Hey, ho. Another month, another exotic tax haven leak. Another political storm, another media circus, another rush to condemn. And maybe this time, it will lead to lasting change. Who knows? But my guess is the Bahama Leaks won’t quite live up to whatever hype it has attracted in its short life. There are two main reasons for that:
Scale and scope
Just like the Panama Papers, the Bahamas Leaks have been shared with German newspaper Süddeutsche Zeitung by a John Doe, from where it has been passed to the International Consortium of Investigative Journalists (ICIJ) and on to their partners. And just like the Panama Papers, the documents reveal previously secret ownership lines and corporate structures in an island haven famous for its tax haven usage. But unlike the Panama Papers, the largest ever such leak, which contained a massive 11.5 million documents on, the Bahamas Leaks features only a tenth of that, at around 1.3 million files.
While the Panama Papers stories led with stories of world leaders such as Vladimir Putin, the Saudi King, the Prime Ministers of Pakistan, Malta and Iceland (who eventually stepped down), and large banks across the Western world, the Bahamas Leaks have kicked off with rather dry stories on former EU Competition Commissioner Neelie Kroes’ and UK Home Secretary Amber Rudd. Not quite the same crowd.
Simply, there seems to have been more meat on the bone with the Panama leaks. Extensive documentation of under-the-table documents between banks, trustees and Mossack Fonseca certainly looks to eclipse “the names of directors and some shareholders” from the Bahamas company registry.
Ever heard about “donor fatigue”, the notion that people (typically in the West) get tired of hearing about third world disasters and crisis? I think we may be seeing a similar dynamic with tax haven leaks. In recent years, we’ve had a plethora of such leaks – Swiss, Offshore, Lux, Panama, Bahamas, etc. The novelty factor and the outrage decreases by each one (though counteracted by the scale and scope of revelations). Thus, we have “leak fatigue”, a situation where each new leak is afforded less attention, thus limiting the associated impetus for change.
We shouldn’t be entirely bearish on the BahamasLeaks outlook, though. As ever, it does contribute to some political momentum, even if it mainly serves as an occasion for policy groups to push their existing agendas (EU: the new CCCTB, NGOs: public BO registries, OECD: automatic exchange of information, etc.). And certainly it provides a very good case for discussion of our current global transparency system. But all in all, I am tempering my expectations for any consequent political initiatives.