A Panamanian Timeline: The Hat, The Canal, The General and The Leak

The Panama hat is described as a man's wide-brimmed hat made of straw. Often seen being worn in old Hollywood movies and likely to be Panama’s earliest claim to fame but followed closely by the Panama Canal one of the wonders of the modern world opened in 1914. There is one other infamous event in the Panamanian timeline and perhaps a precursor to the current Panama leaks and that’s the notorious President General Manuel Noriega, darling of the CIA during Bush senior’s days for being the intermediary smuggling American arms to US backed militias in that part of the world and in return the CIA  turned a blind eye to his cocaine smuggling activities until they reached the Florida coastline, after which they invaded Panama using heavy rock music to flush him out of his palace and extradited him to the USA. Anyway that’s another story!

The world has been waiting for 27 years for Panama to make the headlines again! And the Panamanians have not disappointed; we now have the Panama Papers or Leaks, definitely not a puncture in the canal which would see the merging of the Pacific and Atlantic oceans, rather it is a rupture of one of the world’s worst kept secrets; that the super-rich of this planet indulge in tax avoidance and or evasion. The Panama papers revelations have come about from a cyberattack on the database of the Panamanian law firm Mossack Fonseca (not to be confused with a Police song from the 1980s)

The old saying there is no smoke without fire implying that fire is bad and the evidence that a bad thing has happened is the presence of smoke. Applying this analogy to the case of offshore companies, they being the smoke and if one was able to uncover the trail that led to the creation of these offshore companies you may certainly find iniquitous behaviors (fire) if not illegal! The fact is that saving billions or millions in taxation by creating these offshore vehicles may be a legal means of tax planning, but find me one reasonable man (on the Lahore metro bus) who would say they are morally acceptable in a country of increasing inequality. I believe taxpayers in Pakistan (all 700,000 of them) would find it insulting that those who have the capacity to pay taxes and play a part in taking this country out of misery are unwilling to do so, but instead choose to pay millions to unpronounceable law firms to create offshore companies to avoid paying taxes!

A recent example in the corporate world has been the case of Amazon, Starbucks, Google and Apple all of whom were relying on offshore companies in jurisdictions which had little or no taxation on earnings, countries such as British Virgin Islands, Cayman Islands and Bermuda. Reps from all these household names appeared before a house of commons parliamentary committee in the UK, the latter was not questioning the legal status of their corporate setup but rather did they feel it was morally unacceptable to deny the British public of taxes on revenue which they had earned from selling their goods and services to British people and British businesses. As a result all companies have agreed in order to protect their reputation they will voluntarily change their corporate structure to pay taxes in Britain!

The Panama leaks may turn out to be “Enema Leaks” for the rich and famous!