There is a lot of speculation, and even conspiracy theory, circulating on why the Panama Papers leak does not appear to address US issues. Let me offer a simple and, I think, wholly plausible explanation.
The simple fact is that US tax clients prefer to use Cayman and Bermuda to the BVI or the Bahamas. That's nor surprising: law in Cayman and Bermuda is designed to suit US markets. The BVI is generic but definitely UK law focussed, also making it familiar to many in Europe.
Mossack Fonseca, for whatever reason, did not seem to service the US focussed markets: the omission of information may be for that simple reason. I suspect someone else in Panama was the US market specialist. They've not been hacked, yet.
This may be simplistic. But I also happen to think it may well be right.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
This might be of interest:
http://www.zerohedge.com/news/2016-04-04/mossack-fonseca-has-441-us-clients-who-are-they
441 US Clients.
“Just wait for what is coming next,” says SZ, apparently.
There may well be a different and more complex/costly set of legal issues to deal with before disclosing the US client details. I am not certain of that, but in the wake of previous US efforts to gag and prosecute whistleblowers of material of a “sensitive” political nature, I’m sure extra legal care will be taken before (or even if) any data the journalists have is disclosed publicly.
However, if there are senior US lawmakers/politicians/corporate donors on the list then this will make very interesting reading if it ever makes the light of day. There was reference on the Panorama programme to a wealthy US woman using an elderly UK person as a false beneficiary of her money stashed offshore, so there is definitely at least one US citizen on the file (which makes me think there must be many more!)
Also, the only Tax Information Exchange Agreement signed by Panama so far is with the US (passed by the US Congress on October 12, 2011).
I bow to your knowledge on this Richard, but I’ve got a couple of points — one probably a bit too tin-foil-hatty, the other less so.
The first is that I’m not sure that your argument would apply to another country not in the ICIJ ‘Power Player’ search list, but with significant numbers of companies (over 600) and shareholders (over 850) named in the Panama papers. That country? You’ve probably guessed – Israel.
http://www.timesofisrael.com/600-israeli-companies-850-shareholders-listed-in-panama-data-leak/
On a less conspiratorial note, according to the Public Citizen’s Global Trade Watch (a US non-profit activist group) the US Panama deal has “[a loophole that ] allows Panama to sidestep new tax transparency provisions if they are “contrary to the public policy” of Panama, an interesting concept for a country that earns much of its revenue by providing strict banking secrecy and tax-free status for foreign firms incorporated there.”
http://www.citizen.org/documents/Panama-Papers-Statement.pdf
One aspect of this scandal that the Director of the Citizen’s Global Trade Watch made that I think is worth sharing more widely is that the US-Panama Trade Promotion Agreement (of which I think the tax agreement you mentioned was a part) was sold to the US and Panamanian populations in great part as it would put a stop to all of these nefarious goings on.
Just another one of the many much-trumpeted ‘benefits’ of global trade deals that never actually materialise.
Panama also has a double tax treaty with the UK with the usual information exchange provisions – see https://www.gov.uk/government/publications/panama-tax-treaties-in-force – and treaties with Mexico, France, Italy, Spain, etc.
As well as the US, it has a tax information exchange agreement with Canada, Sweden and several other countries which are in force. See http://www.eoi-tax.org/jurisdictions/PA#agreements
That said, Panama has historically taken a very strong position on privacy and confidentiality – rights protected by articles 17, 29 and 42 of its constitution – which have become increasingly out of line with international standards.
It is the largest jurisdiction refusing to do automatic information exchange
Out of line is a massive understatement
Nothing is ever simple:
http://www.vox.com/2016/4/4/11360404/panama-papers-bernie-sanders
What isn not a conspirarcy theory is the mainstream UK media making so little of the massive involvement of UK names and overseas terroritories in The Panama Papers; BBC Panorama did a predictably weak coverage of the story, compared to other countries. This comes from Craig Murray. “Company documents were flashed momentarily on screen, in some cases for a split second, and against deliberately unclear backgrounds. There is no chance that 99.9% of viewers would notice they referred to British Virgin Islands companies. But instantly reading a glimpsed document is an essential skill for a career diplomat, and of course I happen to know immediately what BVI or Tortola mean on a document. So I have been back and got screenshots of those brief flashes.” https://www.craigmurray.org.uk/archives/2016/04/disgraceful-bbc-panorama-propaganda-hides-grim-truth-about-britain/
Craig then compares BBC coverage with ABC (Australia) coverage. “The Australian Broadcasting Corporation shamed the BBC by putting out a Four Corners documentary on the Panama leak that had real balls.
In stark contrast to the BBC, the Australians named and shamed Australia’s biggest company and Australia’s biggest foreign investor. BBC Panorama by contrast found a guy who sold one house in Islington. The Australians also, unlike the BBC who deliberately and knowing hid it, pointed out that the corruption centred on the British Virgin Islands, and even went there. All in all an excellent job.” https://www.craigmurray.org.uk/archives/2016/04/a-chink-of-aussie-light/
I can’t comment on Cayman law but Bermuda law is pretty much lifted from UK company law ( I believe that Cayman law may also be but will leave that for someone to comment on who knows ). I also think your opinion that US citizens don’t use Panama may not be quite right . Marc Harris certainly lured a few US persons . Is he out yet? Yes offshore may be murky but your broad brush approach whilst understandable ( as your motives are political rather than practical ) does not mean that all that you see things actuall are.p
Interesting to see that the US is clamping down on tax driven mergers and acquisitions – seems like the land of the free market is not so willing to be raped and pillaged itself anymore.
http://www.theguardian.com/business/2016/apr/06/us-tax-clampdown-sinks-pfizers-record-160bn-deal-with-allergan
Interesting video from Bernie Sanders on Panama
https://www.facebook.com/OccupyDemocrats/videos/1108033749289678/
Agreed
Sanders has been consistent on this and most other issues relating to banking, finance and tax throughout his long political career. Unlike Clinton and most other Democrats (and every Republican).
He could do well out of this, as some are already predicting (perhaps somewhat optimistically!) .
http://www.independent.co.uk/voices/the-panama-papers-could-hand-bernie-sanders-the-keys-to-the-white-house-a6969481.html