Global collaboration on Panama Papers delivered higher rate of reform

Major outcomes continue to unfold nearly three years on from the global investigation known as the ‘Panama Papers’, first unveiled in 2016

Both Konrad Mizzi and Keith Schembri were implicated in the findings from the Panama Papers
Both Konrad Mizzi and Keith Schembri were implicated in the findings from the Panama Papers

Nearly a fifth of countries in which the Panama Papers investigation was reported saw at least one instance of concrete reform, researchers from the University of Oxford found.

The reform included a new law or policy designed to address problems exposed in the reporting which grew out of a trove of files leaked from Panamanian law firm Mossack Fonseca, at the time one of the world’s largest providers of offshore services.

The findings are a glaring contrast to what has happened in Malta: no police investigation was held on the revelations that the Prime Minister’s chief of staff Keith Schembri and tourism minister Konrad Mizzi had been found holding two offshore companies. Police are now exploring new evidence connecting the companies to a Dubai firm reportedly owned by an Electrogas power plant shareholder, the magnate Yorgen Fenech.

Additionally, the murder of journalist Daphne Caruana Galizia – who brooke the Panama Papers in Malta – is an indelible stain on the island.

16 countries or international bodies achieved at least one substantive reform related to the Panama Papers by March 2019

More common among individualistic outcomes are various civil or criminal measures to penalise private actors exposed in the leaks or during the resulting audits and investigations. This includes several actions against major banks, such as European regulators shutting down Malta’s Pilatus Bank and a $180 million penalty against Taiwan’s Mega ICBC by New York’s bank authority, as well as penalties against Mossack Fonseca offices in multiple jurisdictions. Various forms of tax enforcement, such as fees, fines, and recouping back taxes, account for more than a third of individualistic outcomes.

“This is a higher rate than has been found in comparable analyses, due in part to the global scope of the Panama Papers and the nature of the institutions implicated,” Lucas Graves and Nabeelah Shabbir wrote in their research paper published by the Reuters Institute for the study of journalism, based at the University of Oxford.

The research paper – “Gauging the global impacts of the ‘Panama Papers’ three years later” – found that 147 distinct outcomes arose from the investigation.

For example, Iceland’s prime minister stood down two days after the stories broke in 2016, after his family’s interest in an offshore company that stood to gain from the bailout of failed Icelandic banks was revealed. In Pakistan, prime minister Nawaz Sharif was also forced to resign.

Some 16 countries or international bodies achieved at least one substantive reform related to the Panama Papers by March 2019, “an impressive result”, the authors wrote.

In the United States, the Obama administration finalised banking rules cracking down on anonymous shell companies, while European governments are in the process of creating registries of companies’ true owners.

Numerous companies and individuals have been penalised or prosecuted as a result.

Reforms often followed substantial deliberation and took time to develop. In Canada, for instance, coverage of the Panama Papers sharpened public criticism of a tax-amnesty program that waived interest and penalties for many wealthy taxpayers who voluntarily disclosed hidden assets. The controversy led to a parliamentary inquiry as well as an expert panel commissioned by the tax agency, which proposed tighter rules in April 2017 based on those recommendations; after public review and further tweaks, the reforms went into effect in March 2018.

“Substantial reforms have been visible in a range of countries,” the authors said, noting the Lebanese vote to lift banks’ secret protections, as well as Mongolia’s legislation banning public officials and their family members from owning offshore companies.

“Various tax-enforcement measures have been a regular outcome of the reporting, and numerous companies and individuals have been penalised or prosecuted as a result,” Graves and Shabbir wrote.

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