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| Panama not to blame for scourge of offshore tax evasion, minister says Panama not to blame for scourge of offshore tax evasion, minister says | |
| (4 months later) | |
| A founding partner of the law firm at the centre of the Panama Papers revelations was a minister for and adviser to Panama’s president but will not receive special treatment in a high-profile corruption investigation, a deputy minister said on Thursday. | A founding partner of the law firm at the centre of the Panama Papers revelations was a minister for and adviser to Panama’s president but will not receive special treatment in a high-profile corruption investigation, a deputy minister said on Thursday. |
| Ramón Fonseca of Mossack Fonseca was close to Juan Carlos Varela until allegations of money-laundering linked to Brazil’s state-controlled oil company forced him to quit his positions two months ago. | Ramón Fonseca of Mossack Fonseca was close to Juan Carlos Varela until allegations of money-laundering linked to Brazil’s state-controlled oil company forced him to quit his positions two months ago. |
| But Ivan Zarak, vice-minister of economy for Panama, told an audience in Washington that Fonseca would face the law like any other citizen and claimed it was wrong to blame his country for the worldwide scourge of offshore tax evasion. | But Ivan Zarak, vice-minister of economy for Panama, told an audience in Washington that Fonseca would face the law like any other citizen and claimed it was wrong to blame his country for the worldwide scourge of offshore tax evasion. |
| “We cannot deny Mr Ramón Fonseca was an adviser to President Varela in a post as a minister adviser,” he said in response to a question from the Guardian at the Wilson Center thinktank. “He resigned a couple of months ago to focus on his defence. | “We cannot deny Mr Ramón Fonseca was an adviser to President Varela in a post as a minister adviser,” he said in response to a question from the Guardian at the Wilson Center thinktank. “He resigned a couple of months ago to focus on his defence. |
| “Now, Panama is respectful of the rule of law and the separation of powers. It will be up to the attorney general’s office to make the appropriate investigations and come out with a definite proposal.” | “Now, Panama is respectful of the rule of law and the separation of powers. It will be up to the attorney general’s office to make the appropriate investigations and come out with a definite proposal.” |
| Mossack Fonseca, which specialises in setting up offshore companies, is currently under examination by four different regulatory agencies, Zarak added. Fonseca has said the company did not break any laws. | Mossack Fonseca, which specialises in setting up offshore companies, is currently under examination by four different regulatory agencies, Zarak added. Fonseca has said the company did not break any laws. |
| Zarak continued: “He will be treated as any Panamanian by the attorney general. This is a very high-profile case and I would just ask for any person to wait until the final investigations are made.” | Zarak continued: “He will be treated as any Panamanian by the attorney general. This is a very high-profile case and I would just ask for any person to wait until the final investigations are made.” |
| While the corruption case gained little international attention, this month’s Panama Papers leaks embarrassed several world leaders, including the British prime minister, David Cameron, and shone a spotlight on the shadowy world of offshore companies. They also caused discomfort in the small Central American republic, home to 3.9 million people, where Fonseca’s proximity to the president is potentially damaging. | While the corruption case gained little international attention, this month’s Panama Papers leaks embarrassed several world leaders, including the British prime minister, David Cameron, and shone a spotlight on the shadowy world of offshore companies. They also caused discomfort in the small Central American republic, home to 3.9 million people, where Fonseca’s proximity to the president is potentially damaging. |
| In a televised address, Varela pledged to create an international panel to help improve transparency in the country’s offshore financial industry. Earlier this week Mossack Fonseca’s headquarters in Panama City were raided by police on the orders of the attorney general. | In a televised address, Varela pledged to create an international panel to help improve transparency in the country’s offshore financial industry. Earlier this week Mossack Fonseca’s headquarters in Panama City were raided by police on the orders of the attorney general. |
| Panamanian officials sought to fight back at Thursday’s event in the US capital, arguing that Varela, who has been in power for 21 months, had already begun financial and legal reforms and it would be unfair to scapegoat the country for a global problem. They repeatedly used the prefix “so-called” when referring to the Panama Papers. | Panamanian officials sought to fight back at Thursday’s event in the US capital, arguing that Varela, who has been in power for 21 months, had already begun financial and legal reforms and it would be unfair to scapegoat the country for a global problem. They repeatedly used the prefix “so-called” when referring to the Panama Papers. |
| Zarak said: “From all the allegations being put forward, none of the assets mentioned are deposited in the Panamanian system. We’re talking about 210,000 companies. Maybe there are some companies that have assets in the Panamanian banking system but so far all of the financial operations were performed in Europe. | Zarak said: “From all the allegations being put forward, none of the assets mentioned are deposited in the Panamanian system. We’re talking about 210,000 companies. Maybe there are some companies that have assets in the Panamanian banking system but so far all of the financial operations were performed in Europe. |
| “So if we’re going to talk about the regulations and if there’s blame to go around, I would say there’s plenty of blame to go around, not just in Panama … To pinpoint this problem on Panama is completely unfair … Because of the ‘Panama Papers’, this unfortunate name, we’ve become like the poster child for this, and 75% of those companies were not incorporated in Panama.” | “So if we’re going to talk about the regulations and if there’s blame to go around, I would say there’s plenty of blame to go around, not just in Panama … To pinpoint this problem on Panama is completely unfair … Because of the ‘Panama Papers’, this unfortunate name, we’ve become like the poster child for this, and 75% of those companies were not incorporated in Panama.” |
