Monday 4 April saw people around the world wake to an outburst of news on the global media concerning the so-called Panama Papers. Almost every news site that could claim to hold a name in the field ran stories on the unprecedented leak of some 11.5 million files from the database of the world’s fourth biggest offshore law firm, Mossack Fonseca. The records were obtained from an anonymous source by the German newspaper Süddeutsche Zeitung, which shared them with the International Consortium of Investigative Journalists (ICIJ). The ICIJ then shared them with a large network of international partners, including the Guardian and the BBC.
All crooks? Some crooks?
The Guardian especially gave the matter extensive coverage, broaching every possible aspect of the matter. In an explanatory piece titled What are the Panama Papers? A guide to history’s biggest data leak
it says: “The documents show the myriad ways in which the rich can exploit secretive offshore tax regimes. Twelve national leaders are among 143 politicians, their families and close associates from around the world known to have been using offshore tax havens.” It goes on to explain that Mossack Fonseca, the firm out of which the documents were leaked, is a “Panama-based law firm whose services include incorporating companies in offshore jurisdictions such as the British Virgin Islands. It administers offshore firms for a yearly fee. Other services include wealth management.”
Perhaps the most pertinent questions posed by the Guardian’s explanatory article, however are: “Are all people who use offshore structures crooks? Are some people who use offshore structures crooks?” The reply to the first query says: “No. Using offshore structures is entirely legal. There are many legitimate reasons for doing so. Business people in countries such as Russia and Ukraine typically put their assets offshore to defend them from ‘raids’ by criminals, and to get around hard currency restrictions. Others use offshore for reasons of inheritance and estate planning.” The reply to the second says: “Yes. In a speech last year in Singapore, David Cameron said ‘the corrupt, criminals and money launderers’ take advantage of anonymous company structures.”
So far, so good. Tax havens are known the world over, nothing new here. But what piqued the media and public interest was that the Panama documents led to national leaders and politicians who used offshore tax havens. And, according to the Guardian, “the USD2bn trail leads all the way to Vladimir Putin.” Aha…then, many in Russia and around the world remarked on social media, so that’s what it’s all about!
The Russians were quick to retort that the entire matter was “Putinphobia”. Both the Guardian and the BBC reported that, apart from rights activists or liberals, most of the Russian public appeared unperturbed about the revelation. The logic went along the line that ‘we knew there was corruption all along. What’s new?’ It just looked like the West was out to get Putin one way or another.
In countries the world over, people searched for the names of their leaders or their associates among those whose names appeared in the Panama Papers. Egypt was no exception, even though it must be admitted that the matter aroused no widespread interest on social media. But for those who were interested, sure enough, there was the name of Alaa Mubarak, the son of former president Hosni Mubarak who stepped down during the Arab Spring in February 2011. Mubarak and his sons, Alaa and Gamal, never left Egypt, and have been in and out of prison, embroiled in court cases on charges that ranged from killing demonstrators to financial abuses. They were convicted in only one case, for misappropriation of funds, but the court has so far cleared them of most charges. Their assets outside Egypt are frozen pending court decisions in the cases not as yet decided.
“Are we to believe this?”
Judging on bloggers and visitors online comments on news that Alaa Mubarak, a famously successful businessman until he was arrested, was implicated by the Panama Papers, it is clear that Egyptians are divided into two camps. The first does not trust the leaks or the information they yielded, and the second poses the argument: what’s new? The first observed that the full name and the address of Alaa Mubarak are inaccurate; the second claimed that offshore assets of the Mubaraks are frozen in all cases, yet nothing has been returned to Egypt.
Muslim Brothers, naturally, jumped at the chance of claiming that the rampant financial corruption of Arab leaders, disclosed now by the Panama Papers, were the reason these leaders supported the downfall of the Islamist MB regime that ruled Egypt in the wake of the Arab Spring.
One blogger wrote: “Are we to believe this? A man who possesses all that wealth outside the country would insist on remaining with his family in the country when a revolution [the Arab Spring] erupts against his father, instead of hastily leaving and using all that wealth to live a most luxurious life? No, he remains here to get imprisoned and humiliated, and leaves all these billions of dollars offshore!”
Recovering the money
A comment posted by Magdy Aziz on youm7 sang to a more sedate note. Mr Aziz pointed out that the leaks merely revealed that Alaa Mubarak is owner of the investment firm Panworld Investment. “This proves neither wrongdoing nor correct business. Such a verdict has to be left to the investigators and the court. Jumping to conclusion serves no one’s interest, least of all Egypt.”
Nabil Helmy, professor of international law, says that the Panama Papers leaks offer information that lacks legal substantiation, so cannot be taken for fact. When asked why Egypt was not able yet to recover funds illegally smuggled abroad, his reply was that the recovery of such money involved very complicated procedures, and that it was practically far-fetched such funds would be returned to Egypt. “The best way for Egypt to recover this money,” he says, “is to reach a settlement with the Mubarak-era figures, even if this means not all the money will be back; at least a substantial portion of it will then be recovered.”
6 April 2016