More than $500 million recovered by tax authorities worldwide following the Panama Papers

The Panama Papers, pub­lished 18 months ago, exposed a sys­tem that enables crime, cor­rup­tion and wrong­do­ing, hid­den by secre­tive off­shore companies.

IMPACT

More than $500 mil­lion has been recouped by tax author­i­ties world­wide after the Panama Papers rev­e­la­tions, first pub­lished in April 2016.

Spain alone col­lect­ed $122 mil­lion after an inves­ti­ga­tion into the affairs of tax res­i­dents who had stock­piled mon­ey off­shore. Among the coun­tries rep­re­sent­ed in the Panama Papers data, a total of 15 – on three con­ti­nents – have pub­licly com­ment­ed on the amount of tax­es recov­ered by tax authorities.

This num­ber could keep grow­ing with sev­er­al coun­tries still con­duct­ing audits on the basis of the Panama Papers infor­ma­tion. In Canada, 123 audits are under­way and sev­er­al crim­i­nal inves­ti­ga­tions are ongo­ing, accord­ing to the Canada Revenue Agency. South Korea also report­ed hav­ing recouped $1.2 bil­lion in tax­es this year, though it is not clear what per­cent­age is direct­ly con­nect­ed to the Panama Papers.

Last July, the German fed­er­al police agency announced it had bought the Panama Papers data. The agency con­duct­ed raids and has so far frozen two mil­lion euros. Danish tax author­i­ties also acquired a por­tion of the Panama Papers data from an unknown source and are inves­ti­gat­ing 320 com­pa­nies and 500 to 600 indi­vid­u­als linked through the data to Denmark.

Earlier this year, the founders of the Panamanian law firm Mossack Fonseca were arrest­ed on mon­ey laun­der­ing charges after author­i­ties raid­ed the firm’s head­quar­ters as part of inves­ti­ga­tions into Brazil’s largest-ever bribery scan­dal, known as Lava Jato.

Rómulo Bethancourt, one of Panama’s orga­nized crime pros­e­cu­tors, has been inves­ti­gat­ing Mossack Fonseca’s alleged role in an inter­na­tion­al cor­rup­tion probe. “We have a sol­id case,” Bethancourt said in March about his agency’s inves­ti­ga­tion of Mossack Fonseca in rela­tion to Lava Jato. A sep­a­rate inves­ti­ga­tion is ongo­ing into Mossack Fonseca and the Panama Papers.

ICIJ part­ners have kept explor­ing the Panama Papers data for new leads. In Bolivia, ICIJ part­ners unveiled last October the use of a Panamanian com­pa­ny by American busi­ness­man Jacob Ostreicher to do busi­ness in Bolivia. Ostreicher was arrest­ed in 2011 on sus­pi­cion of mon­ey laun­der­ing. He lat­er accused a Colombian woman who used to work for him of fraud. She went to jail while Ostericher escaped Bolivia, thanks to the help of American actor Sean Penn, who helped get him trans­ferred from prison to house arrest, which he then left behind.

One of the most remark­able devel­op­ments of the Panama Papers in 2017 unfold­ed in Pakistan last July when the Supreme Court, in an unan­i­mous vote, removed the prime min­is­ter, Nawaz Sharif, from office.

Former Pakistan PM Nawaz Sharif

The Panama Papers inves­ti­ga­tion report­ed that three of Sharif’s chil­dren were own­ers or had the right to autho­rize trans­ac­tions for sev­er­al com­pa­nies, includ­ing two that owned “a UK prop­er­ty each for use by the fam­i­ly” of the com­pa­nies’ own­ers. Sharif’s daugh­ter Mariam, wide­ly seen as her father’s polit­i­cal heir, was the own­er of two British Virgin Islands-based firms.

In Belgium, the police raid­ed the offices of Belfius bank in con­nec­tion to rev­e­la­tions that its for­mer sub­sidiary, Experta Corporate and Fund Services, had been a promi­nent client of Mossack Fonseca. Experta, a tax con­sult­ing firm, helped to estab­lish hun­dreds of off­shore com­pa­nies on its clients’ behalf, alleged­ly tak­ing advan­tage of lax report­ing require­ments for for­eign accounts, accord­ing to ICIJ Belgian part­ners Le Soir, Knack and De Tijd.

In Malta, inquiries into the Prime Minister’s chief of staff Keith Schembri are still ongo­ing. The ini­tial Panama Papers rev­e­la­tions, involv­ing Schembri as well as then-ener­gy min­is­ter Konrad Mizzi and Panamanian com­pa­nies, were fol­lowed by addi­tion­al alle­ga­tions of mon­ey laun­der­ing and cor­rup­tion involv­ing shell com­pa­nies and trusts, result­ing in no few­er than five mag­is­te­r­i­al inquiries.

A Dutch reg­u­la­tor start­ed crim­i­nal pro­ceed­ings against a few trust offices based on the Panama Papers find­ings from ICIJ part­ners Trouw. As a result, the law which reg­u­lates trust offices will also become stricter January 1, 2018. Earlier this year, a Dutch par­lia­men­tary hear­ing con­clud­ed that tax advis­ers and oth­er inter­me­di­aries were ignor­ing the spir­it and intent of the law by help­ing hide the iden­ti­ty of ben­e­fi­cial own­ers and help­ing them avoid taxes.

Other coun­tries have imple­ment­ed reforms fol­low­ing the ICIJ inves­ti­ga­tion. In Canada, the gov­ern­ment for­mal­ly com­mit­ted to cre­at­ing a reg­is­ter of ben­e­fi­cial own­ers, although it is not yet clear when it will be pub­licly acces­si­ble. The Canadian gov­ern­ment also increased the bud­get of the Canada Revenue Agency by more than $500 mil­lion to hire more audi­tors and investigators.

The European Union pub­lished its black­list of 17 tax havens this month, includ­ing Panama. But oth­er major tax havens were miss­ing from the list, includ­ing the British Virgin Islands, where Mossack Fonseca reg­is­tered half of the com­pa­nies it set up between 1970 and 2015.

A mile­stone for trans­paren­cy was reached last April in Mongolia where a con­flict of inter­est law for pub­lic ser­vice was amend­ed to ban civ­il ser­vants and pub­lic offi­cials and their imme­di­ate fam­i­ly mem­bers from hold­ing or using off­shore accounts.

Other coun­tries haven’t pro­duced any vis­i­ble results from the Panama Papers rev­e­la­tions. In Nicaragua and Mali for exam­ple, tax author­i­ties have not pub­licly announced any recouped tax­es fol­low­ing the Panama Papers.

In Tunisia, ICIJ part­ner Inkyfada recent­ly report­ed that the nation­al anti-cor­rup­tion body had opened an inves­ti­ga­tion but closed it “after receiv­ing a note from the judi­cial and finan­cial unit” and that “the Tunisian Parliament had in turn cre­at­ed a com­mis­sion of inquiry, but its work has not real­ly been pur­sued since.”

By Cecile S. Gallego

More than $500 mil­lion recov­ered by tax author­i­ties world­wide fol­low­ing the Panama Papers

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