7 ms·

Structural studies of the global networks exposed in the Panama papers

193 points by nobody9999 6y ago

roenxi 6y ago
Accounting has a rich history going back approximately 7,000 years [0]. This decade will get an entry in that history as "and in the early 21th century, it became a matter of public record how rich people actually managed their money". It might be easy to underestimate how tectonic papers like this are. [0] https://en.wikipedia.org/wiki/History_of_accounting https://en.wikipedia.org/wiki/History_of_accounting
- BadassFractal 6y ago
  I haven't been following the fallout of the Panama Papers leak, but has anything concrete (and positive for us vanilla tax payers) actually come out of it? Or did the ultra wealthy simply move their tax evasion schemes to a different set of countries?
  - ncmncm 6y ago
    Just different agencies at the same countries.
  - vmception 6y ago
    Laws havent been reported to have changed, a few people had legal consequences, a few people had reputational consequences, most didnt because what they did may be misunderstood but not illegal
  - r721 6y ago
    https://old.reddit.com/r/PanamaPapers/comments/4e7f1n/persons_who_have_resigned_or_been_deposed_as_a/ https://old.reddit.com/r/PanamaPapers/comments/4e7f1n/person... (last updated 2 years ago, so without more recent developments)
deleted 6y ago
[deleted]
vikingcaffiene 6y ago
Everything I've heard about the panama papers suggests that it's a massive scandal that exposes how the rich and powerful are systematically fucking over society. The sad truth is that even though it's been exposed, the scheme is too complex for most people to grasp. Hell they even made a movie about it and no one paid much attention.
- nobody9999 6y ago
  >The sad truth is that even though it's been exposed, the scheme is too complex for most people to grasp. As the paper's abstract says: "In recent history, the Panama Papers have comprised one of the largest and most influential leaks detailing information on offshore entities, company officers and financial (and legal) intermediaries, and has led to a global exposé of corruption and tax evasion. A systematic analysis of this information can provide valuable insights into the structure and properties of these entities and the relations between them. Network science can be applied as a scientific framework for understanding the structure of such relational, heterogeneous datasets at scale. In this article, we use an existing, relational version of the Panama Papers to selectively construct various networks, and then study the properties of the underlying system using well-defined analytical methods from network science, including degree properties, country assortativity analyses, connectivity and single-point network metrics like transitivity and density." This is an attempt to make some sense out of this using the tools of Network Science[0]. [0] https://en.wikipedia.org/wiki/Network_science https://en.wikipedia.org/wiki/Network_science
- troughway 6y ago
  Because when you try to explain to HN that things are rigged and that "competitors" at higher levels know each other personally because even their kids attend the same schools gets you flagged, downvoted and warned, there is really no point in doing so anymore. Not important at this point. Let the idiots graze the pasture.
  - TeMPOraL 6y ago
    I'm confident HN could handle an explanation of that that's evidence-based, or at least presents a self-consistent model, and doesn't just peddle conspiracy theories. If you have one, please share (or link to a previous discussion). I'm somewhat open to this view, given that it seems like a reasonable explanation that a good chunk of the influential people have gone through the same few schools, socialize in the same circles, etc. By itself that isn't nefarious per se, but it does limit the distribution of worldviews among the people with power.
wombatmobile 6y ago
> In recent history, the Panama Papers have comprised one of the largest and most influential leaks detailing information on offshore entities, company officers and financial (and legal) intermediaries, and has led to a global exposé of corruption and tax evasion. A systematic analysis of this information can provide valuable insights into the structure and properties of these entities and the relations between them. OK, I get that. What are the insights? In the Summary it says: > We iterate that, while we certainly did not expect small-world phenomena to emerge in all networks, the fact that it did not emerge in even a single network, and also that the distribution of connected components (as a function of size measured in terms of number of nodes) seems to follow a clear and consistent trend throughout, suggest a similar fundamental difference compared to small-world networks. Um, what does that tell us about corruption and tax evasion? Can somebody please explain in layman's terms?
- davisr 6y ago
  It means the corruption is spread far and wide, without a central group of 'authority'.
  - hashtagmarkup 6y ago
    It means the author has to worry about car bombs from more than a single entity.
    - idclip 6y ago
      Hah.
      - hashtagmarkup 6y ago
        Murder. Lol.
- civilized 6y ago
  It means the authors were trained to plot degree distributions of any network they come across, and hey, here's another network, let's plot some degree distributions
seibelj 6y ago
There will always be offshore entities with strong rule of law (Cayman) because multinational companies need a neutral ground to settle disputes with competent judges without the whims of each company’s home base screwing it up. That’s the most generous and ethical explanation for the continued support and existence of offshore judication. The unpopular reason is that offshore countries offer lower taxes and favorable regulation. As someone who believes in the smallest possible state and enjoys the benefits of offshore countries (as do Facebook, Google, and Apple which use a combination of the Netherlands, Ireland, Bermuda, and Cayman in complex corporate structures) I am sympathetic to this argument. Although my friends say I am a corporate stooge!
