In The Panama Capers We Trust by Clive Hambidge

tax the rich mural

Image by Zervas via Flickr

by Clive Hambidge
Writer, Dandelion Salad
London, England
April 14, 2016

The Panamanian Capers

Apparently, if you’ve seen the news, the leaked Panama Papers[1], from the “tight lipped” (Economist) Panamanian law firm Mossack Fonseca & Co, are spilling the beans on the details of what the rich, powerful and greedy “beyond avarice” get up to with unseemly amounts of dosh, in 214,488 offshore tax havens. Mossack Fonseca & Co has been under investigation and intense scrutiny for some time. Ken Silverstein contributing editor for Vice who had cased the Mossack Fonseca & Co joint, two years before the Panama Papers disclosure, writing: “If shell companies are getaway cars for bank robbers, then Mossack Fonseca may be the world’s shadiest car dealership.” True but the Mossack Fonseca shenanigans are part of the problem but not the endemic problem. The endemic problem is American financial hegemony. Mossack Fonseca’s offices have just been raided almost certainly because Panamanian politicians and their dealers (they are all in need of a fix) will be implicated in all sorts of sordid stuff. And one expected that.

Make no mistake it has been a U.S Political chess move, which has led to the leak of the Panama Papers. “11.5 million Documents-or 2.6 terabytes of data” are in the teeth chattering public domain. As we know, relatively few Americans have been named. This is unsurprising as according to a recent article by Liam Stack for The New York Times April 4 2016: “it is easy to form shell companies in the United States. James Henry, an economist and senior adviser to the Tax Justice Network[2], told Fusion[3] that Americans “really don’t need to go to Panama … Basically, we have an onshore haven industry in the U.S. that is as secretive as anywhere,” he said.”

One senior advisor at the White House was rumoured as saying, “Why should we Americans get away with tax aversion, evasion, invasion, inversion, conversion, infestation and the whole world too? Jeez!! It’s just … well … plain dang wrong.”

Soros-USAID

We must mention here that the International Consortium of Investigative Journalists (ICIJ) was George Soros-USAID funded. USAID has been tied to corruption and mismanagement for years:[4] “USAID last month suspended its association with International Relief and Development [IRD] and the action means the group will not be given any new USAID contracts … The Washington area aid group has received more than $2.4 billion in contracts and cooperative agreements through USAID since 2007.” As for the megalomaniac Soros, according to Kurt Nimmo writing on April 5 2016 for Infowars:[5] “The establishment has not bothered to investigate the International Consortium of Investigative Journalists (ICIJ), the organization behind the leak. A trip to its web page reveals its support and funding sources: the Open Society Foundations (a George Soros outfit), the Ford Foundation and a host of other foundations. Soros’ anti-Russian obsession is well-known. Less well-known is the fact the Ford Foundation is connected to the CIA and has specialized in international cultural propaganda since the end of the Second World War.” Soros’ obsession with endless accumulation of wealth makes him the über capitalist whilst dressed up as a self-preening socialist. According to Forbes, George has a net worth of US$ 24.9 billion.[6]

BRICS through the window

The Panama Papers are a flood gate attempt by the USA to discredit (temporarily) certain world leaders and their goodfellas, and, control the bank accounts of any U.S. citizen (rich or poor) linked to other sovereign states which the U.S. regard as a threat to her perceived hegemonic financial superiority, thus maintaining the narcissistic (again perceived) “American exceptionalism.” And to make sure (they will fail) U.S. financial interests (which are the interests of the US super-rich) are shored up against “glory be mama” China and Russia working increasingly with the Middle Eastern Sovereign States (traditionally controlled by America) now diversifying away from carbon based economies to infra structure projects in West Africa alongside China. In addition, the BRICS countries of Brazil, Russia, India, China, South Africa (that 42% of the world’s people) has US$4 trillion of “combined foreign reserves” and counting. This is real financial influence and BRICS are using such advantage against the USA. The so named BRICS New Development Bank (NDB) with the Headquarters in South Africa with an initial start-up-fund of US$50 billion rising over the years to US$100 billion, will fund, infrastructure projects, mainly in Africa. [7]

To challenge American financial hegemony and control over institutions such as the International Monetary Fund (IMF), BRICS has a framework Treaty, the Contingent Reserve Arrangement (CRA).

