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The latest episode in the comedy of errors called the ‘Services Sector’ saw the “revelation” of thousands of Cyprus-interest companies and accounts held or controlled by Panama-based entities, one of which is Mossack-Fonseca, a leading international law firm in the central American country that registers and manages holding companies.
The whole fuss seems to have been blown out of proportion. We all know that Panama, as well as some other Caribbean jurisdictions and outlying U.K. islands are nothing more than havens for tax dodgers, criminals, money launderers, even wealthy businesspeople who want to evade a hefty divorce settlement and have thus parked their assets behind walls of trust companies.
Cypriot lawyers, too, have done a lot of business with Mossak-Fonseca over the past four decades, ever since we established our own “offshore” sector, later legitimised and re-named Services Sector, with tens of thousands of trustee, nominee and holding companies registered and managed by similar law and accountancy firms in Panama and other havens.
Cypriot politicians have now donned their ‘holier than thou’ cape and are demanding that “light be shed” on this scandal, forgetting that they went quiet when the Milosevic Millions were channelled in and out of the island and, more recently, the lack of proper oversight saw millions of depositors duped and the collapse of a major bank, Laiki. Is it a coincidence that shutting down the island’s second biggest lender also suited the interest of some people in Cyprus?
Soon after the Panama Papers were leaked, Cypriot officials were quick to declare that anything suspicious would be investigated thoroughly, not realising that whatever we say, Cyprus will not be able to shed the reputation of being a centre for crooks who can thrive and get away with it, under the cover of politicians.
Simply saying that “we are going by the book” is not enough, nowadays. People need to see that justice has been served and that crooks who have laundered millions through the island’s banks, or have hijacked smaller sums from forex investors, will pay for their crimes, by serving a sentence and paying back what they have stolen.
Apart from the well known bunch of creative accountants and lofty lawyers, the sector has become overpopulated with boring pen pushers who do nothing but data entry on behalf of their clients.
During the past three years of the economic crisis, only a few wealthy companies have managed to survive and thrive, while thousands of SMEs have suffered and many have closed down, due to the lack of proper advice from their accountants, lawyers, ‘consultants’ or industry groups.
Just as the shipping community sent out a loud and clear message at a conference this week that the sector needs to reform, but also to evolve, so, too, should the rest of the services sector, as we are losing business to rival jurisdictions simply because we cannot deliver on the ‘value added’ side of the equation.