- jariel 6y ago
  "multinational companies need a neutral ground to settle disputes with competent judges without the whims of each company’s home base screwing it up." This is definitely not it. The largest entities with the most IP at stake don't duke it out in the Cayman islands. Moreover, Cayman - and any other offshore - does not have nearly the sophistication to handle complicated disputes. 'Sound rule of law' is one thing, but when laws are not very clear or complex, without a lot of historical rulings, without a sophisticated judicial + participants ... then it's not going to be part of the value add. If you're really concerned about 'rule of law' then you want to be in EU/US/UK, possibly Canada, Australia, Switzerland and you don't even want it to touch other jurisdictions.
  - seibelj 6y ago
    I don’t think you understand how offshore works. You seem like someone who saw a bunch of YouTube videos. For example all re-insurance companies that back the US insurance markets are Bermuda companies, and this is explicitly OK in the tax code.
    - jariel 6y ago
      I worked at a company that payed out $700M in an IP dispute involving offshore entities (and worked for a while in an offshore entity, Monaco, though it's a different kind of 'offshore'). Edit: FYI your 'Bermuda' argument doesn't help make your point re: 'neutral ground IP law'. The reason companies exist 'offshore' is to avoid taxation and scrutiny, which is why they are there.
jariel 6y ago
The Panama papers really only make sense in the context of multinationals operating from regimes with some degree of transparency, i.e. the West, Japan, Singapore etc.. 'Most' of the problems are in regimes where everything is nicely hidden i.e. Dubai, Moscow, anywhere in China. Why would anyone do banking in Dubai, where there are absolute Monarchs who can do whatever, whenever, with their money, finances information, when they can go to US/UK/EU and have full legal protections? Because 'no transparency'. And that's it. Billions of USD intended for Afghanistan investment end up in bank accounts there etc.. What we really need are the 'Dubai Papers'.
- powerapple 6y ago
  I would expect people in Dubai, Moscow and China put their money in the WEST. How much money go to London every year? How much money go to Sydney? And Vancouver? Money will go to the so-called cities with transparency.
  - jariel 6y ago
    People in Russia and China put their money in the West for it to be safe from their own corrupt regime, otherwise, they don't want transparency. And Dubai, definitely, is the place to keep dirty money. If it can be cleaned, and someone has legit cover for their money, they can keep it in the West.
    - powerapple 6y ago
      I will not be so certain about it. There are a lot (a lot) corrupt money in London, Vancouver and other cities.
    - powerapple 6y ago
      Actually I have to state what I believe: the only way to keep your corrupt money safe is to work with international institutes, bankers and layers in so called cities with transparency, such as London, Hong Kong, New York, Switzerland and so on. It is called money laundering. Keeping it in Dubai makes no sense. People may spend money in Dubai, but not keeping their wealth in Dubai.
FandangoRanger 6y ago
Hey where can independent researchers obtain the Panama Papers? I don’t think people can be expected to simply “trust us guys.”
- nobody9999 6y ago
  >Hey where can independent researchers obtain the Panama Papers? I don’t think people can be expected to simply “trust us guys.” Footnote 5 of the paper in the submission provides a link to the data used. For your convenience, that link is: https://offshoreleaks.icij.org/pages/database https://offshoreleaks.icij.org/pages/database I look forward to reading your paper when it's complete.
  - FandangoRanger 6y ago
    No I mean, the entire dataset. It's being jealously guarded by the "free" press.
    - nobody9999 6y ago
      Is it? Please explain which data is not included in the ICIJ database[0]. [0] https://offshoreleaks.icij.org/pages/database https://offshoreleaks.icij.org/pages/database
K0balt 6y ago
It should be mentioned that there are lots of non tax avoidance reasons to go offshore. The biggest ones are asset protection and incontestable estate succession. IMHO, if your net worth is over about 250k (or lower if you have a high risk profile) your assets should probably be held in an offshore LLC, trust, or foundation. This makes them effectively untouchable by lawsuit, divorce proceedings, seizure, etc. If you are concerned that your will provisions will be contested or that a lawsuit between siblings is likely when you die, offshore estate management also makes those things impossible. Since in only costs 1-3 thousand US to set up effective offshore asset management, and maintaining it is 200-1200 a year, it's a small price to pay for peace of mind.
- nickpp 6y ago
  This. Most people pissed off about various (legal) offshore structures do not even understand their utility. A little financial education goes a long way.
- JacobAldridge 6y ago
  Noting that transferring assets into Trust will often trigger a capital sales event (and tax), while potentially increasing asset holding costs (your home held by a Cook Islands trust may be subject to non-resident land taxes, for example, than many self-occupiers are exempt from) or life friction (I had a UK client who refused to work with me unless my main company was based in the UK, for example). Of course, these things are hugely jurisdictional - I would set the bar much higher than $250K net worth, but agree with your point.
Havoc 6y ago
This feels very much like a case of when you have a hammer everything looks like a nail

