Also see: Panama Papers: World Leaders and Rich Lawbreakers Exposed in Massive Data Leak
The Panama Papers disclosures this weekend are giving the world a wider window into a world that is not new to the people who have been fighting against the schemes wealthy people and corporations use to shelter their money from taxes.
These papers were leaked from the files of Mossack Fonesca, a Panama-based law firm that is a leader in the creation of secretive shell companies that companies or individuals can then use to keep their wealth out of the sight of governments.
A good deal of this wealth, in addition to being the proceeds of tax evasion, ends up being used in a host of illicit activities. But politically, what’s criminal about the Panama Papers is what people can do legally.
Mossack Fonesca is one of several firms that for as little as $1,000 will sell individuals what amounts to a shell corporation starter kit, including a post office box in a low-tax, low-regulation company. For additional money, you can accessorize the shell corporation with a Potemkin board and other accoutrements. Then, if you are, say, a Silicon Valley tech company or a pharmaceutical giant, you could do something like transfer your patents to the shell company, and as a result all the profits you make from those patents are no longer taxable in the United States. Or you could simply ask someone who wants to give you money to give the money to the shell instead of directly to you. The shell could then spend the money on your behalf so those transactions aren’t traceable back to you.
According to the Financial Accountability and Corporate Transparency (FACT) Coalition, you don’t even need to seek out an exotic locale to create a semi-secret corporate entity. Here in the U.S., “almost every state collects less information from the individuals forming these entities than from people applying for a driver’s license or registering to vote,” according to a FACT document calling for passage of legislation to address the problem, the Incorporation Transparency and Law Enforcement Assistance Act.
The legislation (the Senate version sponsored by Sen. Sheldon Whitehouse, D-R.I., and the House version by Rep. Carolyn Maloney, D-N.Y.) would simply require states to collect information about the beneficial owners of a corporation — in other words, the actual people who stand to gain from the corporation’s existence. The people forming a corporation would have to provide the same level of identification many states are now requiring of people before they can cast a ballot, such as a state-issued identification card or a passport. That information would be shared with government agencies and the public.
The FACT Coalition had already scheduled for next week a lobbying push for the legislation, with supporters from 25 statutes planning to meet their members of Congress, before the Panama Papers news broke. Now the coalition is stepping up its call for organizations to endorse the transparency legislation by signing this endorsement letter, and individuals to sign this petition by SumofUs.org.
“We can curb a lot of the corruption associated by shell companies (those formed in the U.S.) simply by requiring people to disclose their ownership when they first create them. It’s a simple as that,” wrote Mark Hays, senior advisor to Global Witness, a muckraking organization that focuses on corporate and environmental abuses, in an email to OurFuture.org. “As a matter or compelling public interest, we sometimes ask people to register their cars, to fill out library cards, using limited personal information. It’s a balancing act, but we think this is common sense, and a really easy step — a new line on a form, a commitment to transparency as a normal part of doing business.”
Hays points out that the ability to legally incorporate a business is a privilege that should come with basic obligations. “You don’t have to incorporate a company to run a business, but if you want privileges from the state or commonwealth (such as limited liability) you should assume certain obligations or responsibilities as well. Limited liability shouldn’t mean unlimited anonymity.”
The silver lining in the Panama Papers scandal is that the world’s attention is being focused on a global problem in which the wealthy and powerful act beyond the reach of law, playing by a different set of rules from the rest of us. The United States does not have to go it alone in addressing this problem. But our elected officials, and the people running to be our next president, should lead. Supporting legislation that supports more transparency would be a start.
We’re not backing down in the face of Trump’s threats.
As Donald Trump is inaugurated a second time, independent media organizations are faced with urgent mandates: Tell the truth more loudly than ever before. Do that work even as our standard modes of distribution (such as social media platforms) are being manipulated and curtailed by forces of fascist repression and ruthless capitalism. Do that work even as journalism and journalists face targeted attacks, including from the government itself. And do that work in community, never forgetting that we’re not shouting into a faceless void – we’re reaching out to real people amid a life-threatening political climate.
Our task is formidable, and it requires us to ground ourselves in our principles, remind ourselves of our utility, dig in and commit.
As a dizzying number of corporate news organizations – either through need or greed – rush to implement new ways to further monetize their content, and others acquiesce to Trump’s wishes, now is a time for movement media-makers to double down on community-first models.
At Truthout, we are reaffirming our commitments on this front: We won’t run ads or have a paywall because we believe that everyone should have access to information, and that access should exist without barriers and free of distractions from craven corporate interests. We recognize the implications for democracy when information-seekers click a link only to find the article trapped behind a paywall or buried on a page with dozens of invasive ads. The laws of capitalism dictate an unending increase in monetization, and much of the media simply follows those laws. Truthout and many of our peers are dedicating ourselves to following other paths – a commitment which feels vital in a moment when corporations are evermore overtly embedded in government.
Over 80 percent of Truthout‘s funding comes from small individual donations from our community of readers, and the remaining 20 percent comes from a handful of social justice-oriented foundations. Over a third of our total budget is supported by recurring monthly donors, many of whom give because they want to help us keep Truthout barrier-free for everyone.
You can help by giving today. Whether you can make a small monthly donation or a larger gift, Truthout only works with your support.