According to the treaty, “the parties agree that this contingent reserve arrangement shall contribute to strengthening the global financial safety net and complement existing international monetary and financial arrangements (Russia & India Report 30 July 2105)” [8]. America knows China seeks to control Africa through a proxy South Africa, South America through the proxy Brazil, and now the Middle East through the proxy Iran (BRICS & Co?). Just as the U.S. has sought to control the Middle East and North Africa (MENA) supporting some of the gravest crimes (perpetrated by Israel against the Palestinians) of the 20th and 21st century, let us collectively pray that China [no lover of human rights] has more benevolent reasons for flying her dragon than breathing fire.

The Panama Papers are a play show by the USA to keep the people and poor of the world (not the leaders) in awe of their power and powers’ reach. We see however, the waning light of a once unchallenged economic power now in the headlights of China’s rise and rise. As Immanuel Wallerstein states[9]: “the United States and the European Union are constantly demanding that states in the rest of the world open their frontiers to flows of manufactures and services from them. However quite strongly resist opening fully their own frontiers.” Well the bitten bite and let us hope for world peace sake an accommodation by the USA is reached with BRICS, where the poor of the world are the first beneficiaries. Pope Francis described capitalism as “an unfettered pursuit of money rules” adding “once greed for money presides over the entire socio-economic system, it ruins society, it condemns and enslaves men and women, it destroys human fraternity.” It becomes as claimed by 4th century Bishop Saint Basil of Caesarea “the dung of the devil.”

For now, let us return to the interminable Soros-USAID Panama Pathetic Papers (PPP) the second longest “P” in history.

An American Crack-Down-Up

Fusion reporting on April 4, 2016 gave two salient points in light of the above information: “So far, the International Consortium of Investigative Journalists (ICIJ) has only been able to identify 211 people with U.S. addresses who own companies in the data (not all of whom we’ve been able to investigate yet). However, “an estimated $150 billion in potential U.S. tax revenues disappears into offshore tax schemes each year, according to a 2014 Senate subcommittee report.” [10] That being so U.S. offshore havens have been under investigation. The U.S. Foreign Account Tax Compliance Act (FATCA) became law in March 2010. “The objective of FATCA is the reporting of foreign financial assets; withholding is the cost of not reporting” (FATCA). Of course, FATCA works with other government bodies and certainly the Common Reporting Standards (CRP). CRP was “developed in response to the G20 request and approved by the OECD Council on 15 July 2014 … Calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. It sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.”

CNN Money Jan 28 2015 told Americans to stop being so naughty and come clean: “It’s a bad bet to hide money and income offshore,” said IRS Commissioner John Koskinen. “Taxpayers are best served by coming in voluntarily and getting their taxes and filing requirements in order.” CNN Money reported June 4, 2015 that: “laws designed to discourage the wealthy from hiding money offshore are going to snare a lot of other folks, especially immigrants who are legal U.S. residents or citizens who may be sending money to family abroad, may have inherited money from a relative or simply have accounts left over from the days before they emigrated.” U.S. law is gunning for the vulnerable: going after the poor.

The U.S. IRS 2009 Offshore Voluntary Disclosure Program[11] tried to persuade U.S. taxpayers (from not being naughty) that if compliant, pursuant to disclosing offshore accounts, penalties could be reduced, and criminal prosecution avoided. However, in an interview with Fusion 4 April 2016, Don Semensky, (retired chief of the U.S. Drug Enforcement Agency’s Office of Financial Operations), said: “Americans may have figured out a way to add another soft party who has a different nationality or identity. Let’s say [Mossack Fonseca] had a lot of American account holders or clients. It took [the U.S. Foreign Account Tax Compliance Act][12] over five years to get into place, which gave everyone plenty of time to close accounts and move their money—open up new corporations that didn’t look like they were held by Americans”.

The American Recovery and Reinvestment Act of 2009[13] (updated 22 October 2015) shows where the societal infrastructure of the American citizen is progressed, from money recovery, into college saving plans, income tax credit, child tax credits, and more. Hiding money is bad full stop but it is not individuals sending money to family (just so they can live damn it) that must be ruthlessly pursued, but the wholly corrupt, corporate, banking, political, and military financial elitism, and its collective propagandist machine that must be held to account.

