There are more questions than answers, at least so far, in the leak of bits and pieces of what is said to be 11.5 million documents from, again, allegedly, an incredibly corrupt Panamanian law firm.
The first gleanings from “the papers” has already toppled the prime minister of Iceland, caught ostensibly in a conflict of interest with the country’s banks which helped bring on the 2007-08 worldwide financial crisis. So far, more than seventy current or former heads of state and government have been implicated in the whole affair.
According to findings partially published by the International Consortium of Investigative Journalists, itself a somewhat mysterious newsgathering alliance of leftwing newspapers around the world, the records include three dozen entities blacklisted by the US. Why has this group refused to release all the documents? They apparently include everything and everyone from Mexican drug-lords to terrorist groups to sanctioned North Korea and Iran.
It’s not exactly new news that heads of state and government around the world have been dipping into the public trough, sometimes rather deeply as in a still blossoming scandal in Malaysia. There our colleagues at The Wall Street Journal are reporting a cool $1 billion has turned up mysteriously in the personal bank account of Prime Minister Najib Razak assuring his debtors his checks wouldn’t bounce.
We are being assured that overseas bank accounts are not necessarily intended as a way of evading taxes. But no one seems able to explain what other worthy uses they could be put to. Tax authorities in Australia, New Zealand, and the UK apparently have come to the same conclusion since they have already announced they are looking into the whole Panamanian caboodle.
One big question occurs to us, however, about which we have heard no speculation. How is it that all this was going on in Panama, apparently on a scale that it is hard to believe the locals were not aware, and for some time, without the intervention of U.S. Treasury authorities? So far no prominent Americans have been implicated. But with the size of the documentation, we can’t believe that will not be long awaited.
The reason we ask is that the U.S. and Panama have a long and intensive and extensive association. As early as 1846 a treaty between Colombia and United States obliged Washington to maintain “neutrality” in Colombia’s Panama department in exchange for transit across the isthmus. Panamanians already had a long history of armed insurrection against the federal government in Bogota. In one of the later periods of instability, the U.S. in 1885 took over the Panamanian city of Colón to be met by a Chilean counter-occupation of Panama City. Latin Americans speculated Washington was moving for annexation, but it did not come.
In 1903, when the Columbian parliament rejected a treaty with the U.S. to grant Washington the rights to continue building a canal between the two oceans which the French [the builders of Suez] had started and could not finish, the Americans switched to supporting Panamanian independistas. The extraterritoriality of the U.S. Canal Zone that was created was finally abandoned by Pres. Jimmy Carter in 1977 to much domestic U.S. controversy.
But a decade later, Pres. H.W. Bush intervened to dethrone a new corrupt dictator Manuel Noriega. Washington had tolerated Noriega’s drug facilitating operations, but when he switched to pro-Cuban and pro-Soviet politics in Central America and stole a presidential election won by his opponents, the U.S. moved to unseat him despite strong criticism throughout Latin America and at the UN. Since, of course, a Hong Kong Chinese company with close connections to Beijing has acquired stevedore rights at both ends of the Canal, again to the consternation of some American strategists.
This brief review of the history begs the question: with the kind of traditional military and civilian ties to Panama, wasn’t the U.S. Treasury aware of these tax-shelter shenanigans, some of them plainly illegal, but didn’t crack down, and if not, why not?
* This commentary has been posted on yeoldecrabb.com on April 6, 2016