The Tax Shelter Crisis in Finland, Explained
Nordea Bank has been embroiled in revelations that the company was involved in facilitating offshore tax shelters through a division in Luxembourg. The leak, referred to as the Panama Papers, contains 11.5 million files from the database of the world’s fourth biggest offshore law firm based in Panama, Mossack Fonseca. The records were obtained from an anonymous source by the German newspaper Süddeutsche Zeitung, which shared them with the International Consortium of Investigative Journalists (ICIJ).
According to data uncovered by Yle, between 2004 and 2014, Nordea Bank’s Luxembourg unit set up nearly 400 offshore companies for its customers in Panama and the British Virgin Islands. However, at a press conference today in Sweden, it was argued that only seventy of these companies were directly involved with Mossack Fonseca, and that the number of companies in total is closer to 200 if using the Panama Papers criteria of ‘offshore companies’, as opposed to the 400 under the International Monetary Fund’s definition. “The Luxembourg bank is a private division of Nordea, and we have strict measures surrounding it. Offshore companies are a reality of international business. If anything, on what has come out now, it maybe exaggerates our involvement. Based on the information discovered, of our 100,000 structures, we have around 70 active,” stated Snorre Storset, Chief for Wealth Management at Nordea.
On Monday, Nordea issued a press release denouncing the practice of tax evasion, declaring it had changed its practices in 2009. It was revealed today that this change lost the bank around 4000 customers, presumably due to a tightening of regulations surrounding offshore companies. When pressed on the relationship between Nordea and Mossack Fonseca this morning, the panel responded quickly. “We don’t have a relationship with the company (Fonseca), and we don’t deal with them from now on.” Asked if Nordea will continue to collaborate with other law firms, the panel focused on the task at hand. “We will do the review and follow up on what has happened – tax regulations, money laundering, etc, and draw conclusions and more importantly, make decisions on what we will do. Whatever we do, we need to follow laws.” However, another journalist at today’s press conference in Stockholm, Sweden revealed information that dated back to 2013, which was then suggesting a closure of offshore companies. When questioned on the matter, the panel argued that it was evidence of their adherence to their 2009 decision, and that these tasks can take time.
[alert type=blue ]”Whatever we do, we need to follow laws.”[/alert]
“After Luxembourg we will check the Nordic countries. We are constantly looking into our business, with a long line of defences to avoid such matters. We are reviewing all of our businesses. We do as much as we can to make sure that our clients pay proper taxes . . . ultimately it’s up to customers to pay their taxes.”
Earlier in the week The Social Democratic Party announced that it is considering switching banks in protest of the alleged ties of the financial services provider to tax havens.
“It is difficult to understand that Nordea, a Nordic bank, has had a key role in the tax avoidance activities. Nordic countries have for decades fought for the welfare state and against tax avoidance,” Antti Rinne, the chairperson of the opposition party, wrote on Facebook on Monday. “The SDP cannot be a customer of a bank such as this.” Other ministers have also publicly condemned, including current Minister for Foreign Affairs, Timo Soini (PS), who stated on his blog that funnelling funds to a tax haven is a sign of moral decay and will gnaw away at the credibility of the financial services provider in protecting the interest of its mortgage customers.
For further information detailing the complexities of the Panama papers, we recommend Süddeutsche Zeitung and the work of the International Consortium of Investigative Journalists.