{"id":13875,"date":"2016-04-11T08:01:07","date_gmt":"2016-04-11T15:01:07","guid":{"rendered":"http:\/\/spijue.wpengine.com\/news\/panama-rejects-money-launder-label\/"},"modified":"2016-04-11T08:01:07","modified_gmt":"2016-04-11T15:01:07","slug":"panama-rejects-money-launder-label","status":"publish","type":"post","link":"https:\/\/www.juneauempire.com\/news\/panama-rejects-money-launder-label\/","title":{"rendered":"Panama rejects money-launder label"},"content":{"rendered":"

PANAMA CITY <\/strong>\u2014 Panamanians have long shrugged off their country\u2019s checkered reputation as a financial haven for drug lords, tax dodgers and corrupt oligarchs. They like to joke that if they\u2019re crooks, they\u2019ve learned it from the world\u2019s wealthy nations.<\/p>\n

That same defensiveness has re-emerged amid the fallout from the leak of 11.5 million confidential documents from the Panama-based law firm Mossack Fonseca revealing details of how some of the globe\u2019s richest people funnel their assets into secretive shell companies set up here and in other lightly regulated jurisdictions.<\/p>\n

Ramon Fonseca, a co-founder of the firm, said Monday that his country\u2019s success in establishing itself as an offshore banking giant has bred jealousy from first-world rivals at a time of increasing competition and scrutiny of the industry in the aftermath of the global financial crisis.<\/p>\n

\u201cIt\u2019s very unfair what\u2019s happening because there\u2019s not a level playing field,\u201d Fonseca told The Associated Press in an interview. \u201cWithout a doubt if this happened to a company in Delaware nothing would happen, but because it\u2019s Panama it\u2019s the front page of the world\u2019s newspapers.\u201d<\/p>\n

Panama cemented its status as a money laundering center in the 1980s, when dictator Gen. Manuel Noriega rolled out the red carpet to Colombian drug cartels. It has remained a magnet for illicit money, as well as for legitimate funds, because its dollarized economy sits at the crossroad of the Americas. Breakneck economic growth averaging 8.5 percent a year for a decade has been fed by the flood of cash, transforming the capital\u2019s skyline into Latin America\u2019s Dubai.<\/p>\n

But Panama isn\u2019t alone in its permissive attitude toward shell companies, which the British-based Tax Justice Network estimates hide $21 trillion to $32 trillion in untaxed or lightly taxed financial wealth around the globe. Panama ranks 13th on the watchdog group\u2019s financial secrecy index \u2014 better than the U.S., which is at No. 3.<\/p>\n

In 2014, a group of academics wrote a book, \u201cGlobal Shell Games,\u201d that looks at tax havens. They used emails to set up shell companies with 3,700 corporate service providers in 182 jurisdictions, posing as a range of low- to high-risk customers, including drug traffickers and terrorist groups. The findings were startling: All countries scored poorly. Service firms in Panama complied 29 percent of the time with minimum standards like requesting photo IDs and other documents establishing the identity of the company owners. U.S. firms complied on average 25 percent of the time, while Delaware, at 6 percent, was even more lax.<\/p>\n

\u201cMost of the money from these shady dealings is held in other countries, not Panama, so there is plenty of blame to share around,\u201d said Jason Sharman, one of the book\u2019s authors and a political scientist at Australia\u2019s Griffith University.<\/p>\n

Panamanian President Juan Carlos Varela has promised to cooperate with any judicial investigations stemming from the leaked data, and the country\u2019s chief prosecutor\u2019s office said Monday that it will look into the documents to see if they reveal any wrongdoing.<\/p>\n

Varela says he has \u201czero tolerance\u201d for financial crimes and likes to cite the ramming through congress last year of legislation expanding supervision over more than 12 non-financial industries, from real estate to casinos. The legislation paved the way for Panama\u2019s removal in February from a black list of high-risk jurisdictions kept by the Financial Action Task Force, an inter-government agency that sets standards for controlling money laundering and terror financing.<\/p>\n

In a statement issued Monday, Mossack Fonseca said: \u201cOur industry is not particularly well understood by the public, and unfortunately this series of articles will only serve to deepen that confusion. The facts are these: while we may have been the victim of a data breach, nothing in this illegally obtained cache of documents suggests we\u2019ve done anything wrong or illegal, and that\u2019s very much in keeping with the global reputation we\u2019ve worked hard to build over the past 40 years of doing business the right way.\u201d<\/p>\n

Until recently, Panama was one of the few jurisdictions allowing companies to issue \u201cbearer shares,\u201d which obscure any record of ownership by giving whoever is in possession of a stock certificate ownership rights. Legislation last year banned the practice although outstanding bearer shares still circulate while the legislation is being implemented.<\/p>\n

Still, Varela\u2019s close relationship with Ramon Fonseca is likely to bring questions about his commitment to transparency. Until recently, Fonseca was president of the governing Panamenista party and served in Varela\u2019s Cabinet as a special adviser. He resigned in February after authorities in Brazil raided the offices of a Mossack Fonseca affiliate as part of the investigation into bribes paid to politicians by companies doing business with the state-run oil giant Petrobras.<\/p>\n

Varela himself was hit with unproven allegations during the 2014 presidential campaign that he evaded taxes and took money from an illegal gambling ring in the U.S.<\/p>\n

Some say Panama\u2019s stigma as a haven for illicit cash is well deserved and cleaning up will be hard. While the regulatory framework has greatly improved, old habits are ingrained and many of Panama\u2019s bankers and lawyers have little to fear from the country\u2019s corrupt prosecutors and judges.<\/p>\n

\u201cThis scandal is truly an indication of the schizophrenia of Panama\u2019s ruling class,\u201d said RM Koster, an American-born novelist who has made his home in Panama City for decades. \u201cThey want to pretend to live in a first world country run by serious people but at the same time won\u2019t give up the culture of graft, bribes, etcetera.\u201d<\/p>\n

___<\/p>\n

Associated Press writer Juan Zamorano reported this story in Panama City and AP writer Joshua Goodman reported from Bogota, Colombia.<\/p>\n

___<\/p>\n

Joshua Goodman on Twitter: https:\/\/twitter.com\/APjoshgoodman. His work can be found at: http:\/\/bigstory.ap.org\/journalist\/joshua-goodman.<\/p>\n","protected":false},"excerpt":{"rendered":"

PANAMA CITY \u2014 Panamanians have long shrugged off their country\u2019s checkered reputation as a financial haven for drug lords, tax dodgers and corrupt oligarchs. They like to joke that if they\u2019re crooks, they\u2019ve learned it from the world\u2019s wealthy nations. That same defensiveness has re-emerged amid the fallout from the leak of 11.5 million confidential […]<\/p>\n","protected":false},"author":107,"featured_media":13876,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_stopmodifiedupdate":false,"_modified_date":"","wds_primary_category":4,"footnotes":""},"categories":[4],"tags":[65],"yst_prominent_words":[],"class_list":["post-13875","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-nation-world"],"_links":{"self":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/13875","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/users\/107"}],"replies":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/comments?post=13875"}],"version-history":[{"count":0,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/posts\/13875\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/media\/13876"}],"wp:attachment":[{"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/media?parent=13875"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/categories?post=13875"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/tags?post=13875"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.juneauempire.com\/wp-json\/wp\/v2\/yst_prominent_words?post=13875"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}