Region - Pandora Papers A new leak of documents reveals new networks of politicians and business owners who set up offshore accounts.

 

Region - Pandora Papers A new leak of documents reveals new networks of politicians and business owners who set up offshore accounts. Boz Oct 5 The ICIJ and their partners in the media released the initial batch of information from the Pandora Papers. This set of leaked documents about offshore shell companies and tax shelters hits a number of high level politicians and business executives in Latin America. It will take several days to get through the coverage of the Pandora Papers. In the meantime, here are a few initial thoughts. The documents are unlikely to sour Latin American citizens on their politicians because most Latin American citizens already believe their political leadership is corrupt. The evidence of corruption (or even circumstantial claims of tax evasion) isn’t going to make people any angrier. In many cases, the offshore accounts are legal and there is not a reason for additional investigation as long as people can prove taxes were paid. The specificity of the stories out of Latin America vary. Ecuador’s Guillermo Lasso had offshore accounts prior to being president, but there isn’t any evidence of wrongdoing. Lasso also released a statement saying that he currently owns no offshore accounts. Meanwhile, the accusations against Sebastian Piñera are quite specific and may cause problems for Chile’s president. There appears to be a contract in which payments to Piñera’s family are tied to the president’s position on environmental policy. If that turns out to be true (and it is not yet clear if it is), it’s the sort of quid pro quo that could be investigated by prosecutors. Some politicians may also be investigated or prosecuted if they hid the existence of their offshore accounts from the mandatory government transparency forms. While having offshore accounts is not illegal, lying on forms and failing to include those accounts could be a violation of the laws in many countries including Mexico and Brazil. That is potentially the problem facing Paulo Guedes, Brazil’s minister of economy. Nasry Asfura, candidate for the ruling National Party in Honduras’s elections later this year, is among those found to have an offshore company set up in Panama. Given the corruption allegations already known about Asfura, this disclosure could prove to be a key part of the operation to launder the corrupt funds. The news is probably not changing many votes but has the potential to further tarnish the reputation of the whole political system. The list includes a large number of former presidents and other older politicians and businessmen. Whether or not their use of offshore accounts is legitimate, they become targets for politicians currently in office who are looking to demonstrate their ability to target corruption while distracting from the corruption within their own administration. This is likely to be the angle of AMLO in Mexico, targeting political opponents for their offshore accounts revealed in the leak while ignoring any allies who may have also been caught up in the media coverage. The ICIJ highlights the role of Panama’s Alcogal in terms of setting up these shell organizations for wealthy individuals in Latin America (and Russia) including several people who almost certainly routed money from corruption into their accounts. While the bigger story from these Pandora Papers is the role of US states in serving as “offshore” locations where people can hide wealth, the role of Panama is still worth monitoring. For all of Panama’s talk about cleaning up their system, creating greater transparency and doing a better job to force the disclosure of beneficial ownership, it is still a key hub for the creation of shell companies in the hemisphere. The existence of these offshore locations means no country in Latin America experiences corruption and tax evasion in a vacuum. Whether it’s Panama, the Bahamas, South Dakota or Delaware, having locations where wealthy individuals can hide cash and not report their beneficial ownership creates the infrastructure for corruption to occur. The ICIJ points to several instances in South Dakota where trusts were set up by Latin American businessmen from Brazil, Colombia, Ecuador and Guatemala who had been suspected of money laundering or corruption. The US has a lot to fix within its own system, even as it pushes for stronger anti-corruption efforts in the region. The articles on the highest profile cases are going to be published for several more days, but the existence of this database is going to be helpful in the years to come in identifying networks of corruption as well as otherwise hidden linkages among legitimate businesses. I still check the database with the Panama Papers documents every time I do a research report and am often surprised at the info available there that is otherwise unpublished. The Pandora Papers are terabytes more data to dig through and they are likely not the last leak of these sorts of documents. Thanks for reading Thanks to the paying subscribers who support this newsletter