The Good Old Days

by Dr. Edwin Leap, MD, FACEP

I’ve been reminiscing about the ‘good old days’ of medicine.  I think about those times because I remember when medicine was focused on the sick and when practice was challenging & exhausting, but at its heart…fun!  So what changed?  Lots of things.  But two things in particular come to mind: EMR and HIPAA.

First, let’s discuss EMR, or Electronic Medical Records.  Where once we used paper charts or simple dictation to record information on patient care, now hospitals and physicians are increasingly forced into purchasing and using expensive and complex computerized record-keeping systems.  This was a growing trend already, but the Affordable Care Act made it all but mandatory, with rewards for implementation and fines for noncompliance.  Many small hospitals and practices, in fact, struggle to pay for the cost of implementation even as EMR companies make vast amounts of money.

I’ll ‘render unto Caesar’ here.  Paper systems are problematic.  The can be illegible.  On paper, written by hand, it is difficult to document complex medical encounters and procedures.  And thus, the next clinician involved may have trouble understanding what happened before.  (As will the attorneys in malpractice suits.)  Finally, hand-written charts lose charges and are often down-coded in billing when insurers can’t find the information they need, or find enough information to generate a proper bill.  Paper charts aren’t perfect. Likewise, dictated charts, while better, have longer turn-around times.  But both are faster and generally make physicians happier than the monstrosities that are modern electronic medical records systems.  

Indeed, to give credit where credit is due, electronic systems capture lots (and lots, and lots) of data.  And they can be helpful in retrieving information from previous visits.  And some use voice recognition dictation programs.  This kind of real-time dictation can be helpful.

And yet…EMR sucks the fun out of medicine.  Because EMR systems leave clinicians slaves to the keyboard.  The sound of modern medicine is the sound of typing.  And the great anxiety for physicians, and nurses, is the terrible tension between doing the thing we love, which is patient care, and doing the thing our employers mandate, which is hour, upon hour, of mind-numbing data-entry, all the while trying to move patients in a way that provides the best satisfaction scores and the lowest wait times.  

EMR are rarely designed with clinicians in mind. So, while the flow of the log-ins, clicks, drop-down menus, signed orders, time stamps, discharges and all the rest make perfect sense to programmers, billing companies and data-collectors, it’s an electronic nightmare for those of us who simply want to get back to our patients.  (The commonly told joke is that physicians are the highest paid data entry clerks in the country!)

In the end we care for the sick and let the charts pile up.  We then end up with ‘in baskets’ or ‘to do lists’ filled with hundreds of clicks and signatures that we have to do on our own time, after shift, to satisfy the appetite for information that administrators and government agencies desire, even when little of it contributes substantively to the care of the sick, injured and dying before us.  And woe-betide those who are delinquent in completing records!  E-mails and threats will abound until they are completed.

Older physicians and nurses, less computer savvy, sometimes simply leave.  They retire, taking their incredible skills and knowledge with them.  Younger physicians and nurses are frustrated, but have no other option except to press on and type away, longing for the bedside and the people they spent years learning to treat and comfort.

What about HIPAA?  The acronym stands for the Health Information Portability and Accountability Act. Passed in 1996, among the goals of this federal legislation is the protection of the confidentiality of patients’ private medical information.  Like so many things the government touches, it had a noble intent.  But now it is less a law and more of a bludgeon.  

Currently, in order to protect privacy, patients are yearly advised of their HIPAA rights and expected to sign forms to that effect.  And physicians are constantly beset by log-ins and passwords.  This may seem like no big deal.  Every computer has a log-in screen!  In fact, plenty of applications exist to store all of our various and sundry passwords for our many programs and devices.  However, the average physician will have a log-in and password for the hospital computer system, then for the electronic medical records (EMR) system and a separate set for the radiology system. And if a physician works in more than one facility, the number of log-ins and passwords just keeps climbing.

Our nurses have a similar burden of logging into EMR computers, but also have to access the medication dispensing cabinets which are password protected.  Taken together, it’s very difficult to move patients quickly, chart effectively or maintain a train of thought because we are constantly accessing computers and trying to remember new passwords.  (Biometrics like fingerprint scans and others might help, but we’re not there yet.)

