{"id":32830,"date":"2021-10-05T08:11:53","date_gmt":"2021-10-05T04:11:53","guid":{"rendered":"http:\/\/www.mauritiustimes.com\/mt\/?p=32830"},"modified":"2021-10-05T08:11:53","modified_gmt":"2021-10-05T04:11:53","slug":"inside-the-pandoras-box","status":"publish","type":"post","link":"https:\/\/www.mauritiustimes.com\/mt\/inside-the-pandoras-box\/","title":{"rendered":"Inside the Pandora’s Box"},"content":{"rendered":"

Editorial<\/span><\/span><\/p>\n

The International Consortium of Investigative Journalists (ICIJ) released on Sunday 3rd october details from a review of nearly 12 million files leaked or hacked from 14 management companies and other service providers doing business in 38 different jurisdictions in the world, including one locally based. The release concerns offshore management companies and trusts in fiscal paradises shielding the investments of the rich and powerful in luxury mansions, exclusive beachfront property, yachts and other assets for the past quarter of a century.<\/span><\/p>\n

In 2017, the so-called \u2018Paradise Papers\u2019 consisting of some 13.4 million documents, disclosed that several well-known personalities and big companies had funds belonging to them placed in what are called \u201ctax havens\u201d, notably places in different countries of the world which have low taxes. A few years earlier there was a similar disclosure called \u2018Panama Papers\u2019 from Panamanian law firm Mossack Fonseca, which led to widespread outrage that so many political and other personalities were hiding away their money abroad whereas sharp income and wealth inequalities were rife in their home countries. Both were leaked from the dealings of an individual law firm whereas this fresh batch is far wider, hitting at the global elite clients of 14 different law and management firms. \u201cTogether, these 14 firms have helped tens of thousands of clients from more than 200 countries and territories \u2014 including some notable and controversial figures \u2014 access and exploit the secrecy offered by some of the world\u2019s most notorious tax havens,\u201d says the ICIJ.<\/span><\/p>\n

With this breadth and scope, this year’s \u2018Pandora Papers\u2019 unmask then the real owners or beneficiaries of the offshore accounts and hidden assets of some of the world\u2019s richest and most powerful people, including world leaders, monarchs, presidents, politicians, generals, billionaires, celebrities and drug dealers. News agencies inform us that ‘more than 330 current and former politicians are identified as beneficiaries of the secret accounts’. These include former UK Prime Minister Tony Blair, Czech Republic Prime Minister Andrej Babis, and associates of Russian President Vladimir Putin. Also implicated in the leak, which shows how trillions of dollars have collectively been shielded in hidden dealings, are Jordan\u2019s King Abdullah II, Kenyan President Uhuru Kenyatta, and Ecuador’s President Guillermo Lasso. Many of the accounts were designed to evade taxes and conceal assets for other shady reasons.<\/span><\/p>\n

The \u2018Pandora Papers\u2019 investigation dug into accounts registered in familiar offshore havens, including the British Virgin Islands, Seychelles, Hong Kong and Belize. But some of the secret accounts were also scattered around in trusts set up in the US. The aim of the account holders is to minimize the amount of tax they pay on such amounts, under advice from experts in the field. As of now, only one name has been cited locally: one of the two voluntary administrators of Air Mauritius, Sattar H Abdoula for his investments in the British Virgin Islands. More names will apparently come out in the days to come. Mr Abdoula has put up his defence by saying that he only took out an insurance policy sold to him by Deutsche Bank.<\/span><\/p>\n

No one should condone tax evasion, which is a deliberate action taken by people with income and property to avoid paying the fair amount of tax due by them or to avoid questions about the sources of such wealth accumulation. Unlawful action of this sort shifts the burden of public expenditure on those who comply with the law. On the other hand, once certain people have paid the due amount of tax on monies belonging to them, they take action by lawful means to avoid having to pay taxes again on such amounts. This is called tax avoidance or \u201coptimisation\u201d, not evasion. The false impression is sometime created in the public mind that tax avoidance and tax evasion are one and the same thing and that this is facilitated by the so-called ‘tax havens’ like Mauritius, Seychelles, the Caribbean islands, Panama, Bahamas, etc.<\/span><\/p>\n

Rather embarrassingly for those who have tirelessly attacked such distant havens, the leaks show unambiguously that the global centres from which the funds actually go out in the first place into the other low tax jurisdictions are much bigger places like Delaware and New York in the US, London, Luxembourg and Switzerland in Europe. We should be careful not to join cohorts of moralising accusers to bring our financial jurisdiction at the receiving end of unfair accusations, particularly at a time when we are still not out of the woods with regard to the exit from the FATF increased monitoring (grey list) status.<\/span><\/p>\n

Mauritius created an international financial centre in the late 1980s in response to the need to diversify the economy and the rapid growth of the sector has provided higher value jobs and promoted skilled competencies. However by its very success, we have certainly generated some envy from other competing, more established abodes and we would do well to remember that we have to remain on our toes, scrupulous with the respect of international norms and best practices, irrespective of whether we feel they are fair or not, while keeping an eye open to disinformation spread by other players. While we certainly need to look at and investigate evidence of shady or untoward dealings of locals in secretive abodes, let us not throw out the baby with the bath water.<\/span><\/p>\n

\n

* Published in print edition on 5 October 2021<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

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