Panama Papers: The One-Year Anniversary

By: Diane Ring

This month marks the one-year anniversary of the Panama Papers leak. In April 2016, the ICIJ announced the leak and a few weeks later (May 9, 2016) released a database that included a subset of the leaked data. The leak itself comprised over 11 million records spanning 40 years from the Panamanian law firm Mossack Fonseca. At its core, the leak revealed the true ownership of over 200,000 offshore entities, thereby raising a host of tax and political questions regarding many of the entities’ owners.

So what has happened over the past year as a result of the leak?

The leak’s impacts have reverberated across the globe in law and policy, enforcement, and public conversation. Here are some highlights:

Hacking: The Panama Papers leak, widely thought to be the result of hacking, brought home the reality that businesses and private institutions are susceptible not just to current and former employees seizing and leaking data (as was the case in prior leaks), but are also at risk from hackers.

Investigations: A wide range of countries around the world have announced investigations based on the Panama Papers data, including Australia, France, the Netherlands, Canada, the U.S., the U.K., Germany, Indonesia, Denmark, Pakistan, Singapore, South Africa, Taiwan, and Thailand. For example, the U.K. announced in November 2016 that 22 people were facing civil and criminal investigations relating to tax evasion based on the disclosures in the Panama Papers.

Political fallout: The prime minister of Iceland resigned in the wake of post-leak pressure in April 2016. Connections between other political figures and offshore entities also became the subject of controversy, including those involving the Chinese and Ukrainian Presidents and the U.K. and Pakistan Prime Ministers.

Complications for state relations: For its part, Panama created a panel of experts to help improve transparency in the offshore financial sector, although two members later resigned (Joseph Stiglitz and Mark Pieth) over concerns about the panel’s independence. Soon after the leak, France stated that it would be placing Panama back on its “blacklist” of uncooperative tax jurisdictions. About six months after the leak, Panama signed on to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters in October 2016. A few months later, in January 2017, Panama reported that it would soon be engaging in talks with France about “normalizing relations” and being removed from France’s “black list.”

Legal reforms: Legal reforms, particularly those focused on creation of registries of beneficial owners of entities, have emerged in individual countries (see, e.g., Germany, the U.K., Australia, New Zealand, and Ireland), regional bodies (e.g., EU) and globally (via the G20). To be clear, the problem of offshore entities and unidentified owners was not new. Jurisdictions were already discussing the need for better information on beneficial owners before the leak. Nevertheless, the leak helped propel the movement for beneficial ownership registries. One continuing question is whether registries should be public, in whole or in part, as opposed to just available to tax authorities. For example, in 2016, the EC adopted a proposal that would grant full public access to beneficial ownership registries of certain entities.

The law firm: Mossack Fonseca reported in March 2017 that it has fired 75 employees. Additionally, the two founders of the firm were arrested in February 2017 in connection with a bribery scandal.

Prizes: The ICIJ, along with The McClatchy Washington Bureau and The Miami Herald, were awarded the Pulitzer Prize for Explanatory Reporting in April 2017 for their Panama Paper investigation series. The investigative reporting project, “Panama Papers – the Secrets of Dirty Money” (by Frederick Obermaier, Bastian Obermayer, and “many others”) is on the short list for 2017 European Press Prize for Investigative Reporting. The winner will be announced in a week. (Bastian Obermayer was the German reporter who was initially contacted by the leaker of the Panama Papers back in 2014.)

ICIJ: The ICIJ, which has received significant press and public attention all year, decided in February 2017 to spin off from the Center for Public Integrity in Washington, DC, which had been its umbrella organization since 1997. The ICIJ is now a fully independent non-profit news organization.

In all, a busy year. But the lasting impact of the Panama Papers leak remains to be seen, and will likely take some time to play out in political, legal, social, business, and investigative reporting arenas. My co-author, Shu-Yi Oei, and I examine some of these impacts in our forthcoming article, Leak-Driven Law, 65 UCLA L. Rev. __ (forthcoming 2018). We’ll continue to track the impacts and deeper significance of this and other leaks in our future work.

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