It raises again the need for fundamental transformation of international economic governance towards a new international economic order.
The leak reveals details about what many critical watchers of global power dynamics have known for a while – that big global multinationals and billionaires do not wish to pay taxes proportionate with the size of their wealth. We have been aware of the collusion between business and the political elite in swindling countries and their people of money needed for human security.
We have known that as rules, regulations and laws governing tax, capital controls the movement of money across boundaries, and capital has found ways to avoid the implications of this, even by setting up off-shore dealings.
The big global scheme by the rich to avoid taxation, and therefore abdicate their responsibility to ensure some distribution of wealth in favour of the poor, is a matter about which African and third world people and leaders have been talking for decades.
We have been aware that far from trickling down to the poor as promised by the guardians of global capitalism, the wealth is actually being siphoned off-shore.
The modern world and its leaders have simply not listened as study upon study showed that tax evasion erodes the very fabric of modern society’s morals.
They have been in denial or too cautious about the dark underside of a system that trumpets daily its supposed virtues in the form of democracy, human rights, good governance, transparency and accountability.
We have known also that tax havens all over the globe, controlled by powerful actors, are growing and becoming bolder in the face of deferred de-imperialisation of the world economy.
From the British Virgin Islands to Switzerland, the problem has grown and become nastier.
We have known that capital markets have grown astronomically since 1990, outstripping the global GDP more than 100 times. A large number of global multinationals, including big oil companies and banks, have balance sheets bigger than the national GDPs of countries that are expected to regulate them.
We have been concerned for a while about the growing amount of bank secrecy, the obscurity of tax havens, and the whole white-collar underworld that is expanding every year. Conferences on dirty money, cartels, financial imperialism, global coloniality and money laundering, and the resolutions taken have not had an effect on the problem. We have asked why, but with the veil of secrecy on the inner workings of cabals involved in offshore illicit business, answers have been hard to come by.
We have known it is not entirely true that the balance of global economic power is shifting from the West to the East, but that rather it is shifting to big capital wherever corporations choose to station themselves – New York, Moscow, Shanghai or London.
We have wondered for a while now just how do governments exercise sufficient control over these powerful non-state actors that have become much bigger than governments in the size of their wealth. We have been wondering just what meaning do we attach to state sovereignty when global capital has effectively a lot more power to effect its will on the world than governments can muster.
We have also known that Africa is one of the biggest victims of this cabal economics, as money made from its rich natural resources are plundered by business moguls and politicians, and have been stashed away in off-shore accounts.
The reports of the Thabo Mbeki-led United Nations African Union Panel on Illicit Financial Flows show that Africa loses in excess of R500 billion a year through illicit capital outflows such as offshore tax evasion – an amount equal exactly to what Africa needs to overhaul its infrastructure and thus rejuvenate its industrial development and create millions of jobs.
Africa has lamented this for decades, but the powerful have deliberately not listened or paid lip service to the change the world needs.
The leaked database files from the Panama-based law firm, Mossack Fonseca, that helps thousands of corporations and rich individuals set up offshore accounts, have revived public interest in the old problem the mainstream media has not been very keen to keep in the headlines. Many revelations in the past have led to huge alarm only for a short time.
This is how the world responded exactly the same day (April 4) three years ago, when the same organisation behind the Panama Papers, the International Consortium of Investigative Journalists, leaked files consisting of 122 000 offshore registrations, clients of registered companies, personal correspondence in companies’ databases, and information on banking in the British Virgin Islands.
We quickly turned our focus to leaks of diplomatic files by Wikileaks and echoed the US narrative damning Edward Snowden, and linked it to our inherited obsession with Vladmir Putin. In the process, the big problem in the centre of global power was spared our justice-hungry eyes.
Clearly, leaks have become the best way to cause global authorities to act on crimes of the global elite. They galvanise critical civil society to protest and force governments to reluctantly effect some changes. In very rare cases as in Iceland this week, important heads have rolled as a result of citizen pressure.
Leaks have also forced matters swept under the carpet out into the open.
The powerful western voices including mainstream media and analysts are right now obsessing about whether it might draw the name of Putin into this whole scandal somehow, rather than making it difficult for global corporations and moguls to live through this peacefully.
The dust will soon settle because the powerful are indeed a powerful transnational network able to influence what we debate daily. The same happened when the business elite pushed the world economy into a financial crisis in 2008.
But one hopes the leaks will galvanise the citizens of the world to take a view in favour of fundamental transformation of global economic governance.
This article first appeared 10 April 2016 on http://www.iol.co.za/sundayindependent/panama-papers-should-transform-global-economic-governance-2007340.
Siphamandla Zondi is executive director of the Institute for Global Dialogue.