Penetrating the “complex web” of companies set up in “secrecy havens” like Panama was difficult, the European Parliament’s Panama Papers committee was told yesterday.
Joseph Stiglitz, a Nobel Prize winner in economics, told the committee in Brussels the hiding of cash, be it for money-laundering or tax-evasion purposes, undermined the functioning of the global society.
“Complexity contributes to lack of transparency. Those seeking secrecy understand this and create complex webs of corporations and trusts to make it more difficult for enforcement agencies to trace flows of illicit funds and to identify the true beneficiaries of illicit activities,” Prof. Stiglitz said. He added that a whole industry had been created, aimed at servicing secrecy.
The Panama Papers brought home the magnitude of the nefarious activities going on
Centres through which tax avoidance, evasion and money laundering could occur supported corruption and a other range of nefarious activities, he said.
“The Panama Papers brought home the magnitude of the nefarious activities going on. Everyone knew that secrecy havens were up to no good. In a very forceful way, the Panama Papers brought home what was going on,” he said.
Prof. Stiglitz said a whole industry had been set up to service secrecy havens, with lawyers being the main culprits. He advocated the creation of publicly searchable databases, showing the real owners of secretive companies.
The Panama Papers committee, which was set up in the wake of the massive data leak from Panamanian firm Mossack Fonseca, among many others, is expected to summon Minister Without Portfolio Konrad Mizzi to explain his involvement in the scandal.
Questions sent to the Office of the Prime Minister on whether progress had been made on the audit into Dr Mizzi’s financial setup remained unanswered at the time of writing.
The name of the audit company has not been made public and the Prime Minister’s Office has previously said it would be named only once the findings are published.
Dr Mizzi, together with the Prime Minister’s chief of staff, Keith Schembri, were earlier this year found to have set up secret companies in Panama sheltered by trusts in New Zealand.
The Panama Papers showed how their financial advisers, Nexia BT, tried to open bank accounts for both men in various countries. In one e-mail sent last December, Nexia BT gave Mossack Fonseca the go-ahead to open two bank accounts with a Panama bank.
Leaked e-mails show the bank was willing to accept an initial deposit of $100,000 and would close the account if significantly less than $800,000 went into it throughout the year.