193 points by nobody9999 6y ago

Accounting has a rich history going back approximately 7,000 years [0]. This decade will get an entry in that history as "and in the early 21th century, it became a matter of public record how rich people actually managed their money". It might be easy to underestimate how tectonic papers like this are. [0] https://en.wikipedia.org/wiki/History_of_accounting https://en.wikipedia.org/wiki/History_of_accounting

BadassFractal 6y ago
I haven't been following the fallout of the Panama Papers leak, but has anything concrete (and positive for us vanilla tax payers) actually come out of it? Or did the ultra wealthy simply move their tax evasion schemes to a different set of countries?
- ncmncm 6y ago
  Just different agencies at the same countries.
- vmception 6y ago
  Laws havent been reported to have changed, a few people had legal consequences, a few people had reputational consequences, most didnt because what they did may be misunderstood but not illegal
- r721 6y ago
  https://old.reddit.com/r/PanamaPapers/comments/4e7f1n/persons_who_have_resigned_or_been_deposed_as_a/ https://old.reddit.com/r/PanamaPapers/comments/4e7f1n/person... (last updated 2 years ago, so without more recent developments)

deleted 6y ago

[deleted]

vikingcaffiene 6y ago

Everything I've heard about the panama papers suggests that it's a massive scandal that exposes how the rich and powerful are systematically fucking over society. The sad truth is that even though it's been exposed, the scheme is too complex for most people to grasp. Hell they even made a movie about it and no one paid much attention.

