British Overseas Territories, many of which have been bound up in the leaks
Francesc Badia i Dalmases, Director, democraciaAbierta: "an old tradition of English piracy”
A stroll around any leisure harbour around the Mediterranean or the Caribbean will show a fair amount of Panamanian flags sported at the stern of the biggest superyachts. Other flags of convenience include St. Vincent and the Grenadines, Bahamas, Bermuda, Cayman Islands, Antigua and Barbuda... paradises of a few hundred years – an old tradition of English piracy. And they are still operating, yet now in another, more sophisticated scale. There is no need to hit and run anymore, you can comfortably sit in an elegant office in London or Zürich and get the transfers done. But the waters – now known as the internet – are becoming more and more treacherous, as a number of hackers and whistleblowers are sailing around in search of big game.
Latin American leaders are also conspicuously exposed to the leak
Mossack Fonseca might not exactly be a spin-off Drake and Drake Ltd, but it is the firm your bankers will recommend should you wish your super-yacht to be conveniently flagged. The eleven million documents leaked from that legal firm (some reports say the leak might have originated in the Brazil’s M&F branch) are directly pointing at a large number of millionaires as well as to powerful politicians and their close family and friends' circles. As far as we know, Latin American leaders are also conspicuously exposed to the leak. It is early days, but the list looks very promising.
From current Argentinean President Mauricio Macri, to the former secretary of the Kirchner couple, from the financiers of Keiko Fujimori, Peru's current presidential candidate, to Juan Armando Hinojosa, Mexican president Enrique Peña Nieto’s favourite builder from whom his wife bought her famous mansion, known as “Casa Blanca”. The list continues with a substantial number of Brazilian entrepreneurs, already in trouble because of Petrobras' Lava Jato corruption scandal, up to Hugo Chavez’s former bodyguard, who asked Mossaka Fonseca to help him with a number of offshore firms, to put some savings out of reach.
All this is very good news for transparency and accountability, but it adds fuel to the fire of the devastating discrediting of the political class that is sweeping across Latin America, and might bring some extra trouble in the form of “salvapatrias”.
Maxim Edwards, Commissioning editor, oDR: “The problem is as much of a systemic nature at the heart of the economic consensus as it is due to the moral failings of rulers across Eurasia.”
Corruption among post-Soviet elites comes as news to nobody, least of all the citizens themselves. Russian opposition-run bus tours of oligarchs’ properties have appeared in London -- and every Ukrainian remembers the gilded opulence of Yanukovych’s Mezhyhirya Mansion when it was revealed to an outraged public. Many states across Eurasia are facing bleak economic prospects, and there’s the dissent to show for it. With fewer resources to play with, elites from Russia to Kazakhstan are having difficulty maintaining the social contracts by which their people distanced themselves from politics in exchange for modestly rising living standards.
On 21 August 2014, as Ukrainian soldiers were being killed in the Battle of Ilovaisk in the Donbas, Petro Poroshenko registered a holding company in the British Virgin Islands
The Panama files hold a wealth of revelations. Key among them concerns Putin’s inner circle, a childhood cellist friend, "donations" and "loans" from Russian banks and businesspeople, and a network of holdings in the BVI. The South Caucasus features too: at this stage, it would be more of a surprise were Azerbaijan’s ruling Aliyev family to not appear in such an investigation. There are also revelations about the reclusive oligarch Bidzina Ivanishvili, widely considered the power and the purse behind Georgia’s ruling party. Azerbaijan’s 2016 began with social protests erupting across the country. Georgia’s 2016 has seen surveillance scandals, miners’ strikes, a student protest, and will face parliamentary elections in autumn.
