The German newspaper Süddeutsche Zeitung has published the names (link in German) of wealthy Germans who were or are directors of companies in Panama, a country known as a tax haven. The directors included families behind major automakers, banks and businesses, many of whom denied keeping funds abroad for tax purposes or attributed the actions to now-deceased relatives.
This is a particularly embarrassing time for Germany’s elite to have their offshore investments exposed. Their country played a leading role in Europe’s bungled plan to rescue Cyprus from default by taxing bank depositors, because it didn’t want Europe to be bailing out a financial system stuffed with tax-evading offshore deposits, especially from Russia.
The newspaper relied on a database of Panamanian companies created five years ago by Daniel O’Huiginn, a British coder, whose project has helped call attention to offshore money not just in Germany, but in France as well, where an associate of former President Sarkozy was identified as a director of Panamanian companies.
Tax havens like Panama function not just because of low taxes but because their laws allow companies to keep their owners secret, or to use “nominee directors” to disguise who actually controls a company. (It’s not just Panama or the Cayman Islands; US states like Delaware offer this service as well.) The idea, of course, is that if you transfer money to a company you own in a tax haven, it’s nearly impossible to show that you control it. Creditors can’t track you down, and neither can the tax man.
But in 2008, Panama put its company registration information online, a rare move. You could only search by company name, making it difficult to identify individuals. O’Huiginn scraped the data and created an alternative database that allows you to do just that. In the process, he found the tracks of arms dealers, fraudster billionaires and associates of Saddam Hussein. This was important window on off-shore money in Panama—there’s even a tutorial to teach journalists how to look for people there.
This isn’t a guaranteed way to stop tax avoidance—Panama still allows nominee directors, and it’s safe to say that people who wish to keep their ownership of companies there a secret are switching to this method of control. But it was a small victory for transparency; somewhat poignantly, it seems the late hacker-activist Aaron Swartz was interested in the project.