Mostly a synthesis of what you'd find from other sources. The most interesting bit was adding the US context:
"One reason there may be relatively few Americans named in the documents is that it is fairly easy to form shell companies in the United States. James Henry, an economist and senior adviser to the Tax Justice Network, told Fusion that Americans “really don’t need to go to Panama.”"
Turns out that in many cases, forming a company within the US can be more secretive that forming in British Virgin Islands, Panama or the Bahamas.
> If you form a British Virgin Islands company you have to declare who you are to the person forming the company for you; if you form in Nevada, for example, you don’t… So Nevada is great because it’s much more secret than the British Virgin Islands.
I do not think Mr Cameron will stop his political activity just because Panama Papers reveal that his father was one among those who designed the system.
But what if the common folk in each nation finally realizes its national leaders have become, in essence, multinationals, just like Google and Amazon, with all that this entails regarding their actual agendas and worldview?
Agreed provided it's clear that he and his family have not profited from activities shown to be those of tax evasion as against tax avoidance. However he's attacked some folk engaged in the latter (though aren't we all in terms of following the rules to minimize our tax bill?) so he may find that difficult.
Cameron can't do much, because if he did his party would tie him up in a sack and throw him in the Thames - politically, if not physically.
The reality is that a large part of the UK's so-called service industry is based exactly on the creation and maintenance of offshore schemes of all kinds, and much of the wealth of Cameron's party backers would evaporate if the schemes were made public.
Voters are mostly too uninformed to know much about this world. But public exposure plays very badly with them, because Cameron famously said "We're all in this together" while promoting austerity at the start of the first Coalition term.
Now, even the most unaware British voters are beginning to wonder if perhaps he was being less than entirely honest.
Conveniently, it would be the easiest thing in the world to throw Cameron overboard, leave Europe - so the scams can continue - and carry on with someone fresh, new, shiny, and untainted by association, who can guarantee business as usual behind the scenes.
It's still surprising how limited the revelations have been in the UK. It's very hard to believe that more household names aren't involved - but so far we've had a hit list of minor Lords hardly anyone has heard of, some former MPs no one cares about, and Lord Ashcroft, who may not be Cameron's favourite person after he offered some unexpected insights into Cameron's hobbies as a student earlier in the year.
I have a sincere question that may sound hyperbole but worth to discuss in HN: what are the ethical/legal limits of leaks when some of the leakers are the classical media? I mean what is the difference of a movie leak (e.g torrent share) with a political leak on media? I will clarify my question to not sound radically stupid: if the Panama Papers had been published anonymously or showing cases of attacks against social liberties or illegal government activities (e.g. Snowden) it is clear, but when the media is showing documents that are not illegal per se but the illegal activities are more connected to their clients [1] I think they can be hardly sued for it.
All this was triggered by the following quote: "Using information/documentation unlawfully obtained is a crime, and we will not hesitate to pursue all available criminal and civil remedies”.
[1] Mossack Fonseca was indeed engaged in illegal activities because they obstructed the US justice over companies suspected of connections to politicians. But this was not known in advance.
> I mean what is the difference of a movie leak (e.g torrent share) with a political leak on media?
At it's most simple level: a movie leak is a social ill, breaking of the social copyright contract, and a political leak is a social good, revelation of corruptions and education.
That's a simplification of course, copyright is abused, for instance to prevent all access to the copyrighted material in some places and fair use thwarted. Political leaks are sometimes simply scurrilous and provide more heat than light.
I understand that you're simplifying, but I don't think social ill is the right word. It's more like a social good which is ill for the copyright holder. The question in that case is balancing the benefit to society against the benefits to the company which claims copyright or intellectual property. It's a social good in the sense that public domain is a social good when society can benefit, but also a deeper social good for the society which inspired and produced the copyrighted work because it allows it to be distributed to people in countries that would otherwise not have access to it. For example, perhaps the greatest weapon against anti-Americanism is American culture spread through Hollywood and other media. This would normally not be sold in areas that are hostile to American values, but leaked material penetrates the culture and reverses hostility.
