OPINION:
The dribs and drabs of facts and figures leaking from the so called “Panama Papers, detailing the corruption of a Panamanian law firm and its clients, have so far dispensed more questions than answers. More of both are surely coming.
The first gleanings of more than 11 million documents constituting “the papers” toppled the prime minister of Iceland, who was caught in a conflict of interest with his country’s banks, which contributed to the worldwide financial crisis in 2007-08. More than 70 current or former heads of state and government have been implicated in the Panama Papers. No prominent American names have surfaced in the details. So far.
According to the International Consortium of Investigative Journalists, a somewhat mysterious newsgathering alliance of left-wing newspapers across the world, the records include three dozen persons or organizations blacklisted by the United States. The consortium has declined to release all the documents, which are said to include accounts ranging from Mexican drug lords to terrorist groups to the sanctioned governments of North Korea and Iran.
It’s not exactly news that certain heads of state and government from time to time dip into the public treasury, sometimes dipping deep, as in a blossoming scandal in Malaysia. The Wall Street Journal reports that $1 billion has turned up mysteriously in the personal bank account of Prime Minister Najib Razak.
Overseas bank accounts are not necessarily opened as a way of evading taxes. But no one seems able to explain what worthy uses these have had. Tax authorities in Australia, New Zealand and Britain say they are looking into the Panamanian caper.
One question is how this could have been going on in Panama without local authorities being aware of it, and without the intervention of U.S. Treasury authorities. The United States and Panama share a long history of intensive and extensive financial association. As early as 1846 a treaty between Colombia and the United States obliged Washington to maintain “neutrality” in Colombia’s Panama Department, in exchange for transit across the isthmus. Panamanians had taken up armed insurrection against the Colombian government in Bogota. In 1885 the United States took over the Panamanian city of Colon and Chile occupied Panama City. There was even widespread speculation throughout Latin America that the United States would annex the Panamanian territory.
In 1903, Colombia rejected a treaty to grant to the United States the rights to continue building a canal between the two oceans, which the French had started and could not finish. The Americans switched to support the insurrection. This led to establishment of the U.S. Canal Zone, which survived until President Jimmy Carter ceded it to Panama in 1977.
A decade later, President George Bush the elder dethroned Manuel Noriega and his corrupt drug dictatorship that was playing cozy with Cuba and the Soviet Union. With these traditional military and civilian ties to Panama, why wasn’t the U.S. Treasury Department aware of these tax shelter shenanigans, some of them plainly illegal, and why didn’t it blow the whistle, loud and clear? These are very good questions, no doubt to be answered sooner or later, and probably sooner.
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