What The Panama Papers Mean For Global Development

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What The Panama Papers Mean For Global Development

Photo: Web The financial secrecy and tax evasion revealed by the Panama Papers has an extraordinary human cost in developing countries and threatens the realisation of the UN’s ambitious Sustainable Development Goals. The ongoing leak — made public by media outlets including German newspaper Süddeutsche Zeitung, the International Consortium of Investigative Journalists (ICIJ) – has already prompted protests and investigations around the world. The papers connect thousands of prominent figures to secretive offshore companies in 21 tax havens and reveal the inner workings of the offshore finance industry. The documents focus on Panamanian law firm Mossack Fonseca, with its 210,000 entities, and has led to allegations that the firm aided public officials and multinational corporations to avoid taxes. Mossack Fonseca say that media reports have misrepresented the nature of their work and its role in global financial markets. In one case, leaked emails contained in the Panama Papers suggest that the Heritage Oil and Gas Ltd Company (HOGL), sought help from Mossack Fonseca to sidestep tax laws in Uganda. According to ICIJ, upon the sale of an oil field, the company received a tax bill of $404 million. In an effort to avoid paying the taxes, the entity fought the Ugandan courts and meanwhile tried to relocate to Mauritius, according to the leaked emails. Mauritius has a double tax agreement with Uganda, allowing companies such as HOGL to only pay taxes in one of the two countries. In 2000, the International Monetary Fund (IMF) listed Mauritius as a preferred location for companies due to its minimal tax laws. These havens deny developing countries such as Uganda of much needed tax revenue for essential services, Oxfam’s Senior Tax Policy Advisor Tatu Ilunga told IPS. “Tax havens are at the heart of a global system that allows large corporations and wealthy individuals to avoid paying their fair share, depriving governments – rich and poor – of the resources they need to provide vital public services and tackle rising inequality,” said Ilunga. In Uganda, approximately 37 percent live on less than $1.25 per day. The East African nation also has one of the highest rates of maternal and under-five mortality rates in the world. According to the World Health Organisation (WHO), Uganda is one of the top ten countries that account for the majority of global maternal deaths. In a country that lacks access to health services, HOGL’s $404 million in taxes represents more than the country’s health budget. Former governor of Nigeria’s oil-rich Delta State James Ibori was also implicated in the Panama Papers,allegedly using Mossack Fonseca as an agent for four offshore companies in Panama and Seychelles. These entities provide anonymity, hiding true owners’ names and actions and thus allowing for finances and assets to be undeclared and untaxed. Though he was detained in 2012 for diverting up to $75 million out of the country, Nigerian authorities estimate that Ibori stole and stored over $290 million in tax havens. Like Uganda, Nigeria ranks low in health indicators, contributing to some 10 percent of global maternal, infant and child deaths. Poverty has increased in the country with 61 percent living below the poverty line, according to the most recent Nigerian Bureau of Statistics report. The Niger Delta region in particular, despite being a significant contributor to the country’s economy through oil production, remains the poorest and least developed region in Nigeria. In Ibori’s Delta state alone, 45 percent of people live in poverty. The UN Development Programme (UNDP) report found that the majority of people in the region lack access to potable water, electricity, health facilities and infrastructure including roads and telecommunications. “Have you seen any taps here?…Water used to run in public taps, but that had stopped 20 years ago. We basically drink from the river and creeks…hygiene is secondary,” a Niger Delta Resident told UNDP. Though Ibori’s stashed money represents only a slice of Nigeria’s budget, it is indicative of a global and pervasive problem that goes beyond Mossack Fonseca. Transparency International’s Senior Policy Coordinator Craig Fagan told IPS: “If you think about the millions of files that have been released and the number of high profile individuals [in the Panama Papers], this is just one law firm in Panama.” . “We can be certain that there are many other law firms whether in London, Hong Kong, New York, Miami that are operating similar structures,” he said. According to Oxfam estimates, at least $18.5 trillion is hidden in tax havens worldwide. The organisation found that two thirds of this offshore wealth is hidden in European Union related tax havens while a third is in UK-linked sites where it is left undeclared and untaxed. Oxfam said that their estimate is a conservative one. The Swiss Leaks, also released by ICIJ in 2015, revealed how …
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On April 16, 2016

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