Tuesday

23rd Jan 2018

Ambition meets reality in EU tax leaks probe

  • Tax justice campaigners protest against tax havens earlier this year. Journalists told MEPs that the Panama offshore companies were set up with the help of EU banks and lawyers. (Photo: Oxfam)

The European Parliament’s new investigative committee on money laundering and tax dodging (Pana) began work on Tuesday (27 September), hearing from the journalists behind the Panama Papers leak.

The MEPs are to examine whether mass-scale tax avoidance and money laundering could be prevented, at least in part, by better application of existing EU rules.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

The committee also wants to know if new legislation could disrupt the business model of banks and lawyers that help rich individuals and companies to minimise their tax bill through different offshore schemes.

The Panama leaks showed that a Panamanian law firm, Mossack Fonseca, set up shell firms for hoards of European clients.

Highlighting the complexity of the problem, Jan Strozyk from German radio station NDR, told the MEPs: “Mossack Fonseca doesn’t actually work with customers directly”.

”There is a whole industry of middlemen and intermediaries: bankers, lawyers, accountants, consultants, and one-stop-shops”.

Six of Germany’s seven largest banks, including some state-owned banks, also offered Fonseca-type services, he added.

Another NDR reporter, Julia Stein, said she set up her own shell company with a few mouse clicks and no questions asked.

”It was like shopping on Amazon,” she said. ”You Google, and find lots of advertisements on how easy it is to open a shell company”.

Kristof Clerix, a Belgian journalist, said shell firms “can be used for legal, illegal, or even criminal activities”.

He said that, for him, it was OK to use offshore entities to conceal wealth from business partners or spouses, but not in order to trick tax authorities.

Oliver Zihlmann, from the Swiss newspaper Sonntagszeitung, noted: “We have found cases of child abusers, arms smugglers, and terrorists using these [hidden] funds”.

He also highlighted the political risks of shadow structures.

He said that Panama Papers had exposed the fact that Russian leader Vladimir Putin’s “closest entourage” had channelled hundreds of millions of euros through the EU while avoiding controls.

He singled out Cyprus for criticism, saying that while it had a register of corporate ownership on paper, in reality ”nobody is filling it out.”

Journalists, such as Finland’s Minna Knus, also called for a new EU law to protect whistleblowers.

Kroes affair

The mood in the committee’s first meeting was upbeat on Tuesday.

MEPs were concerned, however, the legal service of the EU Council, where member sates meet, had issued an opinion earlier this summer saying the MEPs cannot have full access to information.

The Pana chairman, German centre-right MEP Werner Langen, vowed to fight for the European parliament's right to have the same kind of powers as inquests in national assemblies.

Further clouds on the horizon could appear as the parliament tries to summon guests to its next hearings.

Langen said former EU commissioner Neelie Kroes, recently exposed for having failed to declare her role in an offshore firm while in office, should face the committee’s questions.

When asked whether the current climate change commissioner, Miguel Arias Canete, who failed to declare his wife’s Mossack Fonseca shell firm, should also face questions, the MEP said ”active politicians” would be called up.

He also mentioned Malta’s minister of energy, Konrad Mizzi, another Mossack Fonseca client, as an example.

The decision on who to invite will be taken on 13 October, but Canete’s centre-right EPP political family and the European Commission might try to shield him from any cross-examination.

EUobserved

MEPs stake claim to be EU investigators

With fewer laws to debate, MEPs turn their attention to investigation committees. They have just approved the fourth one under the Juncker commission.

EU tax haven list could name US

The EU commission plans to name and shame foreign tax havens in a new list, but will EU capitals keep their friends, such as the US, out of the register?

Focus

Finnish PM embroiled in press freedom row

Juha Sipila denies trying to pressure a journalist to stop investigating conflict of interest allegations, but a media watchdog says his handling of the issue "looks bad".

News in Brief

  1. Auditors criticise EU economic governance implementation
  2. Dutch environment group appeals air quality ruling
  3. Commission opens case into Polish railways state aid
  4. EU remove eight places from tax havens blacklist
  5. UK to keep forces in Germany over Russia fears
  6. Finnish presidential vote could go to second round
  7. Report: EU might pay Brexit residency fees for EU citizens
  8. Puigdemont free to travel around EU

Stakeholders' Highlights

  1. European Free AlllianceNo Justice From the Spanish Supreme Court Ruling
  2. Nordic Council of MinistersNordic Solutions for Sustainable Cities: New Grants Awarded for Branding Projects
  3. Mission of China to the EUTrade Between China, Belt and Road Countries up 15%
  4. Nordic Council of MinistersOresund Inspires Other EU Border Regions to Work Together to Generate Growth
  5. Mission of China to the EUTrade Between China, Belt and Road Countries up 15%
  6. AJC Transatlantic InstituteAJC Calls on EU to Sanction Iran’s Revolutionary Guards, Expel Ambassadors
  7. Dialogue PlatformRoundtable on "Political Islam, Civil Islam and The West" 31 January
  8. ILGA EuropeFreedom of Movement and Same-Sex Couples in Romania – Case Update!
  9. EU2017EEEstonia Completes First EU Presidency, Introduced New Topics to the Agenda
  10. Bio-Based IndustriesLeading the Transition Towards a Post-Petroleum Society
  11. ACCAWelcomes the Start of the New Bulgarian Presidency
  12. Mission of China to the EUPremier Li and President Tusk Stress Importance of Ties at ASEM Summit

Stakeholders' Highlights

  1. EU2017EEVAT on Electronic Commerce: New Rules Adopted
  2. European Jewish CongressChair of EU Parliament Working Group on Antisemitism Condemns Wave of Attacks
  3. Counter BalanceA New Study Challenges the Infrastructure Mega Corridors Agenda
  4. Dialogue PlatformThe Gülen Community: Who to Believe - Politicians or Actions?" by Thomas Michel
  5. Plastics Recyclers Europe65% Plastics Recycling Rate Attainable by 2025 New Study Shows
  6. European Heart NetworkCommissioner Andriukaitis' Address to EHN on the Occasion of Its 25th Anniversary
  7. ACCACFOs Risk Losing Relevance If They Do Not Embrace Technology
  8. UNICEFMake the Digital World Safer for Children & Increase Access for the Most Disadvantaged
  9. European Jewish CongressWelcomes Recognition of Jerusalem as the Capital of Israel and Calls on EU States to Follow Suit
  10. Mission of China to the EUChina and EU Boost Innovation Cooperation Under Horizon 2020
  11. European Gaming & Betting AssociationJuncker’s "Political" Commission Leaves Gambling Reforms to the Court
  12. AJC Transatlantic InstituteAJC Applauds U.S. Recognition of Jerusalem as Israel’s Capital City