'We Are In An Era Of Leaks', Says Head Of Panama And Paradise Expose

Johannesburg: The biggest expose of 2016 was stories which showed how the rich around the world stashed their money in secret tax havens using complex network of companies. These 'Panama Papers' were a leak of 13.4 million files from offshore law firms, which had 40 years of records of more than 2 lakh companies in 21 offshore jurisdictions, all packed in 2.6 terabyte of data. This year, another set of leaks, called the 'Paradise Papers', named over 120 politicians and world leaders, including Queen Elizabeth II and advisors, major donors and members of US President Donald Trump's administration. 

In an interview to NDTV, Gerard Ryle, Director of International Consortium of Investigative Journalists (ICIJ), a Washington D.C. based non-profit, which steered the investigations across the world from these documents, tells Sonal Matharu why global collaborations for investigating stories are needed today more than ever.

What according to you is the biggest discovery from Panama and Paradise Papers?

The biggest discovery is that a lot of this is legal. The fact that it is legal, for me, it didn't stop being a story.

For the Indian leaks, people named in them who responded said that they are doing all this well within the legal framework. So where are they wrong? Are we then just questioning them on moral grounds?

The stories have shown that this whole thing is a fake. There is nothing there when you go to these islands. They are basically setting up false entities for one purpose only which is to basically avoid tax. It resonates that every person, because if they are not paying taxes or if they are getting a way by not playing by the rule books, there is a kind of a social code we adhere to when we live in that country, we agree to the rules of that country. Yet, this world, which is a fake world, there is nothing there, the money never leaves India. It's just on paper in the end so that you do not have to worry about paying taxes. Sometimes its money laundering, sometimes its arms dealing. Its highly globalised crime...it's fake. And just because it's legal, it doesn't mean that it should happen.

You are saying there is no physically money being transferred to these countries. It is just on paper?

Yes, it's all on paper. The money stays in the banks, in the major banks and financial institutions. The way we have learnt is that these are major accountancy firms and banks that are behind this. You have law firms like Appleby and Mossack Fonseca but they are just the servants of the schemes that are being drawn up by the bigger people. It really just shows the whole farce of the whole thing.

But why are there no big Indian politicians in the leaks?

You can only report on what you see. You have got to work on the documents. Whatever the documents are, what story comes, rather than your preconceived notions of what you wish for. Why there are no politicians? Because we don't have the right law firm. I guarantee you that there is another firm. There are 800 of these firms out there in the world that we know of and we have only reported on 3, 4 or 5 of them.

What is the scale of these offshore transactions?

These are just a couple of law firms that specialize in setting up the accounts for the offshore tax havens. They work for their clients out of the major banks and accountancy firms and the rich people around the world, who go and are advised that this is the best way to structure your finances or hide your money from your wife or whatever it is that they want to do. A lot of it is money laundering.

If the money isn't physically moving, then how do the companies get away by saying that it's legal? What is the loophole that the rich use to their advantage?

Say, the corporate tax in India is 35%. What they make sure they do is that they, say, put intellectual property into a company in Bermuda, where there is no tax. The requirement on the Indian firm is to pay for the rights to whatever it is, like intellectual property. They will charge a lot of money to the Indian firm. The profits from India then certainly go to Bermuda, where there is zero tax. Then you are able to avoid tax in India. That's a very simple example of it. But these structures are a lot more complicated.

Sometimes the money launderers and the politicians might have a company in Bermuda that say, is linked to another offshore firm in British Virgin Islands that is linked to Jersey. There are secrecy laws in each of these places. They can't tell anyone anything. So after a while you are chasing money, you start to just give up. It's all just so very difficult to trace. It's all about secrecy. 

What kind of ethical issues did you have to face for these leaks?

The information as obviously was being taken without the permission of the companies. We are also dealing with an anonymous source. The obligation on the journalists is to really go outside the documents. You have to make sure the documents are real first.

We were lucky with Mossack Fonseca. We had the subsection of their data that we were to cross match and we knew that the bigger set is real. That's not enough. Then you have got to say that okay I now know that politician X has got a company in Bermuda or Isle Island, what else can I find on that? What else publicly available sources are there? Have they declared it in the parliament? Is there a unique register we can check? Is there a court case? Are there any clipping files? Is there a physical person who can tell us more about this? You've got a real obligation much more so when you have an anonymous source to go outside the documents and verify everything. Very few of the stories are just like so here's a document, this is what it says.

What next after these leaks? Especially in India, where we don't see big inquiry happening. Where do we go from here?

There will be more information that will come out whether it's ICIJ that gets it or its Süddeutsche Zeitung or Indian Express. The journalists will get the information if it's out there. We will see more information like this coming out. We are in an era where people can gather information on a scale that was not possible before because technology allows you to put a thumb drive in and scrape millions of records in seconds. We could never do that before. We are in an era of the leak.

Sonal Matharu was a Fellow at Global Investigative Journalism Conference 2017, Johannesburg.