Telita Snyckers ■ World Press Freedom Day: The impact of journalists on tax justice
As the world celebrates the 30th anniversary of #WorldPressFreedomDay on 3 May, we reflect on the importance of the media in bringing transparency to fundamental inequalities – including in respect of tax abuses.
Transparency and securing tax justice
Transparency is the driving force behind a large part of the advocacy work we do at the Tax Justice Network, from disclosing beneficial ownership information and public country by country reporting, to global asset registers and the automatic exchange of information between tax administrations.
To tackle inequality, one has to understand wealth. One cannot understand wealth without understanding how money flows, and who owns what. Transparency is indispensable.
Painting a compelling picture
Information is a public good, and data is a strategic public asset. However, the mere availability of data in its raw form does little to secure real change. Transparency can only bring about meaningful change when sometimes seemingly disparate data is woven together to tell a story. For data to truly add value, it needs to be analysed, matched and mined in a way that paints a meaningful and compelling picture on how money flows, and who it flows to.
While much of this work is done by researchers, it is just as often done by investigative journalists, requiring of them to not only be skilled analysts, but skilled narrators. This is why we have spent so much time helping incubate projects such as Finance Uncovered , training journalists to follow the money, and to deal with multi-jurisdictional financial secrecy.
While we continue to advocate for ever increasing data transparency, on World Press Freedom Day we also celebrate journalists the world over.
Press coverage shining a light on abuses of power, hidden wealth, corrupt dealings and tax abuse does more than raise public awareness. It is about far more than simply acting as a source of information. Good journalism makes conversations about tax injustices accessible. It is a fundamental tool of democracy that has the power to lead to meaningful policy changes. Good journalism empowers citizens to hold their governments to account and to shape public discourse.
In 2016 journalists at German newspaper Süddeutsche Zeitung secured access to some 11.5 million documents, leaked from Mossack Fonseca (at the time, the world’s fourth largest offshore law firm.) They shared the trove of data with media partners, including the Guardian and the International Consortium of Investigative Journalists, in a scoop known as the Panama Papers.
This was a milestone in public understanding of financial secrecy and global fraud, which we reported on at the time, speaking with journalists Frederik Obermaier and Bastian Obermayer about their interactions with ‘John Doe’. You can hear about that work from Episode 55 of our Taxcast podcast and listen to their reflections a year later in Episode 64.
Impact of the Panama Papers
The release of the data itself would have done very little. The hours that 370 reporters from 100 media organisations spent unravelling the data, by contrast, did a lot.
In their report on gauging the Global Impacts of the ‘Panama Papers’ Lucas Graves and Nabeelah Shabbir unpack how the data leak explicitly impacted the 88 countries in their study. At least 16 countries had at least one form of concrete reform, like a new law or policy, to address systemic issues exposed as a direct result of reporting on the leaked data. At least 45 per cent of the 88 countries studied explicitly noted that they were reviewing the implications of the papers. This included investigations by public agencies; parliamentary inquiries or hearings; dedicated commissions or task forces; and intergovernmental exchanging of data and coordination of investigations.
The Panama Papers brought citizens together in a call for change: protesting in the streets in Panama; lobbing bananas in Iceland; throwing rocks in Pakistan.
Consequently, the data leak propelled governments to launch wide-scale and in-depth investigations. Iceland’s prime minister stepped down after his family’s interest was revealed in an offshore firm that stood to gain from the bailout of failed Icelandic banks. In Pakistan, Prime Minister Nawaz Sharif was forced to resign, barred from holding office, fined $10.6 million, and sentenced on corruption charges. Italy’s Guardia di Finanza investigated 800 Italians implicated; the Australian Tax Office investigated a further 800.
It resulted in consequences for those who peddle opacity. Sweden launched an investigation into four banks (Nordea, Handelsbanken, SEB and Swedbank); European regulators (finally) shut down Malta’s Pilatus Bank. The British Virgin Isles fined Mossack Fonseca US$440,000 for countering terrorist financing and money laundering regulations – the highest ever levied by the regulator.
But perhaps most importantly, it resulted in some systemic change. France and Colombia both restored Panama to their tax havens list. Although the US still performs poorly on the Financial Secrecy Index, it has started cracking down on anonymous shell companies. In Canada, coverage sharpened public criticism of a tax-amnesty program for voluntarily disclosed hidden assets, ultimately resulting in tighter amnesty rules.
The Lebanese parliament voted to lift bank secrecy protections, in order to avoid being blacklisted by the OECD. Mongolia and Ecuador passed a law banning public officials and their family members from owning offshore companies.
