THE ‘PANAMA PAPERS’ SPECTACULAR U-TURN

Within hours of 2017, we were treated to a masterclass on how a country could give effect to the common Old Year’s night refrain ‘out with the old and in with the new’.

Writing in the Op-ed section of the Miami Herald, President of Panama, Juan Carlos Varela,  expressed his hope that, “one day, Panamanians would come to regard the Panama Papers as a badge of honor; a moment where we took the lead globally to address the exploitation of our country by unscrupulous tax cheats, returned transparency and accountability to our nation and to others, as well, and improved the prospects for social development worldwide by redirecting needed tax incomes to the critical investments our people deserve.”

There is more…

In this epic about-turn, months after the Varela Administration issued blistering responses to the publication of the so-called ‘Panama Papers’, the President has published a 2017 ‘spin’ on what remains the largest breach of client confidentiality in history. The President’s new thinking is that the hack of the Mossack Fonseca law firm was just the catalyst for Panama to accelerate its adoption of automatic exchange of information (AEOI) as part of the tax reform mandate of the OECD Global Forum on Transparency and Exchange of Information for Tax purposes.

You may recall that for several months Panama refused to indicate its adoption of AEOI, and up-until the release of the Panama Papers, was a logger heads with the OECD GF members about the quality and seriousness of their commitment.

In his  Op-ed, the President makes the further point that before the release of the Panama Papers, his Administration was already making progress in aligning his country’s policy with international best practices. This, even as he admits that the cyber-breach was ‘as a effective catalyst for accelerated action.

Interestingly, Varela’s narrative suggests that, but for the leak Panama would still be languishing in the category of non-compliance inimical to the ethos of co-operation expected to obtain within the international bodies mandated to reform the global financial system.

While noting that despite the unfortunate name, The Panama Papers has been good for Panama as well as for the world. Moreover, he opines that’ The Panama Papers changed everything. From Canada, to the United Kingdom, Denmark, the European Union and Uganda, countries worldwide have intensified their investigations and prosecutions of tax evasion.’

For some, Varela’s Op-ed which could well serve as validation of ‘hacking’ to force timely compliance by recalcitrant countries with international rule-making .

Though perhaps a politically expedient way to ‘bury the hatchet’ as it were, his statement gives no comfort to those who have expressed what are legitimate concerns about the state-sanctioned theft of private information especially when such information that threatens to be considered as ‘collateral damage’ for which there is little by way of compensation for the innocent victims of cyber-crime, is contemplated.

Read full-text here.