By Mikaela Tenner
In the course of only five days, from April 5th to April 10th, both Iceland and Ukraine lost their Prime Ministers. Though these two European nations have little in common, both had their Prime Ministers resign due to information that came to light in the Panama Papers. Originally leaked by Mossack Fonseca, a law firm in Panama, these reports were compiled by the International Consortium of Investigative Journalists and released by news outlets around the world. These series of reports now known as the Panama Papers revealed the offshore bank accounts of many well-known public figures ranging from Russian President Vladamir Putin to celebrity Simon Cowell. Individuals usually put money in offshore accounts to evade taxation and reporting of finances, so although the wealth of most individuals in the papers has never been a secret, using offshore accounts could imply that they were trying to hide their money. Many politicians are now faced with finding a solution to a crisis that has made the public lose trust in the politicians themselves.
Although these records have been leaked for close to a year, a recent interview, with investigative reporter Gerard Ryle, Director of the International Consortium of Investigative Journalists, revealed just how much time went into planning their public release. According to Ryle, the first journalist to obtain the sources was a German reporter with whom he had been working with since a similar leak of offshore Swiss bank accounts. They eventually started compiling millions of documents on offshore accounts, looking for notable figures amongst these records. In June of 2015, Ryle held a confidential conference with other investigative journalists, which is when they began to coordinate their release. After negotiations with worldwide journalists and news stations, the group settled on an April 3rd release date.
One of the most troubling aspect of the Panama Papers has been the extent to which public officials are invested. Of those revealed, twelve are current or former heads of state, and 128 others are politicians, including the former Government Minister of France, Kenya’s Deputy Chief Justice, and members of various Parliaments. Although having overseas investments is not in itself morally reprehensible for politicians, the conflict of interest that these investments can create is what has been the source of so much public outcry. For example, the papers exposed the fact that former Icelandic Prime Minister Wintris had bonds in Iceland’s bank during the financial crisis of 2008. This means that when the crisis arose, Wintris became a creditor to the banks, and was thus able to profit off of the crisis that was causing so much grief for his own citizens. British Prime Minister David Cameron has been one of the politicians to receive the most backlash when his own conflict of interest was revealed through his father’s records in the Panama Papers. On April 7th, after several days of denial, Cameron admitted that he had profited from these offshore accounts, and the tax avoidance that came along with it. After the scandal, many British citizens feel that they have lost trust in their Prime Minister, and on April 9th thousands marched in a protest to call for Cameron’s resignation.
As protests continue around the world, world leaders are faced with how to best address this issue. Since this banking took place offshore, it is difficult for any one country to unilaterally combat it. Several countries have already started proposing plans to combat the overuse of these “tax havens.” On April 10th, German Finance Minister Wolfgang Schaeuble proposed an idea that included creating a registrar listing companies with offshore accounts among other plans. However, in order to combat the problems of tax havens, countries must have politicians who are willing to initiate this type of policy. As evidenced by the release of the papers, many politicians themselves are the ones who benefit from these tax havens. In order for any feasible policy to be initiated, the politicians themselves must be able to put aside their personal gain in order to serve their citizens. Many of these revelations may explain the actions that politicians took during the financial crisis of 2008- information that if publicly known during this time, may have made politicians more accountable during this time. If this does not occur, then revelations like the Panama Papers should come as no surprise to the public in the future.