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Global news headlines are going wild about the leaks on Mossack Fonseca. Iceland, a relatively peaceful country not known for protest is now in a frenzy. Its citizens are calling for the head of Sigmundur Davíð Gunnlaugsson, their prime minister, they want him out for his involvement based on evidence in the leaks.
Africans are already facing so much pressure from a general downturn in their economic futures, leaders who are guilty should prepare to come clean as current social climate is unpredictable.
The genesis of this brouhaha is a massive leak in the private documents of Mossack Fonseca. About 11.5 million separate documents were passed to a German newspaper Sueddeutsche Zeitung, the German newspaper then boosted the leak by sharing it with an International Consortium of Investigative Journalists. Mossack Fonseca is a Panamanian law firm dealing in shell company registration and advisory services in the Panama Islands. This company registers companies who want to be anonymous for many legitimate entities and high networth persons; and perhaps illegitimate companies and individuals.
On the legitimate side, Fonseca and other legal service providers for shell companies help big corporations register new companies to shield their competition from getting to know their research and development moves, new product testing and feasibility studies. Such companies are able to grow their ideas without becoming a victim to the prying eyes of their rivals. Also companies register shell companies to avoid paying humongous taxes in their home countries or major markets where their profits are recorded, a strategy that is not totally lawful but has some loopholes that makes a legal case for the practice.
On the not too legal and criminal aspect, shell companies are conduits for heads of states, prime ministers and top politicians to hide their loots. In an environment where secrecy is the major product sold to whoever needs it, it becomes a haven for the most corrupt around the world. Tax havens and shell companies are melting pots for various criminal groups to hide their wealth in a way that is claimed to be totally anonymous to a company like Fonseca, the same company executing the registration.
The major treasure trove of secrets that would likely cause more controversies are secret bank accounts and details of how clients of Fonseca who are basically the high and mighty laundered money and hid many ill-gotten wealth. This is because the shell companies are used as a launchpad by these high and mighty then wire money all around the world to buy property, set up and or fund other companies who then do legitimate business around the world.
With the usual closure to such leaks about shell companies, Fonseca leaks might be the most difficult to demystify, because companies like Fonseca do not really have a clue about who and who own the shell companies they are registering and representing. To even know that Fonseca alone has registered over 250,000 separate shell companies involved in all manners of businesses is perhaps the dead-end for many investigators. To unearth these long standing order of secrecy and opaque business culture, it will take years of painstaking and aimless forensics.
However, Icelandic citizens might be going about it the right way. Demanding for the resignation of their prime minister might be an easy approach, however, if he is ready to contest his removal in a law court, it might be the beginning of a long battle for him and his country.
As far as African countries are concerned, African leaders, businessmen and individuals are expected to make it into these lists of clients. In the next few days, we are looking forward to a period of revelations. While such revelations are not going to be surprising, Africans are already facing so much pressure from a general downturn in their economic future, leaders who are guilty should prepare to face the music as current social climate is unpredictable.