This really comes down to the classic question of whether it's more important to benefit society in general or the rights of property holders. There are people who strongly believe in both extremes and lots of people in the middle. Some say that property is the foundation of freedom and we should sacrifice social good for the promotion of property and others say that the needs of the many outsweigh the needs of the few, even that property is theft of social value. Where any person might stand on these issues is complicated, to say the least.
You do not mention that the existence of property is meant to benefit the society as a whole. Copyright provides us with blockbusters. We can discuss about fair use, expiration, fines etc, but let's not pretend that STAR WARS would have happend without copyright law.
But, would those plenty of works of art were created before copying such things became incredibly easy? It seems to me that the concept of copyright became stronger over time as the ability to make money off the work of someone else became easier over time.
Sure, see all the graffiti everywhere? Laws aren't protecting that art, au contraire.
The concept of copyright became stronger as lobbying and surveillance state became stronger.
Creative people will create regardless. Creative people who have ample free time and who don't have to think about bills much, will create more and, more importantly, more accessible works. The sophisticated thing to do is to allow copying anybody's ideas¹ and give people a guaranteed income².
¹ I think plagiarism, ie not giving credit where its due, should be punished. I'm not sure if it should fall in the realm of the law though, maybe it could be kept check under social pressure.
² If it can't be universal, then make it scholarship based, subject to renewal, or something.
> See all the graffiti everywhere? Laws aren't protecting that art, au contraire.
Is that really true? I would have thought that the art itself is still copyrighted, but the artist is unlikely to pursue redress as that would effectively be giving evidence of a crime (graffiti).
I would say that copyright does indeed cover graffiti, it just not likely for the original artist to sue you for selling copies of their artwork because they also possibly illegally damaged private property. Some of the Banksy stuff brings up interesting discussions around that idea.
The lobbying part I can understand, and agree, but I'm lost on your surveillance state thing.
All those creative people with all their creativity is covered by copyright as soon as they get done being creative. In the US at least. But whether they make money from their copyrighted creativity, that's a different problem. Copyright doesn't help me make money but it helps me prevent you from making money off my work.
What I said is that it's a contentious issue. It doesn't really matter what copyright is meant to be, only what it actually is, and there are both people who belive it's beneficial to society and people who believe it's detrimental to society. The overall effects of leaked material are related but not the same as the existence of copyright. Both copyright and leaks can and do coexist, so even if copyright is a social good, leaks could still be an overall benefit to society. I would say that it's hard to argue that the ability to make and share infinite copies of something at almost no cost is a benefit to society, especially for the spread of culture, but I agree that it's damaging to the concept of intellectual property.
So this issue of leaked materials being overall good or bad is really a proxy for a deeper argument. If you're starting from the position that property rights are more important than the spread of culture and the availability of material, you can still believe that leaks are overall a social good, one which needs to be sacrificed at times for the greater good of copyright and protection of intellectual property. We have to make these kinds of sacrifices all the time, which leads to interesting situations like this.
Sometimes, the best thing for society is that laws are broken, even if those laws are essentially correct. The perfect society isn't necessarily one that always follows the rules, but one that makes the right sacrifices for the overall good. Copyright is probably the best example of this situation. Even if the laws are entirely justified, there are plenty of situations in which innovation happened because someone learned something from leaked copyrighted material.
It's tempting to believe that it's possible to create a set of rules that everyone can agree to and always create the optimal situation, but in the real world, this never happens. The real world is messy, and sometimes entirely justifiable laws have a net positive effect when they're broken.
> I understand that you're simplifying, but I don't think social ill is the right word. It's more like a social good which is ill for the copyright holder. The question in that case is balancing the benefit to society against the benefits to the company which claims copyright or intellectual property.
Copyright is a limited monopoly, granted by society, to provide incentive for the creation of content; breaking that contract is a social ill. I disagree society breaking that contract, in a bait and switch, can ever be a social good.
The general rule in journalism seems to be that if the information is sufficiently public and there is a sufficient public interest in it, it should be reported on as if it were published legitimately. There's an obvious trade-off between public interest and confidentiality and privacy concerns, of course.