There may be no political repercussions for Putin and his coterie. While the Kremlin’s spokesman Peskov has dismissed the revelations as an “information assault”, state media are happy to report on the travails of Ukraine’s Petro Poroshenko. Popular trust in the president and in institutional politics generally have hit rock bottom in Ukraine, and leading media outlets from the country’s most powerful oligarchs (Akhmetov, Kolomoisky, Pinchuk) have been less than forthcoming on the papers. The behaviour of Ukraine’s elite against a background of a plummeting economy and continuing conflict ahas been despicable. On 21 August 2014, as Ukrainian soldiers were being killed in the Battle of Ilovaisk in the Donbas, Petro Poroshenko registered a holding company in the British Virgin Islands for the offshore transfer of his candy company Roshen. His political future now appears the most tenuous of all.
Yet moral outrage at these excesses, while completely justified, is only part of the picture. There is no excuse for the actions of elites in Azerbaijan, Georgia, Russia and Ukraine, but they have been enabled by an open-door financial policy in the UK and its many dependencies. The problem is as much of a systemic nature at the heart of the economic consensus as it is due to the moral failings of rulers across Eurasia.
Adam Ramsay, editor, openDemocracyUK: “If we want to understand modern Britain, first we need to realise that our primary economic function in the world is probably our network of tax havens”
There is a temptation, when looking at the astonishing Panama papers, to start by searching for politicians from your own country who are implicated. If you are British, then approached this way, you find slim pickings in the information released so far.
Among the many thousands of names listed in the leak as possibly implicated in dodgy tax deals, there can't be any appearance less surprising than Tory Baroness Pamela Sharples, the widow of the former governor of Bermuda. Until you get to Lord Ashcroft, who would have been more remarkable if he had been absent. Then there's Michael Mates, a former Tory MP, who stood down in 2010 amidst another business scandal. And there's David Cameron's late father, but that was hardly a surprise.
This, largely, is to miss the point: not just the point of this astonishing leak, but the point of the UK. Because it's hard not to look at the whole affair, and see Britain right at the core of it. Or, at least, the British State, which you might argue is a different thing.
There are, you see, a few important facts we are rarely told about the British State. Like the fact that it is responsible for more land in the Southern Hemisphere than the Northern and for more penguins than any other government, that there are eighteen legislatures under Westminster's wings, and that they include amongst them by far the most important network of tax havens and secrecy areas in the world.
With the City of London at its core, Britain's network of havens from tax, regulation and other pesky laws stretches first to the Crown Dependencies – Mann, Guernsey and Jersey – and then into the British Overseas Territories: the Virgin Islands, Bermuda, the Cayman Islands. From there, this web extends to places like Hong Kong: not under British rule since 1997, but, according to Nicholas Shaxton, still feeding “billions in business to the City”.
Looking at the documents leaked from Mossack Fonseca one thing is clear: Britain's network is once again at the core. More than half of the companies listed in the documents are registered in the UK or its Overseas Territories, and Hong Kong plays a huge role.
More than half of the companies listed in the documents are registered in the UK or its Overseas Territories
Of course, this shouldn't be surprising. Britain has for a while now been thought to be the global capital for money laundering. And it's no shock that nothing has been done about it. In 2010, two years after they crashed the global economy, the City paid for more than half of the Conservative party's election campaign, helping (along with the aforementioned Lord Ashcroft) them limp over the line, with a Liberal Democrat-shaped crutch. Though, of course, Labour did little to regulate in the previous 13 years.
If we want to understand modern Britain, first we need to realise that our primary economic function in the world is probably our network of tax havens. After all, around $21tn is estimated to sit in offshore accounts, of which Britain's territories are said to make up by far the biggest part. Our own GDP is only around $3tn.
Second, we need to get to grips with the serious claims about our role as the global money laundering capital: a function which pushes up the price of the pound, making other exports unaffordable (bye bye steel), and drives up the cost of houses in London and the South East, fuelling a vast speculative bubble which sucks investment out of the rest of the economy.
And third, we need to think about how this gradually dawning economic reality interacts with our politics: not through the obvious corruption of direct bribery, but through revolving doors between government and civil service, through old boy networks and friendship groups, through perfectly legal election donations and media domination.
That's the picture that I suspect the enormous leak from a law firm in Panama will help us to fill in – if only a little. It'll be a fascinating process. In the meantime, you can read my guide to Britain's Overseas Territories here.