David Cameron

What Are The Panama Papers And Why Should Young People Care?

You’ve probably been hearing a lot about something called the Panama Papers in recent days.

That’s because on Sunday morning The International Consortium of Investigative Journalists and other media organizations announced the largest data leak in the history of journalism.

The leak contained 2.6 terabytes of information with over 11.5 million files that identified corruption amongst some of the top political figures in the world. It’s larger than the Wikileaks leak in 2010 or what Edward Snowden brought to light in 2013.

Now, what is in the leak exactly?

Mossack Fonseca is a law firm which specializes in the creation of shell companies and offshore accounts. It’s where the rich stash their ill-gotten or legally obtained earnings from their governments. These accounts are completely legal and can be used to protect their assets from raids or simply for inheritance reasons and estate planning.

However, there are other common reasons for stashing money in a offshore company, such as money laundering, dodging sanctions, and avoiding taxes.

The firm is based out of Panama but runs a worldwide operation.

On their website they claim to have a global network with 600 people working in 42 countries. It has franchises around the world.

It operates in tax havens including Switzerland, Cyprus, the British Virgin Islands, Guernsey, Jersey and the Isle of Man.

Mossack Fonseca has their fingers dipped in many questionable pies. From Africa’s diamond trade, the international art market, to dealing with Middle Eastern royals and Russian oligarchs.

Data. It's what's for dinner. Photo Credit: www.cwcs.co.uk/ Flickr (CC By 2.0)

Data. It will get ya bro. Photo Credit: www.cwcs.co.uk/ Flickr (CC By 2.0)

The firm rejects that it has ever been involved with dirty money.

“Recent media reports have portrayed an inaccurate view of the services that we provide and, despite our efforts to correct the record, misrepresented the nature of our work and its role in global financial markets,” a statement on the Mossack Fonseca reads. “These reports rely on supposition and stereotypes, and play on the public’s lack of familiarity with the work of firms like ours.”

FIFA:

FIFA, the international football association, an organization often connected to corruption and scandal, is also featured.

The leaked documents allegedly show that FIFA ethics committee member Juan Pedro Damiani, a Uruguayan lawyer, had business links with three men who have been indicted by U.S. officials on corruption charges: former FIFA vice president Eugenio Figueredo and father and son Hugo and Mariano Jinkis.

The latter two were convicted of paying bribes to obtain broadcast rights for soccer matches in South America. Documents show that Damiani’s law firm represented a company registered to Jinkis and seven others registered to Figueredo in a tax haven.

World Leaders: 

Interestingly, the British government has been especially vocal against offshore companies in recent years, but Prime Minister David Cameron hasn’t come out of this squeaky clean. His late father is one of the names revealed in the leak.

It is not yet clear, if Cameron himself has financially gained from off shore accounts.

According to some of the reporting in the aftermath of the leak, Mossack Fonseca has helped Russian President Vladimir Putin hide $2 billion, setting up offshore banks under the name of two of his close acquaintances.

Iceland's Prime Minister Sigmundur Davíð Gunnlaugsson resigned Tuesday after a large public outcry from the Panama Papers. Photo Credit: Control Arms/ Flickr (CC By 2.0)

Iceland’s Prime Minister Sigmundur Davíð Gunnlaugsson resigned Tuesday after a large public outcry after he was named in the Panama Papers. Photo Credit: Control Arms/ Flickr (CC By 2.0)

The now former Prime Minister of Iceland, Sigmundur Davíð Gunnlaugsson, has also been implicated and was facing calls for his resignation as the public’s confidence in his leadership had been shattered.

He resigned on Tuesday, and is the first political casualty. Also listed are Iceland’s minister of finance, Bjarni Benediktsson, and Iceland’s Interior Minister, Olof Nordal.

China’s leaders have relatives who are named in the leak, propelling the government to limit local access to western media coverage of the leak and accusing them of being biased.

In a further twist, documents show Mossack Fonseca’s links to Rami Makhlouf, a cousin of the Syrian president, even though Washington imposed sanctions Makhlouf in 2008.

Though the firm is under no obligation to comply with US sanctions, it was legally bound to react to EU measures in 2011. It took until September of that year for the firm to finally resign from Makhlouf’s companies. By that time, Syria was in the middle of a genocidal civil war.