Furthermore, HIPAA terrifies every clinical staffer because they are warned, over and over, that violating privacy is a federal issue.  Even innocently handing the wrong instructions to the wrong patient can be a huge problem.  To make it worse, clinical employees of a hospital can be fired for simply looking up their own labs.  (Their own labs!  In other words, protected from their own prying eyes!)  Their privacy ensured, their job terminated.  

And where we formerly handed lab and x-ray reports to patients so they could take them directly to their physicians, now they must go through the medical records office the next day or later to obtain what is, in fact, their own information.  (Again, protected from their own snooping.)  Or they must have their physician’s office request them with the appropriate release of information signed.   

And when we, the physicians who cared for a critically ill patient, transfer them to another hospital, it’s pointless to check on their progress.  ‘Hello, this is Dr. Leap and I transferred Mrs. Howard, the multi-trauma yesterday after intubating her and placing a chest tube.  Can you tell me how she’s doing?’  ‘All we can say is that she is in the hospital.’  Great.  That’s good quality control, to be sure.

HIPAA has indeed protected privacy (except of course for instances of computer hacking or carelessly placed and lost computers…all too common).  But it has also created a vast industry of programs and consultants, and left clinical and clerical staff slower, and more anxious, than ever.

No, things aren’t what they used to be.  Many issues conspire to make modern medicine difficult; an aging population, complex diseases, rampant addiction, resistant infections, high costs, high expectations and many more.  In the end, however, HIPAA and EMR reflect a common core issue, which is the disconnect between the administrative and political forces that govern medicine (and stand to profit mightily from supervising it) and those who day in, day out, must practice it in the presence of living, bleeding, hurting, dying, fearful human beings whose bodies have no password, and who care less about privacy than survival.

And until that chasm is bridged, it’s unlikely that medicine will ever again be as fun as it was before.  But I can imagine, can’t I, a shift without a computer and a chart without a log-on screen?  Ah, ‘to sleep, perchance to dream…’

Logging off….

   

Edwin Leap, MD, FACEP

Dr. Edwin Leap is a happily married father of four children in the process of becoming adults. He practices emergency medicine in the southern Blue Ridge Mountains.  In addition to his career in medicine, Dr. Leap writes monthly columns for the Greenville News, Emergency Medicine News and The South Carolina Baptist Courier.  He also blogs at www.edwinleap.com/blog.  From faith to family and from culture to medicine, he covers every topic with humor, insight and compassion.

Alphabet Soup, Part III: The TTIP And the Future of American Labor

by B. Lana Guggenheim What is the TTIP? Have you heard of it? If you have, you’re likely mad as hell, and if you haven’t, you’ll soon understand why many are. One of many free trade deals, the TTIP has come under fire as the race for the White House heats up, with populist anger at obscure government deals that seem to harm the average American and benefit only a select few.

In the previous two articles, we examined two other free trade agreements, NAFTA and the TPP. The first article in the series covered the results of NAFTA, a free-trade agreement between the USA, Canada, and Mexico, established in 1994. The results of this trade deal were decidedly mixed, as new markets were opened and trade established, but American manufacturing moved to Mexico, costing thousands of jobs. Free trade agreements have now become a political lightning rod and litmus test, as anger over the sluggish economy continues. Even with this growing animosity however, another trade agreement, the TPP, or Trans-Pacific Partnership, was signed earlier this year.

The TPP was subject to numerous blistering criticisms and well publicized opposition, which were examined in detail in the second article in this series. But these arguments, while they did not prevent the signing of the TPP, are once again front and center among opposition for a trade deal still under negotiation: the TTIP, or the Trans-Atlantic Trade and Investment Partnership. Whereas the TPP focused on Pacific area trade, the TTIP focuses on cross-Atlantic trade, particularly between Europe and the United States.

If passed, the TTIP would create the largest free-trade zone in the entire world, comprising of about half of all global production. President Obama once had hopes to finalize the deal before he left office, but he faces an uphill battle, and the issues are unlikely to be finalized before 2020. Just like with the TPP and NAFTA before it, this deal is marketed as creating opportunities for medium and small businesses; however, it is likely that the biggest winners will once again be the electronics, pharmaceutical, and chemical industries, industry giants that already enjoy the benefits of strong US-EU ties. Like with the TPP, Big Pharma benefits could result in extending patent protections for their drugs and pushing up the prices of medicines worldwide.

