LONDON – What do the recently released Panama papers, ExxonMobil, and a Canadian mining company operating in Guatemala have in common? They are all cases in which powerful individuals and organizations tried to obfuscate, deceive, or hide behind a front. And they are all cases in which that effort didn’t work.
The global uproar triggered by the Panama Papers – 11.5 million files taken, apparently by computer hackers, from the world’s fourth-largest offshore law firm, Panama’s Mossack Fonseca – is likely to continue for some time. The files’ release has revealed the extreme, and sometimes costly, lengths that individuals go to hide their assets and avoid taxation. What has been uncovered thus far ranges from legal but ethically suspect use of tax loopholes to efforts to stash or launder money gained through corruption or other illegal activities.
The reaction has been swift, harsh, and almost universally excoriating. Already, the prime minister of Iceland has been forced to resign, after it was revealed that he held stakes in offshore companies with his wife. Relatives of senior Chinese officials, including President Xi Jinping, as well as members of Russian President Vladimir Putin’s inner circle, have been implicated as well.
Xi and Putin may have little to worry about. But the sheer hypocrisy of government officials proclaiming the need for austerity and encouraging public sacrifice for the sake of long-term prosperity, while secretly avoiding that effort, is a galling violation of trust in democratic countries. If their offshore shell companies and bank accounts are legal, why go to so much trouble to be secretive? And if secrecy is legal, what is wrong with it?