Other world leaders in the leak include Nawaz Sharif, Pakistan’s prime minister; Ayad Allawi, ex-interim prime minister and former vice-president of Iraq; Petro Poroshenko, president of Ukraine; and Alaa Mubarak, son of Egypt’s former president, just to name a few.

The list of questionable characters goes on, although it gets worse. It includes Ponzi schemers, drug kingpins, tax evaders, dictators and at least one jailed sex offender.

And that’s when it becomes unbearable. The sex offender was a U.S. businessman traveling to Russia to have sex with underage orphans. He signed papers for an offshore company while he was serving his prison sentence in New Jersey.

It’s notable that Mossack Fonseca is the fourth biggest provider of offshore services, meaning that if this much information is coming from this company, larger law firms with these same services must have shocking anonymous beneficiaries.

In reply to ICIJ questions about their methods, Mossack Fonseca said that backdating of documents “is a well-founded and accepted practice” that is “common in our industry and its aim is not to cover up or hide unlawful acts.” The company is extremely protective of their clients’ privacy.

Honestly, should we be surprised by this leak?

The exposé once again emphasizes the need for world financial reform. It shows that not only is the global tax system broken, but with so many world leaders involved, global governance itself is fractured too.

Due to this leak the ability of the super rich to hide their money may be made more difficult. But if government officials themselves are doing this, how are we meant to expect them to do anything about tax havens?

The storm may be about to arrive in the United States as well.

A reporter from the German newspaper Suddeutsche Zeitung responded to tweets about the lack of names from the United States, by saying “Just wait for what’s coming.”

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Cover Photo Credit: Jon Gosier/ Flickr (CC By 2.0)

Millennial Intelligencer: Controversial Tax Credit Cut Divides British Parliament And Society

Conservative MP’s in the British House of Commons have come under fire in recent days following a controversial measure which would cut tax credits for many middle and lower income British citizens.

Earlier this month the House of Commons passed a controversial measure proposed by the Chancellor of the Exchequer; (equivalent to Treasury Secretary) George Osbourne, that would cut an estimated £4.5 billion in tax credits to lower income British citizens.

In a major political defeat, the traditionally ceremonial House of Lords blocked the government supported tax cuts in what has been dubbed by some Conservatives as a “Constitutional Crisis.”

Peers in the upper house voted by a majority of 17 to back the opposition Labour Party’s calls for the government to provide full redress to tax credit claimants who would be affected when their entitlements are reduced; as well as, a delay in implementation of the tax credit cuts until the government has effectively assessed the full financial impact of the measure.

The tax credits were introduced by the previous Labour Government as a way to encourage work and give aid to low income British workers and families with children.

According to the Institute for Fiscal Studies, the average tax credit family-single earner family with children- would lose an estimated £1,000 annually as a result of the cuts.

Prime Minister Cameron defended the cuts during last Wednesday’s Prime Minister’s Questions, stating that any cuts not made to tax credits would have to be made to the police or the NHS.  The Prime Minister also stated his belief that the average family families will still be better off by 2017, as a result of the introduction of the National Living Wage.

In an interview with the BBC, Chancellor Osborne agreed to listen to people’s concerns and announce any modifications to the plan in November. The Chancellor maintained his belief; however, that reforms to the tax credit system were necessary to strengthen the British economy and provide economic security to families in the long run.

“If we have uncontrolled welfare bills, uncontrolled tax credit bills and the like, there will be no security for working families,” Osborne said.

The cuts were supported by David Cameron and a majority of Conservatives in the House of Commons; however, a number of Conservatives publicly challenged the measure.

Welsh Conservative Leader, Andrew Davies, stated that he supported the idea behind the reform but said he could not support the timing of the cuts insisting that the cuts should be phased in over a period of time. The majority of Scottish MP’s also raised concerns over the measure including the leader of the Scottish National Party who called the measure, “A daft idea”.

Chancellor Osbourne is expected to announce a modified version to the measure sometime in November. In an interview with the BBC, Chancellor Osborne agreed to listen to people’s  concerns but maintained his belief that reforms to the welfare system were necessary to strengthen the British economy and provide economic security to families in the long run.

“If we have uncontrolled welfare bills, uncontrolled tax credit bills and the like, there will be no security for working families,” Osborne said.

 

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Cover Photo Credit: DFID – UK Department for International Development/ Flick (CC By 2.0)

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