The Panama Papers, Corruption and the Missing Solution

This piece is written by Stacey Cram, Policy Director, NamatiAnti-Corruption-summit


The role of law is to provide safeguards and protection for us all. But when the law resides in the hands of a few, those few have the power to ignore it, evade it, or manipulate it to advance their own interests – often at the expense of others. Such injustices occur around the world everyday, in various forms. They can affect an individual, a family, a community, a nation, or, as in the case of the Panama Papers, the world.

The 11.5 million leaked documents that make up the Panama Papers reveal that legal professionals at Mossack Fonseca law firm helped set up tens of thousands of offshore companies. While these shell companies are not technically illegal, the Panama Papers have shown that they carry out and hide a wide array of serious crimes, including, but not limited to, tax evasion. Mossack Fonseca reportedly “found allies and clients in major law firms in virtually every nation”.

The unknown whistleblower(s) behind the leak cited ‘the scale of injustice’ as their motivation for releasing the documents. The trillions of dollars siphoned out of countries, particularly from developing and emerging economies, is done at the expense of ordinary citizens. According to the Tax Justice Network, just 1% of this mountain of offshore wealth would yield more than $120bn a year in tax. This is close to the entire $131bn global aid budget. Offshore wealth is expanding inequality by hiding money that should be going towards public services like healthcare, education, and legal services for those who cannot afford or access it. This act of corruption is an injustice of global proportions.

Last week, David Cameron hosted over 40 countries at the Anti-Corruption Summit in London. Although the summit was planned prior to the Panama leak, it could not have been better timed. With the world’s attention currently fixed on corruption, the summit looked to galvanize and coordinate action for developing global tax regulations, closing legal loopholes that permit corruption, and increasing the transparency of lawyers, bankers and other professionals who can facilitate financial secrecy. In a promising start, the UK, the U.S., Nigeria, the Netherlands, and South Africa have all announced a package of steps to stop global corruption. A new global plan was also announced for the return of stolen assets.

These international reforms are important, but they will not solve the problem on their own. Top-down or purely government-run anti-corruption initiatives have proven to be of limited effectiveness and sustainability. Implementation and enforcement remain a major challenge. To bring about lasting change we need to devolve the powers of governance from the elites to the billions who currently live outside of the protection of the law. We need legal empowerment.

Legal empowerment practitioners around the world help citizens to understand, use, and shape the law to ensure justice for those who need it most. Armed with legal knowledge and skills in advocacy, litigation, mediation, and education, these community paralegals and grassroots legal advocates empower ordinary people to defend their rights, hold those in power accountable and fix broken systems. They have successfully confronted stark imbalances of power between citizens and private firms, between citizens and the state, and between citizens and regressive local norms.

In apartheid South Africa, community paralegals mobilized people to confront and change unjust laws and governance structures. Today, they assist clients to access government services and enforce new legislations and protections. In Mexico, local organization Ciudadanos en Apoyo a los Derechos Humanos has helped prisoners eligible for early release access their records which were unfairly being withheld by officials. Over 40% of those prisoners secured early release based on the records they obtained. And earlier this year, in Sierra Leone, community paralegals working with Namati helped a community win back land that was sold to a Chinese rubber company without their consent.

The impact of legal empowerment efforts extends beyond individual cases. By equipping clients with knowledge of their rights, the laws, and the legal processes, they are able address future injustices and hold those in power to account. The aggregate data collected from grassroots experience also creates a powerful empirical basis from which to advocate for systemic reform. It can lead to positive changes in the law itself, and in the institutions by which the law is applied.

Yet, to date, most governments have overlooked the vital role of legal empowerment. Governance and rule of law make up a small and declining share of official  development assistance. Between 2005 and 2013 only 1.8% of aid has gone to the justice sector, compared to 7.5% for education and 11.7% for health.* Of that limited funding, the vast majority goes to state institutions rather than civil society organizations.

Last week’s Anti-Corruption Summit was another missed opportunity for governments to provide direct support for legal empowerment work. But the initiatives announced still hold promise. The planned return of stolen assets, for example, could be directed to funding legal empowerment work or anti-corruption commissions.

World leaders must commit to providing greater support to legal empowerment initiatives if we are to tackle injustice and corruption. More must be done to help put the power of the law in the hands of the people.

*Source: forthcoming report June 2016, Developing a portfolio of financially sustainable, scalable basic legal service models, Law and Development Partnership

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