As with the TPP, ISDS (or, investor-state dispute settlement) is a major point of contention with the TTIP, and seen as a threat to the democracy of the EU, as many suspect it would give companies leverage to dictate policy to European governments. This is of particular concern to those worried about environmentally conscious legislation. The TTIP would eliminate all restrictions on natural gas exports, which means that the USA would have a larger market for oil derived from fracking, or hydraulic fracturing, itself a highly controversial procedure due to its potential environmental impacts. The TTIP also encourages self-regulation over mandatory energy efficiency legislation, and because it requires energy networks not to discriminate between energy sources, it would prevent legislators from prioritizing renewable energy sources. Some countries, like France, are already under fire from their public from trying to loosen up labor laws, and see the TTIP as a threat to their security on the job.

The United States might seem over-regulated (or at least over-supervisory) in comparison to some Pacific Rim countries, but the EU favors government oversight even more than the USA. EU states also often have stricter environmental laws in place than the United States. Still, some European governments are weak on climate action, such as Ireland, and those states are susceptible to corporate pressure under the TTIP, rather than EU pressure to crack down on harmful emissions and get in line with the Paris Climate Agreement.

Under the TTIP, European farmers would face stronger competition and lower prices, with American factory farms and and corporate food giants standing to gain. That might seem great to Americans, but Europeans aren’t too keen. The food fight is something that Europeans are actually really hung up on, much to American frustration. For example, France is upset about scrapping milk quotas, which could damage the country’s dairy sector, a key driver of its economy.  And while genetically modified crops are perfectly safe, citizens of the Euro-zone have a great deal of skepticism and suspicion towards them, and EU states are allowed to ban GMO cultivation as well as mandate labeling of GMO foods. Still, most of the animal feed in the EU is imported from the Americas, and is overwhelmingly comprised of genetically modified crops, but people seem to get antsier when that food goes to people too.

The EU is also much stricter on pesticides than the USA. The US law says that if you can’t prove it’s harmful, go ahead and sell the product, but the EU law is much stricter, demanding a risk assessment when there isn’t enough scientific data to clear up uncertainty. And this means that the EU and the US disagree about the maximum amount of pesticide residue allowed to be in food. The small, family-owned farms that still are present in Europe also contrast with America’s ranch model, especially as America makes use of growth hormones that are banned in the EU. (Meanwhile, America won’t import EU beef either, but that is due to the mad cow disease that ran across the continent in the 1990s.) Also at issue are the methods to prevent infection on meat and poultry (America washes its poultry meat in chlorinated water; the EU in hot water), and the lack of anything resembling the tightly-regulated “farm to fork” strategy in America. In short, folks are concerned that the TTIP would scrub these stricter food standards to bring the EU in line with American standards.

As it stands, there already are very few trade barriers between the US and Europe. Most tariffs are less than 3%. Therefore, many suspect the TTIP to be about increasing deregulation and opening up the European markets to corporations, and allowing them greater ability to roll back American or European rules that impact profits, but also help protect consumers, not just in the agricultural and food industry, but in digital privacy, and government oversight and regulation of financial institutions. The European Commission says the TTIP would boost the EU’s economy by over 120 billion dollars over 14 years, but Dean Baker, of the American think-tank Center for Economic Policy Research, says gains per household would be very modest (he compares it to finding a quarter on the street), and wider effects could result in net job gains or losses, depending on the model referenced. Indeed, he calls the aforementioned number a best case scenario, which is roughly equivalent to a month’s growth anyway.

There are also fears about the privatization of things that in Europe are state-administered social goods. In England, the debate rages about the future of the National Health Service under the TTIP. While some of these protests are a bit hysterical in tone, others raise points about the difficulty of reconciling such different systems, including the TTIP potentially forcing the NHS or other similar systems in other EU states to allow private US pharmaceutical firms to bid for lucrative contracts, thus paving the way for the privatization of the government health-care system “through the back door.” It also means privatization already undergone would potentially be impossible to restore to public hands, due to investor rights granted with ISDS. Fear of potentially being forced to pay compensation could forestall any rollback on privatization, even if the government wanted to. Parliament has promised however that just like CETA (a similar trade deal, but with Canada), there will be a provision that protects public utilities, like health-care, that can be a state monopoly or limited to a handful of private operators, thus avoiding this scenario. But many folks remain unconvinced, especially in UK, where there is a lot of public attachment to the NHS, as opposed to the rest of the EU, which usually has a more balanced mix of public and private options available. (Fears about the future of the NHS were deliberately stoked in the recent Brexit referendum as well, with pro-Leave folks explicitly stating that the NHS would be safe under their care but not in EU hands, and not post-TTIP hands, versus pro-Remain folks rejecting the notion that NHS would be threatened by the TTIP at all.) The European Commission has made available all negotiating texts, including lists of proposed carve-outs, which explicitly mentions protecting health services that receive government support in whole or in part. And back in March 2015, EU Trade Commissioner Cecilia Malmström and US Trade Representative Michael Froman addressed the issue, saying that no agreement between the US and EU would force anyone to privatize anything, or that once privatized, it can never be re-nationalized. Under the TTIP, if the UK or any other EU state breaks its contract with private healthcare suppliers, then yes, they can be sued. But that is pretty unlikely, and it’d be easier (and smarter) to simply let contracts expire and re-nationalize it after its conclusion anyway. (Despite the Brexit vote, the UK remains part of the EU until the exit negotiations conclude; as of the time of this writing, those negotiations hadn’t even been started.)

