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After the Panama Papers: Will the US be the next mega tax haven?

27 April 2016 12:00 am - 0     - {{hitsCtrl.values.hits}}


In the weeks ahead when the second lot of the ‘Panama Papers’ revelations is expected to be published, it will be interesting to see if any Americans are included in the list. The Mossack Fonseca data leak  included 3072 companies, 441 clients, 211 beneficiaries and 3467 shareholders in the US, but none were revealed. The conspicuous absence of US entities in the initial explosive disclosures on how the world’s super-rich hide their wealth to dodge taxes and avoid scrutiny, has not received much attention except in sections of the social media. 


The US has a ‘Foreign Account Tax Compliance Act’ that requires financial firms to disclose foreign accounts held by U.S. citizens. But it has reportedly refused to sign up for the strict disclosure standards sought to be adopted by the OECD (club of developed countries) to help other countries track down tax dodgers. The US is said to be one of the easiest places in which to set up an anonymous shell company.

“After years of lambasting other countries for helping rich Americans hide their money offshore, the U.S. is emerging as a leading tax and secrecy haven for rich foreigners. By resisting new global disclosure standards, the U.S. is creating a hot new market, becoming the go-to place to stash foreign wealth” according to a Bloomberg report.

“How ironic - no, how perverse - that the USA, which has been so sanctimonious in its condemnation of Swiss banks, has become the banking secrecy jurisdiction du jour,” the article quoted a lawyer from Anaford AG, a Zurich law firm as saying. “That ‘giant sucking sound’ you hear? It is the sound of money rushing to the USA.” In its article of 27.01.16 the financial news organisation described how moving money out of the offshore havens like Bahamas, British Virgin Islands etc and into the US had become brisk business. It pinned the story to a talk by a managing director of Rothschild & Co on how the world’s wealthy can avoid paying taxes. 

Many followers of the Panama Papers discussion online have asked why the entire 2.6-terabyte leak is not being dumped – like the US diplomatic cables published by Wikileaks - so that everyone has access to it. The International Consortium of Investigative Journalists (ICIJ) which managed the release has said it has no plans to do that. “We’re not WikiLeaks. We’re trying to show that journalism can be done responsibly,” ICIJ told Wired in an interview. 

Soon after the story broke Wikileaks dissed on it, saying on Twitter that “Putin attack was produced by OCCRP which targets Russia & former USSR and was funded by USAID & Soros.”
OCCRP (Organised Crime and Corruption Reporting Project) - not exactly a household word where news organisations are concerned - is listed as a partner organisation of ICIJ.  OCCRP’s website says its work is ‘made possible by’ USAID and hedge-fund billionaire George Soros’s ‘Open Society Network,’ whose logos appear on the site. In addition, OCCRP displays the logo of the US State Department in its Annual Report 2014 where it lists its partners and donors. OCCRP’s declared corruption-busting focus is Eastern Europe and the former USSR’s breakaway republics.

The ICIJ’s member news-outlets, which include the world’s most respected, were most likely acting in good faith in producing their stories. But the revelation of this element of US government sponsorship of one of ICIJ’s ‘partners’ gives rise to questions as to whether there was any hidden agenda that could have resulted in a biased outcome - especially since the source of the leak remains anonymous even to the ICIJ. 

Another interesting question is whether the US will endorse hounding the whistle-blower behind this leak, as it is doing with Julian Assange and Edward Snowden. A witty observer put it succinctly in an online post where he asked: “US aid doing an Assange/Snowden! shouldn’t they be arrested?” (www.moonofalabama.org)

US State Department spokesman Mark Toner refused to comment on whether he considered the documents as ‘having been stolen.’ Pressed by reporters at the State Department’s daily briefing (7th) he said this was a matter for Panamanian authorities to decide on. He admitted that OCCRP gets support from the US government, but denied that the US was in any way ‘involved in the actual leak’ of the documents. He said it is “a core tenet of our foreign policy that we support organisations that go after corruption.” 

Many of the western media organizations that broke the story predictably led with the revelations relating to Russian President Putin’s associates, although Putin himself had not been named in Mossack Fonseca’s data.  Cynics allege there is no mention of major western corporations or western billionaires in the released information, and suggest that the inclusion of Iceland’s prime minister - a less relevant political actor - is only to give it a semblance of balance.

The methodology used to analyse the data has also come in for criticism. “Essentially the Sueddeutsche compiled a list of known criminals and people and organisations the U.S. dislikes and cross checked them with the “leaked” database. Selected hits were then further evaluated” said moonofalabama.So what was the role of the US-funded OCCRP in the whole process? Though it is not stated upfront, it would appear that OCCRP provided the technological services for processing the ton of data in the leak. Crunching through 2.6 terabytes to make sense of its content is not the kind of task that comes within the ambit of a regular journalist’s work. Setting up search engines, developing algorithms etc requires skills. 

The Panama Papers’ technological team was headed by OCCRP’s technological chief Smari McCarthy. On Twitter, McCarthy rejected the western-conspiracy-theorists’ allegations, and directed readers to an OCCRP website article about Mossack Fonseca’s CIA-linked clients (mostly those involved in the Iran-Contra affair). A reader posted a comment asking McCarthy for “current ppl pls” and “from the US.”  

Another clue that points to OCCRP having provided the technological input for ICIJ’s Panama Papers investigation, is that ‘Google Ideas’ is a partner of OCCRP. Google Ideas (now renamed ‘Jigsaw’) is listed among partners/donors in OCCRP’s 2014 Annual Report, along with USAID, the US State Department and others. Interestingly Google Ideas’ director Jared Cohen was formerly with the Policy Planning Committee of the US State Department.  “Jigsaw has come under scrutiny for its links with the US State Department and its ‘regime change’ activities’ ” according to Wikipedia. 

In a Newsweek article of 23.10.14 titled ‘Assange: Google is not what it seems,’ Julian Assange has detailed Google’s linkages with Washington. He describes there how he had been visited by Google’s chairman Eric Schmidt and Jared Cohen during the time he was under house arrest in England, and how he had only later understood “who had really visited.”  

The Panama Papers team may have performed a great job in exposing some of the world’s most corrupt elites through a year-long investigation of a mind-boggling amount of information. But given the selectivity of the revelation, and the places that OCCRP’s influence-trail leads to, could there be more to the exercise than meets the eye? 

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