www.nettime.org
Nettime mailing list archives

<nettime> Panama Papers source speaks
nettime's_paper_pusher on Sat, 7 May 2016 00:30:54 +0200 (CEST)


[Date Prev] [Date Next] [Thread Prev] [Thread Next] [Date Index] [Thread Index]

<nettime> Panama Papers source speaks


[According to the New York Times, the source of the Panama Papers issued
the following statement on Thursday 5 May.]

<http://www.nytimes.com/2016/05/07/world/panama-papers-source.html>

<https://assets.documentcloud.org/documents/2824509/2016-5-6-Statement-by-John-Doe.pdf>


The Revolution Will Be Digitized

Income inequality is one of the defining issues of our time. It affects
all of us, the world over. The debate over its sudden acceleration has
raged for years, with politicians, academics and activists alike
helpless to stop its steady growth despite countless speeches,
statistical analyses, a few meagre protests, and the occasional
documentary. Still, questions remain: why? And why now?

The Panama Papers provide a compelling answer to these questions:
massive, pervasive corruption. And it's not a coincidence that the
answer comes from a law firm. More than just a cog in the machine of
"wealth management," Mossack Fonseca used its influence to write and
bend laws worldwide to favour the interests of criminals over a period
of decades. In the case of the island of Niue,[1] the firm essentially
ran a tax haven from start to finish. Ramón Fonseca and Jürgen Mossack
would have us believe that their firm's shell companies, sometimes
called "special purpose vehicles," are just like cars.[2] But used car
salesmen don't write laws. And the only "special purpose" of the
vehicles they produced was too often fraud, on a grand scale.

[1] https://panamapapers.icij.org/20160403-mossack-fonseca-offshore- secrets.html

[2] https://next.ft.com/content/ec5952e0-fad6-11e5-8f41-df5bda8beb40

Shell companies are often associated with the crime of tax evasion, but
the Panama Papers show beyond a shadow of a doubt that although shell
companies are not illegal by definition, they are used to carry out a
wide array of serious crimes that go beyond evading taxes.[3] I decided
to expose Mossack Fonseca because I thought its founders, employees and
clients should have to answer for their roles in these crimes, only some
of which have come to light thus far. It will take years, possibly
decades, for the full extent of the firm's sordid acts to become known.

[3] https://www.youtube.com/watch?v=F6XnH_OnpO0

In the meantime, a new global debate has started, which is encouraging.
Unlike the polite rhetoric of yesteryear that carefully omitted any
suggestion of wrongdoing by the elite, this debate focuses directly on
what matters.

In that regard, I have a few thoughts.

For the record, I do not work for any government or intelligence agency,
directly or as a contractor, and I never have. My viewpoint is entirely
my own, as was my decision to share the documents with Süddeutsche
Zeitung and the International Consortium of Investigative Journalists
(ICIJ), not for any specific political purpose, but simply because I
understood enough about their contents to realize the scale of the
injustices they described.

The prevailing media narrative thus far has focused on the scandal of
what is legal and allowed in this system. What is allowed is indeed
scandalous and must be changed. But we must not lose sight of another
important fact: the law firm, its founders, and employees actually did
knowingly violate myriad laws worldwide, repeatedly. Publicly they plead
ignorance, but the documents show detailed knowledge and deliberate
wrongdoing. At the very least we already know[4] that Mossack personally
perjured himself before a federal court in Nevada, and we also know that
his information technology staff attempted to cover up the underlying
lies. They should all be prosecuted accordingly with no special
treatment.

[4] https://www.publicintegrity.org/2016/04/03/19506/o shore-law-rm-runs-trouble-las-vegas

In the end, thousands of prosecutions could stem from the Panama Papers,
if only law enforcement could access and evaluate the actual documents.
ICIJ and its partner publications have rightly stated that they will not
provide them to law enforcement agencies. I, however, would be willing
to cooperate with law enforcement to the extent that I am able.

That being said, I have watched as one after another, whistleblowers and
activists in the United States and Europe have had their lives destroyed
by the circumstances they find themselves in after shining a light on
obvious wrongdoing. Edward Snowden is stranded in Moscow, exiled due to
the Obama administration's decision to prosecute him under the Espionage
Act. For his revelations about the NSA, he deserves a hero's welcome and
a substantial prize, not banishment. Bradley Birkenfeld was awarded
millions for his information concerning Swiss bank UBS -- and was still
given a prison sentence by the Justice Department. Antoine Deltour is
presently on trial for providing journalists with information about how
Luxembourg granted secret "sweetheart" tax deals to multi-national
corporations, effectively stealing billions in tax revenues from its
neighbour countries. And there are plenty more examples.

Legitimate whistleblowers who expose unquestionable wrongdoing, whether
insiders or outsiders, deserve immunity from government retribution,
full stop. Until governments codify legal protections for whistleblowers
into law, enforcement agencies will simply have to depend on their own
resources or on-going global media coverage for documents.

In the meantime, I call on the European Commission, the British
Parliament, the United States Congress, and all nations to take swift
action not only to protect whistleblowers, but to put an end to the
global abuse of corporate registers. In the European Union, every member
state's corporate register should be freely accessible, with detailed
data plainly available on ultimate beneficial owners.