Privacy concerns are also a specter. The EU Parliament rejected ACTA (Anti-Counterfeiting Trade Agreement) back in 2012 after a huge public backlash, as folks did not wish for internet providers to monitor their activity online, much less be required to do so. (Many countries in Europe did sign it, but have not ratified it or put it into effect, effectively killing it where it stood.) But it is feared that the TTIP would allow a “back-door” to get the core of those regulations on the books anyway, thus circumventing democracy. The combination of easing privacy laws, plus restricting public access to corporations’ data (especially pharmaceutical clinical trials) would be a disaster for the public, and a boon to corporations trying to sell them things.

And just like NAFTA allowed for manufacturing jobs to move with greater ease out of the USA to Mexico, the TTIP is likely to cause a bleeding of jobs from the EU to set up shop in the USA, where labor standards are lower and unions much weaker. That might be good news for Americans and the businesses that move here, but Europeans are understandably not too keen on losing their jobs.

In addition, the European community, like the Americans were with the TPP, isn’t thrilled with the secrecy shrouding the specifics of the TTIP, even if such is standard practice for these treaties. (This too is seen as anti-democratic behavior, and they kind of have a point, as many Americans felt the same about the TPP.) When there was a leak of sections of the TTIP draft back in May of this year, John Hilary, Executive Director of London-based charity War on Want, said that there was “no way” that TTIP could survive the leak. “The only way that the European Commission has managed to keep negotiations going so far is through complete secrecy as to the actual details of the deal under negotiation...This is surely the beginning of the end for this much hated deal.” That until recently, much of the publicly available text was only through leaks hasn’t endeared many campaigners to the deal, either. Still, even if the text isn’t that bad, the leak might embarrass EU member states away from signing on - an issue for France and Germany, as they are having national elections in 2017. Just after the leak, French premier Francois Hollande said no the TTIP, in part because he is deeply unpopular, and siding against the deal will earn him some points with the public.

President Obama and German Chancellor Angela Merkel in a joint conference about trade, immigration, and other issues in February 2016

And just like with the TPP, government officials who saw the document saw only sections, were under surveillance, and were not allowed to disclose what they read. And for German lawmakers (or any other non-native English speakers), penetrating the dense legal jargon is especially difficult. This has become a toxic issue in Germany, where Greenpeace activists unleashed their trove of draft documents, in a glass case near Berlin’s Brandenburg Gate - a wry commentary on government transparency, or lack thereof.

Globalization has in general come under fire and anti-establishment feeling is high, as it has failed to deliver on its promises of economic stability and growth, especially in the face of a still-present economic downturn. Such feelings are what prompted the Brexit vote, after all. And with the UK leaving the EU, there is one less vocal supporter for TTIP at the European table. Via the European Citizens’ Initiative, which enables EU citizens to call directly on the European Commission to propose legal actions, over 3 millions signatures against TTIP and CETA (which is basically a Canadian TTIP) were gathered within a year.

But the TTIP goes both ways; the USA has stricter financial and banking rules than most European states. Those restrictions were put in place after the financial crisis of 2008 in order to curb bankers’ powers and avoid a similar crisis in the future. Such restrictions were not put in place in the EU, and the UK might be seeking a lifting of these restrictions via the TTIP.

