Panama tears into accusations

Country objects to being called a secretive offshore hub in wake of leaked ‘Papers’

PANAMA CITY: Panama has hit back at accusations it is a secretive offshore hub spurred by a huge data hack, sending a letter to the head of the OECD saying such allegations were “unfair and discriminatory”.

The country’s deputy foreign minister, Luis Miguel Hincapie, said in the harsh letter addressed to the OECD’s Angel Gurria that, in the wake of the so-called Panama Papers revelations, he had made “allegations and insinuations whose falsity is easily demonstrated”.

The letter, sent on Tuesday and obtained by AFP, said that Panama rejects the “regrettable “characterisation made by Gurria in a statement on Monday, in which he said:

“The ‘Panama Papers’ revelations have shone the light on Panama’s culture and practice of secrecy. Panama is the last major holdout that continues to allow funds to be hidden offshore from tax and law enforcement authorities.

The Organisation for Economic Cooperation and Development (OECD) has led the charge to try to make Panama’s financial transactions more transparent.

The Central American country has introduced recent reforms, but the OECD says it still falls short on the issue of automatic financial information exchange.

Hincapie wrote that Panama’s company laws “are not fundamentally different from any other relevant financial jurisdiction” and noted that half of offshore companies are registered in the British Virgin Islands – “a jurisdiction that operates under British legislation”.

He also stressed that all of the 10 banks named in the Panama Papers as doing business with the law firm hit by the hack were based in Europe, not Panama.

And he noted, too, that the US state of Delaware allowed great anonymity for company owners.

“The tactic to ignore other jurisdictions and focus solely on Panama is unfair and discriminatory,” he wrote.

Hincapie said the reports on the Panama Papers were being used to “distort the facts and tarnish the reputation of the country”.

Panama is mounting a fierce defence of its laws and practices in an effort to protect its vital financial services sector.

Earlier on Tuesday, it warned it could retaliate against France if Paris went ahead with a declaration that it would put Panama back on its blacklist of tax havens.

The foreign ministry will also call a meeting of foreign diplomats in the country to press its argument that it is being unfairly treated in the wake of the hack on the law firm Mossack Fonseca.

At the same time, the government has reiterated that it stood ready to cooperate with any judicial probe resulting from the leaked documents, something Hincapie echoed in his letter.

Meanwhile one of the founders of Mossack Fonseca said on Tuesday his company was hacked by servers abroad.

Ramon Fonseca ( pic) said the firm had lodged a criminal complaint with Panamanian prosecutors on Monday over the breach.

He added that in all the reporting so far

“nobody is talking of the hack, and that is the only crime that has been committed”.

In a telephone message responding to AFP questions, Fonseca said: “We have lodged a complaint. We have a technical report that we were hacked by servers abroad.”

He did not specify from which country the hack was carried out.

Fonseca also rued the fact that reporting on the 11.5 million documents taken from the firm’s computer system focused on the high-profile clients who had used the law firm to set up offshore companies to hold their wealth.

The hack has badly shaken Panama’s financial services sector, which relied on discretion.

With a high-profile clientele and a few criminals revealed to have used Mossack Fonseca to set up offshore entities, scrutiny on the small Central American nation has suddenly ramped up.

But the law firm and the government have stressed that offshore companies are not, in themselves, illegal, and that Mossack Fonseca was not responsible for what its clients used them for. — AFP