Why set up a shell company in Panama?
Robert J Burrowes A previously little-known law firm called Mossack Fonseca, based in Panama, has recently been exposed as one of the world’s major creators of ‘shell companies’, that is, corporate structures that can be used to hide the ownership of assets. This can be done legally but shell companies of this nature are widely used for illegal purposes such as tax evasion and money laundering of proceeds from criminal activity. Despite widespread awareness of offshore tax havens in many countries around the world, governments have never acted in a concerted manner to halt these illicit financial flows. Why? In essence, because wealthy elites are heavily involved in using these mechanisms to isolate their wealth from the usual scrutiny to which the rest of us are subjected precisely so that they can evade tax. And governments do as these controlling elites instruct them. There is an important reason why wealthy individuals want to maximise their wealth and evade contributing to any co...