nobody9999 6y ago
>The sad truth is that even though it's been exposed, the scheme is too complex for most people to grasp. As the paper's abstract says: "In recent history, the Panama Papers have comprised one of the largest and most influential leaks detailing information on offshore entities, company officers and financial (and legal) intermediaries, and has led to a global exposé of corruption and tax evasion. A systematic analysis of this information can provide valuable insights into the structure and properties of these entities and the relations between them. Network science can be applied as a scientific framework for understanding the structure of such relational, heterogeneous datasets at scale. In this article, we use an existing, relational version of the Panama Papers to selectively construct various networks, and then study the properties of the underlying system using well-defined analytical methods from network science, including degree properties, country assortativity analyses, connectivity and single-point network metrics like transitivity and density." This is an attempt to make some sense out of this using the tools of Network Science[0]. [0] https://en.wikipedia.org/wiki/Network_science https://en.wikipedia.org/wiki/Network_science
troughway 6y ago
Because when you try to explain to HN that things are rigged and that "competitors" at higher levels know each other personally because even their kids attend the same schools gets you flagged, downvoted and warned, there is really no point in doing so anymore. Not important at this point. Let the idiots graze the pasture.
- TeMPOraL 6y ago
  I'm confident HN could handle an explanation of that that's evidence-based, or at least presents a self-consistent model, and doesn't just peddle conspiracy theories. If you have one, please share (or link to a previous discussion). I'm somewhat open to this view, given that it seems like a reasonable explanation that a good chunk of the influential people have gone through the same few schools, socialize in the same circles, etc. By itself that isn't nefarious per se, but it does limit the distribution of worldviews among the people with power.

wombatmobile 6y ago

> In recent history, the Panama Papers have comprised one of the largest and most influential leaks detailing information on offshore entities, company officers and financial (and legal) intermediaries, and has led to a global exposé of corruption and tax evasion. A systematic analysis of this information can provide valuable insights into the structure and properties of these entities and the relations between them. OK, I get that. What are the insights? In the Summary it says: > We iterate that, while we certainly did not expect small-world phenomena to emerge in all networks, the fact that it did not emerge in even a single network, and also that the distribution of connected components (as a function of size measured in terms of number of nodes) seems to follow a clear and consistent trend throughout, suggest a similar fundamental difference compared to small-world networks. Um, what does that tell us about corruption and tax evasion? Can somebody please explain in layman's terms?

davisr 6y ago
It means the corruption is spread far and wide, without a central group of 'authority'.
- hashtagmarkup 6y ago
  It means the author has to worry about car bombs from more than a single entity.
  - idclip 6y ago
    Hah.
    - hashtagmarkup 6y ago
      Murder. Lol.
civilized 6y ago
It means the authors were trained to plot degree distributions of any network they come across, and hey, here's another network, let's plot some degree distributions

seibelj 6y ago

There will always be offshore entities with strong rule of law (Cayman) because multinational companies need a neutral ground to settle disputes with competent judges without the whims of each company’s home base screwing it up. That’s the most generous and ethical explanation for the continued support and existence of offshore judication. The unpopular reason is that offshore countries offer lower taxes and favorable regulation. As someone who believes in the smallest possible state and enjoys the benefits of offshore countries (as do Facebook, Google, and Apple which use a combination of the Netherlands, Ireland, Bermuda, and Cayman in complex corporate structures) I am sympathetic to this argument. Although my friends say I am a corporate stooge!

jariel 6y ago
"multinational companies need a neutral ground to settle disputes with competent judges without the whims of each company’s home base screwing it up." This is definitely not it. The largest entities with the most IP at stake don't duke it out in the Cayman islands. Moreover, Cayman - and any other offshore - does not have nearly the sophistication to handle complicated disputes. 'Sound rule of law' is one thing, but when laws are not very clear or complex, without a lot of historical rulings, without a sophisticated judicial + participants ... then it's not going to be part of the value add. If you're really concerned about 'rule of law' then you want to be in EU/US/UK, possibly Canada, Australia, Switzerland and you don't even want it to touch other jurisdictions.
- seibelj 6y ago
  I don’t think you understand how offshore works. You seem like someone who saw a bunch of YouTube videos. For example all re-insurance companies that back the US insurance markets are Bermuda companies, and this is explicitly OK in the tax code.
  - jariel 6y ago
    I worked at a company that payed out $700M in an IP dispute involving offshore entities (and worked for a while in an offshore entity, Monaco, though it's a different kind of 'offshore'). Edit: FYI your 'Bermuda' argument doesn't help make your point re: 'neutral ground IP law'. The reason companies exist 'offshore' is to avoid taxation and scrutiny, which is why they are there.

