## Wednesday, April 06, 2016

### Soros' global taxation dreams may be behind the Panama Papers exercise

After I read the 3rd article about the Panama Papers, I still didn't understand what the story was. Lots of documents about banking operations were stolen somewhere in Panama. They may contain many things. But what do they actually contain to make us interested? Perhaps a list of names of people who have used "tax heavens" to save some money on taxes. I could understand that there was a potential for a story. But was there already a story? (Bill reminded me that the word is "haven", not "heaven". That sucks. In Czech, we call them "tax paradises" so I assumed they had to be heaven. Please assume they're heavens because several paragraphs over here wouldn't make sense.)

A leader of Iceland is in trouble. That's one story I understand which could be great if Iceland weren't as populous as two Pilsens.

Then I read lots of comments about the hypothetical impact of the Panama Papers on Putin – except that his name doesn't appear there at all. Instead, the documents make a "shocking" revelation that Russian people also deposit and withdraw money in banks and some of the wealthy people may have met Putin (like a top cello player who has used tax heaven and met Putin – I exploded in laughter when I read about this "juicy story") or someone who has met someone who has met someone who has met Putin. When it comes to this Russian interpretation of the Panama Papers, I simply have to agree with this op-ed. This direction of the Panama Papers tells us more about the disease plaguing the contemporary Western journalism than about Russia.

Some other people could have used tax heavens and may be in trouble. But while the Panama Papers are presented as a scandal analogous e.g. to the ClimateGate, I don't see any similar shocking sentences in the Panama Papers. So they may be analogous except that they are clearly not.

Now, I think that it's more sensible and more ethical to pay taxes at the place where the actual economic activity takes place (and obviously, I have always done so). At the same moment, any freedom-compatible arrangement that tries to achieve this outcome unavoidably allows some kind of "usage of tax heavens", so much of it simply has to be legal. And let me also say that at the end, I think that the "tax heavens" are better than "tax hells" and if I were fighting against something, it would be hells, daemons, and devils rather than heavens, angels, and God. If you're fighting against the heavens and shooting angels, you're probably evil. It's generally more right (and beneficial for the economic progress) for countries to have lower tax rates and the tax heavens are a tool by which Nature shows this law of Hers to us (and especially to the managers of the "tax hells")!

Some random businessmen and perhaps politicians could have been linked to tax heavens in some way. Great. But what is the big story? And what's behind the story and behind the idea that it should be a story at all?

Mr Ivo Strejček [Eevaw stray-Czech], an official at the Václav Klaus Institute, has a possible interpretation. This whole event is a ritual by which folks around George Soros – a powerful far left puppet master who often uses the nickname Open Society – want to strengthen the chances that global taxes and similar aspects of the global government will be adopted.

It's a bit insane for the huge aß named Soros – who, among other things, owes almost \$7 billion in taxes – influence the world nations' attitudes towards taxation but that's what we see, anyway. Here is Strejček's take on the affair:

Ivo Strejček: Panama Papers – a road towards global taxation?

The content of documents stolen from Mossack Fonseca, a legal firm with headquarters in Panama (therefore Panama Papers), is often described as the "greatest revelation in the history of journalism which unmasks secret offshore operations of firms, current, and former politicians" [1]. That's the opinion of those who brought this whole story to us and who are administering it. We must interpret such a statement as a very serious one. That's another reason why we must clarify some of the so far known facts related to this event and place them in a broader context.

– German daily Süddeutsche Zeitung has received millions of records in a giant volume 2.6 terabytes a year ago. The sender was an anonymous source (calling himself John Doe) who stole them (i.e. obtained illegally, not accidentally from spontaneously leaked data) from the Panama-based firm Mossack-Fonseca [2].

– The source (John Doe) transferred the data to the editors using encrypted communication without any personal contact. The identity of John Doe is unknown. He didn't want any compensation for them, just "a few security guarantees". [3]

The Germany daily has established two teams to evaluate the data and simultaneously, it gave the data also to ICIJ, the International Consortium of Investigative Journalists. It covers 400 journalists from 80 countries employed e.g. at The Guardian, BBC, Le Monde, ORF, Süddeutsche Zeitung, L'Espresso, Le Soir, The Asahi Shimbun, CBC, New York Times, The Washington Post. [4]

– ICIJ presents itself as a non-profit organization. Center for Public Integrity is the institution that actually funds it, by about 1.5 million dollars, and a major sponsor of that is, among others, the Open Society Foundation of George Soros. [5]

ICIJ is also a member of the U.S. organization Organised Crime and Corruption Reporting Project (OCCRP) which is funded by the U.S. government institution USAID as well as by Soros' Open Society Foundation. [6]

The Czech organization cooperating with OCCRP is one founded in 2013 (accidentally (?), the same year when the stolen data were probably given to Süddeutsche Zeitung), named Czech Center for Investigative Journalism. [7] The funding or composition of expenses of this center are not known. The organization has already published its partial comments about the "Czech" part of the Panama Papers. [8]

It's not necessary to defend the transfer of tax residencies from the places of the actual economic activity to the tax heavens. Firms should pay taxes at the places where they do the tangible business.

However, it's necessary to summarize several conclusions and ask several questions linked to the form of publishing of this giant volume of data, with the seriousness of the content, because without these perspectives, it's not possible to establish a holistic picture about the story:

1. It was a theft.

2. It is not known who did it, what was his motivation, what were his goals. Some distance and careful conclusions may be appropriate for those reasons.

3. The president of the Czech center Ms Pavla Holcová claims that there are 283 Czech names in the stolen data – but she has unmasked only a few names on her website. Why these names and not others? Even The Guardian said that "not all names will be published". [9] Why this selectiveness? Are the citizens learning really everything through these investigative journalists? Is it possible to avoid speculations whether at least the journalists were given the full information? And why do these journalists want to keep the information about some people secret while others will be unmasked?

4. If the reports are supposed to be revealed gradually, why? What should be the goal of this selective (and, in effect, deeply corrupting) approach?

This foggy and unclear background should encourage us to a sober and careful search for answers.

A conclusion

It is clear that this story will energize the already excited social atmosphere believing in omnipresent corruption. It will help another wave of aggressive programs with the goal to "remove the corrupt political dinosaurs" and it will keep on strengthening the – already strong – role of assorted anti-corruption NGOs. I am not defending tax evasion but one must also say that the mere activity of an offshore company isn't criminal in any way. Defenders of the harmonization of tax systems at the supernational level will abuse the story to energize their argumentation against the tax competition (although it's not what this story is about) which, in the environment weakened by the impact of the Panama Papers, may be successful (in the EU, attempts to harmonize direct taxes across the continent have been alive and kicking for long years).

Czech PM Sobotka made a statement about the Panama Papers. He doesn't expect the documents to be related to anyone from his government but he will carefully investigate and draw conclusions if necessary. He joined other governments (Spain, France, Britain) that are assuring the voters that things will be investigated – even if political tremors and changes will result from that.

The content of the transferred information isn't known to us so we can't comment on those. We don't even know the circumstances of the data transfer, the person who was the intermediary of that transfer, and his motivations. We don't know whether all names will be published and whether – and who – will cherry-pick the names and data and publish them gradually. Despite these important unclear aspects, there is a potential to influence the public opinion as well as the behavior of the governments. We should greet this likely evolution with a dose of skepticism.

[1] https://www.occrp.org/en/panamapapers/overview/intro/
[2] http://www.panamapapers.sueddeutsche.de
[3] http://www.politico.eu/blogs/spence-on-media/2016/04/how-suddeutsche-zeitung-got-the-panama-leaks-story/