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June 3, 2016
The Panama Papers: The fallout from this leaked document has been explosive. The Panama Papers scandal resulted from a long and painstaking investigation by the International Consortium of Investigative Journalists. The Papers revealed information regarding offshore companies and how they have often been created as shell companies to shield the real owners from public scrutiny. Not surprisingly, offshore tax havens were hugely featured in The Panama Papers exposure.
Many of Mossack Fonseca (a law firm and corporate service provider)’s clients have been revealed as holding bank accounts in the British Virgin Islands. While it’s not actually illegal to keep money offshore, there are huge public perception and political ramifications associated with the act. In Hong Kong, public outcry was initiated by the fact that senior politicians have used unscrupulous means to evade tax and hide their money. It doesn’t help that many of the clients of Mossack Fonseca are also involved with other illegal activities.
As a result of the uproar, the Prime Minister of Iceland resigned. The Prime Minister of the United Kingdom, David Cameron, has been forced to go into detail to deny that he possessed no offshore funds. He’s had to specifically deny that he and his family benefitted from such activities (especially from the fund established and run by his late father—which was set up in Panama, and went three decades without having taxes paid on it in the United Kingdom). In Iceland, the Prime Minister Sigmundur Gunnlaugsson faced huge protests, symptomatic of the massive outrage felt by the public at the revelations that their leaders have been avoiding paying taxes in their own countries.
The fallout from the Panama papers is not just relevant to the rich and powerful. Ordinary workers can learn a few lessons from the disgrace of those who thought they were untouchable. The first lesson? Paying taxes is a necessary evil. No one enjoys it—however, there is no way to truly evade it. Even famous individuals named in the Panama Papers will no longer be able to continue to get away with the act—and maybe that’s why the revelations are striking a chord with so many people. Many have felt the desire to evade taxes—yet, haven’t. Thus, many are outraged that powerful people have the unethical and unfair ability to do so.
The second lesson? Whatever the psychology behind the Papers, the huge data breach that enabled the leak highlights the fact that every business has weak links. For example, this leak was possibly due to an insider at Mossack Fonseca. Employees would be wise to make sure they’re doing everything possible to prevent attacks from within their own organizations. They can do this by taking measures such as controlling access, educating other employees about network safety, ensuring identity and access management, and prioritizing data, as implementation of IT security now, can reduce costs, stress and suspicion later.