WHAT IS the real meaning of the Panama Papers, millions of documents leaked from a law firm, Mossack Fonseca, showing that leaders around the world have stashed their money in offshore accounts? In many cases, offshoring was not illegal. Rather, the practice betrays a lack of confidence in the tax laws and other conditions in the leaders’ own countries, even as they were supposed to be enforcing those laws and creating better conditions at home. They were guilty in many cases of hypocrisy.
President Xi Jinping of China has implored members of the Communist Party to eschew the trappings of wealth, and he has carried out a campaign to root out corruption and emphasize “socialist core values.” He might be embarrassed that relatives of top officials in China opened offshore accounts to hold their riches. According to journalists who examined the papers, “eight current and former members of the Politburo Standing Committee, the country’s top decision makers, have relatives with secret offshore companies.” One of them was Mr. Xi’s brother in law, Deng Jiagui. In Russia, too, President Vladimir Putin has made a show of urging businessmen and others to bring their offshore property home. But the Panama Papers show that Putin’s pals, including a mysteriously wealthy professional cellist, were moving hundreds of millions of dollars through offshore accounts.
For some leaders in the West, too, the Panama Papers proved unsettling. The prime minister of Iceland, Sigmundur David Gunnlaugsson, who had promised to defend the nation’s currency and stressed the importance of keeping money in Iceland, was found to have an offshore company, held for a while with his wife. British Prime Minister David Cameron has been thrown on the defensive about a disclosure that he earned money from an overseas investment trust established by his late father, which he sold before taking office as prime minister. Although there was nothing illegal in it, the optics are bad; Mr. Cameron has been outspoken about fighting international tax evasion.
Note how reactions differed, based on the type of government. In Iceland, a massive street protest by outraged citizens led the prime minister to resign. In Britain, Mr. Cameron is being openly challenged by other politicians. And in China? Censors went to work not only blacking out any mention of the reports about Mr. Xi but blocking any online search for “brother-in-law” lest it reveal news of Mr. Deng’s holdings. In Russia, Mr. Putin said “your humble servant” was not named in the documents so “there is nothing to talk about.” He added that leak of the Panama Papers was an American plot against Russia. “In this connection, attempts are made to weaken us from within, make us more acquiescent,” Mr. Putin declared, ever the paranoid.
The Panama Papers have made an important contribution to accountability. In democratic societies, this means that leaders answer for their actions. In China and Russia, they try to conceal the truth.