Are wealth disclosures dangerous?

On April 15, French ministers posted their asset disclosures online for the first time ever. A week later, Obama reversed a 2012 law that required Congress and other officials to post their disclosures online.

On April 15, French ministers posted their asset disclosures online for the first time ever. On the same day, Obama reversed a 2012 law that required officials to post their disclosures online.

About a third of all countries in the world now require officials to publicly disclose their assets. Institutions like the World Bank and the OECD see this as a good thing. Asset declarations, they say, are crucial tools for fighting corruption and holding officials accountable. As an investigative journalist in the Philippines, I found asset statements vital to digging into conflicts of interest and the illegal accumulation of wealth by those in public office. Asset statements are mother lodes of information – and journalists in Russia, South Africa, Bosnia and Thailand, to name only a few, have found them crucial to their investigations of official wrongdoing.

There is as yet no global consensus on the merits of asset transparency. Last week, Chinese authorities detained six anticorruption activists who had been demanding that senior Communist Party officials declare their wealth. The demands come in the wake of exposés in the U.S. press, including a report that recently won the Pulitzer Prize, on the billions – yes, billions – illegally amassed by the so-called Red Nobility.

But the pushback on official disclosures comes from an unlikely quarter as well. Last Monday On April 15, President Obama signed a law that reversed a provision in The STOCK Act of 2012, which required members of Congress, legislative staff and senior officials of the executive branch to post their financial disclosures online. As my former student Sasha Chavkin pointed out in an informative piece for the Columbia Journalism Review, the 2012 law also came on the heels of scandal – a 60 Minutes exposé on insider trading by congressmen.

For some time now, critics of asset transparency have been saying that wealth disclosures are unnecessary violations of privacy. Rather than disincentivizing corruption, they say, disclosures only provide fodder for “asset porn.” More importantly, the National Academy of Public Administration (NAPA) in Washington, DC said in a recent study that these disclosures, if posted in online databases, pose dangers to law enforcement and national security. NAPA also asserted that asset disclosures have “limited value” in terms of detecting conflicts of interest or insider trading.

On April 15, for the first time ever, French government ministers were required to publicly declare what they own, in what has been called a historic Great Revelation or Le Grand Déballage. Like elsewhere, the demand for wealth disclosure was stoked by scandal.

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The offshore exposé: bigger than Wikileaks’ ‘cablegate’

offshoreIt’s possibly the biggest single leak of documents in the history of investigative reporting. This week, the Washington, DC-based International Consortium of Investigative Journalists released a series of stories based on 2.5 million documents that its director, Gerald Ryle, had obtained while he was still doing journalism in Australia.

In the last 15 months, 86 journalists in 46 countries have been poring over the document cache. ICIJ, housed in the Center for Public Integrity, coordinated the investigation from DC, using a secure messaging system  to communicate with a worldwide team of journalists and free- text retrieval software and programmers in three continents to mine the information from the documents (for more, read this account of how this amazing project was put together).

In recent years, there’s been great work done on the offshore economy, including astounding estimates made by economists, advocacy groups, international financial institutions and academics of the trillions of dollars of global wealth that is stashed in offshore havens. What makes the ICIJ’s exposé such a blockbuster, however, is that it names names, in effect puncturing huge holes in the armor of secrecy that makes offshore havens so attractive.

The ICIJ  reports this week expose an array of individuals, including politicians (everyone from  a Kuwaiti sheikh to Imee Marcos in the Philippines to members of the Azerbaijani ruling  family), businessmen, criminals, and even a songwriter and art collector who have stashed their assets overseas. Up  till now, those assets – at least those in 120,000 offshore companies and trusts now on ICIJ’s database – were cloaked in secrecy, kept away from the prying eyes of journalists, government regulators and tax collectors. But no longer.

Offshore companies are not illegal. There are legitimate reasons for housing a company offshore. But because offshore havens guarantee their clients secrecy, they have become natural havens for corruption, organized crime and tax evasion.

In a tweet last night, ICIJ said it is contemplating making a public release of its data. If that happens,  more secrets are likely to emerge as journalists and others who were not originally part of the collaboration dig into the data and find their own stories. This indeed could be bigger than Wikileaks’ “cablegate,” not just in terms of the size of the leaked documents (Wikileaks had about 250,000  US State Department cables) but also in terms of the international journalistic collaboration. (Disclosure: I am a member of ICIJ and my former organization, the Philippine Center for Investigative Journalism, was part of the Offshore Project). Read the rest of this entry »