Michael Hudson, Experts Who Quit Panama Panel Produce Their Own Report (ICIJ 11/15/16), here.
Ending the kinds of offshore abuses revealed by the Panama Papers scandal requires a global solution led by the United States and Europe, a report released today by Nobel Prize-winning economist Joseph Stiglitz and Swiss anti-corruption expert Mark Pieth says.
The 25-page report, “Overcoming the Shadow Economy,” argues that, as “economic leaders,” the U.S. and the European Union “have an obligation to force financial centers to comply with global transparency standards.”
The U.S. and EU have shown they have the tools to stem the flow of dirty money in the fight against terrorism, but have failed to use these same anti-money-laundering tools as forcefully in the fight against financial corruption and tax dodging, the report says.
“Secrecy has to be attacked globally – offshore and onshore,” the report says. “There can be no places to hide.”
The new report is an outgrowth of the pair’s initial work on a study committee appointed by the Panamanian government in response to a series of news stories by ICIJ and more than 100 media partners. The media partnership’s Panama Papers investigation revealed the inner workings of Mossack Fonseca, a law firm headquartered in Panama that has helped create offshore structures used by world leaders, wealthy individuals, drug lords and financial fraudsters.
Stiglitz and Pieth resigned from the Panamanian government committee in August, saying that government officials had refused to assure the panel it had full independence to investigate and make its findings public. The government blamed their resignations over “internal differences” on the committee.This ICIJ article has the link to the report. The report, titled Overcoming the Shadow Economy, is here in html and here in pdf. The introduction is:
- There is a growing global consensus that the secrecy-havens—jurisdictions which undermine global standards for corporate and financial transparency—pose a global problem: they facilitate both money laundering and tax avoidance and evasion, contributing to crime and unacceptably high levels of global wealth inequality.
- As economic leaders, the United States and Europe have an obligation to force financial centers to comply with global transparency standards. That they have the instruments to do so has been forcefully shown in the fight against terrorism. That they do not do so in the fight against corruption and tax avoidance and evasion is testimony to the power of the interests of those who benefit from secrecy.
- In a globalized world, 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 US and EU are key in tipping the balance toward transparency, but this will only be the starting point: each country must play its role as a global citizen in order to shut down the shadow economy—and it is especially important that there emerge from the current secrecy havens some leaders to demonstrate that there are alternative models for growth and development.
- Countries should position themselves proactively—not just complying with current minimal standards, but placing their economic development model at the cutting edge of the evolution of those standards. Each country must seriously consider whether it wants to be engaged in a never-ending struggle to catch up to the evolving international standards, or serve as a model, setting standards that others will eventually be forced to emulate.