Papier-mâché papers: a sideways take on Panama Pastiche

First published in, April 2022

The story to nothing came and went in a week. Shock-horror headlines one weekend, no mention the next. DSC Metropolitan has some claim to experience in defending tax fraud; we dismissed the whole issue a couple of months back:

They said [anti-money laundering regulations] would stop planes flying into buildings but it’s all about controlling us and collecting tax. Shocking how little has come out from the Panama Papers after the initial flurry of Icelandic resignations. Cameron didn’t need his father, as is turned out, to embarrass himself financially.

For Cameron read Blair. The Blairs bought a company that owned the property. Stamp duty wasn’t applicable. The idea that politicians should be required to make voluntary tax contributions is an absurdity. There is no moral dimension to tax planning. You can’t have human rights and an ill-defined spirit of poorly drafted laws. Legislative weakness has enabled a lazy power-hungry UK executive, ethically if not logistically on a level with 1930’s Germany. Democracy relies on a strong judiciary resisting the government’s obsession with trains running on time. Retrospective legislation crippled anyone who made legitimate investments with tax consequences, literally destroying those who committed suicide before 5 April 2019 so that tax liabilities would fall away. The deaths were sickening but the Revenue’s denials (“the Revenue are not counsellors”) reflected intolerable callousness from servants funded by the victims’ tax payments.

Why is any of this relevant to the Pandora damp squib? The offshore story picked up pace with the Lichtenstein Disclosure Facility in 2009, intended to be a one-off solution to improve Lichtenstein’s image. It was structured so that you moved assets into Lichtenstein and then used the LDF to own up globally. In fiscal terms it was a huge success, but the PR backfired, being seen as too generous to wealthy cheats. Populism gives you hanging, the Daily Mail, Trump, and sooner or later a holocaust.

What do we mean by “offshore funds”? Wikipedia’s article on the Pandora Papers defines it as funds held “outside the country where the money was made”; a good enough definition. “Offshore funds” has implications: funding terrorism, laundering criminal proceeds, tax evasion. There is a hierarchy: drug money, gunrunning, serious crime organizations, activities reflected in the dark web, and the predictable dictators hiding graft. We expected to find swathes of upper-middle class British professionals and aristocratic echoes of eighteenth-century sugar.

The proceeds of crime money seems to be far less than expected, so it isn’t even news. Perhaps it’s been embargoed pending dawn raids. I doubt it. If there were stories, they’d be doing the rounds in the trade. When did this government worry about fair trials? Ask Postman Pat. If he’s banged up, try his cat.

The headlines are avoiding tax and enabling money laundering. If there are tax disclosures, and if we get to HMRC first, then our client’s case will benefit from voluntary disclosure. Revenue COP(9) and Worldwide Disclosure (tax fraud) inspectors just want to get the job done. Where are all the cases? My firm’s tolerably well networked. None of our associates have seen any spike in offshore disclosures. That’s because there isn’t one.

There was more of the same when we read about the Credit Suisse anti-money laundering failures disclosed in February 2022 in the Guardian. It was a good article no doubt well-researched but there has been little follow up. Good journalism is presumably about selling papers and the headlines are fabulous: “Massive leak reveals secret owners of £80bn held in Swiss bank; Whistleblower leaked bank’s data to expose ‘immoral’ secrecy laws; Clients included human trafficker and billionaire who ordered girlfriend’s murder; Vatican-owned account used to spend €350m in allegedly fraudulent investment; Scandal-hit Credit Suisse rejects allegations it may be ‘rogue bank’”, but there has been scant news since.

The big headlines are only of so much interest to the ordinary taxpayer who might have strayed from legitimate avoidance, the new grey territory of morally unsound avoidance, or outright evasion. Where are the serried ranks of middle-class enemies within or offshore without evading their taxes in their billions? What we are seeing is a trickle of pathetic cases like the Swiss Banker who claimed a business expense of £165,000 taking important clients to strip clubs. The headline was “banker jailed over strip clubs on expenses”. Reading the article in more detail, the jail sentence was more likely to be for the £6.4m in illicit side-deals but that isn’t quite such a good headline. The article becomes at once allegorical, how the fake news in the headline is remembered long after the facts in the text are forgotten, and prurient caricature. If there’s a message, strip clubs on expenses might not be illegal but it isn’t a good look when defending your case for fraud, so if the Revenue are onto you, appoint a disclosure specialist, and go early.

The Pandora Papers data was obtained by the International Consortium of Investigative Journalists (ICIJ). The Guardian and BBC Panorama have led the investigation in the UK. Leaving aside structural concerns about state-funded media, for all the tax evasion headlines it is reminiscent of Sir Humphrey’s aphorism in Yes Minister’s Open Government:

Bernard: “But I thought we were calling the White Paper “Open Government”.”

Sir Humphrey: “Yes, we always dispose of the difficult bits in the title. Does less harm there than in the text.”

Sir Arnold: “It’s a matter of inverse relevance. The less you intend to do about something the more you have to keep talking about it.”

Is that it? State paranoia about missing millions. A posse of democratic governments sponsoring the hacking of private data, perhaps illegally. Nothing found. Questions asked. Create headlines that imply industrial tax evasion and what have you got. Gulf millions being invested in London, perfectly legitimately, using offshore vehicles which offer privacy now blown illegitimately. Every time I come up against the state, I wonder who the crooks are. If they can’t rule competently, and I mean come on, then rule by terror. Machiavelli taught us it’s better to be feared than loved. What’s Orwell’s denouement? The odd fish and chip shop under-declaring a couple of deep-fried pizzas, or the state itself, headed up by some of the most egregious politicians in a century.

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