News & Politics

11 Million Documents from Law Firm Show Secret Accounts of World Leaders

A marquee of the Arango Orillac Building lists the Mossack Fonseca law firm in Panama City, Sunday, April 3, 2016. German daily Sueddeutsche Zeitung says it has obtained a vast trove of documents detailing the offshore financial dealings of the rich and famous. (AP Photo/Arnulfo Franco)

They’re called “The Panama Papers.” Contained in the 11.5 million documents is a rundown of the offshore accounts, shell corporations, and tax evasions of the rich and powerful around the world.

The papers were delivered to a German newspaper by an anonymous source and are from the Panamanian law firm Mossack Fonseca, showing how hundreds of thousands of people with money to hide used anonymous shell corporations across the world.

Over a year ago, an anonymous source contacted the Süddeutsche Zeitung (SZ) and submitted encrypted internal documents from Mossack Fonseca, a Panamanian law firm that sells anonymous offshore companies around the world.

These shell firms enable their owners to cover up their business dealings, no matter how shady.

In the months that followed, the number of documents continued to grow far beyond the original leak. Ultimately, SZ acquired about 2.6 terabytes of data, making the leak the biggest that journalists had ever worked with. The source wanted neither financial compensation nor anything else in return, apart from a few security measures.

The data provides rare insights into a world that can only exist in the shadows. It proves how a global industry led by major banks, legal firms, and asset management companies secretly manages the estates of the world’s rich and famous: from politicians, Fifa officials, fraudsters and drug smugglers, to celebrities and professional athletes.

The ever-growing complexity of tax laws makes such tax dodges inevitable. For every attempt to close a loophole, another one springs into being. Also, wealthy individuals have vast influence over how laws are written and interpreted. Armies of attorneys routinely carve out exemptions and safe havens for their clients by contributing heavily to political campaigns and taking advantage of the “revolving door” that sees regulators hired as lobbyists and then return as regulators when the political winds change.

Can you blame ordinary people around the world for being angry and resentful of the elites? I don’t think it’s necessarily true that the “game” is rigged against most of us. There are still pathways to success for entrepreneurs in most societies regardless of their station in life if they have superior ideas and ambition. Rather, the vast majority of us have become afterthoughts to the elites as they arrogantly and selfishly game the system to their advantage.

Yes, it’s a racket. And the best weapon we have against this kind of corruption in America is to simplify the tax code. Making the code less complex gives the rich fewer hiding places for their cash. It won’t solve the problem. But it would be a good beginning.