Financial transparency is when everyone can have access to any required financial information such as prices and audited financial reports.
For example, having a transparent market reduces price volatility.
Meaning that all the market members can base decisions of value on the same data.
To explain better this term, unfortunately, we just got the recent case called The Panama Papers.
First published on April 3rd being the largest release of data ever about the secret world of offshore companies.
The Panama Papers are an extraordinary leak of 11.5m files from the database of the world’s fourth-biggest offshore law firm, Mossack Fonseca.
More than half of the companies are registered in British-administered tax havens, as well as in the UK itself.
The records were obtained from an anonymous source (John Doe) to a german newspaper that shared it with ICIJ – The International Consortium of Investigative Journalists, and this one shared it with its media partners.
The Panama law firm offers secrecy and can be used legally to avoid publicity, limit legal exposure or ease operations across borders.
It can also be employed for outrageous purposes, such as evading taxes and hiding ownership histories.
To date, the case has brought down the Iceland Prime Minister, more politicians from developed and underdeveloped countries, celebrities, businesses, and sports figures who protect money offshore.
By far the most mentioned are politicians.
The top countries with most names of people or companies are British Virgin Islands, Hong Kong, Switzerland, China and the United Kingdom.
The top jurisdictions with the most offshore entities are British Virgin Islands, Panama, Bahamas, Seychelles, and Samoa.
You shall take in mind that the data this buble-diagram is based on. Is only displays data that is available in the Wikidata database.
Therefor the scenario may look different, if all the data is shared.
Prime Minister David Cameron hosted a landmark international anti-corruption summit in London.
The summit goal was bringing together world leaders, business, and civil society to agreed on some steps.
Such as exposing corruption so there are no paradises to hide, punish the crooks, support those affected by corruption and fight the culture of corruption wherever it exists.
Afghanistan, France, the Netherlands, Nigeria, Kenya and the UK – agreed to set up public central registers of beneficial ownership open to everyone, not just law enforcement authorities.
Some small countries are saying that Britain and the US were pushing small countries to adhere to strict rules that they did not always follow themselves.
And regarding this, UK is already trying to do some new changes, but on the other hand, the US is having doubts on belonging to a coalition committed to the fight against corruption.
How can this be possible?
Well, they don’t have to go to Panama to hide their money.
They can go to some of their states, Delaware, and Nevada, to do so. That is why these days you can hear the hypocrisy of US is more famous than ever.
Reaching financial transparency is more important than ever, that is why some world’s leading economists have signed an open letter claiming that tax havens are useless for the economy.
Benefiting just some individuals and multinational corporations at expenses of other, increasing inequality.
There is a need for change, a need to reform the global economic and legal systems, as John Doe said.
But the Panama Papers are not the only case that calls our attention about financial transparency.
Let’s don’t forget the US diplomatic cables released by WikiLeaks in 2010 and the secret intelligence documents given to journalists by Edward Snowden in 2013.
Journalists are having a big role and are helping the whistleblowers to report, for example, corruption.
But still, there is a lot of work to do. Moreover, the role of the government hasn’t been appropriate.
We need good governance to have sustainable development. Corruption will never help to progress and it is too expanded around the world.
Hopefully, transparency will be rewarded enough so it can encourage everyone (powerful or average people) to do what is right because it seems it is not a natural decision to respect.