It’s yet another “good news/bad news” story. The good news is the Cayman Islands came away relatively unscathed in the unprecedented publication of approximately 11.5 million files, known collectively as the “Panama Papers.”
The bad news is that the good news will not do us much good.
Cayman, being one of the most prominent offshore financial centers in the world (we like to rank ourselves No. 5), is inextricably associated with an industry that, rightly or wrongly, is in the international firing line.
In fact, Cayman – in large part because of ineffective communication counter-strategies over the last two decades – has allowed its good name to become almost synonymous with tax havens and money laundering and other nefarious activities that have long been purged from our financial services industry.
But while the practices no longer exist, the perception that they do is greater than ever. It is promulgated in books and film and political speech and, of course, the media. As a country (including the leading industry within our country), our response has been a non-response – or certainly a non-effective response – and so we are now getting swept up in the political tsunami of the Panama Papers.
Perhaps the first tangible effect of this fallout is the announcement yesterday by our Cayman delegation in London (Premier Alden McLaughlin, Minister of Financial Services Wayne Panton and MLA Roy McTaggart) that Cayman “has confirmed to the U.K. that it will join the initiative for the development of a global standard for the sharing of beneficial ownership information.”
We would remind our readers that as recently as last month Cayman had a “deal” with the U.K. that we would enact a “bespoke” or tailor-made process, unique to our special circumstances, to deal with the beneficial ownership issue.
Yielding to pressure by European regulators following the release of the Panama Papers, the U.K. reneged on our deal, and our delegation yielded to what no doubt was the inevitable: Cayman will now march in lockstep (if not philosophically, certainly procedurally) with the regulators of Europe.
We will have much more to say on this issue editorially in coming days once the contours of the information-sharing agreement become more clear, but for now we would like to stay with the Panama Papers issue in a different context – the context of media behavior.
We will not quibble, parse our words, or equivocate: The leaking of the Panama Papers was theft, pure and unalloyed, and the world’s media are trafficking in stolen documents.
The fruits of the break-in to the files of Mossack Fonseca, a law firm in Panama City which specializes in setting up offshore companies around the world (much as Cayman’s law firms, both big and small, do routinely), were first leaked to a German newspaper and later found their way to an organization called The International Consortium of Investigative Journalists (ICIJ).
For more than a year under the direction of ICIJ, journalists from 107 media organizations organized and analyzed the documents before recently making them public.
The predictable media orgy followed, complete with names of celebrities, world leaders, and others who were smeared, with little, if any, due diligence and certainly no establishment of guilt or innocence. These documents were proprietary, and the legitimate right of financial privacy was violated by a cowardly leaker (he calls himself “John Doe”) and a complicit press.
In the aftermath of the leak, a spokesman for the law firm Mossack Fonseca issued this statement to a media organization:
“It appears that you have had unauthorized access to proprietary documents and information taken from our company and have presented and interpreted them out of context. We trust that you are fully aware that using information/documentation unlawfully obtained is a crime, and we will not hesitate to pursue all available criminal and civil remedies.”
If our readers are looking for a local analogy, consider the leaking and subsequent distribution to the media of, say, all the files at Maples, Appleby, Walkers and, for good measure, Deloitte, PwC and a half-dozen banks.
Trust us: You will not read those files in the pages of the Compass.