Care needed on Panama Papers

The cousin of Syrian president Bashar Al Assad was among the clients of a Panama law firm. EPA
The cousin of Syrian president Bashar Al Assad was among the clients of a Panama law firm. EPA

With senior members of the Assad regime in Syria having been implicated in the so-called Panama Papers, both the global scale of the data breach and the possible ramifications are becoming more apparent. Among more than 11 million documents leaked from law firm Mossack Fonseca to a consortium of investigative journalists were communications involving a senior regime financier, Al Assad’s cousin Rami Makhlouf, who was described by US diplomatic cables as a “poster boy for corruption”.

The United States introduced sanctions against Makhlouf in February 2008, accusing him of having benefited from and aided the corruption of officials in Syria. His brother, Hafez Makhlouf, was blacklisted by the US a year before. The Makhlouf family’s wealth was valued at $5 billion (Dh18bn) before the Syrian conflict began in 2011 and it was said to control 60 per cent of the economy.

Just as with the earlier revelations about how those close to Russian president Vladimir Putin were linked to $2 billion via secret offshore deals and vast loans, the Panama Papers’ revelations ought to be the cause of concern but also caution.

US sanctions against Rami Makhlouf, for example, do not compel a Panama-based firm to act, even if leaked internal documents from a Mossack Fonseca compliance officer noted that it was “a serious red flag”. Nor does the use of secret accounts and offshore companies necessarily indicate unlawful activity such as money laundering, theft or corruption.

What might be the greatest effect of the unprecedented data breach is on how elected officials in western countries are perceived by their publics. In reports about how British prime minister David Cameron’s father, Ian Cameron, did not pay tax in Britain for his offshore fund, no illegality has been alleged. However the public image of the prime minister’s family has undoubtedly been damaged by the revelation and the price might be paid at the next election rather than any formal investigation.

Published: April 5, 2016 04:00 AM