Panama responds to its Papers
Juan Carlos Varela, president of Panama, expressed his commitment to cooperate with the international community in the battle against tax evasion and money laundering last Friday, April 8. The announcement came in response to various countries’ and entities’ harsh reprimands against Panamanian legislation after the leaking of millions of confidential documents concerning the dubious work of a Panamanian law firm, Mossack Fonseca, on April 3. The leak, published by the International Consortium of Investigative Journalists (ICIJ), has been denominated as the Panama Papers. The ICIJ report disclosed over 11 million documents linked to Mossack Fonseca for the past forty years. The leak reveals this law firm’s alleged role in helping the establishment of secret shell companies and offshore accounts for many powerful people across the globe, including ‘‘12 current or former world leaders, 128 other politicians and public officials, (…) business associates to Russian President Vladimir Putin, members of FIFA’S ethics committee and men whom the United States has indicted for corruption’’, according to a CNN news report.
The ICIJ investigation suggests that Mossack Fonseca helped its international clients conceal their wealth or avoid taxes. Although holding money in offshore shell companies is in itself not illegal, these companies are often linked to illicit activities, such as money laundering and tax evasion, since ‘‘they can be used to shield vast wealth from tax collectors, regulators and creditors’’, as reported by the New York Times. Many of those implicated in the documents have denied breaking any laws. Mossack Fonseca also released a statement on April 4 denying the suggestion of any illegal activity on their part and reaffirmed their intention of pursuing the anonymous entity that ‘‘illicitly obtained and published’’ the law firm’s documents.
World leaders and organizations across the globe have also responded to the Panama Papers scandal throughout the week. Most notably, the Organization for Economic Cooperation and Development (OECD) called out Panama for being a ‘‘fiscal paradise’’ and reprimanded its ‘‘culture for secrecy’’. Likewise, the French Finance Minister added Panama to the list of ‘‘non-cooperative nation-states and territories’’, arguing that the country does not provide the necessary legislation for transparent transactions.
Despite an initially defensive reaction to the international community’s reproaches against Panama, in which the Panamanian government resented the vilification of the nation’s image, President Varela expressed his willingness to cooperate with the international community, especially the French, in the investigation for possible tax evasion in his country.