Macron and the Potential Future of Tax Leaks

By: Diane Ring

The French election for president—an event worthy of note in its own right (particularly on the heels of the Brexit vote)—generated a political, international relations, security and media firestorm due to a late-breaking data leak and hack. On Friday, the campaign of French centrist candidate Emmanuel Macron announced that it had been the subject of a major computer hack. At least 9GB of emails and personal and business documents from Macron’s campaign were posted to a document sharing site called Pastebin. Initial reports contended that the hack and leak were an effort to aid Macron’s far-right opponent Marine Le Pen, and may have been undertaken with Russian assistance. While Macron won the election, the potential fallout out from these leaks may have only just begun.

There’s an important tax dimension to the story, which may have been slightly overshadowed by Friday’s massive data dump. Two days before, on Wednesday, Le Pen hinted during a debate at possibility that Macron might have an offshore account in the Bahamas. Apparently, two hours before the debate, documents were anonymously posted on an internet forum that purported to include Macron’s signature and to show that he had a Bahamas bank account. During the debate, Macron responded that the claim was false and constituted “defamation.” On Thursday, Macron and his campaign outlined the spread of this offshore-account assertion on various sites and contended some were connected to “Russian interests.” On Friday, Macron lodged a complaint with the French prosecutor’s office regarding offshore account allegations made online.

Though the Friday hack and data dump have dominated the spotlight, the alleged tax leak is in fact part of the bigger and quite troubling picture of leaks in the modern cyber environment . . .

The story of tax leaks is often told as a tale of leakers and media intermediaries trying to unveil scandalous tax evasion and abusive tax planning. The goal of these leakers and intermediaries, according to this story, is to highlight to the public and to taxing authorities the degree to which the wealthy and powerful are able to illegally or inappropriately evade taxes by hiding wealth offshore and to show how governments are failing to enforce the tax laws against them – all with the hope of spurring tax enforcement reform and restoring balance between the tax burdens born by “regular” taxpayers and those borne by wealthy, powerful tax evaders. Regardless of precisely how accurate this story is in all its parts, it stands in sharp contrast to the role of tax leaks in the French election:

Not only are there strong indications that the reports (and “leaked” documents) of a Macron offshore account may be false (Macron himself has explicitly stated they are false), the context and motive of this “leak” share none of the tax enforcement-oriented markers noted above. This tax “leak” was propagated in the context of a volatile election and targeted a relative political newcomer. Additionally, the leak, which shows no indications of having tax reform motivations, may have involved foreign actors. And, as far as I can tell, the tax leak did not include the participation of respected journalists. The Macron tax leak looks more like political sabotage and less like a public unveiling of tax wrongdoing in aid of civil society.

My co-author Shu-Yi Oei and I have written about the potential risks posed by tax leaks in our recent article, Leak-Driven Law, forthcoming in the UCLA Law Review. Against a backdrop of relatively positive existing views of tax leaks as a boon to tax enforcement, we contended that just as tax leaks could, under the right circumstances, be beneficial to society and advance tax fairness, they could also be employed in the opposite direction – to influence elections, target political enemies, or advance non-tax agendas. Therefore, we argued that governments and tax authorities ought to move towards a more sophisticated understanding of how leaks and data dumps may be employed and intermediated to advance various agendas, rather than simply regarding leaked data as a “free audit” conducted by the leaker that benefits tax authorities.

The Le Pen allegation of the purported Macron offshore bank account—and the social media postings that followed—provide a clear illustration of the potential power of leaked tax data to influence non-tax outcomes. Although this time the tax leak strategy did not have its desired effect because Macron won, it will be interesting to see whether and how government and public attitudes towards tax leaks and other data dumps might evolve in the aftermath.

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