Panama papers: Victims behind the exploitation of offshore tax regimes

Will Business & Human Rights Resource Centre be inviting companies appearing in the Panama Papers to respond?

We regularly invite companies to respond to allegations of human rights abuse in the public domain. However, whilst there is a clear link between tax evasion and human rights issues,  due to the number of companies named and the prominence of the Panama Papers – there is significant media attention and many companies have, or will, issue statements – Business & Human Rights Resource Centre will only be inviting companies to respond where the alleged link to serious human rights abuse is direct.

Feel free to get in touch with us with materials that contain direct human rights allegations against companies.

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26 July 2016

"Secret Offshore Deals Deprive Africa of Billions in Natural Resource Dollars" - analysis of Panama Papers

Author: Will Fitzgibbon, Intl. Consortium of Investigative Journalists

"Secret Offshore Deals Deprive Africa of Billions in Natural Resource Dollars", 25 July 2016

Twelve of the 17 shell companies linked to [Farid Bedjaoui, who is accused of facilitating bribes to help Saipem (part of Eni) secure Algerian oil & gas contracts] were created by Mossack Fonseca, the Panama-based law firm that is at the center of the Panama Papers scandal,...the International Consortium of Investigative Journalists and other media partners has found.  Italian investigators described one of those companies, Minkle Consultants S.A., as a “crossroads of illicit financial flows” that channeled millions of dollars from subcontractors to an array of recipients... In all, ICIJ’s review identified 37 companies within the Panama Papers that have been named in court actions or government investigations involving natural resources in Africa.

Saipem, the Italian energy company, told ICIJ it is “fully cooperating” with prosecutors and it has “implemented significant managerial and administrative restructuring measures.”...

“Every dollar siphoned through dirty deals and corruption to offshore tax havens makes the livelihood and survival of the average African more precarious,” [Nigeria’s current president, Muhammadu Buhari] said in a speech delivered at an anti-corruption summit...

[also refers to AngloGold Ashanti, Sonatrach, Rayan Asset Management, Collingdale Consultants, Dan Gertler]


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18 April 2016

Tax evasion by companies shrinks fiscal space for investing in public goods & services, says UN expert

Author: UN News Centre

"After ‘Panama Papers’ leak, UN expert calls for end of financial secrecy to halt illicit fund flows", 8 Apr 2016

In the wake of last week’s leak of a trove of confidential financial documents from a Panama law firm, a United Nations human rights expert called on the international community to urgently put an end to financial secrecy.

“Tax evasion and the flow of funds of illicit origin undermine justice and deprive Governments of resources needed for the realization of economic, social and cultural rights,” UN Independent Expert on foreign debt and human rights, Juan Pablo Bohoslavsky, warned, as the documents, which have been dubbed the ‘Panama Papers,’ have shown how corporations, wealthy individuals and politically exposed persons have systematically hidden assets in more than 21 offshore jurisdictions…

“Tax evasion destroys trust in public institutions and the rule of law, and shrinks the fiscal space for investing in public health care, education, social security and other public goods and services,” the expert explained. “Public funds that are essential to guarantee economic, social and cultural rights to all are robbed from the people,” he added.

The UN human rights office noted that the leaked documentation shows that many banks and financial intermediaries have failed to exercise due diligence with their clients…

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15 April 2016

How the world really works

Author: Nick Galasso, Oxfam America

…[I]n the U.S., every state permits the creation of shell companies that do not require identifying the real owners of those entities. Shell companies are essentially empty vessels for holding financial assets anonymously. This is a key tool for avoiding taxes, and for criminals to launder illicit money and gain access to banks…Embarrassingly, my home state Delaware is the global epicenter for shell companies…[T]he “Delaware loophole” enabled corporations to reduce the tax bill owed to other states by $9.5 billion over the last decade…Without tax dollars, governments cannot build schools, hospitals, or the infrastructure to create dynamic and inclusive economies that bring jobs and fight poverty…[the release of the Panama Papers] demonstrates the power of whistle-blowers, dedicated journalists, and civil society activists to reveal the inner architecture of how wealth is hidden…

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14 April 2016

Leaky Vessel: Shady Tax Evasion Schemes from Scandinavia's Largest Bank

Author: Sputnik

Nordea is named in The Panama Papers...Headquartered in Stockholm, Nordea Bank AB, is a Nordic financial services group operating in Northern Europe. The bank is the result of the successive mergers of the Finnish, Danish, Norwegian and Swedish banks. Recently, the bank was listed alongside around 500 other banks or creating offshore companies through the Panama-based legal company, Mossak Fonseca...Speaking to SVT, Thorben Sander, CEO of Nordea's Luxembourg division, where many of the tax deals are understood to have been facilitated, confirmed that the bank had helped customers to create secret 'letter box' companies in tax havens...At the same time, Finnish tax haven researcher Matti Ylönen told the Helsinki daily Hufvudstadsbladet that Nordea's tax haven scheme was not a surprise to him. By his own admission, Ylönen believes the Nordic banking company in fact uses tax shelters to an even greater extent than the leaked data suggests....[Refers to HSBC, Société Générale, UBS]


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11 April 2016

Activists call for reforms to curb tax evasion by multinationals that rob African countries of resources that could fund education & healthcare

Author: Clár Ní Chonghaile, in The Guardian (UK)

"'A system of privilege and benefits': is a global tax body needed?"