I'm not sure what the legal situation is in every country but as I understand it, similar trade-offs exist in German law (which otherwise has a very strong stance on privacy).
Isn't there sufficient public interest in having culture available to everyone? I think even the CIA used (or tried to use)culture to overthrow governments and political systems around the world. If Hollywood movies are culture/art is debatable, ofcourse, and maybe that's where lies the problem. People are confusing commercial and political agendas with culture/art, and that's no accident...
I'll try to give the simplest possible explanation that tries to be value-neutral and avoids getting bogged down in an ethics debate: copyright. Movies are intellectual property; political information is generally not.
What about use as evidence in a court? If police illegally search and seize, you can conceivably get the case thrown out. If a whistleblower dumps the same information to the internet, that's a different story? The answer is yes, but it does create a new path for prosecution doesn't it? (Can't get a warrant? Hack anonymously, dump to internet, and presto. Good luck proving the source of the leak.)
More worryingly, how hard is it to create fake data? People are leery of accusations by prosecutors, far less so of "data". Video and audio evidence can even be faked now.
For instance, a bunch of your emails get dumped (all of which are indeed your real e-mails). But then there's one (fake) message to a random email address nobody knows the identity of, "Yes, I'd like to buy 100 kilos of coke and I need help laundering the money after I sell it." Who is the burden of proof on? You to prove that you didn't write it? Or them to prove that you did?
I'd think that even if they can't use the leaked data in a prosecution, it'll give them some very good ideas on who needs to be thoroughly audited, and will provide some useful information for financial patterns that might indicate illegal activity in future.
In the case of the movies, most of us know the movie would be released to the public after a short time without the leak. Few leak movies that won't be released in theaters later on, and most folks will have a venue to view the movie in a legal fashion. The release itself can hurt a few and the secretness surrounding the movie beforehand isn't seen as public deceit as there are a few good reasons to delay release (simply logistics of distribution and scheduling, for example).
The panama papers, and such things, aren't actually available to the average person nor do I believe there are legal ways to check this sort of thing. It most definitely isn't socically acceptable - in fact, many of us attempting even a small portion of such a thing would be put in jail if ever found out. Furthermore, some of this seems to the expense of the people - Iceland, for example, took a hit as a country only to show that a politician had a nice, cushy account somewhere safe from the stuff that happened at home.
I'm uncomfortable with trial by media instead of trial by court room. If they did something illegal get a prosecutor to sue them, we shouldn't be quick to bring out the pitch forks because of an accusation of wrongdoing.
I am going to assume your comment is a serious one.
This case isn't a "trial by media". What is happening is that several investigative journalism groups are getting together to examine data acquired through a leak.
The examination may lead to lawsuits, criminal investigations, and legislative action, but is by no definition a trial.
The questions asked as a result of the examination of the leaked information may lead to uncomfortable questions in private and in public.
At this point, who is being accused of wrong-doing?
The "trial by media" point is a fairly common one, insofar as media can influence the public's perception of any activities before any legal wrongdoing is established.
I.e. in the UK, Cameron is on the front pages for his father's activities, regardless of whether he had any part/they're genuine/benefited etc...
"Trial by media" is less a witch hunt, and more influencing the zeitgeist.
"Trial by media is a phrase popular in the late 20th century and early 21st century to describe the impact of television and newspaper coverage on a person's reputation by creating a widespread perception of guilt or innocence before, or after, a verdict in a court of law." https://en.wikipedia.org/wiki/Trial_by_media
Not saying that it should only happen in the court system, just saying that since the media has the widespread ability to do so, they need to hold themselves to a certain account and be satisfied that their definition of "in the public interest" is worthy enough.
I think that argument holds up a lot better in countries that have (relatively) impartial and transparent rule of law than in countries that don't.
In other words, it looks like this is having real and immediate consequences in Iceland, but I wouldn't hold my breath waiting for Vladimir Vladimirovich or any of his cronies to be indicted.
What do you think the likelyhood of an actual trial would be without public outcry about the situation?
