Over the past few days,
there has been a furore
in the global community
regarding reports on
“the Panama Papers”,
an enormous leak of
more than 11 million
documents which are said
to date back up to four
decades and are allegedly
connected to a Panama
law firm. According to the
International Consortium
of Investigative
Journalists, ICIJ, this firm
has, in all that time and
possibly longer, helped
establish secret shell
companies and offshore
accounts for the rich and
the powerful globally. On
an even graver note, data
from these documents
show that the firm
worked with more than
14,000 banks, law firms,
company incorporators
and other middlemen
to set up companies,
foundations and trusts
for customers. In a time
such as this when the
issue of curbing Illicit
Financial Flows, brought
on by practices such as
tax evasion and the use
of Tax Havens, is one of
Africa’s priorities, the
release of these Panama
Papers is most welcome.
The Panama Papers
elaborately bring to light
issues that the African
Union, AU/United
Nations Economic
Commission for Africa,
ECA, High Level Panel,
HLP, on Illicit Financial
Flows, IFFs, from Africa
vigorously underscored
in the Findings in its
Report released and
endorsed by African
Heads of State and
Government in January
2015. Not least significant
in these Findings were
matters relating to Tax
Havens and/or Financial
Secrecy Jurisdictions and
the lack of transparency
with regard to the
Beneficial Ownership of
firms. The information
released in the Panama
Papers thus far strongly
confirm the Findings in
the HLP Report. More so,
they confirm the existence
of a network of offshore
accounts and complex
investment vehicles
that drive tax avoidance
and evasion. Until now,
warnings against such
vehicles have been taken
lightly. The staggering
amount of illicit
practices and the large
number of global actors
exposed by the Panama
Papers demonstrate that
Governments of Africa and
the rest of the world cannot
avoid firm action against
the Tax Havens/Financial
Secrecy Jurisdictions.
The undeniable fact is
that the Illicit Financial
Flows which derive
from tax evasion deserve
our full attention both
continentally and globally.
As revealed within the
Panama Papers, the fourth
most used Tax Haven by
this firm is an African
country. Worse still, the
reports show that this firm
only knew the identities of
the real owners of just 204
of 14,086 companies it had
incorporated in this very
country. Indeed, we must
not rest under the illusion
that the issue of Tax
Havens does not directly
affect Africa and the world
at large.
Now is the time for the
global community to act in
a firm and comprehensive
manner to end the
Illicit Financial Flows
and close down the Tax
Havens/Financial Secrecy
Jurisdictions which serve
as the domicile of these
Illicit Financial Flows.
Several countries in the
world, including South
Africa, Britain and France
have vowed that any of
their citizens mentioned
in the Panama Papers will
be investigated by the
relevant agencies to ensure
they comply with the laws
financial opacity or that
have laws enabling banking
secrecy and the registration
of shell companies. This
is extremely important to
all countries. Otherwise
harmful tax practices and
high levels of opacity in
financial transactions as
exposed by the Panama
Papers will continue to
be a scourge that we find
ourselves discovering only
when there are people bold
enough to expose them.
As stressed in the AU/
UNECA HLP Report on
IFFs, the global community
in all of its institutions,
including parliaments
must take all necessary
steps to eliminate secrecy
jurisdictions, introduce
transparency in financial
transfers and crack down
on money laundering.
Until all countries begin to
work together to combat
IFFs in all its forms,
including by closing down
Tax Havens and combating
the lack of transparency
of ownership and control
of companies that can
hold assets and open bank
accounts, there will always
be a cavernous opportunity
for the exploitation of tax
laws at all levels and in
all countries for negative
purposes.
We should not
misconstrue the release of
the Panama Papers as a
time for celebration or an
end in itself. To the contrary,
it is rather a time for deep
reflection and regret that
we have allowed the
practice to persist which
is made possible among
others, by the existence
of Tax Havens/Financial
Secrecy Jurisdictions.
The Panama firm in
question, which all
would hope to see
receive the deserved
justice if found guilty,
has responded to the
exposures by stating that
nothing in the documents
released suggests that it
has been involved in any
illegal practice. Sadly,
this may very well be
the case legally, given
the current incomplete
global architecture for
tackling IFFs, which
should include binding
International Treaties.
Now is the time for
the global community
to act in a firm and
comprehensive manner
to end the Illicit Financial
Flows and close down the
Tax Havens/Financial
Secrecy Jurisdictions
which serve as the
domicile of these Illicit
Financial Flows.
Thabo Mbeki, former
South African President,
is Chair of African Union,
AU/United Nations
Economic Commission
for Africa, ECA, High
Level Panel, HLP, on
Illicit Financial Flows,
IFFs.
regarding tax evasion. It is
a decent start to the efforts
required. Now all countries
within and outside Africa
must follow suit and begin
their own investigations.
These investigations
should not only be limited
to the findings in the
Panama Papers but should
go further to uncover other
possible destinations of the
proceeds from tax evasion.
The exposures contained
in the Panama Papers are
massive blow to financial
secrecy, which must be
encouraged.
Specific efforts must
continue to put political
pressure on the countries
that enable a high level of


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