The whole world is still in a state of awe over the recent leakage of ‘Panama Papers,’ a set of leaked confidential documents exposing how offshore companies are used by the global elite to conceal the ownership and control of assets and property worth billions.
The Panama papers—co-authored by two journalists, Frederick Obermaier and Bastian Obermayer from Germany’s second-biggest daily in sales, the Sueddeutsche—expose a collection of 11.5 million confidential documents that provide detailed information about more than 214 000 offshore companies listed by the Panamanian corporate service provider Mossack Fonseca, including the identities of shareholders and directors of the companies.
The leak includes more than 4.8 million emails, three million database files, and 2.1 million Portable Document Format (PDFs), or simply 2.6 terabyte troves of data, making it the biggest data journalism project of all time.
The documents could be likened to a movie detailing how wealthy individuals, including public officials, hide their assets from public scrutiny in offshore accounts.
Several world leaders across the globe have been implicated by the papers for using what are called shell companies for illegal purposes, including fraud, drug trafficking and tax evasion.
Shell companies are mostly inactive or dormant companies which serve as a vehicle for business transactions and without necessarily having significant assets or manoeuvers.
However, while our politicians and those multinational companies plying their trade in Malawi are yet to be named by the papers, we must not delude ourselves that they are not doing the same.
It is a fact that the use of offshore business entities by politicians and multi-national companies is not illegal in the jurisdictions in which they are registered, but oftentimes elites tend to abuse their privilege at the expense of the likes of my grandmother at Gonondo Village in Ntchisi.
The Cashgate scam is a good example that compels me to believe that some of our taxpayers’ money is somewhere hidden by some of our unscrupulous politicians in some low tax jurisdiction or tax havens— countries or territories where certain taxes are levied at a very low rate or are not levied at all.
Countries such as Bermuda, Mauritius, Seychelles, Luxembourg, Switzerland, and British Virgin Islands are mostly listed as among 10 major tax havens in the world.
Then there is transfer pricing used by multi-entity firms in situations where the firm’s individual units are treated as separate using what is called the Arms Length principle to blindfold all of us in that their prices don’t differ too much from the market price.
While there are transfer pricing rules being implemented by the Malawi Revenue Authority (MRA), it is also imperative that the revenue body works aggressively hand in hand with the Reserve Bank of Malawi (RBM), the fiscal police, the Financial Intelligence Unit (FIU) and the Anti-Corruption Bureau (ACB), among other relevant authorities, in assessing those tax liabilities and punish accordingly those illegally externalising foreign cash to off-shore accounts.
Equally important is the need to thoroughly investigate the wealth amassed by all our past presidents and where they are keeping their last penny.
Remember, the infamous Muammar Gadaffi of Libya, Hosni Mubarak and Ben Ali had their accounts frozen in the most famous of all tax havens, Switzerland.
That is why Malawi’s Office of the Director of Public Officers Declarations is crucial in this whole equation as well.
Tellingly, the Panama Papers data leak is a timely wake-up call for Malawi to buttress her efforts in guarding potential leakages of taxpayers’ money by shell or shelf companies, tax dodgers, warmongers, and the whole criminal underworld who thrive in the system of financial secrecy by hiding illicit funds. n