EU Makes Inquiry into Panama Papers Scandal

The European parliament has opened a 10-month inquiry examining the Panama Papers scandal, holding its first evidence session in Brussels. The panel, comprised of 65 members of the European parliament tasked with conducting the inquiry, aims to probe whether the European commission and national European governments failed to properly execute EU anti-tax avoidance and transparency rules and regulations, leading to money laundering, tax evasion, and tax avoidance. Following the inquiry, the panel will then have 12 months to present its findings.

The proceedings began with testimony from journalists at the various media organizations involved in reporting the scandal. It is likely that the panel will call politicians to testify as the inquiry proceeds.

The inquiry is specifically interested in examining the role of UK overseas territories as tax havens. British MEPs from parties across the political spectrum were instrumental in pushing for the inquiry, as roughly half of the some 214,000 companies, foundations, and trusts that had data released in the leak were based in the British Virgin Islands.

The data showed that other overseas territories and countries with a rather murky relationship with the City of London and the UK dominate the data,” explained Molly Scott Cato, a Green Party MEP. “Britain is right at the heart of this.”

Politicians from across Europe have echoed this sentiment. “I recommend that we have a look at the influence of Great Britain on the former colonies and crown dependencies and the role that for instance the Cayman Islands, the British Virgin Islands, the Channel Islands, the Isle of Man or Gibraltar are playing,” said Michael Theurer, a German MEP of the centrist Alliance of Liberals and Democrats for Europe party. “It would also be interesting to know if there could not be conditions attached to payments from London. For this, I will suggest to invite the responsible representative of the British government.”

Politicians, particularly those on the left end of the political spectrum, are keen to summon British politicians to testify at the hearings, including former Prime Minister David Cameron, who the leak revealed had invested in a fund in the Bahamas run by his father, as well as home secretary Amber Rudd, who directed two different offshore companies prior to entering parliament.

A preliminary role call of witnesses is set to take place on Oct. 12. The problem is that the panel has no official legal power to force witnesses to testify. However, it is unusual for a witness who has been called to testify before the European parliament not to do so.

The head of the panel, former Luxembourg Finance Minister and Prime Minister Jean-Claude Juncker, has also moved to investigate the role of third-world countries as tax havens, a move that has angered many politicians. Juncker released a list of such countries that would be examined to identify whether they serve as tax havens, which many say detracts from the overall aim of commission: to examine Europe’s role in facilitating global tax avoidance. Furthermore, the list released did not include Ireland or Luxembourg, both of which are widely regarded as mid-shore jurisdictions.

Ultimately, it remains unclear what the effect of the commission will be — and to what extent it will facilitate change.

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