in their country. All this hobbles growth.
Cleaning up tax havens will not end graft. The prime responsibility for this lies with national governments, many of which should do more to make their finances transparent and their safeguards against cronyism stringent. But it would help if kleptocrats were less able to hide their stashes.
The world has not seen either the end of ‘Panama Papers,’ or those similar.
Our guess is that there is much more to come, some of them with political overtones so disastrous that it would be difficult to separate the criminals from those abetting them or turning the other way.
Dredging the canal of corruption has become even more urgent.
