Global outrage over ‘Panama papers’ scandal

The biggest data leak in history has shone a light on the shady world of offshore tax havens. World leaders, celebrities and criminals are all implicated. Can the practice ever be stopped? It started with a cryptic message to the journalist Bastian Obermayer at a German newspaper: 'Hello. This is John Doe. Interested in data?' He replied to say that he was. Soon, the anonymous source was sending 2.6 terabytes of emails, letters and accounts from the offshore law firm Mossack Fonseca, a cache nicknamed the Panama papers. For a year, 400 journalists in 80 countries combed through the files, piecing together groundbreaking stories which exposed 40 years of dodgy deals. It is the biggest data leak in history. The papers show how 143 politicians, including 12 national leaders, kept money 'offshore' and avoided paying tax at home. They include details of a $1 billion money launderingMaking money acquired illegally seem to have come from a legitimate source, often by feeding it into the income stream of a legitimate organisation. scheme linked to the Russian president Vladimir Putin. Then there are the accounts of 23 people from countries like Syria and North Korea who used the law firm to avoid international sanctionsEconomic measures designed to punish a country, for instance by excluding it from trade.. The prime minister of Iceland has already stepped down. And journalists say there are 'more headlines' to come. The latest scandal revealed that Britain has given 253m of taxpayers' money to tax havens through foreign aid over six years. So what exactly is all the fuss about? Tax havens are countries like Panama and the Bahamas which have low tax rates for corporations, and high levels of secrecy. Law firms like Mossack Fonseca create 'shell companies' in these countries, which can be used to hide money from their clients' governments. This means that they can avoid paying taxes on their profits, creating a 'gap' in national finances and deepening inequality. Hiding wealth to evade tax is illegal, and financial secrecy laws attract criminalsPeople who break the law.. Often, however, people with money offshore have not broken any rules - and Mossack Fonseca insists that it has not done so either. Yet many people argue that not paying tax is immoral either way. Most of us do not get the option, they say. And the economist Gabriel Zucman estimates that illegal tax evasion costs the world around $200 billion per year. Can it be stopped? Avoidance tactics Tax havens should not be allowed to turn a blind eye to criminality on their shores, say some. Rich countries like Britain make big claims about 'clamping down' on tax evasion - they should try harder to close their own loopholes, and put pressure on tax havens to reform their laws and report unacceptable behaviour. But rich countries cannot be trusted either, argue others. The Panama papers show that democratic leaders can be just as guilty of hiding money as criminals. The whole world is implicated; it needs an independent body like the UN to take control and put an end to tax havens once and for all. Only then will trust be restored in capitalism. KeywordsMoney laundering - Making money acquired illegally seem to have come from a legitimate source, often by feeding it into the income stream of a legitimate organisation.