Latin America continues to be hit by corruption scandals, with the release of a vast trove of documents, known as the Panama Papers, creating an uproar across the region.
The Panama Papers involve more than 11.5m, some of them financial and legal documents from a Panamanian law firm, Mossack Fonseca, documenting the creation of more than 200,000 offshore entities, used as tax shelters.
The revelation by the International Consortium of Investigative Journalists (ICIJ) has already led to the resignation of Iceland’s prime minister and put a harsh spotlight on politicians, business leaders and sports heroes in Latin America.
Argentine president Mauricio Macri is mentioned, as are candidates running for president in Peru’s 10 April election.
Denials of wrongdoing have followed the document dump, but with corruption scandals having brought down Guatemala’s former president and threatening Brazilian president Dilma Rousseff with impeachment, the sense in the region is that corruption is rampant and everyone is suspect, even if no crimes were committed setting up the offshore companies.
Jose Ugaz, head of watchdog Transparency International, said Latin Americans were fed up with corruption.
“The perception is that there is massive corruption at all levels. These offshore companies may be legal, but they reveal a systematic and massive use of financial mechanisms to avoid paying taxes,” he told Emerging Markets.
Peru is a telling example. The documents released include the names of big financial backers of leading presidential candidate, former Congresswoman Keiko Fujimori. No crimes may have been committed, but Fujimori’s father, former president Alberto Fujimori (1990-2000), is in prison for corruption.
More than $1bn was stolen from government coffers during his 10 year rule. The new revelations are not helping Fujimori put distance between her candidacy and her father’s presidency.
Also implicated have been Pedro Pablo Kuczynski, a former finance minister making his second bid, and former president Alan García, who is trying to win back the presidency after sitting out five years. The three have denied any relationship to the scandal, but the mere mention of their names has generated new doubts.
The Panama Papers increase pressure on countries to tighten laws against asset laundering. Panama has taken strides to get off the “grey list” of the Financial Action Task Force, and the Bahamian government said it had been tightening legislation.
New efforts by the G20 and OECD could make life harder for countries failing to implement new laws.
World Bank president Jim Yong Kim told Emerging Markets that the Panama Papers reinforced the need for transparency. “I think the world as a whole is moving towards greater transparency and I do not think that is something we can turn backwards,” he said.
“And when people are not paying their taxes — and far from paying their taxes, they’re stealing assets and taking them to other places for their own benefit, this is something that will be a great detriment to our goal of ending extreme poverty.”