The Paradise Papers made a global splash in early November. For a few days at least, the latest mass leak of high-end offshore financial information—curated, like its predecessor, the Panama Papers, by the International Consortium of Investigative Journalists and partners round the world—refocused global attention on the ways wealthy individuals and corporations lower their tax burdens.
Although the leak prominently featured US Commerce Secretary Wilbur Ross, the reaction to the Paradise Papers was more muted in the US than it was elsewhere. Three big European papers who worked on the story played it across their front pages for days: The Guardian framed large images of implicated celebrities—such as Queen Elizabeth II, Prince Charles, and F1 driver Lewis Hamilton—with a bespoke yellow trim, while Le Monde, and Süddeutsche Zeitung mocked up special graphics and logos to garnish above-the-fold spreads. By contrast, The New York Times—which chose to collaborate on the Paradise Papers despite not having worked on the Panama Papers—put the story on its unchangeable, boxy front page only twice in the week after publication, and one of those articles was below the fold.
Newspaper front pages are a crude measure of media attention and public interest. But the Paradise Papers have struggled for air in a heavily saturated US news cycle—even though the country’s major news story these past weeks has been about tax reform. And even in the UK, Germany, and elsewhere, initial interest has petered out somewhat—especially compared to the reaction that greeted the Panama Papers last spring. “This time we [didn’t have] all the bad guys, Assad, Putin, Mugabe, and so forth, so the attention in general was lower,” says Bastian Obermayer, a Süddeutsche Zeitung reporter who received both initial data leaks.
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“The Paradise Papers were always going to be more difficult to get global reaction to, because it no longer had the novelty of being the biggest collaboration of journalists in history and the biggest leak ever provided to journalists,” adds Will Fitzgibbon, a senior ICIJ reporter who also worked on both stories.
The real significance of the Paradise Papers is less about naming famous names, and more about exposing the structures they use. “With the Panama Papers, there was clear criminality and a clear bad guy,” says Gerard Ryle, the director of ICIJ. “People could dismiss [the company where the leak originated] as a rogue law firm in Panama….With the Paradise Papers, we showed that the whole system is gamed.” The firms rich people use to protect their money are rattled—on December 18, the company at the heart of the leak, Appleby, launched UK court proceedings against The Guardian and the BBC for publishing confidential information.
Tax authorities and politicians in countries from Argentina to India are using the leak to start to get their houses in order. That’s especially true in Europe, where Switzerland is considering legislation to regulate companies like mining giant Glencore, the Netherlands doubled down on scrutiny of its massive trust sector, and UK authorities are actively reviewing the tax status of the Isle of Man—a British dependency critics call a tax haven.
The Paradise Papers also galvanized the European Union as a bloc to take action on tax, giving fresh steam to investigations initiated after the Panama Papers leak. In late November, three Paradise Papers reporters testified in front of a European Parliament committee. Among them was Jan Lukas Strozyk, a journalist with Germany’s public broadcaster who also gave evidence after the Panama Papers. “The interest this time was bigger than I expected. The questions were better, the [politicians] were better prepared,” says Strozyk. “When I talked to some of them after the hearing you could see there was a core group, from all parties, that are really interested in this, and really want to move this.”
In early December, European finance ministers published a blacklist of 17 tax havens. The list was criticized by ICIJ and others for several notable omissions, though some observers pointed to an accompanying, longer “grey list” putting other low-tax jurisdictions on official notice. Since then, the EU has announced plans to tighten corporate oversight, force companies to publicly identify their real owners, and give permanent status to temporary investigative committees.
None of this is to say that meaningful, systemic reform of the global tax avoidance system is in sight; as Strozyk admits, a succession of crises in Europe have captured much of the EU’s attention and political capital. And elsewhere around the world, tax authorities are notoriously slow-moving when it comes to change—in some cases combing through data for years before reaching charges of wrongdoing against individuals and companies, or broader suggestions for reform.
ICIJ’s reporting has shown all users of offshore structures that their financial information can be compromised.
But the quiet impact of the Paradise Papers goes far beyond institutions of government—it’s behavioral, too. While the media found the novelty of the Panama Papers compelling, it’s precisely a lack of novelty that makes the Paradise Papers so important: By proving that a huge data leak from a big financial firm wasn’t a one-off event, ICIJ’s reporting has shown all users of offshore structures that their financial information can be compromised.
Eroding the expectation of secrecy around offshoring is a vital legacy of the Paradise Papers. “If we were on a beach on St. Barts right now, or on a yacht off of Saint-Tropez, we would be hearing ultra-wealthy people express anxiety like, ‘Uh-oh, how do I know the next leak isn’t going to come from a place where I have my wealth?’” says Brooke Harrington, an expert on offshore finance who’s written about it for The Atlantic. “[You don’t want] your life splashed on the pages of some international newspaper, because that pulls people out of the woodwork to extort you or kidnap your family.”
The Paradise Papers are proof of a repeatable model: Disgruntled employees of offshoring firms know with greater certainty that they can anonymously leak data to reporters who will sieve it and translate it into public-interest journalism. “I certainly hope this will continue—and I honestly believe it will,” says Obermayer. “It’s so easy to copy digital information, and not so hard to transfer it. I think there are quite [a number of] guys out there with a moral motivation and the impetus to act.”
Even if each new leak generates less media buzz than the last, the cumulative effect will chip away at a system that hides vast riches in far-flung places, depriving governments worldwide of crucial revenue. And each dataset contains years worth of potential stories and leads spanning every country on the planet.
“Even though projects like the Paradise Papers often emerge as a global phenomenon, they play out subtly in many different ways in many different countries,” says Fitzgibbon at ICIJ. “Even if you as a reader in the US or the UK or Australia don’t feel like you’ve seen much come from the Paradise Papers, don’t forget that citizens in Nigeria or Mongolia or Serbia or Argentina might be experiencing them in a very different way.”
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