All You Need to Know About: The Panama Papers

Photo: lobelog.com

Plato’s allegory of the cave is a staple in philosophy classes. It states that if several men were chained to a rock in a cave, unable to move their heads, with a fire burning behind them, they would assume the shadows they see on the cave¬†wall would be reality. Plato said true enlightenment would come if they were to somehow move away and see outside of the cave. The public has been staring at the shadows on the wall for so long, but now the so-called¬†Panama Papers have brought us out of the cave.

The Panama Papers is a collective name for a series of over 11.5 million documents relating to Panamanian law firm, Mossack Fonseca. They detail how a large amount of rich people worldwide have exploited tax loopholes and havens to get away with not paying billions of dollars in taxes, an act that is legal but considered highly unethical.

Why is this such a big deal though?

Taxes exist due to what Swiss philosopher Jean Jacques-Rousseau called the ‘Social Contract’; the idea that governments protect people and in return people pay the governments in taxes. Most countries worldwide extract taxes for a variety of reasons; funding militaries, welfare, education etc. However, when legislators make rules about who should pay certain taxes and why, they often leave behind certain loopholes.

rousseau, quotesgram.com
Swiss Philosopher Jean Jacques Rousseau, Photo: quotesgram.com

Mossack Fonseca is a law firm in Panama dedicated to helping rich and powerful people exploit these tax loopholes in their own respective countries. Often these people will hold their money in ‘offshore’ bank accounts, or accounts that are held in different countries and regions with more favorable tax systems (these ‘tax havens’ include the Cayman Islands, the British Virgin Islands, the Canary Islands, Switzerland and many more).

Despite the long list of names involved in the Panama Papers scandal, Mossack Fonseca is actually only the fourth biggest law firm of it’s type.

Despite the scandal being less than a week old, the fallout has already been massive. Icelandic PM Sigmundur Gunnlaugsson formally resigned after it came out that he and his wife had large stakes in an offshore firm that dealt with Mossack Fonseca. His resignation was preceded by a protest in the capital of Reykjavik with 10,000 people (3% of Iceland’s population) showing up.

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Former Icelandic PM Sigmundur Gunnlaugsson, Photo: de.wikipedia.org

Despite the international uproar over the Panama Papers, very few if any people are expected to be legally punished, due to none of the dealings and schemes actually breaking any laws. US President Barack Obama has criticized this loophole in the legal system, claiming that America’s somewhat byzantine tax system needs to be reformed, a sentiment shared by many of the leading US Presidential candidates.

The list of people who were involved in the scandal is massive. However, the one who has been garnering the most media attention is Russian President Vladimir Putin. Despite Putin himself never being named in the Papers, many of his close friends and associates have been, with some claiming Putin was just good at covering his tracks. The Russian President is estimated to have the equivalent of $2 billion in offshore accounts.

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Russian President Vladimir Putin, Photo: telegraph.co.uk

Other notable members include, but are not limited to:

Simon Cowell, Host of The X Factor

Lionel Messi, Footballer for FC Barcelona

messi, wikipedia
FC Barcelona and National Argentine Footballer Lionel Messi, Photo: Wikipedia.org

Petro Poroshenko, President of Ukraine

Mauricio Macri, President of Argentina

Rami and Hafez Makhlouf, businessmen and cousins of Syrian President Bashar al-Assad

Bidzina Ivanishvili, former Prime Minister of Georgia

Ian Cameron, father of British Prime Minister David Cameron

Stanley Kubrick, Film Director

kubrick, senseofcinema.com
Director of 2001: A Space Odyssey (1968) Stanley Kubrick, Photo: senseofcinema.com

Salman bin Abudulaziz al-Saud, King of Saudi Arabia

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King Salman of Saudi Arabia, Photo: arabroyalfamily.com

Muhammad bin Nayef, Crown Prince of Saudi Arabia

Khalifa bin Zayed bin Sultan al-Nahyan, President of UAE

Ayad Allawi, former Prime Minister of Iraq

Jaynet Kabila, MP and sister of President of the Democratic Republic of the Congo

Jean-Marie Le Pen, founder and father of French Front National leader Marine Le Pen

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Jean-Marie Le Pen, Photo: dailymail.co.uk

Deng Jiagui, brother-in-law of Chinese Chairman Xi Xinping

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Chinese Chairman Xi Xinping (left) and Deng Jiagui (right), Photo: icij.org

Mohd Nazifuddin Najib, son of Malaysian Prime Minister Najib Razak

Kojo Annan, son of former UN Secretary-General Kofi Annan

Juan Pedro Damani, Head of FIFA Ethics Committee (resigned 6 April)

Gianni Infantino, Head of FIFA

Jackie Chan, Actor

Mario Vargas Llosa, Writer and Nobel Prize winner

Sir Mark Thatcher, businessman and son of former UK Prime Minister Margaret Thatcher


Sources include The Guardian, ICIJ, BBC, The Telegraph and TIME