Nobel prize-winning economist steps down saying Panama government refused to guarantee report would be made public

This article is more than 4 years old

This article is more than 4 years old

The committee set up to investigate the lack of transparency in Panama’s financial system itself lacks transparency, Nobel prize-winning economist Joseph Stiglitz has said after resigning from the Panama Papers commission.

The leak in April of more than 11.5m documents from the Panamanian law firm Mossack Fonseca detailed financial information from offshore accounts and potential tax evasion by the rich and powerful.

Stiglitz and Swiss anti-corruption expert Mark Pieth joined a seven-member commission to investigate Panama’s notoriously opaque financial system, but both quit the group on Friday, saying Panama refused to guarantee the committee’s report would be made public.

The Panama Papers: how the world’s rich and famous hide their money offshore Read more

“I thought the government was more committed, but obviously they’re not,” Stiglitz said. “It’s amazing how they tried to undermine us.”

The Panamanian government defended the committee’s “autonomous” management in a statement, and while it said it regretted the resignations of Stiglitz and Pieth, it chalked them up to unspecified “internal differences.”

The government thanked both men for the recommendations they had already made and said it remained committed to “transparency and international co-operation”.

Panama’s president, Juan Carlos Varela, said in April that the independent commission would review the country’s financial and legal practices.

In its first full meeting of the investigative committee in New York on 4 and 5 June, the members agreed that the government of Panama needed to commit to making the final report public, whatever its findings, Stiglitz and Pieth said.

But they said last week they received a government letter that drew back from its commitment to making the findings public.

“We can only infer that the government is facing pressure from those who are making profits from the current non-transparent financial system in Panama,” Stiglitz said.

The Panama Papers cover a period from 1977 to December 2015, and show that some companies set up in tax havens may have been used for money laundering, arms and drug deals, as well as tax evasion.

In addition to embarrassing leaders worldwide who had interests tied to secretive business concerns, the leak heaped pressure on Panama, a well-known global tax haven, to clean up its act.

“I have had a close look at the so called Panama Papers and I must admit that, even as an expert on economic and organised crime, I was amazed to see so much of what we talk about in theory was confirmed in practice,” Pieth said.

In the paper he said he found evidence of crimes such as money laundering for child prostitution rings.

Stiglitz said the remaining five members of the committee may stop work on the probe as well, and that it is now up to the international community to pressure Panama to improve transparency.

“We’re being asked to do this as a courtesy for them and we’re paraded in front of the world media first,” said Pieth, a criminal law professor at Basel University. “Then we’re told to shut up when they don’t like it.”