The Panama Papers, the largest data leak seen so far, will have far-reaching implications for scores of nefarious deals and transactions linking despots, criminals as well as those who entered into perfectly legal financial arrangements with the wrong company. Whether it will cause corrupt regimes to fall, arms deals to be scuppered and tax defying ‘global citizens’ to be jailed will become clear in the fullness of time, but is clearly a story set to develop over the coming days, weeks and months.
What this could mark though, in a less dramatic fashion, is the beginning of a new type of transparent global financial system driven by collaborative investigative data gathering by journalists – based on the assumption that, despite every effort, no system is impervious to leaks.
The sheer volume of data being uncovered means that these complex stories will run over a significant number of news cycles – with reputations undermined at turn. While reputation management can support an onslaught of negative press, what is clear is that reaction is no substitute for preparation.
The realisation that no-one is safe could mean that thousands of companies and individuals must do their own PR audit. Essentially, this is the moment every affected institution needs to look at its transactions and ask themselves: ‘How would this look to the public?’ There has to be a shift from doing business then looking to PR to fix the ensuing mess, to using PR expertise to establish how best to do business for your reputation.
As the Panama Papers website points out, owning an offshore company is not illegal in itself, going on to say “…in fact, establishing an offshore company can be seen as a logical step for a broad range of business transactions.” Clearly, many of the transactions documented are – if the BBC’s le Carré dramatization, The Night Manager, has taught us anything – for dirty money, and that is an issue for governments, security, and enforcement agencies to scrutinise and decide upon which to take action.
However – there will be a proportion that have used a financial mechanism within the confines of the law, and will now suffer the consequences of guilt by association. Just as Jimmy Carr and Gary Barlow were lambasted for their – totally legal – tax arrangements, across the globe, organisations and individuals we have to look at their dealings. The Icelandic Prime Minister is under fire for the company he set up with his wife before becoming an MP, and while The Guardian was at pains to state it has seen “no evidence to suggest tax avoidance, evasion or any dishonest financial gain” his Government looks set to topple in a matter of days.
This scrutiny could usher in faster the new transparent global economy as successive governments across the globe move together to crack down on tax evasion. If no-one knows where the next leak will come from, then shouldn’t companies and individuals work on the assumption that their transactions could be opened up to the world?
Essentially, this is reputation management for the new age – a pre-emptive activity to think ‘how would this look?’ rather than ‘how does this look?’ Focussed not just on shareholders or individuals, this new style of international data-driven collaboration could mean greater accountability to not just a nation-specific general public, but a global public. It’s a brave new world for the financial sector, and one in which the PR industry can lead the way.
Kate Turner, Account Manager