In case you haven’t already heard, the world’s elite have basically been caught with their pants down.
It’s being referred to in the media as the “Panama Papers“, and it may be the biggest data leak in history. It all began when an anonymous source transferred a whole whack of data to a German newspaper that revealed over 200,000 companies and 14,000 individuals were hiding large sums of money in offshore bank accounts with the help of Panamanian law firm Mossack Fonseca.
Among the people implicated were world leaders, celebrities, business tycoons and 350 Canadians. Which include, according to The Toronto Star, big names like former Newfoundland cabinet minister Chuck Furey and the Royal Bank of Canada. British Prime Minister David Cameron and Russian President Vladimir Putin were also connected to the leak through family members or associates.
In other words, this is serious stuff. But if you’re anything like us, you probably don’t really understand why these offshore accounts are relevant or how they work–maybe short of some tax evasion benefits. Thanks to Redditor DanGliesack though, we can finally wrap our heads around it:
“When you get a quarter you put it in the piggy bank. The piggy bank is on a shelf in your closet. Your mom knows this and she checks on it every once in a while, so she knows when you put more money in or spend it.
Now one day, you might decide “I don’t want mom to look at my money.” So you go over to Johnny’s house with an extra piggy bank that you’re going to keep in his room. You write your name on it and put it in his closet. Johnny’s mom is always very busy, so she never has time to check on his piggy bank. So you can keep yours there and it will stay a secret.
Now all the kids in the neighborhood think this is a good idea, and everyone goes to Johnny’s house with extra piggy banks. Now Johnny’s closet is full of piggy banks from everyone in the neighborhood.
One day, Johnny’s mom comes home and sees all the piggy banks. She gets very mad and calls everyone’s parents to let them know.
Now not everyone did this for a bad reason. Eric’s older brother always steals from his piggy bank, so he just wanted a better hiding spot. Timmy wanted to save up to buy his mom a birthday present without her knowing. Sammy just did it because he thought it was fun. But many kids did do it for a bad reason. Jacob was stealing people’s lunch money and didn’t want his parents to figure it out. Michael was stealing money from his mom’s purse. Fat Bobby’s parents put him on a diet, and didn’t want them to figure out when he was buying candy.
Now in real life, many very important people were just caught hiding their piggy banks at Johnny’s house in Panama. Today their moms all found out. Pretty soon, we’ll know more about which of these important people were doing it for bad reasons and which were doing it for good reasons. But almost everyone is in trouble regardless, because it’s against the rules to keep secrets no matter what.”
As DanGliesack mentions, there are legitimate uses for offshore accounts. So just because someone was implicated in the Panama Papers doesn’t mean their motives were sinister or underhanded. But in many cases, it does. There are allegations that some of the people involved used these offshore accounts to hide assets during divorce proceedings, for example. Or to conceal a money-laundering operation.