Paradise Papers: Rich Africans, Others Run To Havens To Avoid Tax
Is offshore banking or shareholding in an offshore company illegal? An interesting breakdown was found on Reddit via The Guardian after the Panama Papers leak in April 2016.
The Panama Papers was the biggest leak in the history of data journalism, with 11.5 million documents equaling 2.6 terabytes, from Panamanian law firm Mossack Fonseca, which showed how hundreds of thousands of people, including world leaders, celebrities, athletes, FIFA officials and criminals hid money using anonymous shell corporations across the world. 18 Africans were named in the leaked documents. A new leak The Paradise Papers has broken the record set by the Panama Papers with 13.4 million documents from a Bermuda-based law firm, Appleby. The document reveals how the firm helps its clients (rich people from 180 countries) evade taxes and obscure ownership of assets. Again, Africans were not left out.
The papers mentioned Nigeria’s Senate President Bukola Saraki as a director of Tenia Limited, a company established in the Cayman Islands in 2001.
Ibrahim Mahama, the brother of the former president of Ghana, John Mahama, was also named in the Paradise Papers. In 2013, representatives of Mahama contacted Appleby to create offshore companies that would provide consulting in the oil and gas industry besides real estate. Another Ghanian Ken Ofori-Atta, a minister was named.
There is also Sam Kahamba Kutesa of Uganda, President Ellen Johnson Sirleaf of Liberia, Sally Kosgei of Kenya.
Plato, a Greek philosopher who lived in the city-state of Athens. In 380 A.D., wrote “The Republic” as a collection of conversations of his teacher Socrates. Plato described government going through five stages, the third stage being oligarchy, which he described as an insider clique, a ruling class. “These are lovers of “money” and “gain.” They seek money to get into office, then once elected they funnel money and favors to family, friends, constituents and supporters who in turn help them stay in power. The insider ruling class raises taxes on everyone except themselves. They pass laws, but exempt themselves,” Plato wrote.
“They invent illegal modes of expenditure; for what do they or their wives care about the law? … Their fondness for money makes them unwilling to pay taxes. … And so they grow richer and richer … the less they think of virtue … and the virtuous are dishonored. … Insatiable avarice is the ruling passion of an oligarchy.”
Their fondness for money makes them unwilling to pay taxes.
Every year, Africa loses more than $50 billion in illicit financial outflows as multinational companies, the rich and the powerful, engage in schemes aimed at avoiding tax payments.
But if the existence of tax havens encourage illicit financial flows, why allow their continued existence? They have continued to exist because powerful people and big companies benefit from the offshore system.
They avoid tax payment at the expense of the many, especially the middle-income taxpayers, who are often left to bear the burden of taxation. Multinational corporations also have an unfair advantage over smaller competitors this way.
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