The recent massive financial document dump, dubbed in the press as the Panama Papers, reveals a global pattern of tax avoidance—and worse. In Monday’s episode of the award-winning investigative series Four Corners, Marian Wilkinson delves into some of the documents affecting Australian taxpayers.
Attentive viewers would have noted that about midway through the welter of documents flashing across the screen, a spreadsheet showed row after row of references to the Port Vila offices of the now-defunct GT Group, owned by the very colourful Geoffrey Taylor.
The Vanuatu Financial Services Commission reports that the company, which was registered in 2001, was removed from the business registry only two years ago, in March 2014.
Mr Taylor was the subject of a number of investigative reports centering around an arms shipment, allegedly between North Korea and Iran, in which Geoff and his son Ian Taylor appeared to be unwittingly enmeshed. Further accusations arose that they had facilitated—again, they claim, unwittingly—the laundering of tens of millions of dollars for the infamous Sinaloa drug cartel.
The practice that brought the two Taylors under such close scrutiny has to do with operating shell companies—holding companies used to mask the actual owners, who are referred to by the Financial Action Task Force as the ultimate beneficial owners, or UBOs.
You might recognise the Financial Action Task Force. The FATF, as they’re known, is the group that recently landed Vanuatu back in hot water when we failed to live up to our anti-money laundering responsibilities.
And some people might remember Geoff Taylor as vice president of the European Bank between 1997 and 2002.
You might recognise the European Bank, too, because it was mentioned in a Suspicious Transaction Report to the Vanuatu Financial Intelligence Unit that the Public Prosecutor alleges was part of last year’s bribery scandal. According to testimony during the politicians’ trial, money reportedly paid for a sale of shares in the European Bank entered a PITCO account. This money, the Public Prosecutor alleges, provided the funds used by Moana Carcasses to bribe over a dozen MPs.
The matter is still before the courts at this time. Local businessman Tom Bayer is facing charges of complicity to bribery. His case was separated from the others’ because an acquittal of the politicians would have rendered the charges invalid.
We’re not saying that anyone had done anything illegal. We are suggesting that, right now, the global financial regulation and reporting regime is insufficient in many ways, especially because it allows bad people to sully others with their misdeeds.
Every country has a right to know who’s investing and doing business within their borders. Not just their delegates, but those who ultimately hold the strings. That is not always the case today, and those who trade—albeit legally—in ghost directorships… well, they still run the risk of fronting for some very unsavoury characters.
It’s no secret that Vanuatu’s financial sector—along with that of many other countries—has contributed to this latter-day Augean stable. (This is the mythical stable so full of, er, muck that Hercules had to divert an entire river to wash it clean.)
It may well take a herculean effort to clean up the world’s finances sufficiently that money launderers and terrorists are starved of financial resources.
As one local observer remarked, it would also help if we recognised the contribution of numerous wealthy countries to the obfuscation of ownership and hiding of wealth. One of the most notable names to emerge from the Panama Papers was the UK Prime Minister’s own father. While David Cameron was busy campaigning against money laundering, his own da was taking advantage of the perks.
Cleaning up Vanuatu’s financial sector is something everybody agrees needs to happen. There are still real differences of opinion about how the cleanup will come about. But one thing is clear: there needs to be an accounting.
The Daily Post will be looking in more detail at the Panama Papers, and will report further on the matter.