The Panama Papers Explained pt. 3

The release of the Panama Papers represents the single largest journalistic leak and, perhaps, achievement of investigative journalism in the digital age. The papers give a rare glimpse into the world of offshore shell corporations, and the many ways that they can be used nefariously, due to the lack of oversight that accompanies them. Because news is still coming out about the Panama Papers every single day, it can be difficult to keep track of what exactly this latest revelation means. To help in that understanding, here is a 3-part series that explains the Panama Papers and what we can expect to see from here…

Regions of hidden wealth

Of the offshore business structures that were created by Mossack Fonseca, most of the ones that were hiding wealth for the purpose of tax evasion (which are nearly all of them) were set up in the Caribbean, with over half of them being on the British Virgin Islands, Panama, and the Bahamas. Of where this money came from, nearly all of it derived from industrialized, and often Western, countries. China, Russia, and Hong Kong represented the largest contributors of tax evaded wealth, with Britain and Sweden being shockingly high, as well.

There are legal uses of offshore firms

It’s important to note that there are plenty of uses for offshore firms, like Mossack Fonseca, that are perfectly legal and ethical. However, the particularly shocking thing about this leak isn’t the illegal activities that were revealed, but the amount of unethical activity and tax evasion that is actually legal. The truth is that there may not be a lot of legal precedent to go after individuals for some of the largest tax evaders exposed in the documents (although there will be plenty who will be prosecuted, as well). If anything, these documents show that new policy needs to be instilled to try to stop the $500 billion of lost tax income that is lost, annually, from tax evasion.

Information is still coming to light

There is still plenty of information that is coming out about the Panama Papers. Journalists have promised that they will release a full list of everyone who is implicated in the documents in early May, as well as publish the entirety of the papers later this year. Recently, Panamanian law enforcement raided a Mossack Fonseca property to secure more evidence about whether the law firm had broken any laws. These investigations will surely bring new news to light.