Translated by Ruby Izar-Shea
Iceland's prime minister was forced to resign. In Great Britain David Cameron is in trouble. In Argentina Macri’s image it muddied and he’s under suspicion. The same applies to members of the elite in Pakistan, Azerbaijan, Ukraine, Australia, and South Africa. Documents evidencing tax evasion and phantom investments and irregular transactions outside the law or on the edge of it. Given the information revealed, there are stammering explanations by those involved in different ways, including 140 politicians and civil servants, as well as 12 presidents, monarchs and heads of state still in office. Global shocks, unusual consequences, earthquakes still being felt. Secrets and lies that could produce tectonic shifts in global governance.
But the heavy silence of the pact of impunity prevails in Mexico. The tombstone that covers everything. The names of 33 Mexicans whom the SAT promises to investigate, but probably never will. Or will in its own way. Just remember the "investigation" of the "White House" or Ayotzinapa or Tlatlaya or OHL [construction company, government contractor that built and financed the "White House"of Peña Nieto's wife, Angélica Rivera]. While more accused will emerge in the rest of the world, in this country documents will be mysteriously misplaced. People will be protected by their relationship to power or the malleability of laws created to facilitate tax evasion. People like Ricardo Salinas Pliego. Like Carlos Slim. Like Higa Group’s Juan Armando Hinojosa. Members of the club of untouchables, the irreproachable, those often accused but never punished.
Here they’ll say what they did was perhaps "immoral" but not "illegal". Here the authorities will argue that sending money to places like Panama and creating shell companies and secret accounts doesn’t violate the law. Here Aristotle Nunez [head of the Tax Administration Service, SAT, of the Secretariat of the Treasury] will subtly underline that protecting wealth outside of Mexico is perfectly legitimate. And it will be confirmed that banks are not required to report the origin of their client’s resources since they are not tax auditors.
Few will question how Juan Armando Hinojosa achieved such "success" that he was forced to take out 100 million dollars, "a small portion of the client's portfolio." Thereby covering up transactions done to hide, to avoid digging deeper, to torpedo transparency. And if there’s nothing to hide in the case of the 33 Mexicans, then why resort to tax havens? Places known for the ease offered to evade taxes, launder money, hide it, conceal its origin.
True, these are not exclusively Mexican practices. According to economist Gabriel Zucman, about 8 percent of global wealth, 7.6 trillion dollars, is in offshore accounts, legally. But there is something morally questionable about it. It goes to the root of the perennial problems of inequality in Mexico and beyond; it highlights the disconnect between the elites and the half of the country that remains poor. It evidences not only the businesses stealing but also the government's incompetence. As Edward Snowden tweeted this week, "the problem is what’s legal". What the Mexican government, and others, are not doing. The taxes it’s not charging, the monitoring it’s not doing, the investigations it’s not carrying out, the practices it’s not sanctioning.
Both, transparency and corruption are debated now days in Mexico [constitutional amendments have been passed and "secondary", implementing legislation is under discussion in Congress]. There is a lot yet to be changed to move forward. A part of the change will have to be part of global transformations that lead to transparency, collaboration, provision of information related to taxes and assets. As Thomas Piketty argues, we will have to fight global financial opacity. But the collective crisis caused by the Panama Papers should also lead to scrutiny and the question of how and why the Mexicans involved managed to accumulate so much wealth. How and why so many buddies in the political class operate like this.
The answer is simple: corruption. Complicity of the tax authorities. The buddy system at work with government bids and investments. That leads to Mexico being poorer and more unequal. When politicians and their protégés take out unjust profits and steal and hide, resources that should end up in bridges end up in Panama. Some members of the Mexican kleptocracy take their wealth out of the country, but others don’t even need to do that. Buddy capitalism protects them in such a way that any irregularities will be ignored and forgiven. One more case of documents mysteriously misplaced.
True, these are not exclusively Mexican practices. According to economist Gabriel Zucman, about 8 percent of global wealth, 7.6 trillion dollars, is in offshore accounts, legally. But there is something morally questionable about it. It goes to the root of the perennial problems of inequality in Mexico and beyond; it highlights the disconnect between the elites and the half of the country that remains poor. It evidences not only the businesses stealing but also the government's incompetence. As Edward Snowden tweeted this week, "the problem is what’s legal". What the Mexican government, and others, are not doing. The taxes it’s not charging, the monitoring it’s not doing, the investigations it’s not carrying out, the practices it’s not sanctioning.
Both, transparency and corruption are debated now days in Mexico [constitutional amendments have been passed and "secondary", implementing legislation is under discussion in Congress]. There is a lot yet to be changed to move forward. A part of the change will have to be part of global transformations that lead to transparency, collaboration, provision of information related to taxes and assets. As Thomas Piketty argues, we will have to fight global financial opacity. But the collective crisis caused by the Panama Papers should also lead to scrutiny and the question of how and why the Mexicans involved managed to accumulate so much wealth. How and why so many buddies in the political class operate like this.
The answer is simple: corruption. Complicity of the tax authorities. The buddy system at work with government bids and investments. That leads to Mexico being poorer and more unequal. When politicians and their protégés take out unjust profits and steal and hide, resources that should end up in bridges end up in Panama. Some members of the Mexican kleptocracy take their wealth out of the country, but others don’t even need to do that. Buddy capitalism protects them in such a way that any irregularities will be ignored and forgiven. One more case of documents mysteriously misplaced.
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*Denise Dresser is a Mexican political analyst, writer, and university professor. After completing undergraduate work at The College of Mexico, she earned her Ph.D. in Politics at Princeton University. She is currently a faculty member in the Department of Political Science at the Autonomous Technological Institute of Mexico (ITAM), where she teaches courses such as Comparative Politics, Political Economy and Contemporary Mexican Politics. She has taught at Georgetown University and the University of California. In December 2015, she was decorated as a Knight of the Legion of Honor by the French government. Twitter: @DeniseDresserG