The release of the Paradise Papers gives some much needed transparency to the tax avoidance and elite conflicts of interests, but they show also just how murky the waters really are . It’s unclear who even runs most of these accounts, as anonymity can be achieved by hiding the wealth under the names of corporations, pseudonyms and trusts. What we do know now is that it is estimated 10 percent of global GDP is held offshore in such accounts.
Süddeutche Zeitung, a German publication, was the first to get hold of the leaks. They shared the documents with an association of journalists, and 96 publications in total worked on the leak of the details of over 1.34 Terabytes of data. The leak is the second largest of its kind, just behind the Panama Papers leak of 2016, and just ahead of the renowned WikiLeaks of 2010.
What citizens may find particularly galling is that a lot of this carry-on is legal. Having offshore accounts, redirecting money to other areas, listing your home address as the Bahamas, most of these practices are made legal through a variety of loopholes.
The practices have been very carefully crafted by expert legal teams, often quite removed from the individuals themselves. The layers of legal entities surrounding them allow for the wealth that exists to act as a teat for these teams, and the corporations they advise, allowing the wealth of the wealthiest to balloon even further.
The wealth of the world’s elites exists in sanctuaries, the capital remaining untouched by the ups and downs of the economic systems of their home countries. The world is a low-stakes game for them and this is troubling. It gives them a buoyancy aid that the rest of us don’t have, and reduces their sense of accountability, as well as the sense citizens have of their leaders as being accountable.
The International Financial Centres Forum (IFC), which represents offshore law firms, has been revealed to have lobbied the British government, as reported in the Guardian. “The files show the IFC speaking of its influential ‘penetration’ of the UK government. It boasted that this behind-the-scenes activity may have prevented world leaders from agreeing more wide-ranging transparency measures at a G8 summit in 2013”.
It’s not a new phenomenon that corporations might lobby national governments or the EU, lobbying is at different levels encouraged and regulated. But there is often no transparency about who is lobbying whom and why. A seemingly benign corporation may represent a myriad of interests, but the most pressing will be an interest in capital and an opposition to greater transparency.
The IFC issued a statement in response to the Panama Papers in 2016 where they claim that those such as the Labour leader, Jeremy Corbyn, who want to “shut down” the offshore centres will risk destabilising “key platforms for intermediating global investment” with “a resulting impact on growth in both developed and emerging economies.”
A year later we know much more about where their interests lie. Whilst pushing against tighter transparency regulations, firms within the IFC, including Appleby, have been revealed to have not even been complying with what is described as the low level of regulation that exists under the status quo. The files show that Appleby was red flagged by the Bermuda Monetary Authority as well as having “flawed compliance procedures in 12 confidential audits over a 10-year period” as the Guardian reports.
Appleby also assisted Apple when they began to search for a new tax haven when their practices in Ireland were beginning to be questioned. Apple are revealed to have been actively searching for a new tax haven once the tide turned against them in Ireland.
For American citizens, disturbing facts in relation to the Commerce Secretary, Wilbur Ross, who has ongoing business connections with close relations of Vladimir Putin, have emerged from the papers. This is particularly damning at a time when the interests of Russia in America are being scrutinised.
Revelations like these only serve to further worsen the democratic deficit. Citizens are disenchanted as it is with political systems and the elites behind them; contempt for the EU is illustrated in the Brexit vote. The papers can only fan the flames of such disgust, as they reveal the messy entanglement of political and legal institutions with corporations and elite interests.
The problem is is that the division between the offshore world and the rest of us, the small men who are expected to pay their tax, is growing. The capital that a corporation or individual accumulates no longer accrues much, if any at all, benefit to the citizens of their country and the laws we have today facilitate this.
Bernie Sanders has argued that we are dangerously close to becoming an “international oligarchy” where “a handful of billionaires own and control a significant part of the global economy”. The facts speak for themselves, as do the intertwined interests.
Democratic principles that we revere such as transparency and accountability are being undermined by the actions of the elite and the inaction of our governments in tackling the problem. As the wealth concentrates in the hands of fewer it becomes more difficult for governments to even be able to do anything about it.
The elites are stateless and taxless with no consequences for their actions, while we remain at the whim of their interests and suffer the fallout of their misjudgments. We must take heed of what the papers highlight, and our governments, particularly the Irish government, should no longer bend over backwards for the big money.