On Thursday, as I was about to start writing a post on the “Panama Papers,” an email landed in my inbox. It was from Jill Stein, the Green Party candidate for president of the U.S. I only knew about Stein because I saw part of her interview with Chris Hedges on Truthdig some time ago. How did she get to me? Had Truthdig passed her my email address? I felt almost irritated, but then I realized that Stein had something to say about the Panama Papers. So I didn’t trash the email immediately, despite the fact that it was signed by Jill Stein’s HQ. Stein wrote that:
The Panama Papers reveal where the economic and political elite converge in the shadowy world of tax havens. Today our world is run by the wealthiest of the wealthy, who buy and market politicians like any other commodity.
Bill Clinton’s enduring political legacy is being the salesman for corporate globalization, which has brought rampant corruption and inequality to the entire world. Clinton took the selling of our political system to special interests to a whole new level, and in return those special interests have fueled his and Hillary’s fortunes, both political and personal. The Clintons’ drive for power has created a global order that is the textbook definition of oligarchy: rule by a few wealthy elites.
The bipartisan consensus on trade has enriched the global corporate elite by throwing jobs, workers’ rights, and environmental protections under the bus.
After they were revealed on Sunday night, the Panama Papers became grounds for all kinds of political exercises. People immediately compared the papers — a massive 2.6-terabyte leak of confidential documents revealing a deep web of international corruption and tax evasion from the world’s political elite — to two previous, much more important information leaks. That is, the secret diplomatic dispatches revealed on Wikileaks, and Snowden’s leak of surveillance data from the NSA’s secret files. In the case of the Panama Papers, someone from within the the law firm Mossack Fonseca — which specializes in helping foreigners set up international shell companies to protect their financial assets – leaked the information to the International Consortium of Investigative Journalists to expose the offshore holdings and hidden financial dealings of some of the world’s most familiar names. Selected news organizations worked on this huge mass of data for a year, trying to carve out a comprehensive story that would sell. As Paul Ford says in his piece for Track Changes:
[After] much massaging and exploration, and global cooperation among journalists, now have The Panama Papers!, a global event in journalism that is touted, complete with charts showing just how big they are.
This is the first time that a data leak has been treated like a product. It’s surreal and a little like any product launch—except instead of a man from Apple standing on stage in a bright purple shirt, stroking gorilla glass, or Samsung insulting all womankind, it’s a global consortium of journalists and some rather well-thought-out home page work: A leak, a plan, and a brand: The Panama Papers. Brought to you by Journalism!
Let me add that the Panama Papers are not the Pentagon Papers, as the editors of this massive data operation (which is not at all investigative journalism) would like to suggest. In the case of the Pentagon Papers, the world learned for the first time about the extent of American involvement in Vietnam — about the lies and the denials of the secret bombings of Vietnamese, Cambodian and Laos citizens. As a result, America — and the rest of the world — was enraged.
But in Panama’s case, Americans knew about the issue for decades. We knew about the Panama hideout even before the canal was built, the Economist Magazine nonchalantly reminds us:
Two women wash clothes in the Panama Canal, which was still under construction in 1908 when this picture was taken. Over a century later, laundering of a wholly different kind would be making the headlines. But Panama’s dirty dealings as an offshore haven began almost as soon as the canal opened its waterways.
By allowing merchant ships to travel between the Atlantic and Pacific Oceans without having to make the long and perilous journey around the southern tip of South America, the canal transformed Panama into a major hub of international trade. The rules governing shipping back then would look familiar to Mossack Fonseca, the law firm at the centre of the Panama Papers maelstrom. From the outset, the low taxes and minimal regulations of Panama’s shipping registry encouraged foreign owners to transfer the registration of their ships to Panama, in a practice known as flying a “flag of convenience”. In 1919, the Canadian cargo vessel Belen Quezada (which was under partial US ownership) became the first foreign ship to fly Panama’s colors, a tactic which allowed it to smuggle rum to America despite Prohibition.
