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Op-Ed Contributor: The Paradise Papers Hacking and the Consequences of Privacy

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In Congress, Republicans promote lower tax rates for American corporations even as companies employ the offshore system to pay little tax on billions of dollars in profit. This uncomfortable reality is not the focus of the tax debate in part because firms like Appleby help keep these activities secret. The public is simply unaware.

Meanwhile, there is the torrent of illegal cash that washes through tax havens and secret bank accounts — cash that is often put to illicit use, from bribing public officials to arms trafficking. The research and advocacy organization Global Financial Integrity has estimated that transnational criminal activities account for $1.6 trillion to $2.2 trillion annually. And laundered money represents 2 percent to 5 percent of global G.D.P., according to a recent report by the European Parliament.

The right of privacy keeps this underground river of money secret, but its existence has real-world consequences. Tax avoidance robs governments of funds to pay for education, health care and infrastructure. Prices for homes in New York, Miami, Los Angeles, London and other cities have spiraled beyond the reach of most residents because the global elite, often hiding behind anonymous companies, parks cash in them. And the corruption it enables is a major factor in the persistence of dire poverty in resource-rich regions like Africa.

Last week, the special counsel Robert Mueller indicted Paul Manafort, the former chairman of Donald Trump’s presidential campaign, on money laundering charges. The indictment charges that Mr. Manafort used offshore Cypriot companies and overseas bank accounts to disguise payments from a foreign government and bring the money into the United States. Even after scrutiny by one of the most high-powered teams of prosecutors and investigators ever assembled, it’s still not clear how many millions of dollars passed through these various channels. “Manafort’s financial holdings are substantial, if difficult to quantify precisely because of his varying representations,” Mr. Mueller stated in one legal filing.

With the offshore world so expansive and so in need of transparency, it often falls to journalists and those with access to leaked data to shine light on these secret dealings. Privacy is not an absolute right when the public interest is at stake. And so, journalists must face a difficult question before seeking to publish information that comes from hackers or other unauthorized leaks: Does this information directly affect the well-being of society?

When it comes to the secrecy world, which caters to the moneyed elite and the politically powerful, the answer is often yes. Still, the Mossack Fonseca documents in the Panama Papers were full of confidential information about people who broke no laws. The exposure of this information did not meet a public interest test. Despite complaints by WikiLeaks and other advocacy groups that the International Consortium of Investigative Journalists should have posted all the Panama Papers material online, the organization never seriously contemplated such a move.

What it has done instead is create the world’s most extensive online database of offshore company names, directors and shareholders. This database is about to grow significantly thanks to the Paradise Papers revelations, which include information from 19 corporate registries held by tax havens. The consortium has created a resource that shines a light on shadowy activities that undermine the rule of law and the norms of public responsibility. In this way, a flag has been planted on the boundary between privacy and secrecy.

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Wendy Pettit

Wendy Pettit is a writer for NYT and writes for other publications on her spare time. She lives in Chicago with her husband and her dog Zuko.

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