The (im)morality Behind the Pandora Papers
The revelations from the Pandora Papers are riveting the world and have shaken up political and economic elites everywhere. Scrupulous and painstaking examination of thousands of documents by committed journalists have revealed to the world, the extent of hidden wealth stashed in offshore tax havens around the world.
Sri Lankans also feature in the revelations – Nirupama Rajapaksa and Thiru Kumar Nadesan, close relatives to the ruling Rajapaksa clan. Some Media reports have been suggesting that those are not the only Sri Lankan names revealed in the Pandora Papers – simply that they received more prominence because Nirupama Rajapaksa is a former parliamentarian.
Writing to President Gotabhaya Rajapaksa, Thiru Kumar Nadesan has professed innocence – or denied any wrongdoing and has called for an investigation, even graciously suggesting that a ‘retired Judge’ should be appointed to conduct the investigation. He has just stopped short of naming who that should be! Well, we all know what commissions of investigation will do.
This country has probably earned a place in the Guinness Book of World Records, for the sheer quantity of utterly useless commissions that have been appointed to investigate the many crimes committed by the powerful in this country. Although the alleged crimes committed by the economic and political elite of this country are manifold – not a single person has been held accountable for their actions.
At best, a few scapegoats might have been prosecuted – but the big fish have got away scot free. Leave that as it may, the bigger question here is that very few named in the Pandora Papers will be found to have broken the law. Basically, what investigations of these leaked documents show is how the global elite amass money through embezzlement, bribes, commissions, money laundering, cronyism and then hide their wealth using laws that they themselves have helped create.
The Pandora Papers are not the first (and unlikely to be the last) of such revelations. There were the Panama Papers before that. Also the leaks from HSBC, the Paradise Papers and so on. All of these revealed a shocking network of dodgy financial dealings linking global political and economic elites. But these revelations have led to very few investigations, prosecutions or reforms of the law.
The point is that amassing wealth – by any means – and avoiding taxes are not antithetical to capitalism. Capitalism has a legacy of plunder and exploitation – we only need remind ourselves of how empires flourished by extracting resources from their colonies or how slavery supported the generation of wealth in many countries.
Today, while we reject such forms of extraction and wealth creation – we have developed far more sophisticated strategies to achieve pretty much the same results. All over the world there are close relationships between the political and economic elite resulting in weak regulation and ensuring that little progress is made with regard to investigations and prosecutions, leaving large holes for avoiding taxes.
Politicians are either in the pay of these economic elites and/or directly involved. In fact, what the Pandora Papers and other similar leaks have revealed are how there is little to distinguish between political and economic elites. In such a context, what chance is there for meaningful reform efforts? The case of Nirupama Rajapaksa and Thiru Kumar Nadesan are classic examples of the way this works. And it is not simply, that the couple is closely related to the Rajapaksa family.
Their networks and alliances extend beyond the Rajapaksa family, to a tight circle that is highly protective of each other. Take for instance, the recent ‘Finance Bill’ presented to and passed in Parliament, coincidentally not long before the Pandora Paper revelations. It essentially provides a legal framework for money laundering. It provides an amnesty for those who have hidden wealth to gain legitimacy and amass further wealth.
As a member of COPA in Parliament, I continue to be amazed at the regular reports provided by the Auditor General revealing the amount of tax evasion in this country by large, reputed companies. Recently, Dr. Tissa Vitarana when reporting on COPA to Parliament, stated that unrecovered tax revenue amounts to Rs 290 billion.
This, remember is simply lost revenue from declared incomes. Yet, apart from a mild knock on the knuckles, I have learned that under the current legal framework, there is very little that COPA can do, to resolve these issues. How has tax evasion become an acceptable practice? How is it morally defensible to do so? We know that currently, globally, wealth generation is on the increase. But the other side of the coin is that income inequality is also on the increase. Yes, on average, lives have improved across the board.
One needs only to compare the lives of rural Sri Lanka in the 1970s and now, and there is a notable improvement in the material lives of most people. Hidden beneath that exterior is however, indebtedness and precariousness. Lives are lived on the edge; people are working harder for longer hours to sustain themselves. At the other end of the scale is luxury and splendour on a global scale. As children, writing the inevitable essay on ‘How I spent my holidays’ in school at the beginning of a new term, a family trip to Nuwara Eliya was considered the height of excitement.
Today, children write blithely about trips to Disneyland in the US, skiing vacations in the Swiss Alps and at the very least a shopping trip to Singapore and Malaysia. This is the same country, where school closure has meant that some children are deprived of a nutritious meal.
How do we defend this level of inequality? How thick should our skins be, for this degree of inequality to be acceptable? This is not an issue that will be resolved by charitable impulses – many of the companies defaulting on tax payment engage in ‘Corporate Social Responsibility’ initiatives. This requires an overhaul of the system, where as much as income generation, redistribution of income become part of economic policy.
A proper taxation system and closing the loopholes for tax default and avoidance has to be a major part of this policy. At the same time, there is a perception that tax avoidance is defensible, because, public money is wasted. There is some justice to this – a Government that is highly corrupt cannot expect law-abiding or socially responsible actions from citizens. As citizens, we then resort to finding private solutions rather than common solutions and in such a context, paying taxes seems a waste. Yet, that is precisely what needs to change.
The cycle of corruption is not simply in Government; it is also maintained by an economic elite who benefit from Government patronage. It is this cycle that must be disrupted in the interests of the wider public. This idea of collective good, the larger picture – the pursuit of goals that are based less on pure and undiluted self-interest, but the larger good requires a moral shift in our thinking.
Surely, the last one-anda-half years taught us the value of shared responsibility and cooperation; the importance of collective responses especially at times of crisis. The shift that society so desperately needs, towards a more cooperative and responsible system of governance starts with a shift in perception from within all of us.