In World Economy News 16/11/2016
Countries that fail to clamp down on tax havens should be cut off from the global financial system, Nobel Prize-winning economist Joseph Stiglitz said, four months after quitting the panel set up to probe the Panama Papers scandal.
He and Swiss anti-corruption expert Mark Pieth quit the investigation in August, claiming that Panama’s government would not promise to make its report public, whatever the findings.
So Stiglitz and Pieth published their own report and presented the findings in Brussels.
A leak in April of more than 11.5 million documents from the Panamanian law firm Mossack Fonseca, dubbed the Panama Papers, sparked outrage by showing how the rich go offshore to avoid paying taxes while working families are required to pay theirs.
The report by Stiglitz and Pieth says regulators should treat secrecy havens like the carriers of a disease.
“We know what to do with dangerous contagious diseases: quarantine. And so too for the secrecy-havens. They should be cut off from the global financial and economic system,” it says.
They call for making it illegal for anyone in cooperative countries to have an account in a non-cooperative jurisdiction, or for someone in a cooperating country to be a shareholder in a corporation in a non-cooperative one.
The Panama Papers showed money was hidden in ways that law enforcement could not detect. The purpose of the secrecy jurisdictions was not only tax evasion, according to the report, but money laundering for a wide range of criminals.
“One client of the Panamanian law firm was the alleged ringleader of a child prostitution ring in Russia, whose members kidnapped, raped, and sold orphan girls,” the report said.
“Secrecy havens could be viewed as co-conspirators in these crimes.”
Panama is expected to publish its own findings this month and says they will be released to the public.
Ecuador, which estimates that an amount equal to 30 percent of its gross domestic product is hidden off-shore, has called for the United Nations to take on the problem.
The Stiglitz/Pieth report calls for international agreements that would pull the licenses of banks and lawyers involved in the off-shore economy, estimated in the trillions of dollars.
“If there is any pocket of secrecy, funds will flow through that pocket. That is why the system of transparency has to be global,” the report said. “Information exchange under bi-lateral tax treaties has not been adequate to stem the leakage.”
Source: Reuters (Reporting by Hugh Bronstein; editing by Clive McKeef)