Could lawmakers or a future President actually gut existing trade deals? Trump said he would, but could he actually? Reversing trade policy won’t actually bring any jobs back, and companies tend to go where costs are cheapest anyway. This happened with America’s textile industry. Once a booming, core section of our economy, it moved overseas decades ago, decimating towns across the South - towns that have yet to recover. And that happened without NAFTA or any other trade deal. Trump says he wants to put huge tariffs on Mexican and Chinese imports (35% and 45% respectively), but that won’t make production move back. Those companies would just go somewhere else, likely Vietnam, or Indonesia, or Korea, as the standard of living is lower in these countries, and workers are therefore willing to do the same work for a lower wage. It’s just math.

Besides, slapping on such huge tariffs isn’t exactly easy; it requires an act of Congress, and would violate all the trade agreements the US has with other countries involved in the WTO, over 160 in all. And besides, if the US raises tariffs on imported goods, other countries would retaliate by raising theirs on our goods, which would hurt our economy to the tune of over a trillion dollars worth of exports. Preventing this from happening (or at least, making it very costly) is kind of the point of the WTO in the first place.

If trade is good for the country, why are the benefits not reaching Rust Belt towns, even decades on?  White collar jobs are doing better, and more goods are available for cheaper nation-wide, but blue-collar factory jobs are doing worse and worse - and trade deals exacerbate this. But advancements in technology, such as automation, and increases in productivity also slashed factory jobs - to the tune of about 80% of the total loss - and leaving no other opportunities for low-skilled workers. Another 20% lost was due to trade - and when you’re already hurting, this addition adds insult to injury. The US Chamber of Commerce argues that this automation is the primary engine of job loss, not trade deals, and that the elimination of tariffs and other obstacles boost market access for small and medium sized businesses that would otherwise be shut out of the global market.

“Onshoring,” a term for companies bringing manufacturing jobs back inside the USA, seems like it might help reverse this trend, but in truth, it offers little relief. Such moves, such as when GM opened a plant in Tennessee, or when Whirlpool was moving production from Mexico to the USA, only offer a trickle of new jobs. Most of these plants are in right-to-work states, which means laborers will have a very tough time unionizing, meaning they have much less job security than previous generations who worked in this field. Adjusted for inflation, they earn less too. Manufacturing and other blue-collar jobs are no longer a road to the middle class. There are no “good jobs” to be found here.   

In the end, you can’t stop trade, and attempts to do so would be disastrous. So what can be done? Focusing on the lack of labor protections would be a way to make sure those who do have work aren’t stuck in dead-end jobs that can’t even let them make ends meet.  Or tackling the lack of regulations that promote companies to boost their bottom line, regardless of the human cost. Or focusing on government policies that don’t provide enough avenues to re-employment for displaced workers. Expanding the Trade Adjustment Assistance (TAA) program would be a good start. This program helps workers pay for education and training to find new, better jobs, something that is critical for these blue-collar workers who are out of a job and out of options. However, funds for this program were sharply cut in the 1980s, and its current funding is entirely insufficient to address Americans’ current needs. President Obama and some economists also recommend expanded wage insurance, a sort of unemployment-wage that would offer laid-off workers a portion of their previous salary for a period of several years, which would ease a lot of the economic hardship suffered by older workers who are forced to take a deep pay cut, assuming they are lucky enough to find new employment at all.

Jeffrey E. Garten, Dean Emeritus of the Yale School of Management, states that the goal should not be to reverse trade policy, but that these policies should no longer stand alone. Rather, they must be accompanied by domestic policies that help workers thrive in the new environment, rather than leaving them to languish, as has been the case for the past decades. This can also include a progressive tax policy, better unemployment programs that increase the robustness of the social safety net for the chronically unemployed and underemployed, as well as better job training.

The current economic predicament has been decades in the making, and trade deals are only one complicated part of how we got here. Counterintuitively, these deals are good for America’s overall productivity and income, and boost many industries, while decimating already foundering manufacturing and factory jobs. The benefits of such trade deals are not shared equally. Combating this painful reality and helping America’s blue-collar workers is a lot more complicated than simply opting out of trade deals. Instead, we need a comprehensive economic reform, a series of policies that can start correcting the many factors that led us to abandon so many of our fellows in the first place. To not do so will only hurt us all.

