The Paradise Papers and why they’re important
A new batch of files obtained by the German newspaper Süddeutsche Zeitung leaked from two law firms specializing in wealth management in tax havens and part of the so-called “Offshore Magic Circle”, Appleby and Asiaciti Trust, has been processed over the course of a year by 382 journalists from around the world coordinated by the International Consortium of Investigative Journalism (ICIJ), and released yesterday by several media that provided resources: in Spain El Confidencial and LaSexta. In total, there are some 13.4 million documents covering all types of financial activities in 19 tax havens around the world over 66 years (between 1950 and 2016), no less than 1.4TB of information.
Putting such as quantity of documentation at the disposal of journalists from all over the world in a way that guarantees its confidential use and allows the media to make the most of the resources invested, represents a huge technological challenge, as I mentioned at the time of the Panama Papers leak. This time the haul is even larger. The ICIJ received in 2017 the prestigious Pulitzer Prize for its work on Panama Papers.
What is the importance of this leak, and of all the previous work — the Offshore Leaks, the Luxembourg Leaks, the Swiss Leaks o the Panama Papers, and that have made the ICIJ the benchmark in investigating tax evasion and tax havens? It’s certainly not about the importance of the people avoiding tax, instead, I would argue that it is the creation of a collective conscience about tax havens, places whose economies help the super rich “optimize” their tax return: in other words to pay as little tax as possible. For generations, this idea of paying less tax or not paying it at all has been part of the collective imagination in which the richest, the most powerful or the smartest, had access to means the rest of us could only dream of, allowing them to contribute much less to the public finances of their countries.
When I was a child, I remember friends of my parents who boasted how they avoided paying their taxes, and how this was widely admired, seen as a sign of their intelligence and social prestige: if you used such schemes, it was because you were rich enough, and commenting on it in private was flouting your wealth. Now, at least in Spain, anybody who boasts that they don’t pay taxes, will likely face opprobrium: thanks to several high-profile cases, we all understand that people who don’t pay taxes are robbing us all.
Stashing your money away in a tax haven are increasingly out of date, increasingly questioned and criticized and, above all, have increasingly negative connotations: as more and more leaks occur and are widely reported by the media, fewer and fewer of us think that people who use such systems are clever, regardless of whether what they are doing is illegal or not. You may be on one of these databases and still be perfectly within the law, although this is often not the case, and what’s more, your reputation is likely to be damaged, which means that tax avoidance in all its forms can now be consigned to the past. Even the Queen of England is not exempt from media coverage, and the impact of what that means for democracy should not be played down.
A world without tax havens? Sadly, we are still very far from that. But technology should provide us with more and better weapons when it comes to tracing transactions, while reducing the risk and increasing incentives for whistle blowers. Protecting yourself from disgruntled or former employees in law firms, from weak links tempted to pass on files to the media is a very complex task, and the successive leaks and their corresponding reporting suggest we are on the right path. The true value of Paradise Papers and the work of the ICIJ in general is that they raise awareness of how we expect the super rich to behave. Once again, the ICIJ deserves much praise in once again exposing financial wrongdoing and thereby helping to change things.
(En español, aquí)
