Tuesday, August 2, 2016


Fearing exposure for taxes, Spanish investors flee post-Mossack Fonseca Panama
Caribbean News
August 2, 2016
By Kenneth Rijock
MIAMI, USA -- Statistics from Panama indicate that a major capital flight of assets owned by wealthy Spanish investors has occurred since the Panama Papers disclosures surfaced in the global media. Holdings of Spanish nationals in Panama, previously appraised at $1.1 billion, are now at $511 million, a 54% decrease.

Some observers have learned that tax evasion investigations have been initiated in Spain against a number of wealthy Spanish businessmen, who claimed tax advantages through Panama, and that is the principal reason for the capital withdrawal, but others believe that the negative publicity generated by the Mossack Fonseca scandal, and the fact that so many investors had retained the Mossack law firm to handle their Panama business is the principal case for the urgent capital movement.

Whether the reason is criminal tax evasion investigation or negative publicity, the money is swiftly leaving Panama, reportedly for European tax havens. The impact of this capital drain upon the Panamanian economy cannot yet be measured or ascertained.

Meanwhile, the Panama Papers have also exposed runaway corruption in Africa; after recent disclosures have blown open the extent of massive illegal activities in the continent. The illicit flows of literally billions of dollars in bribes, kickbacks, diverted funds from national treasuries, transfer pricing, and other financial crimes, perpetrated against the very people that African politicians were supposed to be representing, are staggering.

The Panama Papers media sources have reported that the amount of illicit funds actually exceeds the amount of foreign aid and foreign direct investment into African nations. This fact, alone demonstrates that official corruption in Africa is universal, and unchecked. 

Almost every country in Africa showed up in the Panama Papers, with suspicious offshore corporations having been formed by prominent politically exposed persons (PEPs). 

Kenneth Rijock is a banking lawyer turned-career money launderer (10 years), turned-compliance officer specialising in enhanced due diligence, and a financial crime consultant who publishes a Financial Crime Blog. The Laundry Man, his autobiography, was published in the UK on 5 July 2012.


Kenneth Rijock
Though the Government of Panama is desperately attempting to keep this news from its citizens, many Panamanian banks have very little cash on hand, and what is left is being depleted further by withdrawals. Many savvy financial advisers are telling their Panamanian clients to move their money out of local banks at this time.

The reasons are simple:

(1) The adverse publicity generated by the Panama Papers scandal, which fatally exposed the widespread use of bearer-share Panamanian and BVI corporations by foreign tax evaders secreting their assets in Panama. As the result, many affluent foreign nationals, who are account holders, have nervously moved their funds into tax havens located elsewhere.

(2) Many Panamanian banks, which are partially- or completely-owned by the country's organized crime syndicates, have made loans to insiders, or individuals closely linked to them, and those debts will never be repaid. Given the dysfunctional and corrupt court system in place in Panama, there is no effective way to collect on those bad debts, even if bank ownership wished to, which it is not.

(3) The lack of a Central Bank, which means that there is no enforceable external audit system operating, to keep the banks honest, results in grossly exaggerated and totally bogus claims by the banks, as to their financial status. Some banks claim they hold millions of dollars in gold, but, in truth and in fact, the "assets" are gold certificates of dubious authenticity and value.

The bottom line: if local bank customers made a run on their accounts, many of Panama City's banks would be forced to close their doors, rather than admit they could not pay out to their depositors. The nightmare of Insolvency, for several of them, is a real possibility. Bear this in mind when considering how to assign the appropriate level of Country Risk to the Republic of Panama.