This is a socialist challenge in a country that hates socialism loves “human capital”. It is a World System challenge that fails the majority of the world’s population. Howard Zinn, in his brilliant and compassionate A Peoples History of the United States 1492-Present[14], quotes from Jack London’s Iron Heel of 1906: “with its warning of Fascist America, it’s ideal of a socialist brotherhood of man.” London, (aware of the commodity of human beings), “through his characters … indicts the system”. London: “let us not destroy those wonderful machines that produce efficiently and cheaply. Let us control them. Let us profit by their efficiency and cheapness. Let us run them for ourselves. That, gentlemen, is socialism …” Well it is in America. The world system challenge is for human beings not to accept over and over again being passive observers of their own manipulation. Noam Chomsky[15]: “obedient producers do[ing] what they’re told, and the rest of life is to be passive consuming.” Human beings should be arbiters of change not its victims.

The Ice Man Cometh

The Icelandic Prime Minister Sigmundur David Gunnlaugsson seems to be a first victim. I say seems because an e-mail from an Icelandic government PR (first revealed by Richard Milne Financial Times, Nordic Correspondent and published in the Iceland Magazine April 5 2016)[16] suggests the Prime Minister and the stories of his demise have been grossly exaggerated. He is to be absent for “an unspecified amount of time” before he probably falls on his sword. Johannes Por Skulason, close to the PM, has said Gunnalaugsson must tender his resignation to the president, the president accept the resignation and that the PM remains in office only withstanding this technicality. We will see.

One must assume other Icelandic officials be implicated in the days and weeks ahead, as the full extent and legal ramifications of the Panama Papers become apparent. This holds true for others in similar or worsening legal quagmires across the murky world of off/on shore accounts. If not criminal then a system that is wholly lacking in moral and ethical boundaries will inevitable draw in other firms such as Mossack Foneseca & Co to include their rich list client base and the secretive movement of their monies for the sole purpose of satiating a collective lust for more: capitalism at its worst.

UK Response Measures

Well we know Cameron loves his late daddy and the chancellor is remaining tight lipped about family finances though now revealing his own family finances. Michael Fallon Defence Secretary quipped the PM had not “done anything at all improper” but he needs to be “neater.” Does that mean being more careful where he sticks his inherited dosh? Alternatively, perhaps be more “cool”, dress more tidily, or even be neatly “bad-ass” in an English introverted secretive way? Perhaps Osborne needs to be tidier? There we have it. Cameron and Osborne, Dave and George, otherwise known as Neat and Tidy.

Anyhow, Cameron has declared (now) under pressure: “In terms of my own affairs, I have no offshore funds. “And later, after all and sundry realised daddy had. No 10 then realised the immoral twaddle game was up, and issued a taciturn: “To be clear, the prime minister, his wife and their children do not benefit from any offshore funds. The prime minister owns no shares.” Then “he loves his mummy as much a Jeb Bush loves his mummy” so “frack off shore, you left wing Corbynistas.” Corbyn, Leader of part of the opposition, but fully in charge of the grassroots (mainly young Labour movement), said: “I know he loves mummy” but the cad (the bounder) has shown: “His determination to conceal that arrangement over many years raises serious questions over public trust in his office and his willingness to be straight with the public.” Then as Corbyn later walked past a portrait of the Queen (without a second glance mind you) said to an aide: “I love Tony Benn, he was the daddy of us all.” further adding: “you know I was thinking of re-introducing the original Clause 4 [17] as the Santa Claus, he too was a bearer of gifts, what do you think?” Well he might have. It will roll on and on but no heads, as the real problem of the world financial system itself is left unaddressed.

No Se-cret[e]s

Barry Vitou[18], who: “heads the firm’s [International Lawyers Pinset Masons] global corporate crime team and leads the broader Regulatory & Investigations and Administrative law group,” was quoted by London’s Evening Standard 5 April 2016: “This is the new now (rather like saying black is the new black). Secrecy can no longer be guaranteed when these sort of things are happening.” The Standard further quotes Ray McCann of as saying: “The days of are over when an individual could rely on secrecy as a way of ensuring that a transaction is effective.”

Others have said this has been going on since the 16th century and what about the Magna Carta, habeas corpus, the British Constitution, statue laws and stuff. Crikey it’s all a crock of shit.

“And, what about my money?”

“You don’t have any money.”

“Yeah but what if I did?”

“You wouldn’t have any money.”

“Who are you waiting for?”

“I am waiting for Godot?”

Oo Suits You Sir

New Quadrant Partners [19] (NQP)[20]: “boutique private client legal practice … guides [their] clients through the ever-changing landscape of legal tax and wealth management issues. By taking the complexity out of these matters, we leave clients free to enjoy their wealth and spend their time as they wish.” NQP, bless them, have a: “Charitable entity New Quadrant Foundation.” That open[s] our eyes to issues which often go unseen in the Private Client and Wealth Advisory Industry.” I bet!

