The Financial Express

A game of cat and mouse

A game of cat and mouse

In 2013 the International Consortium of Investigative Journalists (ICIJ), a global collaborative platform of media organisations and journalists, obtained 260 gigabytes of leaked offshore data contained in 2.5 million documents from Portucullis offshore group in Cook Islands. In 2016, the information was from the law firm Mossack Fonseca in Panama, and hence the leaked documents were called Panama papers. The information was equivalent to 2.6 terabytes from 11.5 million files. The Paradise Papers of 2017, on the other hand, contained 1.4 terabytes of data from 13.4 million documents. The source of the leaked information was the law firm Appleby in British Virgin Islands. Now we have the Pandora Papers not from a single, but 14 different firms working for the superrich and the powerful people who evaded tax, transferred and kept their wealth in offshore tax havens through anonymous companies. The amount of data leaked is colossal ---2.9 terabytes of data in 11.9 million files. The people named in the latest data leak are 300 politicians from some 90 countries. They include 35 heads of state, both former and present. They include Jordan's King Abdullah, Azerbaijan's president Ilham Aliyev, Kenyan president Uhuru Kenyatta, Czech prime minister Andrej Babis, former British prime minister Tony Blair and a host of celebrities as well as non-celebrities. But who are actually these whistleblowers in the so-called ICIJ? It is a consortium of more than 600 journalists from 117 countries. They along with some media groups work in sync as though from the same newsroom. They investigate leaked data on hidden offshore assets, financial dealings and business operations of very wealthy and powerful people from across the globe. Based in Washington, USA, it has been working as an independent organisation since 2017. However, it was originally created in 1996 by the US Centre for Public Integrity.

But the question is what do these leaked documents that they have been obtaining over time from different sources actually say about the rich and the powerful? What are the differences between the eruptions of information from the various, so-called Panama, Paradise or the latest Pandora, papers?

The Panama papers of 2016, for example, focused on what was going on at the offshore tax havens by way of tax evasion. As expected, the Panama paper leaks prompted international tax watchdogs to act so that the loopholes through which those tax crimes took place could be plugged. That also helped trigger international tax transparency efforts. But the tax evaders did not also sit idle. They devised more creative strategies to do the same thing as they had been doing all along. The Paradise papers of 2017, therefore, looked at the creative aspects of the tax cheating being committed by the offshore companies. Multinational companies are notorious for this kind of tax cheating. But there is also a lot of nationalistic politics that often shields these global behemoths from tough action by countries where they operate or international tax alliances. However, the Organisation of Economic Cooperation and Development (OECD), a platform of countries committed to democracy and market economy, is now looking into how transnationals' tax dodging behaviour could be addressed. On this score, OECD has also been, as part of its objectives, trying to find answers to common problems, identify good practices and coordinate domestic and international policies of member countries. As such, it is now engaged in an effort to reach an agreement between its members to the effect that a minimum corporate tax rate could be fixed for the multinationals. This may discourage the multinationals from shifting their operations to where tax rules are lax or the governments are amenable to manipulations. This is about international efforts to check tax evasion by the very rich and the powerful. But learning their lessons from the earlier data leaks, the world's filthy rich, as noted in the foregoing, have been looking for more ingenious ways to hide their wealth through, what tax sleuths call, shell companies and offshore trusts. As their very names signify, the so-called shell companies are indeed shells with nothing inside. The Pandora papers have actually highlighted the ways in which these entities have been used by the superrich to hide their wealth. From that perspective, Pandora papers are more interested in the inherent weaknesses or biases in the tax regimes of different countries that help the rich to keep their wealth in ways that cannot be termed illegal. From this standpoint, one cannot say that all the people mentioned in the Pandora papers have committed tax crimes. For some very rich people may well want to keep their legally earned and owned money at locations they think safe. That happens in cases where the countries where those rich live are politically unstable or are a hotbed of violence and crime. So, they look for such offshore legal structures to secure their wealth. But unbeknown to these otherwise legal owners of big money, they might as well be falling into traps. Since, the offshore entities providing them the service to keep their (of the rich) wealth safe, may also be serving others to launder their ill-gotten money. However, the Pandora papers, which are yet to be made public in their entirety, have also been trying to show that these data leaks and the actions international tax watchdogs and alliances have been taking in response have not been able to put an end to the bad practice of tax evasion. New tax havens have been operating even in countries known for strict tax laws. South Dakota, Montana, New York, Wyoming and Nevada are to mention but a few of the states in America that are hosting such rather expensive offshore sites. In fine, as long as tax laws remain lax favouring the rich, leaks will continue. Law enforcers, on their part, will mount their searches anew. Thus, playing cat and mouse between tax dodgers and their catchers will also continue.


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