When browsing websites of transparency groups and organizations that regularly publish leaks, you’ll find that many of them strongly encourage potential leakers and informants to use hyper-secure messaging apps like Signal or Telegram. That’s not very transparent.
There are two likely reasons for this: They want to guard the safety of their sources, and they don’t want their internal communications made public.
Safety of sources is a legitimate concern. Let’s move onto the second reason.
It’s possible that transparency groups (like commercial organizations) don’t want internal communications made public because they can be taken out of context. The public perception of leaks and transparency are often misconstrued and incorrectly used interchangeably. This leads to confusion and an atmosphere where it’s easy to visualize crowds arming themselves with pitchforks.
Documents from the Panama Papers have been frequently taken out of context. A huge amount of information was dumped on the public with little narrative. The vast majority of the individuals named in the Panama Papers were operating completely legally (but not transparently). However, in many headlines the fact that a name appeared in the Panama Papers became a serious condemnation.
Was illegal or suspicious activity happening through some of the shell companies named in the Panama Papers? Absolutely. But there’s usually nothing illegal about owning or controlling anonymous companies if the companies are used for legal purposes.
Not to diminish the impact of the Panama Papers; over $1.2 billion in fines and back taxes have been collected by governments around the world after the leak. It is certainly one of the most influential events in compliance from the last decade.
In our post about #29Leaks, we said anonymous companies “are sometimes used to evade taxes, launder money, and hide assets.” In the Twitter post below, the user changed the “sometimes” to “often.”
This one word reflects the public opinion about leaks: shell companies are used by criminals.
Vera Cherepanova has written about how transparency can actually lead to an increase in corporate crime. “Transparency implies accountability,” she said, yet transparency doesn’t always bring accountability.
Many things are brought to light in a leak. Criminal behavior may be revealed, along with violations of compliance controls on a corporate or national level.
But for transparency to be effective, you need to know what you are looking at. I would be useless performing surgery. I can’t tell the difference between a malignant tumor and a benign tumor. To me, they are all tumors.
Not all shell companies are criminal, and leaks can muddy the waters so much that it becomes hard to see anything. The end goals of leaks and of transparency are, and should be, different from one another.
But what are those goals?
Is it the abolition of shell companies, the advent of a transparent Ultimate Beneficial Ownership (UBO) system, or something else entirely? That’s a debate we welcome and encourage.