Panama and the 1%: Shell Games, Taxes, and International Law

By B. Lana Guggenheim

The Panama Papers, as the information leak from a law firm operating in Panama has been dubbed, is the largest information leak in history, clocking in at 11.5 million files, about 2.6 terabytes of data, which is most likely the bulk of law firm Mossack Fonseca’s database, if not its entirety. The well-known Wikileaks cache comparably is much smaller, but is still substantial at 718,000 documents. This event has blown open the operating procedures of offshore tax havens, money saving schemes for the extremely rich, and their less than savory ties to many families, government officials, and rogue regimes all over the world.

Though the story broke only days ago, Mossack Fonseca has been setting up shell companies to shelter funds for decades, and journalists have been poring over the data for months before they released the story. While an anonymous source tipped off the German newspaper Süddeutsche Zeitung, the data they received soon outpaced their ability to process, and they reached out to the International Consortium of Investigative Journalists, consisting of a team of over 400 journalists in over 100 countries, to help. Even so, going through this much data took months.

The results have been immediate and dramatic. Already on Tuesday, the Prime Minister of Iceland, Sigmundur David Gunnlaugsson, tendered his resignation due to he and his wife having been among the many clients who parked their cash in a Panama shell business, Wintris. Considering the scars from the country’s recent financial collapse and painful rebound, there was little tolerance from Iceland residents for their premier's secret money stash, and one tied to the failing investment banks from 2008 at that - which meant there was an enormous and undisclosed conflict of interest. More than $2 billion has been traced to Vladimir Putin and his associates in Russia, and Ukrainian premier Petro Poroshenko, sole shareholder of Prime Asset Partners Limited (PAPL), has come under fire for similar reasons. The candy magnate promised to sell his business when he took office, but Mossack Fonseca set PAPL up as a shell company based in the British Virgin Islands in August 2014, at the time of Russia’s bloodiest attacks on Ukraine, thus saving him millions of dollars in Ukrainian taxes and prompting some to wonder if his priorities were the country he leads or the finances he promised to liquidate. High ranking families in China’s Communist Party are under the lens as well for quietly squirreling their wealth away, and the US and UK don’t have their hands clean either, one client being the late father of British Prime Minister David Cameron. Even Nawaz Sharif, Prime Minister of Pakistan, is under fire, as is the monarch of Saudi Arabia, King Salman bin Abdulaziz bin Abdulrahman Al Saud, and even two cousins of Syrian dictator Bashar al-Assad, Rami and Hafez Makhlouf, among many others all around the world, and in various positions of power.

But how does it all work? One commenter on Reddit charmingly described the issue behind the Panama Papers as people stashing their piggy banks in someone else’s house to hide their savings from their moms, and while some were simply seeking privacy, others were hiding stolen money and engaging in other illegal and unethical activities (you can see it illustrated here.) The reality is slightly more complicated - in order to hide their funds, corporations create new bank accounts and new business ventures based in countries that have low tax rates and/or do not tax on income earned abroad. Such havens include the Cayman Islands, the British Virgin Islands, Luxembourg, Ireland, Panama, and yes, the United States, which is in fact one of the biggest tax havens for foreign money. Ironically enough, the United States holds other countries to a standard of transparency that it does not itself follow, as the USA did not sign on to OECD standards, though Panama did, though with conditions. Because these accounts are held under different names, their origin is hard to trace, and because these countries do not disclose the information to the corporations countries’ of origin, it is easy to avoid disclosing the true extent of one’s assets and thus avoid taxation on it. Banks often seek out relevant law firms, like Mossack Fonseca, on behalf of their clients to complete these services. (Mossack Fonseca created about 200,000 of these offshore entities.) The law firms charge a fee to set shell companies up and maintain this legal fiction, but this fee is often significantly less than the home tax rate rich individuals and corporations are looking to avoid by engaging in this practice. And a legal fiction it is: one building can be home to thousands of companies and accounts that are little more than a mailbox with a gilded name plaque, with no rooms or employees to speak of. But it’s one that allows many to dodge the tax man in a way that beggars belief.

The entire situation is a tangled web of how the top tiers of international finance are open to the rich, but not the average citizen. The offshore banking industry intersects with criminals, terrorists, corporations, and your average billionaire, and often enough, it’s legal - though not always. Academics estimate that about $7.6 trillion is held in overseas tax havens, costing governments a minimum of $200 billion a year in lost tax revenues. Tax havens are an ugly, but integral part of the global banking system. However, not everyone involved in offshore banking is a thieving criminal. Some folks place funds in tax havens totally illegally, but for reasons most of us would support, such as in defiance of authoritarian governments seeking to crack down and restrict potential actors that would upset their monopoly on power.