Don't get me wrong, in general I would agree with you. It is completely unfair for folks in the US (Think casey antony) to be forced into protective custody after being found non-guilty because of the media coverage of her court case, and even as a teenager I found the whole thing surrounding OJ as ridiculous. But in extreme cases, this is often felt as the only recourse, especially to those in power whom may have some influence over whether or not they will ever be sued or arrested.
The options seem to be "trial by media" or "gets away scot free" in this case. Politicians weren't prosecuting this, in some cases they were a party to it! Also, the whole point of these companies is to hide from the government, so if it were easy for the government to prosecute they wouldn't be used.
Leaks like this are about the only way it was realistically going to come to light.
And in a million years, don't mistake legal for ethical. Even more so when the people writing the rules for what's legal (the politicians) are the very ones playing this game.
Does anyone understand what benefit a wealthy person gets legal or illegal from using a so called "shell company"? Is it just that their name isn't easily associated with the activity of the company?
On the illegal end of things, typically the benefit is three fold, one is that the company obscures the identity of the beneficial owners (simply by not reporting the shareholders), tax evasion - often this being the entity holding the money in a tax free offshore jurisdiction (I.e. It's may be easier and you less likely to get caught evading taxes if a Panamanian trust opens a brokerage account in Hong Kong), and lastly as conduits of illegal gains - money laundering - company a takes illegal money in Mexico, makes a loan to company b in Panama which pays a dividend to company c in the United States (and paying tax on that dividend and deposing the rest in a u.s account to spend freely).
On the legal side there are actually probably more reasons, anonymity being one (I.e. Hiding from your neighbors who just bought the house next door), numerous legal tax avoidance reasons (two common ones would be: 1. Because of the u.s. Tax code (unlike most other places) the u.s. Charges corporate tax on foreign income but only when it is repatriated - so many companies will avoid tax by having offshore subsidiaries that hold IP to keep profits from coming back to the u.s. and being subject to tax (see every big software company with irish subsidiaries or swiss corporate inversions) 2. Hedge fund/private equity business makes extensive use of offshore companies so that non-u.s investors do not become subject to US tax and also so that US non-taxable investors (pensions and universities) do not create inadvetant tax liability for themselves (UBTI in particular)), also simple local compliance i.e. if you are a u.s. citizens and want to buy land in mexico i believe there are certain areas (typically near the coast) where the only way you can do this is to form a mexican entity)
The number one benefit: Privacy. Until, of course, someone steals your private information from your lawyer.
I'm characterizing this "event" as closer to a theft of credit card information than a Snowdon-esque expose of governments.
This is a private company who's data was ransacked. Hope the lawyers at that firm are getting ready to be sued by all their private clients.
Paying taxes. In most countries company will pay taxes on income rather than revenue. They can use shell company to create an invoice that your real company will pay. This way you will channel all your profits out to the country with no taxes.
Hiding true ownership. You can give % of shares to a politician in exchange for a law that will directly benefit you. Politician will be able to monetize on this once he is out of office.
Anti-monopoly regulations. You can own two companies that on paper are competition but in reality are same entity blocking any other company from entering the market.
International trade requires operating companies in many jurisdictions.
Even something as small as a single person consultancy that has clients in 2 countries (Canada/USA say) are frequently benefitted by having entities in each location.
Those entities also need money, frequently in each location, so holding cash in banks in each location is also beneficial.
Having offshore corporations is not evil, its just mechanics.
Your comment doesn't contain an answer to my question.
Having entities in different countries for easier interface with local customers and authorities is very different from transferring ownership or large chunks of money to a company registered in the British Virgin Islands, population 28,054.
Maybe "it's just mechanics" in some countries where corruption is low, but the world is very corrupt and offshore companies are tools which allow for this corruption to happen.
Here is a more direct answer then. Banning trading with foreign companies would destroy international trade for the company doing the banning. Most jurisdictions view the benefits of that trade to be worth the costs.
As for legislating how you can do transfers/ownership/taxation etc of foreign entities and cash, every jurisdiction in the world already legislates that. This article is about a law firm that exists solely as experts in that area for instance.
