Monday, April 4, 2016

The Panama Papers

Marie over at A Puff of Absurdity offers a very good overview of something that is certain to have long-lasting reverberations, The Panama Papers. Be sure to check out her post.

The Toronto Star reports the following:
In the largest media collaboration ever undertaken, more than 370 journalists working in 25 languages dug into 11.5 million documents that revealed Mossack Fonseca’s [a Panamanian law firm renowned internationally for establishing shell companies] inner workings and traced the secret dealings of the firm’s customers. The more than 100 news organizations involved shared information and hunted down leads generated by the leaked files using corporate filings, property records, financial disclosures, court documents and interviews with money laundering experts and law-enforcement officials.
Significantly, the only Canadian media organizations to participate in the consortium undertaking this massive investigation are The Toronto Star and the CBC/Radio Canada. At least someone in our country is concerned about the public good.

Why is this such an important investigation? First and foremost, it identifies a panoply of individuals and companies whose main motivation is tax avoidance. Their allegiance to themselves and, in the case of corporations, their shareholders, is paramount.

It should be stressed here that the vast majority of those involved in these schemes are doing nothing illegal, merely taking advantage of loose tax laws that permit such avoidance. But to me, this points to an incontrovertible truth about some wealthy individuals and many corporations: they feel no obligation to pay the country of their residence their fair share of taxes. In other words, they are putting their own financial security and profits above the land that nourishes and hosts them, the land that provides them with an educated workforce and the infrastructure that make their wealth possible.

And that should serve as a cautionary tale of great magnitude as we contemplate, for example, signing both the CETA and TPP free trade deals. The Investor-State Dispute Settlement provisions of such trade agreements give priority to corporations over state sovereignty so that should a country's laws impinge upon a company's profits, that company can sue the government. Given that The Panama Papers will confirm that loyalty and patriotism are concepts foreign, indeed, inimical, to those who pursue profit at almost any cost, there is surely reason for real caution.

The investigation is a wake-up call for governments to amend tax laws that in fact aid and abet theft from national treasuries. Here at home,
... Canadians have declared $199 billion in offshore tax haven investments around the world, according to Statistics Canada.But experts say that figure is a small fraction of the Canadian offshore wealth that goes undeclared.

The precise annual cost to Canadian tax coffers is unknowable. But credible estimates peg Canada’s tax losses to offshore havens at between $6 billion and $7.8 billion each year.
One need not have an especially rich imagination to consider how an increase in federal coffers of that size could be used for the benefit of all.

Every so often, thanks to circumstance and the indefatigable efforts of investigative journalists, the curtain is pulled aside and we are able to get a peek at an underlying and ugly reality. Ours is a world in which selfishness and evil often prevail, thanks to the complicity of far too many and the shield of darkness behind which much of this takes place.

Perhaps The Panama Papers can help to bring some much-needed light and eventual reform to this shameful and unjust state of affairs.


  1. In my old neighbourhood in Vancouver, a tear-down (bare lot) today goes for over $2-million. Yet, in terms of declared income, it is the poorest neighbourhood in Vancouver, hands down. Nobody there, it seems, lives on more than a subsistence income yet they often pay in cash and many of them own multiple properties of which most sit vacant.

    Doing nothing illegal? Do you really believe that? Yes, buying a shell company and parking it offshore is perfectly legal. It's what they do with it afterwards that matters.

    One solution I've come up with is for Revenue Canada to start treating these people like drug dealers. If a drug trafficker owns a multi-million dollar property, the revenuers will use the value to attribute a deemed income to the bandit. They will then assess that income, together with hefty penalties and interest, and register it as a continuing charge against title. Eventually they will seize the property and sell it.

    That won't catch all of their sheltered income, not by a long shot, but it will drive the bastards out of Vancouver's ruined housing market where kids have zero chance of ever owning a home in the same neighbourhoods in which they were born and raised.

    Now, ask yourself the important question: why hasn't government, federal and provincial, moved on what is blatant money laundering and tax evasion? This is no accident. There's a complicity in this and part of it is anchored in the gluey bonds that tie our political apparatus to big money and, especially, the major banks and accounting shops. There's a big raging example of neoliberalism at work.

    1. I think your last two sentences provide the full context and foundation for the inequities you describe, Mound, and I can assure you, the same dynamic is in play in Toronto, where I am happy I don't live.

  2. One other point. As for TorStar and the CBC being the only Canadian news outlets engaged in this enormous project, can you think of any other that the International Consortium of Investigative Journalists would trust? That's rich.