Data exposure is when data is left wide open for anyone, including those without access, to see and use. There are two types of data exposure: data breaches and data leaks. Data breaches happen when cyberattackers attack to gain access to sensitive data. On the other hand, data leaks are usually the result of either an individual’s intentional or accidental actions like weak data security practices.

One of the most infamous data leaks was the release of the Panama Papers, which were first exposed in 2016. As exposed by independent investigative journalism nonprofit International Consortium of Investigative Journalists (ICIJ), the Panama Papers contained 11.5 million leaked files (equivalent to 2.6 terabytes) and an additional 1.2 million files were also published two years later.

Discovery

In 2016, a whistleblower under the pseudonym “John Doe” blew the whistle on the powerful Panamanian law firm Mossack Fonseca, regarding how its clients had obscured their wealth and participated in shady business dealings. Founded in 1977 by Jürgen Mossack and Ramón Fonseca, the firm offered offshore financial services and helped its clients hide ownership of assets.

John Doe published a statement in May 2016, citing income inequality as a reason for coming forward. Doe had given encrypted documents to the German newspaper Süddeutsche Zeitung (SZ), who forwarded the files to the ICIJ. In his statement, Doe outlined that shell companies in the offshore finance industry were helpful in committing crimes more nefarious than just evading taxes. The whistleblower also admonished various global governments for not doing more to protect genuine whistleblowers as well as allowing corporations to restrict their transparency to the public. In all, Doe’s reason for making the Panama Papers public was to address the injustices caused by legal loopholes and filthy riches.

Scandals

The Panama Papers uncovered various crimes of prominent individuals, including tax evasion and fraud as well as illegal offshore shell company transactions. 

An infamous client of Mossack Fonseca revealed in the leak was the investment trust set up by former British Prime Minister David Cameron’s father. Cameron had shares in the trust which he sold before becoming prime minister. However, the issue was very controversial because Cameron’s father’s trust never had to pay taxes on its profits in the United Kingdom (UK) by avoiding tax laws. 

Many other similar cases happened, including the involvement of powerful politicians like former Pakistani Prime Minister Nawaz Sharif. The Panama Papers revealed that Sharif and his family held multiple British and other foreign holdings offshore, and evaded taxes. An investigation by Pakistan’s Supreme Court sentenced Sharif to prison and forbade him from holding office again in his lifetime.

Aftermath

At the time in 2016, the Panama Papers leak surpassed all other data leaks such as Cablegate, Offshore Leaks, and Swiss Leaks. 

In the United States, two U.S. residents, Harald Joachim von der Goltz and Richard Gaffey were sentenced to more than three years in prison. Von der Goltz had used Mossack Fonseca to participate in wire fraud, tax evasion, and money laundering. Gaffney was an American accountant who helped clients, including von der Goltz, hide their assets by forging documents.

On a grander scale, nations including Germany and Norway, in addition to many more, recovered significant lost tax revenue as an effect of investigations opened by the Panama Papers. The Panamanian government agreed to share information on foreign taxpayers with other countries. New Zealand strengthened its trust laws to decrease “foreign trusts” from tarnishing its image. The United Kingdom also passed laws regarding the criminality of tax evasion hidden by lawyers’ clients, likely because a string of British politicians was implicated in the Panama Papers leak. American company owners are also now mandated to divulge their identities to the Department of the Treasury after the passing of the Corporate Transparency Act by the U.S. Congress.

Conclusion

Even after five years, the effects of the Panama Papers leak are still felt by countries around the globe that have tightened their laws to combat illegal financial activities.

In the following years, the SZ also obtained more leaked files which they shared with the ICIJ. One of them, published in 2017, is the Paradise Papers. The Paradise Papers were similar to the Panama Papers in that they also exposed the financial crimes of numerous people and over 100 countries in 13.4 million leaked files. The Paradise leak originated from Bermudan offshore legal firm Appleby. Sequel to the Paradise Papers, the ICIJ reported exposés on the Pandora Papers in October 2021. Similar to the Panama and Paradise Papers, the Pandora Papers unveiled secret offshore accounts and corruption of billionaires, celebrities, and prominent government officials. In addition, the Pandora Papers culminated in 2.9 terabytes of data, exceeding both the Panama and Paradise Papers. Also, the Pandora Papers uncovered financial secrets of the wealthy most expansively, reporting on leaked data from 14 different companies.

Hidden things have a way of coming to light. Through the power of investigative journalism, the global financial system needs to be revised to prevent more future incidents of people with means taking advantage of the system.

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By: Allie Chang
Title: The Panama Papers
Sourced From: streetfins.com/the-panama-papers/
Published Date: Sat, 23 Jul 2022 22:41:54 +0000

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