The Panama documents are not the tip of the iceberg, they are a mere speck; here's why – Firstpost

The people benefitting from the global economy are those at the top, simply because our economic system is heavily skewed in their favour The deepening scandal initiated by a massive leak of financial documents from a Panama-based law firm, Mossack Fonseca and Co. has once again highlighted the glaring loopholes in the global financial system – which is at once big news and tediously familiar. However, the Panama Papers only point towards what has always been in plain sight – crime, violence, corruption and inequality are directly aided by financial secrecy offered to the rich and powerful through tax havens and enablers of such secrecy and illicit wealth. Tax havens also change their laws for wealthy individuals and organizations located elsewhere, thus making them ‘offshore’ secrecy jurisdictions. According to Gabriel Zucman, an economist at University of California, Berkeley, 8 percent of global wealth or $7.6 trillion sits in offshore tax havens – half of which belongs to developing countries. However, contrary to popular imagination, these illicit flows don’t always result in fat bank accounts sitting in tax havens – a significant portion of offshore wealth makes its way back into the country through reinvestment and conversion into different forms of assets, such as securities, real estate or bullions, through a process called ‘round-tripping’.