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The Panama baloney
by Thanos Kalamidas
2016-04-07 11:35:02
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It all started as the leak of the century, the leak of all times. The ultimate financial scandal that will bring down governments and empires. A few days later we are down to news agencies and investigating journalists wondering how much money Sarah Ferguson, the Duchess of York, really made during a charity fashion show in London in 2009, why the late director Stanley Kubrick had an offshore company and what happened with the late American chess grandmaster, Bobby Fischer’s money he had saved in a Panama bank through an offshore company. In other words, baloney!

Rich people are getting richer, rich people always find ways to get richer, always find ways to get richer and rich people don’t like to share their riches, especially with the state. Period. The rest lays in the inability of the system that rules contemporary states to fulfil their obligations. The key word here is “contemporary”.

ballon02_400Contemporary states are in the essence of this hypocrisy and schizophrenia. Everybody is taxed. This supposed to be the principal. But practice shows that not everybody is equally taxed. The rich, the real rich, corporations and banks are not equally taxed with a tradesman or a small business owner for example. Actually, contemporary states using hypocritically the excuse that corporations, banks and investors (another word to say rich who make money from money like Donald Trump) bring money to the state indirectly, schizophrenically help them to avoid paying taxes equally to the others.

The idea is that corporations, banks and investors bring work, cash flow and money to the state through taxes. Contemporary practice has shown that they bring work under their conditions and aiming the increase of their profit which means minimum expenses, minimum wages even in violation of local laws. There is no cash-flow from them locally (cash flow would have come if the work force had money to spend) and they don’t pay their share in taxes because schizophrenically the states are afraid that if they will demand from them to pay the right amount they will damage their greed and in a global economy they will go somewhere where they will make more profit. Like Panama. This is called contemporary capitalism.

But let’s return to Panama. There are no damaging or illegal leaks in the Panama business apart from the leak per se and the fact that somebody hacked the law-firm computers. The firm that was the target of those leaks was legal in all her actions according to the laws of the country they are based and practice. They didn’t do anything wrong or illegal. Even though unethical, in a capitalist world the people who are in the lists didn’t do anything wrong either. They were rich who wanted to be richer, they were rich who didn’t like to share their profits. This is called capitalism we pride so much in the west. Aim maximum profit and use any legal way to get there. Any is another key word. And in Panama is legal for a foreigner to bring money without any unnecessary questions and tax relaxation. Period. This is also called contemporary capitalism.

What there is not in the lists and they are the ones who were neither legal nor ethic are the banks. You see the banks mediated and advised their customers into violating their countries’ laws exporting their profits, laundering them in economic havens and helped in the transaction – with a little fee of course – aiding them to avoid paying their taxes …legally. And all this has nothing to do with Panama but with the hypocritical relationship between states, banks and in extent corporations, where banks are legally illegal with the states’ blessing.

According to research by Reuters, in 2014 seven city banks paid a combined 29.5 million US dollars in corporation tax while the very same banks declared a combine 5.1 trillion US dollars in …profit for the very same year. That represents roughly a 5.7 percent. According to the taxation laws in UK, the Corporation Tax rate for company profits is …20%. It’s a law. It applies to everybody who has business in UK. Well… it didn’t for seven banks. Actually and completely legally, these seven banks avoided to pay a 14.3% of their 5.1 trillion dollars obligations that the rest equals were forced to pay otherwise they would lose everything including personal assets like their house or their car.

Let’s make it numbers. These banks should have paid – always combined – 1.02 trillion US dollars and they paid 29.5 million US dollars!!! They avoided to pay well over a trillion. They paid pennies. They paid nothing. Absolutely nothing. That while the state will go without any mercy after a small family business of repairing shoes because they were late to pay 400 US dollars for their yearly taxes in that extent that only the penalties sometimes in a year exceed the amount in thousands of dollars.

I kept the best part for the end. Due to the euro-crisis and the banking turmoil the last few years this same banks have taken bail-out money that accounts to over 1 trillion US dollars. That amount was for all Europe and only for a year but I presume the seven took a good part of that that probably accounts to a few million. By the way, the whole scheme has a name, is called …recapitalization. This banks are in the centre of the transaction of the Panama leaks.

But hey, this is UK. UK supposedly to be after Germany the second healthiest economy in Europe. So let’s move to Greece. The country that nearly caused a euro-crisis and the end of euro, the country that in theory is saved but in truth has bankrupted twice the last 6 years and the country with 24.5% unemployment this minute, more than 300,000 families living under poverty and over 40,000 homeless.

Cooperative tax in Greece is a cooperative mystery and a sign of the corruption that this country has suffered the last 30 years at least. Is full of small “windows” as the Greeks call them, huge holes in the law that let people with clever accountants to manipulate the laws and in the end avoid pay taxes. Actually the government that was supposed to save Greece – Antonis Samaras government – mastered the game to unbelievable extent. So, cooperative tax in Greece is in levels, 26% on profits up to 57, 000 US dollars and at the rate of 33% for profits exceeding 57,000 dollars. Piraeus Bank, the biggest Greek bank and coincidentally the owner of the bank close friend of Antonis Samaras, the former Prime Minister, for the year 2015 is going to declare over 1.64 billion US dollars profit. Noticeable that 2015 was the year when bank controls were enforced in Greece. Now you must wonder how much this bank paid in cooperative tax, in a country with bank controls, 24.5% unemployment then and over 40.000 homeless only in Athens. A newspaper taking in accounts laws, windows and …doors came with the magic number 230 million US dollars. That’s the amount this bank will pay. That represents 14% of their profits. No 26%, no 33% and that in a country where every penny counts.

