2.6 terabyte of data, 11,5 million documents, 214,000 letter-box companies - the Panama Papers are lifting the lid on a parallel society which operates in completely different dimensions. One day after the publication of the huge data leak, German Federal Minister of Justice, Heiko Maas, is demanding a transparency register.
On 3 April 2016, 109 newspapers, television stations and online media organisations in 76 countries simultaneously presented the results of research carried out by an association of investigative journalists. Over a period of 12 months these journalists evaluated the files provided by an anonymous whistle-blower. These files show how law firm Mossack Fonseca helped over 14,000 clients to establish 214,488 companies in 21 offshore financial centres. This has once again thrust the issue of tax havens and tax avoidance into the limelight – and German politicians are now demanding consequences as a result of these latest revelations.
Dr. Geulen (Regional Director DACH at Bisnode), the Panama Papers are currently the hot topic of conversation. Is this, the largest leak in the age of digital journalism, also affecting Bisnode?
We are of course closely monitoring the current reports,as we do all others. This particular case has caught our attention from a professional perspective as well. In line with our compliance solutions, we have long been intensively involved with shareholdings and interdependencies - and determining their beneficial owners.
Federal Minister of Justice, Heiko Maas, is now demandinga “transparency register”. Can such a register shine somelight on the tax haven jungle?
As Mr. Maas says, the climate of secrecy must come to an end and he is pleading for a worldwide prohibition on companies and foundations whose beneficial owners remain anonymous. The suggested transparency register would however, only be a national instrument and could not therefore offer a means of tackling the issue of letter-box companies in the Caribbean or other tax havens. Here at Bisnode we have an exceptionally comprehensive global database which helps us unravel the issue of beneficial owners and complex ownership structures.
In your opinion, what does the Federal Government’s proposal aim to achieve?
It of course sends an important signal to the international financial markets, even though I fear that this approach will remain ineffective for as long as it is not adopted by otherstates as well.
In your view, is it actually feasible to prohibit companies whose beneficial owners are anonymous?
Here in Germany and Europe we will certainly be unable toprevent companies from being established in other countries.We must of course also remember that not every letter-box company, in the Caribbean for example, is established with the purpose of concealing money or for other illegal activities. But transparency is the key requirement for preventing economic crime, money laundering and the financing of terrorism.
But would such a register be conceivable within Europe?
It’s not actually a question of being conceivable: Last year the European Parliament adopted the 4th EU Money Laundering Directive which requires Member States to maintain a register that lists the names of the beneficial owners of companies. The present reaction is therefore not just relevant to current events, but must be seen in a broader context.
Who would be able to view this data?
This is exactly the issue that has not yet been clarified – and it is already attracting criticism. The information currently available to us suggests that such a register should not beavailable for the general public to view.
Is this criticism justified?
Put it like this; we determine for our clients the beneficial owners of companies worldwide and also unravel the most complex company interdependencies. This is of course also essential in terms of fulfilling compliance requirements. Our global database is therefore also available to the public.
Exactly how comprehensive is this database?
We hold business information on more than 250 million companies in 220 countries. This naturally includes Panama and other tax havens such as the British Virgin Islands,Vanuatu und Liechtenstein. Given the current situation, we have for instance investigated which German companies have their worldwide ultimate parent company in a country that is classified by the European Commission as a tax haven– and the number is surprisingly large. Highly favoured locations include the Cayman Islands and the Bermudas. However, even we are unable to provide details about exactly why these companies have chosen to domicile their parent companies there.