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.

Fitzgerald, Alison, and Marina Walker Guevera. "New Leak Reveals Luxembourg Tax Deals for Disney, Koch Brothers Empire." International Consortium of Investigative Journalists. International Consortium of Investigative Journalists, 09 Dec. 2014. Web. 06 Apr. 2016.

Gardner, Matthew. "Panama Papers and America's Problem." CNN. Cable News Network, 05 Apr. 2016. Web. 06 Apr. 2016.

Garside, Juliette, Holly Watt, and David Pegg. "The Panama Papers: How the World's Rich and Famous Hide Their Money Offshore." The Guardian. Guardian News and Media, 03 Apr. 2016. Web. 06 Apr. 2016.

Golshan, Tara. "The 8 Most Important Things to Read to Understand the Panama Papers Document Leak." Vox. Vox, 04 Apr. 2016. Web. 06 Apr. 2016.

Karmanau, Yuras. "Ukrainian President Under Fire Over Panama Papers." US News. Associated Press, 04 Apr. 2016. Web. 6 Apr. 2016.

Kroll, Louisa. "Panama Papers Fallout: Iceland's PM Resigns, Ukraine's President Pressured, Billionaire Responds." Forbes. Forbes Magazine, 5 Apr. 2016. Web. 06 Apr. 2016.

Maven, Duncan, and Lionel Laurent. "Banks Have a Panama Problem." Bloomberg.com. Bloomberg, 04 Apr. 2016. Web. 06 Apr. 2016.

Mullen, Jethro. "Panama Papers: Rich and Powerful Respond to Claims They Hid Billions Offshore." CNNMoney. Cable News Network, 04 Apr. 2016. Web. 06 Apr. 2016.

Nelson, Libby, and Zack Beauchamp. "How the Panama Papers Brought down Iceland's Prime Minister." Vox. Vox, 05 Apr. 2016. Web. 06 Apr. 2016.

"Panama Law Firm Says Document Leak 'a Crime'" RTE.ie. AFP, 04 Apr. 2016. Web. 06 Apr. 2016.

"Panama Papers: How Did Panama Become a Tax Haven? - BBC News." BBC News. BBC, 05 Apr. 2016. Web. 06 Apr. 2016.

Politi, Daniel. "The Latest From the Panama Papers: Details From the Largest Leak in History." Slate. Slate.com, 05 Apr. 2016. Web. 06 Apr. 2016.

Ryle, Gerard, Will Fitzgibbon, Mar Cabra, Rigoberto Carvajal, Marina Walker Guevera, Martha M. Hamilton, and Tom Stites. "Banking Giant HSBC Sheltered Murky Cash Linked to Dictators and Arms Dealers." International Consortium of Investigative Journalists. International Consortium of Investigative Journalists, 08 Feb. 2015. Web. 06 Apr. 2016.

Schmidt, Blake. "Panama Papers: A Conversation with Jurgen Mossack and Ramon Fonseca." The Sydney Morning Herald. The Sydney Morning Herald, 05 Apr. 2016. Web. 6 Apr. 2016.

Schmidt, Blake. "Panama Papers: Jurgen Mossack Says the Cat's Out of the Bag." Bloomberg.com. Bloomberg, 04 Apr. 2016. Web. 06 Apr. 2016.

Schmidt, Michael S., and Steven Lee Myers. "Panama Law Firm’s Leaked Files Detail Offshore Accounts Tied to World Leaders." The New York Times. The New York Times, 03 Apr. 2016. Web. 06 Apr. 2016.

"Tricks of the Trade." International Consortium of Investigative Journalists. International Consortium of Investigative Journalists, 05 Nov. 2014. Web. 06 Apr. 2016.

Wayne, Leslie, Kelly Carr, Marina Walker Guevera, Mar Cabra, and Michael Hudson. "Leaked Documents Expose Global Companies' Secret Tax Deals in Luxembourg." International Consortium of Investigative Journalists. International Consortium of Investigative Journalists, 5 Nov. 2014. Web. 06 Apr. 2016.

End of the Embargo: the Future of Cuban-American Economic Cooperation

President Obama’s state visit to Cuba has garnered a lot of press, as he is the first sitting president to do so since 1928. But while momentous, this isn’t surprising; it’s merely the latest in a series of steps the President has taken over the years to normalize relations with the island nation. Since 2009, Obama has lifted travel restrictions, released prisoners, and last year, removed Cuba from the list of terror-sponsoring states. In July, the two countries officially restored diplomatic relations and re-opened their embassies in their respective capitals. During his visit, Obama has declared his intention to lift the economic embargo on Cuba entirely. “I have come here to bury the remnants of the Cold War,” he declared.