jariel 6y ago

The Panama papers really only make sense in the context of multinationals operating from regimes with some degree of transparency, i.e. the West, Japan, Singapore etc.. 'Most' of the problems are in regimes where everything is nicely hidden i.e. Dubai, Moscow, anywhere in China. Why would anyone do banking in Dubai, where there are absolute Monarchs who can do whatever, whenever, with their money, finances information, when they can go to US/UK/EU and have full legal protections? Because 'no transparency'. And that's it. Billions of USD intended for Afghanistan investment end up in bank accounts there etc.. What we really need are the 'Dubai Papers'.

powerapple 6y ago
I would expect people in Dubai, Moscow and China put their money in the WEST. How much money go to London every year? How much money go to Sydney? And Vancouver? Money will go to the so-called cities with transparency.
- jariel 6y ago
  People in Russia and China put their money in the West for it to be safe from their own corrupt regime, otherwise, they don't want transparency. And Dubai, definitely, is the place to keep dirty money. If it can be cleaned, and someone has legit cover for their money, they can keep it in the West.
  - powerapple 6y ago
    I will not be so certain about it. There are a lot (a lot) corrupt money in London, Vancouver and other cities.
  - powerapple 6y ago
    Actually I have to state what I believe: the only way to keep your corrupt money safe is to work with international institutes, bankers and layers in so called cities with transparency, such as London, Hong Kong, New York, Switzerland and so on. It is called money laundering. Keeping it in Dubai makes no sense. People may spend money in Dubai, but not keeping their wealth in Dubai.

FandangoRanger 6y ago

Hey where can independent researchers obtain the Panama Papers? I don’t think people can be expected to simply “trust us guys.”

nobody9999 6y ago
>Hey where can independent researchers obtain the Panama Papers? I don’t think people can be expected to simply “trust us guys.” Footnote 5 of the paper in the submission provides a link to the data used. For your convenience, that link is: https://offshoreleaks.icij.org/pages/database https://offshoreleaks.icij.org/pages/database I look forward to reading your paper when it's complete.
- FandangoRanger 6y ago
  No I mean, the entire dataset. It's being jealously guarded by the "free" press.
  - nobody9999 6y ago
    Is it? Please explain which data is not included in the ICIJ database[0]. [0] https://offshoreleaks.icij.org/pages/database https://offshoreleaks.icij.org/pages/database

K0balt 6y ago

It should be mentioned that there are lots of non tax avoidance reasons to go offshore. The biggest ones are asset protection and incontestable estate succession. IMHO, if your net worth is over about 250k (or lower if you have a high risk profile) your assets should probably be held in an offshore LLC, trust, or foundation. This makes them effectively untouchable by lawsuit, divorce proceedings, seizure, etc. If you are concerned that your will provisions will be contested or that a lawsuit between siblings is likely when you die, offshore estate management also makes those things impossible. Since in only costs 1-3 thousand US to set up effective offshore asset management, and maintaining it is 200-1200 a year, it's a small price to pay for peace of mind.

nickpp 6y ago
This. Most people pissed off about various (legal) offshore structures do not even understand their utility. A little financial education goes a long way.
JacobAldridge 6y ago
Noting that transferring assets into Trust will often trigger a capital sales event (and tax), while potentially increasing asset holding costs (your home held by a Cook Islands trust may be subject to non-resident land taxes, for example, than many self-occupiers are exempt from) or life friction (I had a UK client who refused to work with me unless my main company was based in the UK, for example). Of course, these things are hugely jurisdictional - I would set the bar much higher than $250K net worth, but agree with your point.

Havoc 6y ago

This feels very much like a case of when you have a hammer everything looks like a nail