Saturday

10th Apr 2021

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.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

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?

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. Turkey blames EU for sexist protocol fiasco
  2. France to close elite civil-service academy
  3. Covid-19 cases in UK drop 60%, study finds
  4. White House urges 'calm' after Northern Ireland riots
  5. Italy's Draghi calls Turkey's Erdoğan a 'dictator'
  6. Slovakia told to return Sputnik V amid quality row
  7. EU risks €87bn in stranded fossil fuel assets
  8. Obligatory vaccination not against human rights, European court says

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  2. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance
  3. Nordic Council of MinistersThe Nordic Region can and should play a leading role in Europe’s digital development
  4. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance
  5. UNESDAEU Code of Conduct can showcase PPPs delivering healthier more sustainable society
  6. Nordic Council of MinistersWomen benefit in the digitalised labour market

Latest News

  1. The Covid bell tolls for eastern Europe's populists
  2. Four deaths after taking Russian Sputnik V vaccine
  3. Post-Brexit riots flare up in Northern Ireland
  4. Advice on AstraZeneca varies across EU, amid blood clot fears
  5. Greenland election could see halt to rare-earth mining
  6. After 50 years, where do Roma rights stand now?
  7. Why Iran desperately wants a new nuclear deal
  8. Does new EU-ACP deal really 'decolonise' aid?

Join EUobserver

Support quality EU news

Join us