I was interested to hear the example they had for a legal reason:
JOFFE-WALT: But again, Daniel and David emphasized they do not help people launder money or do anything illegal with offshore entities. There are lots of legal reasons to have companies like these. They would repeat again and again as we spend time with them. For instance, they said, imagine, you know, you have a international T-shirt making company, and you have investors from Canada and Mexico and China, all over the world. So sure, you could set up your company here in the U.S. But if you do that, then the Canadian and Mexican and Chinese investors, they all have to file tax paperwork in the U.S. And sometimes it's just easier to set up the company offshore, have the company file all the paperwork. You know, the same amount of taxes gets paid, but ultimately, it's just less paperwork for all the investors.
A question I find myself wondering if society will seriously consider as a result of this leak:
Should shell corporations be outlawed everywhere?
There are certainly legitimate reasons[1] for wanting a shell corporation, but is society more demanding of transparency and willing to reject the idea of shell corporations as a legitimate net good for society?
Because most of them are obviously shells, but if you want to outlaw something, you must define it first, and if you don't want your law being used to persecute whoever the police/government wants, you'd better have an objective and clear definition.
I bet that a lot of cases will be prescribted yet (after 4 or 10 years) and that this information is known since many years so, the most interesting question here is... why now?
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[ 3.9 ms ] story [ 116 ms ] thread"One reason there may be relatively few Americans named in the documents is that it is fairly easy to form shell companies in the United States. James Henry, an economist and senior adviser to the Tax Justice Network, told Fusion that Americans “really don’t need to go to Panama.”"
Turns out that in many cases, forming a company within the US can be more secretive that forming in British Virgin Islands, Panama or the Bahamas.
> If you form a British Virgin Islands company you have to declare who you are to the person forming the company for you; if you form in Nevada, for example, you don’t… So Nevada is great because it’s much more secret than the British Virgin Islands.
The reality is that a large part of the UK's so-called service industry is based exactly on the creation and maintenance of offshore schemes of all kinds, and much of the wealth of Cameron's party backers would evaporate if the schemes were made public.
Voters are mostly too uninformed to know much about this world. But public exposure plays very badly with them, because Cameron famously said "We're all in this together" while promoting austerity at the start of the first Coalition term.
Now, even the most unaware British voters are beginning to wonder if perhaps he was being less than entirely honest.
Conveniently, it would be the easiest thing in the world to throw Cameron overboard, leave Europe - so the scams can continue - and carry on with someone fresh, new, shiny, and untainted by association, who can guarantee business as usual behind the scenes.
It's still surprising how limited the revelations have been in the UK. It's very hard to believe that more household names aren't involved - but so far we've had a hit list of minor Lords hardly anyone has heard of, some former MPs no one cares about, and Lord Ashcroft, who may not be Cameron's favourite person after he offered some unexpected insights into Cameron's hobbies as a student earlier in the year.
All this was triggered by the following quote: "Using information/documentation unlawfully obtained is a crime, and we will not hesitate to pursue all available criminal and civil remedies”.
[1] Mossack Fonseca was indeed engaged in illegal activities because they obstructed the US justice over companies suspected of connections to politicians. But this was not known in advance.
At it's most simple level: a movie leak is a social ill, breaking of the social copyright contract, and a political leak is a social good, revelation of corruptions and education.
That's a simplification of course, copyright is abused, for instance to prevent all access to the copyrighted material in some places and fair use thwarted. Political leaks are sometimes simply scurrilous and provide more heat than light.
This really comes down to the classic question of whether it's more important to benefit society in general or the rights of property holders. There are people who strongly believe in both extremes and lots of people in the middle. Some say that property is the foundation of freedom and we should sacrifice social good for the promotion of property and others say that the needs of the many outsweigh the needs of the few, even that property is theft of social value. Where any person might stand on these issues is complicated, to say the least.
The concept of copyright became stronger as lobbying and surveillance state became stronger.
Creative people will create regardless. Creative people who have ample free time and who don't have to think about bills much, will create more and, more importantly, more accessible works. The sophisticated thing to do is to allow copying anybody's ideas¹ and give people a guaranteed income².
¹ I think plagiarism, ie not giving credit where its due, should be punished. I'm not sure if it should fall in the realm of the law though, maybe it could be kept check under social pressure.