Helen McGhee and Roy McCann of NQP remind the UK Government (and us the 90%) in a revealing article[21]: “that 68 percent of UK tax is paid by 10 percent of the population.” So NQP clearly thinking of their expanding client base, advice caution: “Tinkering with the tax system to increase the tax take from the wealthy should therefore be done with extreme caution.” The wealthy might just “start to feel the pinch”, face “draconian penalties.” Leave the country leave the planet perhaps. They warn the Common Reporting Standards (CRS) will: “Drive to develop a global standard for the automatic exchange of information to improve transparency to fight tax evasion, and over 90 countries have now signed up.” They go on “The CRS has been termed FATCA’s[22] big brother due to its global reach.”[23] McGhee and McCann quote David Gauke Financial Secretary to the Treasury as saying: “Time’s up for people who don’t pay their fair share of tax by hiding their money offshore. People, who evade tax, facilitate or turn a blind eye to tax evasion will now face powerful criminal and civil sanctions under our tough new regime.”

Crucially “The Finance Bill 2016 will include: Increased civil sanctions for offshore tax evaders. These proposals build on the existing penalties regime for offshore non-compliance as enhanced by the Finance Act 2015,[[24]] including changes to the way that penalties are calculated for offshore non-compliance, for example, a new asset-based penalty as well as non-financial deterrents, such as enhancing the naming and shaming provisions. Commencement of these provisions will be coordinated with a new final disclosure opportunity;” Also: “A new strict liability criminal offense for offshore evaders. This will not take effect until April 2017 at the earliest, but will mean that it’s no longer possible to plead ignorance in an attempt to avoid criminal prosecution.”

The McGhee McCann combo relay: “There is no doubt that the Government perceives a large proportion of the tax gap to be represented by offshore evasion, and indeed HMRC has already collected over GBP2bn (USD2.9bn) from previously undisclosed offshore income through agreements with Switzerland, Liechtenstein and the Channel Islands.”

The above figure is a drop in the ocean and highlights how far governments and indeed doctrinally free investigative journalists must go to uncover and recover monies from “undisclosed offshore income.” The “tax-gap” must be closed simple. But and it is a big but, the banks and corporations must also be so targeted with stringent rules to reign in malpractice and expose links to government connivance.

Tax avoidance is legal, tax sheltering can be both legal and illegal[25] though immoral. Tax evasion[26] is illegal though doable. Tax aversion is endemic and cultural. The burden for the so-called “tax gap” or reality gap must be shouldered by those who can afford to when we find out where their money is hidden, so that the profligacy of the super rich must be seen for what it is: tax non-compliance.

If this is the “age of austerity” then it is also the “age of resilience”, an idiom beloved in American think tanks and those that would smoothly guide rich clients through the sleight of a legal hand from financial and seductive “boutiques.” However, now “resilience” is an energizing word used by those that would see a more equitable society based on statute laws by exposing the seductive language of secretive money exchange, cut the crap so-to speak. This being so the statement below by McGhee and McCann is particularly dangerous when having set out laws that should protect all of society not just the 10%, whine: “The backdrop to all of this, as alluded to at the start, is that alienating the wealthy is not the answer. If one of our clients paid 30 percent of our annual income, we would be pretty nice to that client, not pave the way with traps and then throw him in prison should he get anything wrong?”

I would remind companies like NQP that laws broken means persons breaking said laws end up behind bars. Also those that advice and discretely cater for immoral practices by 10% of the UK population should advice clients to do the right thing with their money and close the tax-gap. The “new now” offers this opportunity. Ask the rich to invest in the people, the 90%, and the people will respond by enjoying and “spend[ing] their time as they wish.”

Some of the above quotes are true, some of them are less than true, many I wish were true. All the legal stuff is true. Is this avoidance or evasion? I tell you what is true: standing with the people on the right side of history, the moral side of history.

[1] http://panamapapers.sueddeutsche.de/en

[2] http://www.taxjustice.net/

[3] http://fusion.net/story/287671/americans-panama-papers-trove/

[4] http://www.voanews.com/content/probe-of-suspended-usaid-contractor-deepens/2634844.html

[5] http://www.infowars.com/soros-and-ford-foundation-behind-the-panama-papers/

[6] http://www.forbes.com/profile/george-soros

[7] https://en.wikipedia.org/wiki/BRICS

[8] https://in.rbth.com/economics/2015/07/30/brics_contingent_reserve_arrangement_treaty_comes_into_force_44497

[9] Immanuel Wallerstein. World-Systems Analysis – An Introduction- Duke University Press 5th printing, 2007. P55.

