Fascinating, isn’t it, how successive governments have been so diligent when it comes to closing loopholes through which common people might be able to pay less taxes, but when it comes to big money they leave gaping chasms large enough to drive cargo ships filled with cash all the way to Panama?

As I write this, the majority of the Panama leaks have gone public, and several well-known names have cropped up, from both sides of the political fence, as well as others with no notable political affiliations. Of course, this could be just the tip of the iceberg. Mossack Fonseca, from whom the Panama Papers were leaked, is one of many businesses which specialise in these type of dealings.

Who knows how many other fake shell companies exist with the sole purpose of owning something on behalf of someone else, not just in Panama but in many other tax havens around the world?

Several of the people mentioned in this context were quick to point out that these companies and accounts are all perfectly legal. Ideally there should be investigations to determine this, but personally, I wouldn’t be at all surprised if they were. After all, if you’re paying a company like Mossack Fonseca a pile of cash to handle these affairs for you, you expect everything to be squeaky clean.

Or at least, sufficiently clean for a good law firm to take you the rest of the way.

There’s at least one problem with that. Many of the people mentioned are, or were, politicians – the very same people whose job it is to write the laws that determine what is legal and what isn’t.

Telling me that someone’s actions are in line with laws they themselves or their predecessors wrote, is not really convincing

Frankly, telling me that someone’s actions are in line with laws they themselves or their predecessors wrote, is not really convincing. We expect better from our politicians than to act legally. We expect them to act ethically too.

There are indeed many perfectly ethical reasons why one might open a company abroad, the most obvious being to do business there. There are a number of successful Maltese businesses that have expanded their operations overseas, and nobody is objecting to these.

However, there are other companies which do no business. They produce nothing, import nothing, export nothing, employ nobody. They do not have a factory or even an office. The entire company exists on several pieces of paper stored safely in a file.

You would be a director of that company, and some businesses even offer you the service of providing ‘directors’ so that your name does not appear anywhere, and if you really want to hide what you’re doing, you can open a company in yet another country to own the companies in the first one, making it all the more difficult for someone to follow the trail.

Why all this secrecy, these complicated manoeuvres to hide these companies and one’s link with them if they are not only legal but perfectly ethical? Could it be because many of them are not ethical at all?

According to the website of a company that will help you set up camp in a tax haven, “this type of corporation is a good choice if your objective is to save taxes or protect your assets”. Shall we say “avoid paying taxes” in place of “save taxes”?

This is where it starts getting unethical. Thanks to shenanigans like this, those with a substantial amount of money can avoid paying taxes while the rest of the population have to shell out even more to make up for it.

Of course there’s more that one can do with such an anonymous arrangement. For instance, if someone wants to receive a large sum of money which was acquired in suspicious circumstances, you can’t very well take a cheque to your nearest bank branch or deposit it in the ATM machine.

You wouldn’t want any record of such a transaction to exist – and you can do just that if the transaction takes place between one anonymous company and another. According to the US assistant Attorney General in 2012, shell companies are the number one vehicle for money laundering.

The Panama Papers scandal may be the thing that spurs world governments into action, to put a stop to these legal lacunae that are being abused in such a way.

The idea of commercial companies is to conduct business, and the real owners should be a matter of public record. I hope that the government and Opposition can set aside their differences to cooperate with other countries and create the necessary laws to put an end to this abusive situation.

The problem is that these things are legal. That’s what we have to fix.

Ramon Casha is chairman of the Malta Humanist Association.

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