Posts
Panama
Papers: Obama, Clinton Pushed Trade Deal Amid Warnings It Would Make
Money Laundering, Tax Evasion Worse
4
April, 2016
Years
before more than a hundred media outlets around the world released
stories Sunday exposing a massive network of global tax evasion
detailed in the so-called Panama Papers, U.S. President Barack Obama
and then-Secretary of State Hillary Clinton pushed for a Bush
administration-negotiated free trade agreement that watchdogs warned
would only make the situation worse.
Soon
after taking office in 2009, Obama and his secretary of state — who
is currently the Democratic presidential front-runner — began
pushing for the passage of stalled free trade agreements (FTAs) with
Panama, Colombia and South Korea that opponents said would make it
more difficult to crack down on Panama’s very low income tax rate,
banking secrecy laws and history of noncooperation with foreign
partners.
Even
while Obama championed his commitment to raise taxes on the wealthy,
he pursued and eventually signed the Panama agreement in 2011. Upon
Congress ratifying the pact, Clinton issued a statement lauding the
agreement, saying it and other deals with Colombia and South Korea
"will make it easier for American companies to sell their
products." She added: "The Obama administration is
constantly working to deepen our economic engagement throughout the
world, and these agreements are an example of that commitment."
Critics,
however, said the pact would make it easier for rich Americans and
corporations to set up offshore corporations and bank accounts and
avoid paying many taxes altogether.
“A
tax haven ... has one of three characteristics: It has no income tax
or a very low-rate income tax; it has bank secrecy laws; and it has a
history of noncooperation with other countries on exchanging
information about tax matters,” Rebecca Wilkins, a senior counsel
with Citizens for Tax Justice, a nonpartisan nonprofit that advocates
changes in U.S. tax policy, told the Huffington Post in 2011. “Panama
has all three of those. ... They’re probably the worst.”
David Sirota
Email shows Clinton State Dept pushing Panama pact amid warnings it would help the rich hide money #PanamaPapers
The
Panama FTA pushed for by Obama and Clinton, watchdog groups said,
effectively barred the United States from cracking down on
questionable activities. Instead of requiring concessions of the
Panamanian government on banking rules and regulations, combating tax
haven abuse in Panama could violate the agreement. Should the U.S.
embark on such an endeavor, it could be exposed to fines from
international authorities.
“The
FTA would undermine existing U.S. policy tools against tax haven
activity,” warned consumer watchdog group Public Citizen at the
time, saying the agreement would encourage corporations to thwart any
U.S. efforts to combat financial secrecy. The group also noted that
U.S. government contractors, as well as major financial firms
supported by taxpayer bailouts, stood to gain from the trade deal's
provisions that could make it harder to crack down on financial
secrecy.
Then-Secretary
of State Hillary Clinton listens to President Barack Obama speak
during a Cabinet meeting at the White House in November 2012.
PHOTO:
REUTERS
Despite
the warnings from watchdog groups, some Democratic lawmakers urged
the Obama administration to aggressively push for the Panama
agreement. According to a 2009 email sent to Clinton by her top State
Department aide, high-ranking then-Sen. Max Baucus, D-Mont., was
pushing for passage of the Panama and Colombia free trade pacts, and
Rep. Charles Rangel, D-N.Y., said "the president had to lend his
star power to pushing them through." Obama ultimately did just
that, hosting Panama's president at a 2011 Oval Office event touting
the proposed trade pact.
Major
corporations also lobbied for the deal, including, among others,
Rupert Murdoch's News Corporation, which at the time maintained 136
Panamanian subsidiaries, according to the Huffington Post.
Obama
and Clinton’s support of the FTAs, however, was not universally
shared within the Democratic Party. Obama received criticism from
many lawmakers, including then-Rep. Mike Michaud, D-Maine, who wrote
an op-ed in the Hill two months after the new president was sworn in
in 2009.
“Talk
about a double whammy: another job-killing Bush trade agreement, and
with the country that a Government Accountability Office study
identified as one of only eight countries — and the only current or
prospective FTA partner — that was listed on all of the major U.S.
and international tax-haven watchdog lists,” Michaud wrote then,
noting that Obama had promised as a candidate that he would
renegotiate the trade agreements. Panama’s unwillingness to sign a
tax information treaty with the U.S. is just the tip of the iceberg,
he said.
Email shows House Dems backing Obama push for Panama pact amid warnings it would help rich hide cash #PanamaPapers
Before
the agreement was ratified, the Obama administration did forge a tax
information sharing agreement with the Panamanian government that it
said would increase financial transparency. Public Citizen, however,
asserted that the separate agreement "does not remedy these
problems" of secrecy, noting that it "merely requires
Panama to stop refusing to provide information to U.S. officials on
specific cases if U.S. officials know to inquire."
The
Sunday reports on the so-called Panama Papers exposed nearly 40
years’ worth of information that included more than 11 million
documents on more than 210,000 companies, trusts, foundations and
world leaders with offshore dealings in Panama where money
laundering, tax avoidance and crime (including funding terrorism) are
made easy. The leak, from financial services firm Mossack Fonseca,
shows that the organization helped clients perform all of those acts.
The
leaks have revealed a suspected billion-dollar money laundering ring
that includes many close allies and associates of Russian President
Vladimir Putin, and showed that Icelandic Prime Minister Sigmundur
David Gunnlaugson has been hiding interest linked to his wife’s
wealth. A total of 12 current or former heads of state and 60 people
linked to current or former leaders have been revealed to have had
secretive dealings in Panama.
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