Panama Papers: ‘Schäuble largely ignored shell companies’

The Panama Papers scandal has led German Justice Minister Heiko Maas to pledge the creation of a transparency register. However, the Greens’ finance expert Gerhard Schick told EURACTIV Germany that this is not a new idea and that the issue has been largely ignored despite evidence of wrongdoing.

Dr. Gerhard Schick (Alliance 90/The Greens) is deputy chairman of the Bundestag’s Finance Committee.

There seems to be a lack of surprise at the extent to which shell companies have had a hand in this affair. Even the Ministry of Finance commented that: “This is not entirely surprising”. Does this surprise you?

It is indeed not surprising that there are hundreds of thousands of shell companies and that Panama has been implicated. However, it is amazing that a whistleblower came forward from such a secretive industry and that now we have such detailed records of companies and transactions, which will allow us to gain an understanding of how it all works. It’s going to allow us to understand the division of labour as well.

We also see the same thing: companies say what they are doing is legal, but that illegal transactions are carried out elsewhere. The leaked documents have provided us with politically valuable information that will allow us to establish who was involved and who has to answer for it now.

Heiko Maas has responded by promising to establish a transparency register. But the problem with this is that such a register would only apply to companies based in Germany, so Berlin would have to hope that tax-havens like Panama follow suit. What would be needed for this to happen?

The Justice Minister is a good bluffer. The idea of a transparency register is not a new one, as the EU is actually preparing to launch its own as we speak. The government used to be opposed to the notion of such a register, so it shouldn’t be giving the impression that it has been a supporter of it all along.

It is a good thing that Europe will now have a means by which to stop shell companies. Even in Germany, identifying all the beneficial parties behind companies is not so easy.

Germany plans new tax law on back of 'Panama Leaks' revelations

Germany is planning a new national transparency register that will oblige offshore companies to disclose the identity of their owners, Germany’s Sueddeutsche Zeitung reported on Monday (4 April).

What measures does the EU have to take to crack down on tax-havens?

It needs more beyond just the transparency register, because it alone won’t have an effect on shell companies in countries such as Panama. Therefore, a reference point has to be set in Germany and elsewhere in Europe: the banks. That is why we propose that banks that make monetary transactions with companies whose owners are unknown or unclear, be hit with penalties. Again, the government has not wanted to do this for some time.

How would this work?

The US already has agreements in place that punish banks that do not comply with transparency rules. If both economies would exert pressure and make it clear that business will only be done with companies that are transparent, then this would have a significant impact globally.

In 2014, a large-scale international project was launched between 50 countries in Berlin, in which the automatic exchange of information about foreign bank customers would occur between tax authorities. But it will not come into force until next year…

This information exchange doesn’t, in reality, help combat shell companies, because it simply wouldn’t affect them. The problem of a shell or letterbox company is that its owner’s identity is often difficult to establish. So long as illegal transactions carried out by such companies go unchecked, data exchanges of this nature will count for nothing. The offshore leaks also showed that tax evasion on international investments is also going on, so we have to improve cooperation on international financial supervision.

Iceland PM steps down after Panama Papers tax scandal

Iceland’s Prime Minister Sigmundur David Gunnlaugsson became the first major casualty of the Panama Papers revelations, stepping down yesterday (5 April) after leaked files showed his wife owned an offshore firm with big claims on the country’s collapsed banks.

But Germany has still not acted…

What Finance Minister Wolfgang Schäuble has done has only come about because of international pressure and he is yet to develop an anti-money-laundering strategy for Germany. It’s significant that German financial supervision has only kicked in since the Panama Papers were leaked and the German banking system has come under scrutiny: far too late. A financial authority that has no clue what involvement banks have in money-laundering, is not fit for purpose.

Schäuble must tell the financial supervisors not to go easy on the banks and they must establish who is involved in illegal transactions and take the necessary steps to put a stop to them. We know that the federal government has long had evidence of shell companies. But up until now, Schäuble has paid little attention to the issue.

Record-breaking leak exposes offshore holdings of politicians and elites

The hidden wealth of some of the world’s most prominent leaders, politicians and celebrities has been revealed by an unprecedented leak of millions of documents which show the myriad ways in which the rich can exploit secretive offshore tax regimes.

Astonishingly, the German Tax Union (DSTG) estimated that tax fraud costs the country €50 billion in revenues every year.

With money laundering, it’s different. If international shell companies have it easy here, then laundered money is going to flow this way, which will eventually fund and support the drugs trade and other illegal activity.