What if they held a mammoth document leak and nobody came? That seems, with a slight allowance for hyperbole, the impact of the release of 2.6 terabytes of data from the inner sanctums of Mossack Fonseca, the high-rolling Panamanian law firm. Mossack Fonseca—which is, appropriately enough, the joint brainchild of a scion of an émigré Nazi family and a Panamanian lawyer-novelist—is maniacally dedicated to the instant incorporation of obliging shell companies for an elite clientele seeking to shelter their fortunes from revenue collectors in their economic homeland. More than 100 newsgathering outfits across the globe collaborated, under the aegis of the nonprofit International Consortium of Investigative Journalists, to roll out the lead disclosures arising from the leak—a project that is still ongoing. But American news operations largely consigned these lurid revelations of how diligently the international political and economic power elite conceal their pelf from prying auditors to their back pages.
Indeed, the redoubtable hot-take maestros at Vox media leapt fearlessly into the fray to declare that, you know, when you really think about it, offshore tax shelters can be kind of cool—like when, for instance, wealthy dissidents in authoritarian countries use them to shield their fortunes from grasping strongmen! Of course, this enormously charitable view of things suffers a good deal from the actual material leaked about Mossack Fonseca’s enormous client base, which leans heavily toward authoritarian strongmen and their enablers, from Vladimir Putin to Ukrainian President Petro Poroshenko to Bashar al-Assad’s enterprising cousin-cum-financial fixer, Rami Makhlouf. It also didn’t help the slapdash case that Vox quisling—er, excuse me, “reporter”—Zack Beauchamp was hoping to make that he staked it largely on an interview with Yale political science professor Margaret Peters, who went out of her way to praise the transparent business climate of the authoritarian regime in Singapore, without bothering to disclose that Yale is partnering with the National University of Singapore in a glorified tax shelter of its own. (Indeed, Yale, like many an elite institution of higher learning, is a centuries-old master of tax dodging.) But hey, as Beauchamp cheerily assures us, “the relations between individuals, states, and offshore accounts isn’t as straightforward as we might think.”
The unexamined presumption in such recursive and rudderless counter-taking is that Beauchamp and his colleagues, or anyone else notionally tasked with reporting on the inner workings of wealth accumulation in our new millennial gilded age, thinks at all about offshore capital shelters. Far from being an exotic plaything of thuggish world leaders like Putin, or merely corrupt ones like Iceland’s ex-Prime Minister Sigmundur Gunnlaugsson (who laid the groundwork for his parliamentary exit on Tuesday in the wake of the news that he’d used Mossack Fonseca shell firms to conceal banking assets at the height of the global financial crisis), the phony incorporation trick is at the heart of America’s own decrepit, financialized, and top-heavy economic order.
That would be why, for example, Apple—which has surpassed merely industrial-age corporations like General Motors and Exxon as the most heavily capitalized company in the world—has routed sales through Ireland (while concertedly soaking its labor force in China). After depositing more than $200 billion in overseas accounts, the computer giant actually borrowed $17 billion in 2013 to finance a massive stock buyback to artificially spike its share prices—and thereby reap hundreds of millions for its lead shareholders to store in their tax-avoidant nest eggs. As finance scams go, the Apple ownership structure admittedly lacks the screwball ribaldry of Ukrainian President Poroshenko busily at work with Mossack Fonseca, worried about his private assets and providing a current utility billto document his home address, on the very day Russia was (again) invading Ukraine. But, structurally speaking, there’s no bright line to distinguish Tim Cook’s Cupertino tax dodges from the more downmarket variety east of the Black Sea.
Indeed, the reason that more American financiers and political figures aren’t named in the Panama Papers is that most of the elaborate ruses of Mossack Fonseca are perfectly legal within American borders, and indeed, the standard m.o., for the American financial sector. Nest-feathering American investors “mostly don’t go to Panama,” says Ken Silverstein, who published a major Mossack Fonseca expose for Vice in 2014. “Hey, Goldman Sachs has private banking systems all over the world.”
America has conspicuously refrained from adopting automated data-sharing protocols promulgated by the OECD to crack down on offshore tax havens—for the simple reason that more robust enforcement of global tax laws would impair the bottom line of the U.S. financial sector.
Indeed, the redoubtable hot-take maestros at Vox media leapt fearlessly into the fray to declare that, you know, when you really think about it, offshore tax shelters can be kind of cool—like when, for instance, wealthy dissidents in authoritarian countries use them to shield their fortunes from grasping strongmen! Of course, this enormously charitable view of things suffers a good deal from the actual material leaked about Mossack Fonseca’s enormous client base, which leans heavily toward authoritarian strongmen and their enablers, from Vladimir Putin to Ukrainian President Petro Poroshenko to Bashar al-Assad’s enterprising cousin-cum-financial fixer, Rami Makhlouf. It also didn’t help the slapdash case that Vox quisling—er, excuse me, “reporter”—Zack Beauchamp was hoping to make that he staked it largely on an interview with Yale political science professor Margaret Peters, who went out of her way to praise the transparent business climate of the authoritarian regime in Singapore, without bothering to disclose that Yale is partnering with the National University of Singapore in a glorified tax shelter of its own. (Indeed, Yale, like many an elite institution of higher learning, is a centuries-old master of tax dodging.) But hey, as Beauchamp cheerily assures us, “the relations between individuals, states, and offshore accounts isn’t as straightforward as we might think.”The unexamined presumption in such recursive and rudderless counter-taking is that Beauchamp and his colleagues, or anyone else notionally tasked with reporting on the inner workings of wealth accumulation in our new millennial gilded age, thinks at all about offshore capital shelters. Far from being an exotic plaything of thuggish world leaders like Putin, or merely corrupt ones like Iceland’s ex-Prime Minister Sigmundur Gunnlaugsson (who laid the groundwork for his parliamentary exit on Tuesday in the wake of the news that he’d used Mossack Fonseca shell firms to conceal banking assets at the height of the global financial crisis), the phony incorporation trick is at the heart of America’s own decrepit, financialized, and top-heavy economic order.
That would be why, for example, Apple—which has surpassed merely industrial-age corporations like General Motors and Exxon as the most heavily capitalized company in the world—has routed sales through Ireland (while concertedly soaking its labor force in China). After depositing more than $200 billion in overseas accounts, the computer giant actually borrowed $17 billion in 2013 to finance a massive stock buyback to artificially spike its share prices—and thereby reap hundreds of millions for its lead shareholders to store in their tax-avoidant nest eggs. As finance scams go, the Apple ownership structure admittedly lacks the screwball ribaldry of Ukrainian President Poroshenko busily at work with Mossack Fonseca, worried about his private assets and providing a current utility billto document his home address, on the very day Russia was (again) invading Ukraine. But, structurally speaking, there’s no bright line to distinguish Tim Cook’s Cupertino tax dodges from the more downmarket variety east of the Black Sea.
Indeed, the reason that more American financiers and political figures aren’t named in the Panama Papers is that most of the elaborate ruses of Mossack Fonseca are perfectly legal within American borders, and indeed, the standard m.o., for the American financial sector. Nest-feathering American investors “mostly don’t go to Panama,” says Ken Silverstein, who published a major Mossack Fonseca expose for Vice in 2014. “Hey, Goldman Sachs has private banking systems all over the world.”
America has conspicuously refrained from adopting automated data-sharing protocols promulgated by the OECD to crack down on offshore tax havens—for the simple reason that more robust enforcement of global tax laws would impair the bottom line of the U.S. financial sector.
by Chris Lehman, The Baffler | Read more:
Image: David McLimans
