Panama Papers reveal tax havens for elites

The release of more than two terabytes worth of documents and data on offshore financial dealings of wealthy, famous and powerful people around the world is raising questions over the use of such tactics to avoid taxes and move away from financial oversight.

This leak of data is one of the biggest ever- even more massive than the US diplomatic cables released by WikiLeaks in 2010, and the secret intelligence documents given to journalists by Edward Snowden in 2013.

An anonymous source contacted German based newspaper Süddeutsche Zeitung over a year ago to submit encrypted internal documents from Massack Fonseca, a Panamanian law firm that sells anonymous offshore companies around the world.

These shell companies are what make it possible for their owners to cover up all the business dealings they want. Billions of dollars can be hidden this way without anyone taking interest or knowing it is happening.

In the past year about 400 journalists from more than 100 media organizations in over 80 countries have been a part of researching these documents.

Using offshore structures is entirely legal. Businesses in Russia and Ukraine typically put their assets offshore to defend them from raids and to get around their country’s hard currency restrictions.

However, criminals take advantage of anonymous company structures. Shell companies and offshore accounts can be used to mask the origin of financial transactions and ownerships. Members of the Japanese Yakuza Mafia, the Sicilian Mafia and the Russian mafia have all been linked to these leaks.

Nothing has been done since the leak has been revealed and the problem of offshore tax havens remains unresolved, although it is quite possible the Panama leaks will have a significant effect on the future ability of the super-rich to hide their money.

With the leaks having names such as Vladimir Putin involved, there should be hope this will produce a global political shock that could lead to a spring on global governance.

The Panama Papers leak has revealed we aren’t just realizing the significance of a broken global tax system, but global governance itself. The ultimate challenge now is to change global capitalism.