Many American vessels would follow suit; dry cruise ships were worried about losing out to their European competitors, who could serve alcohol to passengers, and shipping companies wished to evade America’s increasingly strict labour laws. Panama’s shipping registry continued to balloon in the 1930s with an eclectic mix of new entrants: from Danzig oil tankers to Norwegian whalers; from Greek weapons smugglers to a short-lived pirate radio station operating off the coast of Los Angeles.
It wouldn’t be long before the financial services industry took notice of Panama’s laissez-faire regulatory regime. In 1927, Wall Street helped Panama pass a series of laws that allowed anyone to form anonymous tax-free corporations with very few questions asked. Although shipping remained the primary economic activity for many decades, the 1970s saw deposits in Panama’s banking sector swell dramatically, from almost nothing to $50 billion; a who’s who of dictators and malefactors – from Ferdinand Marcos and “Baby Doc” Duvalier to Augusto Pinochet – secreted their money there. After a slight lull in the 1980s due to political instability in Panama and the Latin American debt crises, deposits grew substantially: Panama was firmly established as one of the world’s major offshore havens.
We also knew that during Vladimir Putin’s first presidential mandate, $2 billion dollars disappeared from Russia; and that almost every dictator — Mubarak and Gaddafi included — had stashes of cash in foreign banks. And, as Bloomberg disclosed four years ago, top Chinese leaders are running rich businesses with help from their family members, stashing billions of dollars in obscure foreign banks. All members of the Politburo of the Communist Party are billionaires! Therefore the International Consortium of Investigative Journalists, the organization that edited the Panama Papers, did not need to do much work on their file on China.
And why are there almost no American names in the Panama Papers? As Vice reports:
American officials have also for years been trying to track money shifted around the world through shell companies that the firm specializes in establishing.
Though governments around the world have long decried tax havens and have aggressively pursued big banks in Switzerland and other countries, they have not pursued high-profile lawsuits against Mossack Fonseca or its clients despite knowledge of its business dealings.
“They haven’t remotely the staff to investigate,” said William Black, a University of Missouri–Kansas City white-collar criminologist, referring to federal regulators and prosecutors. “They haven’t remotely the expertise. But mostly they don’t have the will.”
Why not? In a speech to Congress in 2011, Senator Bernie Sanders openly attacked the Panama Free Trade agreement as a cover-up for a safe haven of untaxed American money. After many years of battling in Congress, Sanders got tired of arguing on the Senate floor and decided to run for president. No one believed that, nine months into the primaries, he would still be competing for the Democratic nomination, shoulder-to-shoulder with Hillary Clinton — the politician who owns the biggest political machine in the U.S. But the 74-year-old senator is resisting, with much support from young voters who have had enough of the corrupt Washington politics that protect special interests and that do not care for the rest of the country.
According to IRS calculations, the U.S. Treasury loses $150 billion a year to tax evasion. That is about twice as much as the U.S. government spends on education.
But there is more. As the New Yorker reports, “[The] United States is widely recognized as a leading source of offshore money: during the Union Bank of Switzerland tax-evasion scandal, it emerged that, at that bank alone, U.S. clients had almost twenty thousand Swiss-based accounts. In the hedge-fund industry, it is considered perfectly normal and entirely legitimate to domicile funds in tax havens like Grand Cayman or the British Virgin Islands. In addition, as Bloomberg’s Jesse Drucker reported earlier this year, America is also, thanks to its relatively lax disclosure laws, emerging as a major tax haven and destination for offshore funds. Anonymous money is moving in and out of the United States all the time, with American lawyers and financial intermediaries helping to facilitate the flow.”
So there is nothing new in the Panama Papers — at least, nothing that Asia, Russia or America don’t already know. The question is not one of knowing the situation, but of changing it. And what is depressing is that voting in elections no longer changes anything. Neither does social media. So what will?
Also published on Medium.