The EU Investigates the Panama Papers
Six months after the first Panama Papers leak, revelations about the global shell company business continue. The latest tranche of documents from the International Consortium of Investigative Journalists (ICIJ) detail over 175,000 Bahamian companies, many linked to European Union (EU) politicians. Having just opened a Panama Papers-inspired inquiry into whether the European Commission or European governments were applying their own laws on tax-avoidance and financial transparency, the new data illuminates potential test cases—including the former EU commissioner for competition policy and current UK home secretary. Reporters and the named politicians will be asked to speak at upcoming hearings that could lead to reforms.
Boeing Wins, but Global Trade May Lose
The United States won the latest round in a twelve-year trade dispute between the world’s two biggest aircraft manufacturers: U.S.-based Boeing and its European competitor, Airbus. Last week the World Trade Organization (WTO) found that the European Union (EU) provided up to $22 billion in illegal subsidies to Airbus, costing Boeing billions of dollars in sales. Worse, the subsidies continued even after a 2011 WTO ruling ordered them to stop. After an appeals process, the United States can impose up to $10 billion in annual retaliatory tariffs. If it does, it will increase the already rising Western protectionism that has led the WTO to cut its 2016 global trade forecast, down from 2.8 to 1.7 percent.
Och-Ziff Pays for Bribery with Money, not Jail Time
The largest publicly-traded U.S. hedge fund, Och-Ziff, reached a settlement with the U.S. Department of Justice (DOJ) in one of the DOJ’s biggest Foreign Corrupt Practices Act cases to date. The financial firm admitted to bribing senior government officials in the Democratic Republic of Congo (DRC)— where it bought mines on the cheap and then sold them for millions in profits—as well as in Chad, Libya, and Niger. At $412 million, the DOJ and SEC fines are some of the heftiest ever; still no one from Och-Ziff will face criminal charges. The DOJ has yet to make good on its 2015 pledge to bring individual criminal charges for corporate wrong doing. As the Och-Ziff case shows, issuing fines is often easier than holding executives accountable for corruption.