econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 12 April 2016

Panama Papers: This Is A Chance To Fix A Long Broken System

from The Conversation

-- this post authored by Daniel Hough, University of Sussex

In every crisis there lies an opportunity. And that applies even to a crisis as large and potentially scandalous as that revealed by the so-called Panama Papers.

Over the coming days and weeks the financial behaviour of many rich, powerful and influential individuals will come under the microscope. There will be accusations of hypocrisy - and much embarrassment.

But some of those influential individuals have the opportunity to grasp the nettle and push for more transparency in the world's dark financial corners.

A compelling defence

The background to this is quite extraordinary. More than 11m documents have been leaked from a Panamanian law firm, Mossack Fonseca. They appear to outline how the firm helped clients complete an array of potentially tricky financial tasks. These ranged from helping some of the world's best-known rogues to filter money back into the financial system, to helping them (and others) get around awkward sanctions. Mossack Fonseca also appears to have helped rich individuals keep funds away from the prying eyes of curious tax authorities.

To be clear, Mossack Fonseca will be defending itself rigorously, and it's already gone on record to say that it has never been charged with any criminal wrongdoing.

It has also noted that it has operated beyond reproach for more than 40 years. It might deal with people and organisations who don't win popularity contests but, it will argue, there is no law against that. Indeed, anyone - providing they pass a set of due diligence tests - can, for a fee, use the services that such law firms provide. Mossack Fonseca, in other words, certainly won't be taking the revelations lying down.

Given the sheer volume of data that has been leaked, it will take time to unpack what precisely has been going on. But two things are likely to become apparent.

The first is that Mossack Fonseca's employees will likely be shown to know the rules that govern their work inside out. They are already claiming that everything they do is above board and they see no reason to apologise, let alone accept any sort of punishment, for helping clients complete what are legal financial activities.

There are, furthermore, good reasons to allow the owners of some companies to remain anonymous. If you live in a country in which criminal gangs come after those who do well for themselves, it makes no sense to punish people who make money legally by forcing them to go public about it. That the likes of Mossack Fonseca use these rules to help clients who are not in similarly delicate positions is not the law firm's fault - the rules allow them to do it, and it's those rules that desperately need changing.

But what will also become clear - as if it wasn't already - is that the legal infrastructure that governs the behaviour of companies in offshore jurisdictions (essentially tax havens) is woefully inadequate.

Pressing for change

As of Sunday evening the BBC was claiming that 72 current or former heads of state were linked to Mossack Fonseca, and that they had potentially problematic financial affairs that needed investigating. That the rich and powerful appear to be able to act largely anonymously while squirrelling their wealth away from prying eyes should be deeply troubling to anyone who believes that transparency is the best disinfectant against corruption, fraud and tax evasion.

And here Britain's David Cameron in particular has an opportunity - despite the revelations about his family. In 2013 Cameron openly criticised tax secrecy and tax havens. In truth, and despite periodic background noise, little happened between then and 2015.

Last summer, Cameron raised the issue again in a high-profile speech in Singapore. There, he said that he regarded the anonymous ownership of companies as deeply problematic. That led to a plan to introduce (in June 2016) a register to identify those who own companies and make profits from them (so-called "beneficial owners").

Putin and Cameron: both implicated. EPA/Andy Rain

There are still plenty of reasons to doubt that this move will have the intended impact. There is not, as yet, any agreement to create an international list that everyone can access. But Cameron is at least talking about something that others recognise to be deeply important. Given both the size of the UK's financial services sector and the fact that many of the tax havens that the likes of Mossack Fonseca use fall under UK jurisdiction, the UK government has an opportunity to push others in to a corner and make a difference.

Cameron has called an international anti-corruption summit in London in May. It could - let's be honest - end up as nothing more than a talking shop. But it might also be the perfect forum to push for an international agreement on stricter rules concerning beneficial owners. It is also a moment to generate commitments to actually implementing such legislation.

The UK, in other words, will inevitably be at the centre of pushing for, or kicking back against, changes in international financial regulations. Cameron has the choice between watching and worrying from the sidelines, or seeing the Mossack Fonseca case for what it really is - a wake up call to try and finally do something about the long outdated rules and regulations that shape international financial transactions.

The ConversationDaniel Hough, Professor of Politics, University of Sussex

This article was originally published on The Conversation. Read the original article.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical Opinion Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.





Econintersect Opinion


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Are You Feeling the Economic Surge?
Big Mess in Italy
News Blog
Big Mac Index In Its 30th Year
What We Read Today 03 December 2016
Scientists Find Giant Underground Ice Reserve On Mars
Sustained 3 To 4% GDP Growth Is A Huge Stretch
New Earthquake Risk Model Confirms Possibility Of Statewide Earthquake In California
Subprime Auto Debt Grows Despite Rising Delinquencies
Silver Sentiment Looks Golden
Infographic Of The Day: Investing In A Cure For Cancer
Early Headlines: Trump Campaigning Still, WaPo Finds Voter Fraud Favored Trump, No Carolina GOP Shotguns For Voter Fraud, New Age Of Blacklisting, All Eyes On Italy, Big Bucks In India And More
What Did The EU Ever Do For Europeans?
The 10 Most Stolen Cars In America
Improvements In US Air Pollution
Has The Fed Been Effective In Stimulating Consumption?
Investing Blog
Technical Thoughts: Manage Risk
Investing.com Weekly Wrap-Up 02 December 2016
Opinion Blog
Modern Slavery
Please, Donald Trump, Don't Send Climate Science Back To The Pre-Satellite Era
Precious Metals Blog
Silver Prices Rebounded Today: Where They Are Headed
Live Markets
02Dec2016 Market Close: WTI Crude Climbed Back Up To Previous 51 Handle, US Dollar Index Trading At The100 Level, Oil Rig Count At 10-Month High
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government



Crowdfunding ....






























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved