Since 2011 over 4,70,000 people are killed in Syrian civil war which is initiated by its own government and over a billion people are living in poverty on earth that is like 1 in every 7 individual is living without basic amenities like food and drinking water. Now it sounds a bit preposterous talking simultaneously about Syrian Civil war and global poverty but here I want to build a nexus between both, by taking on apparently the dark side of the financial world i.e. offshoring companies.
WHAT ARE OFFSHORE COMPANIES?
An offshore company is a company which is located or based outside nation’s boundaries to pursue various financial, legal and tax benefits and it is totally legitimate to have offshore company but mostly these companies are formed for doing tax evasion and black-market operations. And this is further supported by offshore financial centres (OFC) which are formed by tax havens like Switzerland, Panama etc. which provides the corporate and commercial services to the offshore company and facilitates the investment of the offshore fund. We can further categorize this in the form of a shell company, which is a corporation without existing business operations or significant assets, it exists only on paper, and there is no employee, no office. You don’t necessarily need to be a millionaire or need finance experts in order to set up a shell company instead of that you can create your own shell company online just in the matter of minutes and you can also park your illegal money there, you will even get your own bank account and credit card which can be used anywhere in the world without revealing your identity because everything will be based on the company name and not yours. it’s not necessary to go online if you have a big chunk of money then you can use different methods.
WHO ARE BEHIND OFFSHORE COMPANIES?
Well, these companies are incorporated with the help of shady law firms which operates through offshore tax havens. These type of law firm plays the role of literal manufacturer of the companies by producing and selling shell companies. For.eg In case if you want to buy a backdated company which was incorporated in the year 2005 which has fulfilled all the requirements of legal registration. Well, there it is, you pay the price and be a proud owner of an 11-year-old company by bypassing all the lengthy registration and incorporation process. And there will be a nominee director of your company who is a real human being but he will be the person planted by your very own shady law firm. He will appear on all the paperwork of the company but your identity will be not be disclosed anywhere except to the law firm and again this is totally legitimate in those tax haven where your company will be based. Well, Warren Buffet is the director of 7 companies but your nominee director can be the director of as many as 10000 companies. You can set up a shell company with as low as $900 in investment. All the money sent to these tax havens by different money laundry channels.it is estimated that there are around 20 million shell companies around the globe.
PANAMA PAPERS
2.6 terabytes of data, 11.5 million documents and more than 214000 shell companies were revealed in Panama papers. The size of information was 160 times bigger than Wikileaks.it is called Panama papers because the information leaked was from the Panamanian law firm Mossack-Fonseca which is the giant player in the world for setting offshore entities. A whistle-blower named John Doe reached the German newspaper Suddeutsche Zeitung, In order to research and report on the information the newspaper reached out International Consortium of the Investigative journalist (ICIJ) and further ICIJ contacted 400 journalists from over 46 countries for extensive and authentic investigation. And after almost a year of investigation, they discovered that a Panamanian law firm named Mossack-Fonseca had helped their clients hide taxable income from foreign governments, avoid international sanctions and even launder potential illegal funds. Mossack-Fonseca was able to do this by creating the “shell companies” for their clients in the tax-free haven like Panama. Panama paper reveals that current and former heads of states, Government officials, sports and entertainment celebrities, business people, hardcore criminals, Drug dealers were clients of Mossack-Fonseca. One of the largest reveals in Panama paper is Prime Minister of Iceland, Pakistan and the United Kingdom, Saudi King, Russian president Vladimir Putin, President of China and Argentina, talking about India there is DLF chairman KP Singh, Amitabh Bachchan, Harish Salve etc. The next few months of disclosures are expected to uncover the tangled web of illegal banking among the world’s most powerful people.
OFFSHORE VICTIMS
Mossack Fonseca also worked with Rami Makhlouf, a cousin of Syrian President Bashar Al-Assad who practically controls the Syrian economy and he is a big reason for Syrian crises. After Syrian government initiated the war against its own citizens, US and UK imposed the sanctions on Syrian Defense companies but the companies were able to raise the funds through Shell companies, which made them buy air-fuel and paying off Syrian soldiers which eventually resulted in the brutal death of thousands of innocent Syrian citizens. In Uganda, a company that wanted to sell its oil fields, paid off Mosssack-Fonseca to avoid $400 million dollars in taxes and for the poor country like Uganda, it means a lot, some of the government hospitals in Uganda do not have access to as basic as scissors, cotton balls, beds and other basic medical equipment. According to Tax Justice Network, Individuals around the globe are hiding around $32 trillion dollars through shell companies, to give you a perspective this is more than the GDP of United States, China, India, and Germany combined.
ROAD AHEAD
This reveal was just a tip of the iceberg, there are many law firms like Mossack Fonseca operating around the globe. Icelandic people had done their bit by forcing their prime minister to resign, like that people need to show their anger and question the powerful by demanding transparency in order to create an equal world. According to Oxfam, 62 people own the same wealth as half of the world. So we need an urgent action to tackle extreme inequality crises that threaten to undermine progress made in fighting global poverty. There is a need to ban these tax havens and forming uniform law across the globe.
Rohan Sharma
You can certainly see your expertise in the work you write. The world hopes for even more passionate writers like you who are not afraid to say how they believe. Always go after your heart.