² If it can't be universal, then make it scholarship based, subject to renewal, or something.
Is that really true? I would have thought that the art itself is still copyrighted, but the artist is unlikely to pursue redress as that would effectively be giving evidence of a crime (graffiti).
The lobbying part I can understand, and agree, but I'm lost on your surveillance state thing.
All those creative people with all their creativity is covered by copyright as soon as they get done being creative. In the US at least. But whether they make money from their copyrighted creativity, that's a different problem. Copyright doesn't help me make money but it helps me prevent you from making money off my work.
So this issue of leaked materials being overall good or bad is really a proxy for a deeper argument. If you're starting from the position that property rights are more important than the spread of culture and the availability of material, you can still believe that leaks are overall a social good, one which needs to be sacrificed at times for the greater good of copyright and protection of intellectual property. We have to make these kinds of sacrifices all the time, which leads to interesting situations like this.
Sometimes, the best thing for society is that laws are broken, even if those laws are essentially correct. The perfect society isn't necessarily one that always follows the rules, but one that makes the right sacrifices for the overall good. Copyright is probably the best example of this situation. Even if the laws are entirely justified, there are plenty of situations in which innovation happened because someone learned something from leaked copyrighted material.
It's tempting to believe that it's possible to create a set of rules that everyone can agree to and always create the optimal situation, but in the real world, this never happens. The real world is messy, and sometimes entirely justifiable laws have a net positive effect when they're broken.
Copyright is a limited monopoly, granted by society, to provide incentive for the creation of content; breaking that contract is a social ill. I disagree society breaking that contract, in a bait and switch, can ever be a social good.
I'm not sure what the legal situation is in every country but as I understand it, similar trade-offs exist in German law (which otherwise has a very strong stance on privacy).
More worryingly, how hard is it to create fake data? People are leery of accusations by prosecutors, far less so of "data". Video and audio evidence can even be faked now.
For instance, a bunch of your emails get dumped (all of which are indeed your real e-mails). But then there's one (fake) message to a random email address nobody knows the identity of, "Yes, I'd like to buy 100 kilos of coke and I need help laundering the money after I sell it." Who is the burden of proof on? You to prove that you didn't write it? Or them to prove that you did?
The panama papers, and such things, aren't actually available to the average person nor do I believe there are legal ways to check this sort of thing. It most definitely isn't socically acceptable - in fact, many of us attempting even a small portion of such a thing would be put in jail if ever found out. Furthermore, some of this seems to the expense of the people - Iceland, for example, took a hit as a country only to show that a politician had a nice, cushy account somewhere safe from the stuff that happened at home.
Sorry to be That Guy, but this would be a tidier title and fix the errant copy & paste:
Here’s What We Know About the ‘Panama Papers’
This case isn't a "trial by media". What is happening is that several investigative journalism groups are getting together to examine data acquired through a leak.
The examination may lead to lawsuits, criminal investigations, and legislative action, but is by no definition a trial.
The questions asked as a result of the examination of the leaked information may lead to uncomfortable questions in private and in public.
At this point, who is being accused of wrong-doing?
I.e. in the UK, Cameron is on the front pages for his father's activities, regardless of whether he had any part/they're genuine/benefited etc...
"Trial by media" is less a witch hunt, and more influencing the zeitgeist.
I am also not sure what you mean. Are you taking the view that "influencing the zeitgeist" should only happen in the court system?
Not saying that it should only happen in the court system, just saying that since the media has the widespread ability to do so, they need to hold themselves to a certain account and be satisfied that their definition of "in the public interest" is worthy enough.
In other words, it looks like this is having real and immediate consequences in Iceland, but I wouldn't hold my breath waiting for Vladimir Vladimirovich or any of his cronies to be indicted.
Don't get me wrong, in general I would agree with you. It is completely unfair for folks in the US (Think casey antony) to be forced into protective custody after being found non-guilty because of the media coverage of her court case, and even as a teenager I found the whole thing surrounding OJ as ridiculous. But in extreme cases, this is often felt as the only recourse, especially to those in power whom may have some influence over whether or not they will ever be sued or arrested.
