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'The Panama Papers': An Offshore Investigator's Perspective

Is what's taking place at Mossack Fonseca in Panama any different to what's taking place every day in virtually every major law firm in the world?
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Owner & Editor, OffshoreAlert
2016-04-06T14:09:17-04:00
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Aviso de la oficina de Mossack Fonseca en Panamá Crédito: RODRIGO ARANGUA/AFP/Getty Images


First off: the fact that a person living in one of the world's major countries has an account in an offshore jurisdiction is not, in and of itself, evidence of illegal activity. An accuser needs corroborating evidence before making that leap.

It's undoubtedly suspicious, though, and with an offshore jurisdiction as overtly seedy and lawless as Panama, it's highly suspicious. That's just common sense.

If you're hungry and the nearest restaurant is 50 yards away on the other side of the road, you cross that road in a straight line so that you can tuck into your food as quickly as possible. You don't hop on a bus, go 100 miles in the opposite direction, take a taxi to the airport, fly to another country and then circle back to the said restaurant, making sure to approach from the rear to avoid detection. That would be insane.

Yet that's essentially what happens in the world of finance when someone living in Big Country A enters into transactions with someone living in Big Country B via structures in Small Countries C, D and E. They're doing something they don't want tax agencies, law enforcement, regulators and/or the general public to know about and they consider the relatively high cost and inconvenience of doing so a small price to pay for the considerable benefits they receive.

So, at the very least, we can reasonably assume that, unless they're living and/or directly doing business in Panama, virtually every foreign client whose accounts at the law firm of Mossack Fonseca were revealed in 'The Panama Papers' is doing something they're not proud of.

This might be tax avoidance, tax evasion, concealment of assets or receipt of ill-gotten gains, which are the main reasons to go offshore.

Some of these activities are illegal and some are legal but considered to be immoral by the world's major governments. But morality is subjective. Politicians in major countries are routinely corrupt and are unfit to moralize to anyone.

Is what's taking place at Mossack Fonseca in Panama any different to what's taking place every day in virtually every major law firm in the world — onshore or offshore? Probably not.

In my experience, major law firms helping seedy clients do seedy things is a routine occurrence, whether in Panama, the Cayman Islands, London, New York, Delaware, Nevada or Wyoming. It's standard practice. The same applies to financial institutions, accounting firms and other professional service providers.

Their collective reaction to the leaking of Mossack Fonseca's client records and the fallout is likely to have been 'There but for the grace of God (go I)'.

So let's put 'The Panama Papers' into perspective. The leak and everything it reveals is not indicative of an offshore problem or even a Panama problem. It's a people problem. Most human beings are motivated by self-interest. That's reality.

Disclaimer: We selected this Op-Ed to be published in our opinion section as a contribution to public debate. The views and opinions expressed in this column are those of its author(s) and/or the organization(s) they represent and do not reflect the views or the editorial line of Univision Noticias.

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