| The event at the Wilson Center, named after former president Woodrow Wilson, had been planned before the Panama Papers came to light and no doubt better attended because of them. Zarak commented wryly: “When we first started discussing this event over a month ago, our plans were slightly more low key.” | The event at the Wilson Center, named after former president Woodrow Wilson, had been planned before the Panama Papers came to light and no doubt better attended because of them. Zarak commented wryly: “When we first started discussing this event over a month ago, our plans were slightly more low key.” |
| He said Panama had been ranked as one of the fastest-growing economies in Latin America and the most competitive economy in Central America, attracting increased foreign direct investment. Legal services related to corporations represent less than 1% of GDP. | He said Panama had been ranked as one of the fastest-growing economies in Latin America and the most competitive economy in Central America, attracting increased foreign direct investment. Legal services related to corporations represent less than 1% of GDP. |
| He went on: “I have to acknowledge the elephant in the room: the recent publication of documents that have unfairly been used to tarnish the name of our beloved country. Let me say, first and foremost, that Panama does not tolerate illegal activities in any form.” | He went on: “I have to acknowledge the elephant in the room: the recent publication of documents that have unfairly been used to tarnish the name of our beloved country. Let me say, first and foremost, that Panama does not tolerate illegal activities in any form.” |
| Panama has already made significant reforms and would cooperate and share information with the international community in its investigations, Zarak continued. The new international panel would include Nobel prize-winning economist Joseph Stiglitz and report its findings in around six months. “That said, the so-called Panama Papers are not in fact about Panama or even about Panamanian companies.” | Panama has already made significant reforms and would cooperate and share information with the international community in its investigations, Zarak continued. The new international panel would include Nobel prize-winning economist Joseph Stiglitz and report its findings in around six months. “That said, the so-called Panama Papers are not in fact about Panama or even about Panamanian companies.” |
| Mossack Fonseca has branches in 30 countries around the world, he noted, and some of the transactions detailed in the files date back 40 years. | Mossack Fonseca has branches in 30 countries around the world, he noted, and some of the transactions detailed in the files date back 40 years. |
| “These documents shed light not on a Panamanian problem but rather on a global phenomenon that is affecting almost all countries. This is not a cop-out as no doubt there are further steps Panama has committed to take to strengthen transparency but rather a reflection of what is happening today around the world.” | “These documents shed light not on a Panamanian problem but rather on a global phenomenon that is affecting almost all countries. This is not a cop-out as no doubt there are further steps Panama has committed to take to strengthen transparency but rather a reflection of what is happening today around the world.” |
| Zarak added: “More work needs to be done to eliminate the problem of tax evasion in money laundering not only in Panama but around the world. We must resist the temptation to go on a historical witch-hunt that ignores the significant progress made in recent years.” | Zarak added: “More work needs to be done to eliminate the problem of tax evasion in money laundering not only in Panama but around the world. We must resist the temptation to go on a historical witch-hunt that ignores the significant progress made in recent years.” |
| Eyda Varela de Chincilla, Panama’s vice-minister of finance, made a brief reference to this week’s raid on Mossack Fonseca’s office, remarking: “This shows our system is working as intended … The new regime we have so recently implemented has started taking the appropriate steps to improve financial transparency. However, this is only the beginning.” | Eyda Varela de Chincilla, Panama’s vice-minister of finance, made a brief reference to this week’s raid on Mossack Fonseca’s office, remarking: “This shows our system is working as intended … The new regime we have so recently implemented has started taking the appropriate steps to improve financial transparency. However, this is only the beginning.” |
| In February the Financial Action Task Force (FATF) removed Panama from its “grey list”, consisting of countries it regards as having inadequate provisions in place to combat money laundering and the financing of terrorism. The intergovernmental organisation said it had made “significant progress” in meeting its standards. | In February the Financial Action Task Force (FATF) removed Panama from its “grey list”, consisting of countries it regards as having inadequate provisions in place to combat money laundering and the financing of terrorism. The intergovernmental organisation said it had made “significant progress” in meeting its standards. |
| Chip Poncy, a senior adviser at the Center on Sanctions and Illicit Finance at the Foundation for Defense of Democracies, said Panama had been grey-listed by the FATF in June 2014. “I’ve never seen a country come off the list inside of two years. Panama did it in just under two years, so this was supposed to be a congratulatory panel and it should be.” | Chip Poncy, a senior adviser at the Center on Sanctions and Illicit Finance at the Foundation for Defense of Democracies, said Panama had been grey-listed by the FATF in June 2014. “I’ve never seen a country come off the list inside of two years. Panama did it in just under two years, so this was supposed to be a congratulatory panel and it should be.” |
| Referring to an episode of the current affairs series 60 Minutes that investigated the setting up of anonymous shell companies in the US, he asked: “Do we think this is a Panama problem? Fourteen out of 15 law firms in New York City agreed to do the same thing on camera … There was a shock that we, Americans in this case, allow this to happen.” | Referring to an episode of the current affairs series 60 Minutes that investigated the setting up of anonymous shell companies in the US, he asked: “Do we think this is a Panama problem? Fourteen out of 15 law firms in New York City agreed to do the same thing on camera … There was a shock that we, Americans in this case, allow this to happen.” |
| Congress has been holding hearings about terrorist groups’ exploitation of such loopholes for more than 15 years, Poncy added. “I’m shocked that we’re shocked … The real question is, are we going to be shocked this time long enough to do something about it?” | Congress has been holding hearings about terrorist groups’ exploitation of such loopholes for more than 15 years, Poncy added. “I’m shocked that we’re shocked … The real question is, are we going to be shocked this time long enough to do something about it?” |