The embargo itself is a tricky piece of American policy. Rather than a physical, military blockade, which hasn’t been present around the island since after the Cuban Missile Crisis in 1962, it is entirely a commercial, economic, and financial enterprise. It was first imposed back in 1960, only two years after the Cuban Revolution deposed the US-backed Batista regime, as a reaction to Cuba’s nationalization of American-owned Cuban oil refineries without compensation.

This action was in turn a response to then-President Eisenhower’s decision to cancel 700,000 tons of sugar imports from Cuba and refusal to export oil to the island nation, leaving it reliant on Soviet Russian crude - and with American oil companies further refusing to refine the Soviet crude oil, Cuba seized the American-owned refineries. The embargo was soon expanded to include almost all imports and exports. In total, the US holds approximately $6billion in claims against the Cuban government, and the Cuban Democracy Act of 1992 states that sanctions are to be maintained so long as the Cuban government refuses to democratize and respect human rights. These policies were further tightened under President Clinton with the Helms-Burton Act after Cuba shot down two planes flown by anti-regime protest group Brothers to the Rescue that had repeatedly violated Cuban airspace to drop anti-Castro leaflets over the island, killing four, three of whom were American citizens. Former Cuban President Fidel Castro did encourage insurgence against the USA back in 1982, but in 1992 he promised to cease all such activity, and the State Department reports that Cuba has indeed ceased their support for terrorism. More recently, relations between the two countries took a turn for the worse in 2011 when Cuban authorities arrested Alan Gross, a US Agency for International Development (USAID) subcontractor for the crime of bringing in internet and communications equipment for Havana’s Jewish community. His release was part of a prisoner swap as part of Obama’s “Cuban Thaw” policy.

Refusal to normalize diplomatic relations does not, in fact, have anything to do with communism, as the USA was certainly able to normalize relations with the Soviet Union during the Cold War, as well as with China and Vietnam. Nor is Cuba much of a security threat, as it is militarily impotent, no longer serves as a base for Soviet intelligence operations, nor does it seek to export Communism, or fund or encourage terrorism abroad. It isn’t an entirely toothless country, as it has maintained close relationships with both North Korea and Iran, and has gone back on previous agreements in the past, failing to act in good faith, and remains a sovereign nation run by dictat, not democracy, but it is far from the threat it posed it posed in the height of the Cold War. But while the embargo might have started as a reaction and resistance to Castro, it soon became a political club for first generation Cuban-Americans, often manifesting in election years for politicians running for election, especially in Florida. And indeed, it seems to be generational; the most recent generation of Cuban-Americans differs from the politics of their parents, and many seek to renew ties with island and their families left behind. A Pew Research poll from 2014 shows that the majority of Americans support engagement with Cuba, and a poll from Florida International University shows similar sentiments among Cuban-Americans specifically. A 2015 poll shows that this feeling is reciprocated, with 97% of Cubans favoring restoring ties to the United States. And Obama’s overtures to Cuba have been celebrated around Latin America as well.

Does the embargo even work? It seems not. The Castro regime is well entrenched, and despite the hardships of the Cuban people, doesn’t seem to be going anywhere. There is doubt that the embargo has had any positive effect at all. The United States doesn’t block Cuba’s trade with third parties or other countries, and despite the embargo, the US is the fifth largest exporter to Cuba, consisting mostly of agricultural goods and accounting for over 6% of its imports, though the island nation must pay for it in cash. Moreover, since 1992, the UN has passed a non-binding resolution every year condemning the embargo and declaring it to be in violation of the UN Charter and international law. Only the United States and Israel voted against this resolution in 2014, with a few Pacific island nations abstaining. A great many states engage in active trade and tourism with Cuba. In fact, the embargo might be helping entrench the regime, as it is a convenient scapegoat for the Cuban government on which to pin all its ills and policy pitfalls.