Leaks like this are about the only way it was realistically going to come to light.
On the legal side there are actually probably more reasons, anonymity being one (I.e. Hiding from your neighbors who just bought the house next door), numerous legal tax avoidance reasons (two common ones would be: 1. Because of the u.s. Tax code (unlike most other places) the u.s. Charges corporate tax on foreign income but only when it is repatriated - so many companies will avoid tax by having offshore subsidiaries that hold IP to keep profits from coming back to the u.s. and being subject to tax (see every big software company with irish subsidiaries or swiss corporate inversions) 2. Hedge fund/private equity business makes extensive use of offshore companies so that non-u.s investors do not become subject to US tax and also so that US non-taxable investors (pensions and universities) do not create inadvetant tax liability for themselves (UBTI in particular)), also simple local compliance i.e. if you are a u.s. citizens and want to buy land in mexico i believe there are certain areas (typically near the coast) where the only way you can do this is to form a mexican entity)
I'm characterizing this "event" as closer to a theft of credit card information than a Snowdon-esque expose of governments. This is a private company who's data was ransacked. Hope the lawyers at that firm are getting ready to be sued by all their private clients.
Hiding true ownership. You can give % of shares to a politician in exchange for a law that will directly benefit you. Politician will be able to monetize on this once he is out of office.
Anti-monopoly regulations. You can own two companies that on paper are competition but in reality are same entity blocking any other company from entering the market.
Extraction of dirty money (from bribery) is also very easy to do with offshore companies.
The third reason is to add confusion about ownership of companies and real estate.
More simply, offshore companies help rich people pay less taxes.
Why do countries permit offshore companies to dominate and rob their economies ? Could anyone explain it to me ?
Wouldn't banning trade with offshore companies have the effect of drastically reduced corruption and illegal "schemes" ?
Edit: By "offshore" I mean companies registered in small island nations or "tax havens".
Even something as small as a single person consultancy that has clients in 2 countries (Canada/USA say) are frequently benefitted by having entities in each location.
Those entities also need money, frequently in each location, so holding cash in banks in each location is also beneficial.
Having offshore corporations is not evil, its just mechanics.
Having entities in different countries for easier interface with local customers and authorities is very different from transferring ownership or large chunks of money to a company registered in the British Virgin Islands, population 28,054.
Maybe "it's just mechanics" in some countries where corruption is low, but the world is very corrupt and offshore companies are tools which allow for this corruption to happen.
As for legislating how you can do transfers/ownership/taxation etc of foreign entities and cash, every jurisdiction in the world already legislates that. This article is about a law firm that exists solely as experts in that area for instance.
http://www.npr.org/sections/money/2016/03/30/472452808/episo...
I was interested to hear the example they had for a legal reason:
JOFFE-WALT: But again, Daniel and David emphasized they do not help people launder money or do anything illegal with offshore entities. There are lots of legal reasons to have companies like these. They would repeat again and again as we spend time with them. For instance, they said, imagine, you know, you have a international T-shirt making company, and you have investors from Canada and Mexico and China, all over the world. So sure, you could set up your company here in the U.S. But if you do that, then the Canadian and Mexican and Chinese investors, they all have to file tax paperwork in the U.S. And sometimes it's just easier to set up the company offshore, have the company file all the paperwork. You know, the same amount of taxes gets paid, but ultimately, it's just less paperwork for all the investors.
http://www.cnbc.com/2016/04/05/reuters-america-white-house-s...
Should shell corporations be outlawed everywhere?
There are certainly legitimate reasons[1] for wanting a shell corporation, but is society more demanding of transparency and willing to reject the idea of shell corporations as a legitimate net good for society?
[1] http://www.vox.com/2016/4/5/11361992/panama-papers-authorita...
Because most of them are obviously shells, but if you want to outlaw something, you must define it first, and if you don't want your law being used to persecute whoever the police/government wants, you'd better have an objective and clear definition.
I'd think something like a company that has, say, less than 3 employees, and/or has no discernible "customers." But I'm taking a wild guess.