Mossack Fonseca offices in Panama City. From elcambur.com.ve

Much of Mossack Fonseca’s work isn’t for humanitarian or anti-authoritarian reasons, however. Though the two men behind the firm, Ramon Fonseca and Jurgen Mossack, insist they are the wronged party for having been hacked into and their privacy violated - and they have a valid point - they say that their business is like “selling cars”; they are not responsible if people use their products to do wrong. Still, a number of their clients are involved in some shady business. And while technically their law firm violates no Panamanian laws, among their clients are those placed under international sanctions, and those who have earned their funds through extralegal means. Some of these companies were based in Iran, Zimbabwe, and North Korea, including DCB Finance, which had links to North Korea’s nuclear weapons program. Even in cases when they were not yet sanctioned when Mossack Fonseca helped set up their shell companies, the firm continued to act as a proxy for them after sanctions were put in place. In the case of DCB Finance, Mossack Fonseca continued relations with them until contacted by the British Virgin Islands authorities in 2010 inquiring about a different North Korean company, after which Mossack Fonseca resigned as agents for DCB Finance. They also set up a shell company that hid the millions gained from the infamous 1983 Brink’s-Mat heist at London’s Heathrow Airport, dubbed “the crime of the century.” The company in question, Feberion, was set up a mere 16 months after the crime for the London-based money launderer Gordon Parry, who went to jail in 1992 for his role in the aforementioned robbery, and Jurgen Mossack was aware that Feberion was involved in laundering money from the heist, though the law firm later denied this when pressed. And yet, they only ended relations with Feberion as late as 1995.

The pressure is on, not just for this law firm, but for the various global tax havens to engage in greater transparency and close these legal loopholes. But international banking is likely to face some fallout as well. Banks have already faced an uptick in scrutiny, and are likely to be faced with more, as well as additional regulation and even fines. Untangling the industry’s many offshore entities would also be expensive and traumatic, and would make repairing any reputations difficult, even for banks that claim they weren’t involved in such activities in the first place. Some banks have already begun to overhaul their internal structures. HSBC sold their Panama bank in 2013, and Credit Suisse sold its Gibraltar and Monaco private-banking operations. Some tax havens are also becoming more transparent, as the OECD’s original blacklist of “uncooperative havens” has significantly dropped over the past decade, though Panama, Liechtenstein, and Barbados were still named as such on an EU list last year. Closing all these tax loopholes is going to be a long, messy process, and it is likely that inventive accountants will find new areas to exploit for future clients. But one lesson everyone can learn, from tax accountants to lawyers, is that cybersecurity will be an increasingly significant factor. Leaks this big only happen if someone scrapes the entirety of a database, a security breach that is the stuff of nightmares.

Cited Sources and Further Reading

Beauchamp, Zack. "The Panama Papers Revealed Lots of Shady Stuff. But Some Shell Corporations Aren't so Bad." Vox. Vox, 05 Apr. 2016. Web. 06 Apr. 2016.

Bilton, Richard. "Panama Papers: Mossack Fonseca Leak Reveals Elite's Tax Havens - BBC News." BBC News. BBC, 04 Apr. 2016. Web. 06 Apr. 2016.

Chang, Alvin, and Javier Zarracina. "The Panama Papers Leak, Explained with an Adorable Comic about Piggy Banks." Vox. Vox, 04 Apr. 2016. Web. 06 Apr. 2016.

Clark, Nicola. "How a Cryptic Message, ‘Interested in Data?,’ Led to the Panama Papers." The New York Times. The New York Times, 05 Apr. 2016. Web. 06 Apr. 2016.

Cox, Simon. "Panama Papers: Mossack Fonseca 'helped Firms Subject to Sanctions' - BBC News." BBC News. BBC, 04 Apr. 2016. Web. 06 Apr. 2016.

Díaz-Struck, Emilia, Et Al. "Panama Papers: Who's Who?" The Irish Times. The Irish Times, 04 Apr. 2016. Web. 06 Apr. 2016.

Drucker, Jesse. "Panama Has Company as Bank-Secrecy Holdout, as U.S. Offers Haven." Bloomberg.com. Bloomberg, 05 Apr. 2016. Web. 06 Apr. 2016.

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