Why are so few prominent Americans named in the Panama Papers?


Julia Glum tries to understand why there are not more prominent Americans named in the Panama Papers.

Why aren’t there more Americans implicated in the Panama Papers? Well, there might be: An editor with Süddeutsche Zeitung, the German newspaper that has been leading the investigation of the records, tweeted Monday to “just wait” until more were released. But some tax experts suggest the reason is that U.S. executives simply don’t have to leave the country to find places to make sly-but-legal business deals. The practices detailed in the documents are simply standard in many parts of the country, including Nevada and Delaware.

“A very small number of states are notorious for allowing pretty much anybody to start a company in the state without requiring even the most basic information,” said Matthew Gardner, executive director of the Institute on Taxation and Economic Policy with Citizens for Tax Justice, a progressive think tank and advocacy group in Washington. “There are a few states that effectively make the U.S. a privacy haven in exactly the same way that Panama is being described here.”

John Cassidy also asks the same question and tries to answer it. He dismisses the notion that Americans are less likely to indulge in this kind of activity.

A more convincing explanation is that the journalists who are researching the leaks are still pursuing American clients of Mossack Fonseca. In fact, we now know this to be the case. On Monday, a piece published by Fusion, one of the U.S. media organizations that has access to the leaked material, said, “So far, the International Consortium of Investigative Journalists (ICIJ) has only been able to identify 211 people with U.S. addresses who own companies in the data (not all of whom we’ve been able to investigate yet). We don’t know if those 211 people are necessarily U.S. citizens. And that figure covers only data from recent years available on a Mossack Fonseca internal database—not all 11.5 million files from the leak.”

There are several reasons why the United States might not have been a major source of clients for the Panamanian law firm, relatively speaking. Perhaps it deliberately avoided having a large presence in the United States, so as not to attract the attention of U.S. authorities. Or perhaps there was too much competition. An article published in The Economist in 2012 pointed out that the business of setting up shell companies in tax havens is competitive and includes a number of well-established firms, such as the Hong Kong-based Offshore Incorporations Ltd., the Isle of Man-based OCRA Worldwide, and Morgan & Morgan, of Panama. In other words, wealthy Americans have many options for structuring their offshore holdings.

Like with the Snowden documents, we will have to wait for some time all the leaked data to be analyzed and emerge in news reports. The latest leak of 11.5 million documents is supposedly the largest ever.

Comments

  1. Reginald Selkirk says

    One explanation you didn’t consider: who leaked the data in the first place? Maybe it was the CIA.

  2. doublereed says

    I feel like the CIA doesn’t know how to do something for the benefit of the public, even with ulterior motives. They just can’t bring themselves to do anything that might be constructive.

  3. sonofrojblake says

    The simpler and more obvious answer, and following Occam’s Razor the one I believe until a better, simpler one comes along, is that since the recent free trade agreement between the US and Panama, Panama is simply a less attractive option. People from the US looking to make private transactions just trust Panama less, because they feel that they’d be less assiduous in defence of client privacy than they were before the trade agreement. This makes other places (Isle of Man, Hong Kong etc.) more attractive. This would explain, with minimal need for reference to conspiracy theories, why one particular country is under-represented among clients.

  4. says

    The simpler and more obvious answer, and following Occam’s Razor the one I believe until a better, simpler one comes along, is that since the recent free trade agreement between the US and Panama, Panama is simply a less attractive option

    The simpler and even more obvious answer is that the US tax code already prefers wealth, to a point where someone like Warren Buffet can gloat that he famously pays less taxes than his secretary. The laws themselves are rigged; there’s no point for the wealthy to offshore their wealth at all.

    Do like Trump and Romney and most of the rest of the 1%: start a “foundation” (if you want to look humanitarian) or a “venture fund” (if you want to look like a ruthless capitalist) then you’re the primary shareholder, CEO, etc – and can pay yourself with perks like company jet, car, residence, travel – as long as it’s for the company, you don’t even register it as income, it gets buried in an “expenses” line in the company’s taxes, not yours. Of course you are supposed to declare some of those “perks” but if the company doesn’t send the IRS a statement that shows you earning money, the IRS’ chances of knowing about it are effectively zero. This is also how mega-church pastors work. It has the further benefit of protecting you against personal lawsuits: your assets are minimal and the company’s are hard to come after because, after all, it’s not the company’s fault if you get caught snorting crank off a hooker’s butt. Then as CEO you can pay yourself a salary and the value of your shares presumably keeps going up. Especially if you’re a good vulture like Romney (apparently is) or a sleazy investor (like Clinton)… This is how it’s done and this is how it’s pretty much always been done. Indeed, it’s what companies are for.

  5. says

    I feel like the CIA doesn’t know how to do something for the benefit of the public

    They’re generally incompetents. This one has too much splash damage even for them.
    When they want to go after someone they do it like they did to Spitzner and Petraeus.

  6. Friendly says

    Last night NPR’s Marketplace aired a segment in which one of their correspondents called a U.S. firm that helps people set up shell companies. She was able to register a company in Delaware, without being asked to prove her identity, in (IIRC) a matter of hours. I think the former explanation for why more Americans aren’t named — that hiding your assets is too easy to do domestically — is the correct one.

  7. Friendly says

    BTW, the representative of another firm in Latvia that their correspondent talked to said, on air, the equivalent of, “You want a firm registered in Belize with a Swiss bank account and a Latvian board of directors? No problem.”

  8. Reginald Selkirk says

    If it wasn’t the CIA, there are plenty of other three-letter agencies.

  9. says

    PS – the US tax system’s notion of “capital gains” is a deliberate attempt to defeat collecting taxes on the rich. “Oh, you can afford to invest your money and sit on it for 5 years let’s reward you for keeping your money out of circulation by letting you save 20% on your taxes!” If you think about it for a second, why the hell are there capital gains deductions? It should be the other way around!

  10. Nick Gotts says

    The latest leak of 11.5 million documents is supposedly the largest ever.

    A spokesperson for Mossack Fonseca has complained they are being “taken out of context” (reported on the BBC). You couldn’t make it up, as they say.

    Meanwhile David Cameron has finally admitted that he did, until 2010, have shares in an offshore company set up, through Mossack Fonseca, by his late father. This was in his fourth or fifth statement on the matter. His cronies have been all over the BBC defending him (nothing illegal, he paid the UK tax due on his share of the profits – evading the fact that these profits themselves were inflated by avoidance of corporate taxes, even “everyone has investments in offshore tax havens” – this on the grounds that a lot of pension funds invest in them). Unlikely he’ll have to resign, but the stench of hypocrisy – he’s denounced others who do very similar things as immoral – is going to take quite a while to dissipate.

  11. StevoR says

    @7. Marcus Ranum :

    I feel like the CIA doesn’t know how to do something for the benefit of the public
    They’re generally incompetents. This one has too much splash damage even for them.

    Yet you’ve claimed before on FTB that the CIA are the very worst terrorists of all haven’t you? So. Are they just at being bad or something?

    See : http://freethoughtblogs.com/arun/2016/03/23/faq-terror-attacks/#comment-39 among other places.

    If they’re that “incompetent” clearly they wouldn’t be -which incidentally they’re not given you mistake terrorism and counter-terrorism in the first place.

    Read more: http://freethoughtblogs.com/singham/2016/04/07/why-are-so-few-prominent-americans-named-in-the-panama-papers/#ixzz45EA5ElCC

  12. StevoR says

    $#@!$$@@! lack of editing abiliuty here. Sigh That’s :

    So. Are they just bad at being bad

    intended to be written there, natch.

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