Panama Leak: Why the secret world of offshore banking matters to Nigerians

By now you’ve probably heard of the Panama Papers, a massive database leaked from a law firm based in Panama. The leaked documents show that the company, Mossack Fonseca, helps its clients set up offshore shell companies, some of which are allegedly linked to crime.

panama-leak

Why is this such a big deal? The size of the release, for one, is staggering; then there’s what all these files stand to reveal about offshore banking by global elites and its ties to illegal activities.

The leaked data also show that more than 500 banks and their subsidiaries used Mossack Fonseca’s services to register offshore companies, which has been a huge blow to the reputations of some major banks, including HSBC and Credit Suisse.

How does all this affect ordinary people? The impact is indirect, but huge. When individuals or companies hide their assets in tax havens through shell companies, the governments that they should pay taxes to lose an important source of income which could be used to improve the lives of citizens.

A study by Tax Justice Network, an international research and advocacy group, conservatively estimated that at least $21 to $32 trillion was hiding in more than 80 tax havens in 2010.

Some of the Africans mentioned in the documents include a nephew of South African President Jacob Zuma, the twin sister of Democratic Republic of Congo President Joseph Kabila, the jailed former governor of oil-rich Delta State, the senate president Bukola Saraki, wife, Toyin and David Mark. Also mentioned is the petroleum minister of Angola, Africa’s second-biggest oil producer behind Nigeria.

 

Despite hundreds of billions of dollars in aid, the United Nations determined that 54 countries had actually become poorer than they were 15 years previously. Most analysts now agree with findings of the World Bank that it is corruption that has been “the single greatest obstacle to economic and social development.

A 2002 UNODC study estimated that between $600 billion and $1.8 trillion is the amount of money that is illegally laundered throughout the world each year, and a substantial portion of that is money derived from corruption.

Nigeria has been categorized as a victim country by the UN.

The Tax Justice Network study also found that individual elites in 139 mainly low-middle income countries had accumulated $7.3 to $9.3 trillion of unrecorded offshore wealth in 2010, while their governments were borrowing themselves into bankruptcy and other economic predicaments.

If 30% of $7.3 trillion in hidden wealth was paid as taxes and divided equally among 139 countries, each would get almost $16 billion. Imagine what a country like Nigeria could build with $16 billion.

 

 

Culled: PSN

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