Denmark’s finance minister cited the Panama Papers to justify hiring hundreds of new employees to bolster the fight against tax fraud. Panama adopted OECD reporting standards and finally criminalised tax evasion, after having been repeatedly blacklisted.
Inevitably, transparency comes at a cost. Predictably many of the reporters who were instrumental in lifting the veil have come under fire.
A number of journalists lost their jobs in the wake of the leaks: a top editor of Hong Kong daily Ming Pao was unexpectedly fired on the same day the paper carried front-page reports on the Panama Papers. In Venezuela, a reporter for regime-friendly outlet Últimas Noticias was fired for working with the International Consortium of Investigative Journalists.
There are more than a dozen cases in which journalists or news organisations were threatened or restricted. In China censors instructed outlets to delete articles related to the Panama Papers. The Communications Minister in the Democratic Republic of the Congo publicly warned journalists to be ‘very careful’ about reporting on the data. Finnish tax authorities threatened to raid reporters’ homes to seize documents.
In Malta, the brave anti-corruption campaigner and journalist Daphne Caruana Galizia was killed by a car bomb; and in Slovakia, Ján Kuciak and his fiancée were shot to death. Both journalists had been working on the Panama Papers in particular – and on speaking truth to power in general.
Progress lost in the EU
One of the biggest impacts of the Panama Papers was kicking off a process that lead to EU countries finally establishing beneficial ownership registers and to various degrees providing public access to these registers.
The public beneficial ownership registers had the potential to deliver the type of transparency that had made the Panama Papers so impactful but without the need for journalists to take high risks and pay high prices for it. That progress however was short lived.
The European Court of Justice made a baffling decision late last year to ban public access to beneficial ownership registers, effectively barring EU governments from using a powerful transparency tool that was largely a response to Panama Papers. You can read more about this decision and our analysis of the consequences here.
What this now means is the EU is once again dependent on the brave work of investigative journalists to bring vital transparency to wealth and money flows in the EU.
Transparency and democracy
Joseph Stiglitz – recipient of the Nobel Prize in Economic Sciences – so rightly said, “A free press not only make abuses of governmental powers less likely, they also enhance the likelihood that people’s basic social needs will be met. Secrecy reduces the information available to the citizenry, hobbling people’s ability to participate meaningfully. Essentially, meaningful participation in democratic processes requires informed participants.”
The Panama Papers may arguably have had the biggest impact on the public imagination, but others like Luxleaks and the Pandora Papers play an equally important role in changing the landscape for the better.
What all of these data leaks have in common is that they only shed light and bring about change because of the work investigative journalists do to unpack the data. The data only becomes meaningful when the media weaves data into compelling narratives that speak to our collective need for justice.
It is impossible to address tax injustices without transparency. And it would be impossible to secure transparency without the unwavering work of investigative journalists the world over.
Comments • 1
A government is obliged to collect money from the public in order to provide a necessary and useful service to its citizens–but how can it do this without causing opposition and offence? Everything that its business-minded and working citizens do, should be to their advantage alone, but when this causes others to become disadvantaged the balance between the two needs badly to be examined and alterations in the tax regime to be introduced so as to “level the playing field” or make our living in a more socially just society. Taxation is not simply about national incomes but also about the control of national ethics.
Yet nobody (except for a few inspired extremists) seem to care about changing our tax system for achieving this idealistic and ethical objective. Yet there is an obvious way for the government to collect sufficient income so as to not need to tax anyone else, but only to take what is its responsibility to take in order to make us all living in a socially just environment.
I am referring to the advantages that a person who has rights to the bounty that a site of useful land or other natural resource provides or has the potential to provide, (when that site is held unused for purposes of speculation in its growing value). The proposal by Henry George in 1879 in his classic book “Progress and Poverty) and later supported by a number of idealistic but rather impractical followers, has never been taken seriously by the more powerful governments. They all find it too hard to remedy the harm that more regular and traditional taxation creates. No doubt that a tax on land values would cause a large number of landowners to rebel against it and this is justified because as capitalists they regard this ownership as property that they can rightfully exploit.
However when we consider the amount of harm and poverty caused when the opportunities that land provides when it is properly used, there needs to be a way for the better sharing of this right among all of the population in a fairer and juster way. The alternative to land value taxation is through land trust councils, where the land is owned by a governing body which is empowered to collect a lease fee on all those who occupy a useful site of it.
When a property is put up for sale, the land trust council (as a part of government) should be empowered to purchase that part of the real estate or site that is the land. It would do this initially by a loan and subsequently by the income that it receives as lease fees after a significant amount of land comes under its jurisdiction. This regime would need a lot of effort to introduce but it would also allow other taxation to be eliminated with the release from employment of tax officers and the need for their re-employment as administrators of the leased sites instead.