Published On: Thu, Aug 11th, 2016

Essential issues will be avoided, warns American former member of Panama Papers committee

Rebooting the Global EconomyMIAMI - Joseph Stiglitz, the sole American member of the financial reform commission in Panama, more commonly known as the Panama Papers Committee, resigned recently, when he saw Panama's overbearing influence in what was supposed to be an independent body.

The panel was assembled in the immediate wake of the Panama Papers scandal for damage control on the part of the government, as the country's image was severely tarnished by the release of incriminating materials and documents, detailing obvious tax evasion, money laundering, and corruption on a global scale, facilitated from Panama.

In his first interview since his resignation, the Nobel Prize-winning American economist warned that Panama cannot avoid the central issues the commission has identified as critical to reform.

Stiglitz, who has stated that he understood that the commission was to have complete independence, later learned that the government of Panama asserted ownership over the final report, including the right to see it first, and the right to release it to the public.

Panamanian members of the committee seem to have agreed to the government's rights to the report, and claim that this was the agreement from the creation of the commission. Stiglitz disputes this, stating that complete independence was offered to him.

It is, of course, one thing to give the government time to formulate a response, but another to allow it to indefinitely delay public release of the report, according to Stiglitz, who stated that the commission requires total transparency to perform its role effectively.

Finally, Stiglitz pointed to two principal issues that Panama must approach if it is to truly reform itself. They are:

(1) The formation of a public national registry, identifying the beneficial owners of Panama's bearer-share corporations.

(2) Closer monitoring and supervision of tax-free zones in Panama.

If the final report, which is due out next month, does not tackle these and other essential points, Panama can count on additional jurisdictions labeling it as a tax haven, and a jurisdiction where money laundering, tax evasion, and the deposit of the proceeds of corruption make it a high-risk country which is to be avoided, and blacklisted.

By Kenneth Rijock

Kenneth Rijock is a banking lawyer turned-career money launderer (10 years), turned-compliance officer specialising in enhanced due diligence, and a financial crime consultant who publishes a Financial Crime Blog. The Laundry Man, his autobiography, was published in the UK on 5 July 2012.

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