Parenthetically when Mr Samaras started the selling out of the Greek state’s assets to save some money and save the country, he sold one of these assets to his friend, the owner of the Piraeus Bank. The Agriculture Bank. A profitable and historic Greek bank that her role was essential in the Greek countryside and the salvation of the Greek agriculture, the second oldest Greek bank. The price? 1 euro. 1.14 US dollars. No need to pay taxes even. And of course every time Greece took another memorandum and money to help pay the pensions, the hungry, the unemployed, the homeless, Piraeus Bank took a few millions bite. Is called …recapitalization.

Mr Latsis, another Greek banker graces with his presence the Forbes’ list for the 100 richest people in the world. 60% of the Greek deposits disappeared from 2009 – 2014 from the Greek banks. The lists that periodically have leaked always mention the same names always include bankers and politicians. A bright star among others has been the close adviser of Samaras – yes, the prime minister who was going to save Greece – and responsible for the negotiations with the troika, Mr. Papastavrou with billions of US dollars in foreign accounts avoiding taxes. Of course, I hope you don’t believe that mysterious men with black suits and black suitcases chained to their hands moved all these money abroad. It all happened through banks. Greek banks. Piraeus to name one. Again banks behind the real leak.

ballon01_400But I suppose Greece is not far from the already formed stereotypes most people have identifying a nation with the example of the few rotten. Let’s go to Finland. The country that champions transparency. 600 businesses and individuals keep money abroad avoiding to declare them and pay the proper taxes. I’m sure politicians and bankers included. After all it was the biggest Finnish bank that advice, orchestrated and even organized everything. Nordea Bank and its branch in Luxembourg. Why in Luxembourg? For the same reason Piraeus has a branch office in Luxembourg or Switzerland, the same reason the seven UK banks have also offices in Luxembourg and Switzerland. Because it is legal there. And …this is capitalism.

It is legal to do all this money laundering there, in the rest of the countries is just not …ethical. So what? This is why I said in the beginning that the whole Panama thing is a big baloney. Because the states and the banks have in a very schizophrenic way cooperated and balance between legalities and illegalities to create this situation. In the last sentence I mentioned the third important word in order for these thoughts. Ethics.

The laws about the offshore companies applied in most European and American countries between 2012 and 2014. Most of them not in full force yet, going through an adjustment and adapting period. Therefor what Sarah Ferguson, the Duchess of York, did in 2009 doesn’t matter. Doesn’t matter what the Greek ship-owner did, doesn’t matter what the British banker did. What they did was unethical but not illegal. But contemporary states are not made with ethics but legalities. Legalities that value the salvation of the banks more than the salvation of the people. Legalities where a state boldly tells you that the only way to fight unemployment is to create tax havens for investors and the only way to pay pensions is to sell public assets for one euro.  A state that feels able to measure human dignity in pennies.

You see in a complete hypocritical and schizophrenic way the states have knowledge and actually participated in creating what they publicly condemn. Is all like a huge cinematic scenery where you see the street, the house and the shops and behind it there is absolutely nothing. Everything is fake. Who cares about ethics? It’s all about money going around. State economic budget balances show no loses and investors getting more so they …invest!

As far the Panama leaks, no worries, there are plenty more economic havens – some even better than Panama - all around the world and perhaps more leaks to come. By now Sarah Ferguson has moved her money and if the taxman asks …she withdraw them to buy chocolate biscuits and fish and chips. No money any more, no violation of any law. And the rich will continue to get richer, rich people will always find ways to get richer and rich people don’t like to share their riches with anybody. The guilty are not in Panama but home, protected from the state. This is contemporary capitalism. Period.


P.S.1 I tried to find out how many homeless would have been fed and housed in USA with the money, the protector of the poor, Bernie Sanders has and will spent till the end of his campaign. Nobody cares. In the meantime millions of dollars are spent. Millions. Somewhere I’ve read that Sanders. The poorest of all candidates from both parties has spent something like 3 million. Perhaps it is not true. Perhaps he has spent only one million. How many homeless in USA this million would have house and fed and for how long? Nobody knows. Nobody cares.

P.S.2 The Rolling Stones in a very rare political statement said that they think that UK will be better financially out of the EU and that the Brexit will help British companies and individuals. The Rolling Stones have moved all their assets and interests in the Isle of Man since 1970s avoiding to pay taxes in UK and USA. Irony?


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Emanuel Paparella2016-04-07 15:44:35
Indeed Thanos. Marx may be dead but not forgotten, for nothing much has changed since Das Kapital was published in the 19th century and savage capitalism continues to be misguidedly seen as the best of all possible “enlightened” economic systems in Western Civilization.

What remains a constant on which one can reliably count is rampant greed among the rich, the so called one per centers, the job creators whom I like to dub "the greed producers" who know all the tricks and loopholes on how to shelter their illegitimately earned money and avoid paying taxes for the public domain and the common good, and then shamefacedly counsel the disadvantaged that they ought to consider themselves lucky if they are offered a job by the "job creators" at starvation wages. Those greedy entrepreneurs also advise those who demand reforms not to fret too much since things have always been that way and the poor will always be with us…No wonder the likes of Pope Francis and Bernie Sanders are not exactly beloved by the billionaire class. They intuit that Francis and Bernie’s idea of Christianity is that it ought to be there to console the poor and afflict the insensitive rich. I use the word “ought” advisedly since much remains to be done among the upper classes of the clergy too who live in luxurious Renaissance villas; and ethics is not the descriptive analysis of the way things have always been, but the prescriptive suggestion of how things ought to be.

Francis and Bernie may be presently called passing fads but not really since the ideals of justice which they prescribe have been around since Plato and Jesus Christ, and the young, the millennials, have finally grasped how rigged the system is in favor of the rich. Perhaps in part it is also a matter of knowledge and ignorance. Having tried ignorance and insensitivity, it’s time now to try knowledge and genuine enlightenment.

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