The United Kingdom can be proud of its domestic initiatives thus far,
but it still has a vital role to play by ending financial secrecy on its
various island territories, which are unquestionably the cornerstone of
institutional corruption worldwide. And the United States can clearly no
longer trust its fifty states to make sound decisions about their own
corporate data. It is long past time for Congress to step in and force
transparency by setting standards for disclosure and public access.

And while it's one thing to extol the virtues of government transparency
at summits and in sound bites, it's quite another to actually implement
it. It is an open secret that in the United States, elected
representatives spend the majority of their time fundraising. Tax
evasion cannot possibly be fixed while elected officials are pleading
for money from the very elites who have the strongest incentives to
avoid taxes relative to any other segment of the population. These
unsavoury political practices have come full circle and they are
irreconcilable. Reform of America's broken campaign  finance system
cannot wait.

Of course, those are hardly the only issues that need fixing. Prime
Minister John Key of New Zealand has been curiously quiet about his
country's role in enabling the financial fraud Mecca that is the Cook
Islands. In Britain, the Tories have been shameless about concealing
their own practices involving offshore companies, while Jennifer Shasky
Calvery, the director of the Financial Crimes Enforcement Network at the
United States Treasury, just announced her resignation[5] to work
instead for HSBC, one of the most notorious banks on the planet (not
coincidentally headquartered in London). And so the familiar swish of
America's revolving door echoes amidst deafening global silence from
thousands of yet-to-be-discovered ultimate beneficial owners who are
likely praying that her replacement is equally spineless. In the face of
political cowardice, it's tempting to yield to defeatism, to argue that
the status quo remains fundamentally unchanged, while the Panama Papers
are, if nothing else, a glaring symptom of our society's progressively
diseased and decaying moral fabric.

[5] http://www.wsj.com/articles/financial-crimes-enforcement-network- director-calvery-to-depart-1461693902

But the issue is finally on the table, and that change takes time is no
surprise.

For fifty years, executive, legislative, and judicial branches around
the globe have utterly failed to address the metastasizing tax havens
spotting Earth's surface. Even today, Panama says it wants to be known
for more than papers, but its government has conveniently examined only
one of the horses on its offshore merry-go-round.

Banks, financial regulators and tax authorities have failed. Decisions
have been made that have spared the wealthy while focusing instead on
reining in middle- and low-income citizens.

Hopelessly backward and inefficient courts have failed. Judges have too
often acquiesced to the arguments of the rich, whose lawyers -- and not
just Mossack Fonseca -- are well trained in honouring the letter of the
law, while simultaneously doing everything in their power to desecrate
its spirit.

The media has failed. Many news networks are cartoonish parodies of
their former selves, individual billionaires appear to have taken up
newspaper ownership as a hobby, limiting coverage of serious matters
concerning the wealthy, and serious investigative journalists lack
funding. The impact is real: in addition to Süddeutsche Zeitung and
ICIJ, and despite explicit claims to the contrary, several major media
outlets did have editors review documents from the Panama Papers. They
chose not to cover them. The sad truth is that among the most prominent
and capable media organizations in the world there was not a single one
interested in reporting on the story. Even Wikileaks didn't answer its
tip line repeatedly.

But most of all, the legal profession has failed. Democratic governance
depends upon responsible individuals throughout the entire system who
understand and uphold the law, not who understand and exploit it. On
average, lawyers have become so deeply corrupt that it is imperative for
major changes in the profession to take place, far beyond the meek
proposals already on the table. To start, the term "legal ethics," upon
which codes of conduct and licensure are nominally based, has become an
oxymoron. Mossack Fonseca did not work in a vacuum -- despite repeated
fines and documented regulatory violations, it found allies and clients
at major law firms in virtually every nation. If the industry's
shattered economics were not already evidence enough, there is now no
denying that lawyers can no longer be permitted to regulate one another.
It simply doesn't work. Those able to pay the most can always find a
lawyer to serve their ends, whether that lawyer is at Mossack Fonseca or
another firm of which we remain unaware. What about the rest of society?

The collective impact of these failures has been a complete erosion of
ethical standards, ultimately leading to a novel system we still call
Capitalism, but which is tantamount to economic slavery. In this system
-- our system -- the slaves are unaware both of their status and of
their masters, who exist in a world apart where the intangible shackles
are carefully hidden amongst reams of unreachable legalese. The horrific
magnitude of detriment to the world should shock us all awake. But when
it takes a whistleblower to sound the alarm, it is cause for even
greater concern. It signals that democracy's checks and balances have
all failed, that the breakdown is systemic, and that severe instability
could be just around the corner. So now is the time for real action, and
that starts with asking questions.

Historians can easily recount how issues involving taxation and
imbalances of power have led to revolutions in ages past. Then, military
might was necessary to subjugate peoples, whereas now, curtailing
information access is just as effective or more so, since the act is
often invisible. Yet we live in a time of inexpensive, limitless digital
storage and fast internet connections that transcend national
boundaries. It doesn't take much to connect the dots: from start to
finish, inception to global media distribution, the next revolution will
be digitized.

Or perhaps it has already begun.

#  distributed via <nettime>: no commercial use without permission
#  <nettime>  is a moderated mailing list for net criticism,
#  collaborative text filtering and cultural politics of the nets
#  more info: http://mx.kein.org/mailman/listinfo/nettime-l
#  archive: http://www.nettime.org contact: nettime {AT} kein.org
#   {AT} nettime_bot tweets mail w/ sender unless #ANON is in Subject: