Alaco

13.04.2016 | Panama leaks - the new normal?

The "Panama papers" affair is only the latest in a series of major confidential information leaks to have made headlines around the world – and it is unlikely to be the last.

The mass of information leaked from Mossack Fonseca looks set to continue to generate global media interest for weeks to come, even if the specific implications of the revelations are often less clear cut than they may immediately appear.  As the disclaimers to many articles on the subject are at pains to point out, ownership of an offshore company, even one in a notorious jurisdiction for tax evasion, is not illegal.  Nevertheless, the public outrage triggered by the affair has cost Icelandic Prime Minister Sigmundur Davíð Gunnlaugsson his job and given UK Prime Minister David Cameron an uncomfortable week.  More politicians and public figures could experience similar fates in the coming years, as the Panama leak is part of a growing trend of major private information dumps attracting international media attention.

The rich recent history of data leaks arguably began with Wikileaks in 2010 and continued through the Edward Snowden revelations and the various projects overseen by the Washington DC-based International Consortium of Investigative Journalists.  Along with the Panama papers, the ICIJ has led a series of leaked data-driven journalistic exercises, which have included the exploitation of similar troves of data from Luxembourg and Switzerland, among other jurisdictions.  While leaked data has often formed the basis of important campaigning journalism – for example the work of organisations such as the NGO Global Witness or the Daily Telegraph’s reporting of the MP expenses scandal in the UK – the recent cases have provided the basis for a large number of stories spanning a variety of subjects.

One of the reasons for this new trend is technological change.  Terabytes of data can be carried out of an office in an external hard drive the size of a book, and modern database software greatly simplifies the analysis and use of such caches.  More interesting, however, is what appears to be the emergence of an interconnected network of actors across a wide number of global jurisdictions willing and able to collaborate on the analysis and publication of these caches.

The Panama documents were reportedly first passed to the Suddeutsche Zeitung, which worked with the ICIJ to co-ordinate its efforts with around 250 other media organisations over the course of a year.  This was accomplished with some sophistication – the initial source of the leak is yet to be publicly named and none of the big stories broke before the jointly-agreed embargo expired.  The group can now continue to manage the release of information to retain public interest over the coming weeks.

Now that this network exists, the only upper limit to the amount of further such disclosures we may see is the number of disgruntled employees of banks or corporate services firms willing to follow in the leakers’ footsteps.

There is some irony in the idea that the technological forces which allow the easy movement of capital between international jurisdictions also promote the information flows which expose these transfers.  But the more prosaic truth is that mechanisms have long existed to assist in the concealment of personal wealth.  The current interest in offshore structures appears to reflect a prevailing environment in much of the West in which wage growth is stagnant and public provision is being rapidly wheeled back.  In this context, the perceived unfairness of a system which allows the wealthy to elude financial obligations that are unavoidable to the less fortunate is starkly drawn.  But this is unlikely to be foremost in the public mind when – if – these countries return to a sustained growth trajectory.  Until then, the risk that yesterday’s private financial arrangements could become tomorrow’s headline news will remain very real.