[10] http://www.hsgac.senate.gov/subcommittees/investigations. The hearings focused on two tax haven banks, UBS AG, the largest bank in Switzerland, and LGT, a private bank owned by the royal family of Liechtenstein.1 On the first day of the hearings, UBS acknowledged its role in facilitating U.S. tax evasion, apologized for its wrongdoing, and promised to end it. It later entered into a Deferred Prosecution Agreement with the U.S. Department of Justice, paid a $780 million fine, and turned over about 4,700 accounts with U.S. client names that had not been disclosed to the Internal Revenue Service (IRS). It also committed to disclosing to the IRS all future accounts opened for U.S. persons. Also click on this link to access the pdf REPORT: Offshore Tax Evasion: The Effort to Collect Unpaid Taxes on Billions in Hidden Offshore Accounts (8-20-14 update) (1.57 MB)

[11] https://www.irs.gov/uac/2012-Offshore-Voluntary-Disclosure-Program

[12] https://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-FATCA

[13] https://www.irs.gov/uac/The-American-Recovery-and-Reinvestment-Act-of-2009:-Information-Center

[14] Howard Zinn. A Peoples History of the United States 1492-Present. First Harper Perennial edition published 1995. Harpers Collins Publishers, Inc., 10 East 53rd Street, New York, New York, NY 10022. P315.

[15] Noam Chomsky. Propaganda And The Public Mind. Interviews by David Barsamian. First published in the United kingdom 2001 by Pluto Press 345 Archway Road, London N6 5AA. P20.

[16] https://twitter.com/rmilneNordic

[17] http://www.labourcounts.com/oldclausefour.htm

[18] http://www.pinsentmasons.com/en/people/partnersconsultants/barry-vitou/

[19] http://www.newquadrantpartners.com/

[20] https://companycheck.co.uk/company/07179875/NEW-QUADRANT-PARTNERS-LIMITED/summary

[21] http://www.newquadrantpartners.com/sites/newquadrantpartners.com/files/The%20Cost%20of%20Getting%20it%20Right.pdf

[22] The Foreign Account Tax Compliance Act (FATCA) is a 2010 United States federal law to enforce the requirement for United States persons including those living outside the U.S. to file yearly reports on their non-U.S. financial accounts to the Financial Crimes Enforcement Network (FINCEN). It requires all non-U.S. (foreign) financial institutions (FFI’s) to search their records for U.S. person-status and to report identities of such persons and assets to the U.S. Department of the Treasury. March 18, 2010 (26 USC § 6038D); December 31, 2012 (26 USC §§ 1471-1474)

[23] https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance_Act

[24] http://www.legislation.gov.uk/ukpga/2015/11/pdfs/ukpga_20150011_en.pdf Penalties in connection with offshore asset moves Schedule 21 contains provision for imposing an additional penalty in cases where—(a) a person is liable for a penalty for a failure to comply with an obligation or provide a document, or for providing an inaccurate document, relating to income tax, capital gains tax or inheritance tax, and (b) there is a related transfer of, or change in the ownership arrangements for, an asset situated or held outside the United Kingdom.

[25] Tax avoidance is the legal usage of the tax regime in a single territory to one’s own advantage to reduce the amount of tax that is payable by means that are within the law. Tax sheltering is very similar, although unlike tax avoidance tax sheltering is not necessarily legal. https://en.wikipedia.org/wiki/Tax_avoidance.

[26] One measure of the extent of tax evasion (the “tax gap”) is the amount of unreported income, which is the difference between the amount of income that should be reported to the tax authorities and the actual amount reported. In contrast, tax avoidance is the legal use of tax laws to reduce one’s tax burden. https://en.wikipedia.org/wiki/Tax_evasion


Previously published at Facilitate Global.

Clive Hambidge is Human Development Director at Facilitate Global. He can be contacted at: clive.hambidge@facilitateglobal.org.

from the archives:

Michael Hudson: They Finance the Military Budget with Money Laundering by the World’s Criminals

The Panama Papers: War on Corruption or War on Savers? by Ellen Brown

WikiLeaks: Panama Papers Funded by US Against Russian President Putin

The Panama Papers: Victims of Offshore Financing

The Iron Heel (1908) by Jack London

7 thoughts on “In The Panama Capers We Trust by Clive Hambidge

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