The Panama Papers have pulled back the curtain, revealing how tax wizards push and pull the levers of the global system to benefit elites. The fact that tax havens and offshore accounts are used by powerful individuals and corporations to wriggle out of tax obligations is no surprise; some developing countries and activists have long called for reforms, and their fight is gaining momentum...

The OECD, sometimes described as the rich countries’ club, has embarked on a two-year reform process to combat aggressive tax avoidance, particularly by multinationals that exploit differentials to move money across borders...Savior Mwambwa, the head of ActionAid’s international tax campaign, describes the OECD move as “tinkering at the edges of a huge injustice”. He argues that while it might be based on a genuine desire for inclusiveness, it does not go far enough. “It still doesn’t touch the core of global international governance in terms of who really is involved in making the rules,” says Mwambwa, noting that most wealthier countries would rather others moved first than be trendsetters themselves...

In poor countries, corporate taxes can fund education and healthcare, pay for roads and railways and increase gender equality.

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11 April 2016

Panama Papers Show How Lawyers Can Turn a Blind Eye

Author: Peter J. Henning, New York Times (USA)

During the savings-and loan-crisis in the early 1990s, the question “Where were the lawyers?” was asked about the wrongdoing taking place at numerous banks. The confidential documents known as the Panama Papers…provides one possible answer: The lawyers have always been right in the middle of it…Lawyers in the United States are not required to comply with anti-money laundering compliance procedures imposed on financial institutions that require gathering information about the identity of account owners and the source of funds or assets. By avoiding the duty to inquire about their clients, lawyers can turn a blind eye by focusing only on what the client wants without asking the harder questions about what led to seeking legal advice.

Limiting the tools for helping clients engage in misconduct would make it harder for lawyers to claim they are only serving the wishes of those clients.

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8 April 2016

The Panama Papers: implications for lawyers and tax advisors

Author: Noel Hudson, Tax Reconciliations, on Lawyers for Better Business (UK)

The Panama Papers are headline news in many parts of the world. Around 11.4 million pages of information copied from about 200,000 client files of international company formation lawyers Mossack Fonseca, reveal the real beneficial owners of clients’ offshore companies...Their homeland tax-collectors will check the clients’ tax returns against this information...[T]ax evasion is damaging...Advisors should focus on the homeland or source nations' laws – the tax haven's national laws are irrelevant...It is the laws of your client’s country of residence that apply – that is where the assets and profits are generated and it is the region that imposes penalties...Few OECD regions, apart from the USA, jail accountants, lawyers, bankers and tax-planners alongside clients whom they have assisted to evade tax. But this latest, largest leak will, I think...trigger tens of thousands of tax investigations under existing laws...

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8 April 2016

‘Panama Papers’: when tax abuse is human rights abuse

Author: Center for Economic and Social Rights

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4 April 2016

The Panama Papers – a Business and Human Rights Reading

Author: Nadia Bernaz, Rights as Usual (UK)

Yesterday, the International Consortium of Investigative Journalists (ICIJ) revealed the Panama Papers…In a nutshell, the Panama Papers expose how some prominent individuals…from around the world have hidden money and avoided tax, using the services of Mossack Fonseca…As I was reading about this, one point particularly attracted my attention. As noted in The Guardian, “using offshore structures is entirely legal”. And this, I think, is the biggest challenge for those of us working in the field of business and human rights…The problem with the use of offshore structures is that it quickly becomes difficult to distinguish between what is legitimate business and what is in reality a convenient way to break the law, hide assets illegally obtained, pay less or no tax, etc.

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Company response
4 April 2016

Comments regarding media statements about Nordea Luxembourg and tax evasion

Author: Nordea

Nordea strongly denounces tax evasion. Already in the end of 2009, Nordea International Private Banking in Luxembourg took proactive measures beyond the requirements to secure all customers' holdings and incomes on their accounts were reported to the tax authorities. To ensure that activities related to offshore structures in Luxemburg are fully compliant to our policies, we will once again review all such structures...Our tax advice policy and ethical standard are clear: we do not encourage or facilitate tax schemes of our customers that are regarded as tax evasion. We help our customers to pay the tax they should by reporting to the authorities. However, we regret that we didn’t have these procedures already earlier, says Casper von Koskull, Group CEO. Offshore structures can be used as a legal and administrative vehicle for some customers with very complex, international business. In these cases Nordea has a wide range of processes to ensure that the customers declare their accounts to the tax authorities...

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