The Panama Papers is a global investigation into the sprawling industry of offshore companies. According to the International Consortium of Investigative Journalists (ICIJ), which conducted the investigation of more than 11 million leaked files, “the investigation exposes a cast of characters who use offshore companies to facilitate bribery, arms deals, tax evasion, financial fraud and drug trafficking.” However the allegations made in the Panama Papers case are not representative of the international financial services industry, affirms the boss of one of the world’s largest independent financial advisory organizations.
According to Nigel Green, founder and chief executive of deVere Group, the leaked documents from Panamanian law firm, Mossack Fonseca suggest there might have been tax evasion on a grand scale, but in is opinion, those allegations are not representative of today’s wider international financial services industry. “The overwhelming majority of the offshore sector only provides services that are fully compliant and legal and they are used by law-abiding clients, who are simply looking for typically better returns, more investment options and greater flexibility.”
He believes that the idea of a ‘tax haven’, in the traditional sense of the phrase, is now somewhat outdated. “In today’s world, in which financial information is being automatically exchanged with tax authorities globally, it is almost impossible to hide money. No longer can people stash assets on ‘treasure islands’ and not expect to be caught.” Green mentions that in his experience working with expatriates and international investors, who have generally more transient lifestyles, “offshore accounts are preferable simply for convenience. They offer centralised, safe, flexible and international access to their funds no matter where they live and no matter to which country the individual moves to in the future. In addition, they offer a wide choice of multicurrency savings and investment solutions.”
Amongst the benefits of offshore financial centres, Green highlights that they allow those who qualify to do so, to use legal, bona fide international investment products to form part of a robust and sensible financial planning strategy. As well as that they allow companies to avoid getting taxed twice on the same income and that they offer legitimate financial refuge for those in countries where there is economic and political turmoil, such as extremely volatile currency and confiscation of assets.
Green claims that the current scandal is an opportunity “to further enhance the effectiveness and credibility of these international financial centres and the sector. This is especially important as the industry is set to grow exponentially in the coming years as individuals and companies become ever more globalized.”