The American embassy in Cuba

The US Chamber of Commerce estimates the embargo hurts us as well as Cuba, costing the economy $1.2billion per year in lost sales and exports. The Cuba Policy Foundation, a non-profit organization dedicated to America-Cuba relations and policy, estimates that the annual cost to the US is a much higher $3.6billion. The Cuban government estimates the embargo costs them approximately $685million annually. Moreover, the embargo uses US resources in endeavors like tracing property ownership of Spanish hotels in Cuba to ensure they weren’t stolen from Americans decades ago. At least 10 different agencies are responsible for enforcing the embargo, and according to the Government Accountability Office, a huge amount of resources are spent on enforcement, to the tune of hundreds of millions of dollars and tens of thousands of man hours every year. Over 70% of US Treasury Department inspections each year are focused on smuggled Cuban goods, even though the agency administers more than 20 other trade bans. Resources spent on this and on programs like Radio Mardi, an anti-regime radio broadcast that is actively jammed by the Cuban government, could be re-directed towards other American endeavors abroad, like Radio Free Afghanistan, where the broadcasts aren’t jammed, or monitoring terrorist financial networks.

Some Americans have been agitating against the embargo for some time, citing the untapped markets of Cuba as avenues for potential profit and growth. Free market supporters and lawmakers representing agribusiness are some of the strongest in vocalizing this. Recently, the American government has approved American investment in Cuba. Two men from Alabama were permitted to construct a factory to build tractors to sell to Cuban farmers, and they are expecting to deliver products beginning as soon as 2017. This plant would be the first significant US business investment on Cuban soil since 1959, and is well in line with Obama’s anti-embargo intentions. And Cuba’s few exports do not rival any US industries, making future free trade with the island low cost both politically and economically, with high potential yields. But that can’t happen until Cuba liberalizes their economy and makes private enterprise a more accessible option for their populace, though the reforms put in place by President Raul Castro since 2008 have begun the process that Obama hopes to accelerate.

In other words, the embargo has utterly failed to accomplish any of its goals, only resulting in harming the US economy and failing to liberate a single Cuban or move the regime towards democracy. And isolation isn’t often an effective tool towards fostering change either. In 1970, 17 out of 26 Latin American and Caribbean nations were authoritarian; today, Cuba is the sole holdout. But only Cuba has been subjected to such a comprehensive embargo, whereas economic engagement has been the rule for everyone else. That Cuba’s government is oppressive isn’t under dispute, but the embargo certainly hasn’t made things better. And indeed, President Obama’s rationale for visiting Havana was grounded in the notion that interaction will empower Cubans and bring about change faster than decades of isolation ever did. Obama urged Castro more about liberalizing the economy and embracing the free market than he did about decreasing authoritarian control and respecting human rights, indicating his belief in the power of capitalism to aid transformation of the country from within, using economic policy to circumvent political stalemate. Moreover, ending the embargo would send a powerful message to regimes that do pose threats to American security: foreign governments that attack the United States will be sanctioned severely and possibly worse, but those that cease to engage in such activity will benefit from trade with us. Carrot and stick.

Still, Obama has to overcome strong opposition in Congress in order to lift the embargo once and for all, and it won’t happen immediately.

The sanctions in place were poorly designed and demonstrably easily circumvented, making them difficult both to enforce as well as to remove in the face of political opposition. Until the embargo does eventually end, Obama and successive presidents can use the existing barriers and the clout we do have and that Obama has built as incentives for Castro to change, as well as encouraging grassroots democratization movements in the island nation. This may involve taking the hard-line at relaxation of barriers, making them conditional on Castro ending some of his regime’s most egregious human rights abuses and harmful economic and political policies.

In the short-term however, Obama can use executive authority to create ties around trade, investment, and travel, with the agricultural and telecommunications industries standing to gain the most both from immediate increased ties and the eventual collapse of the embargo over the long term. Farmers in the southeastern part of the USA especially stand to gain, as their proximity to Cuba makes them ideal exporters of poultry, fish, rice, and corn, but all American wheat and rice farmers are likely to benefit from increased trade with Cuba. “We believe our market share could grow from its current level of zero to around 80% to 90%” said Alan Tracy, president of the US Wheat Associates.

Trade with Cuba could result in the creation of 6000 new jobs in the agricultural sector, many of them in Florida. And for Cuba, an end to chilly relations with the USA means tourism, travel, and remittances from relatives already in the USA. Currently, the $5.1billion annual remittance money that Cuba receives overwhelmingly comes from the USA, and is critical for the Cuban economy, and the Cuban government estimates the impact on remittances as part of the overall impact of the embargo on its economy. It also means that other Latin American businesses will start investing in Cuba, as previously they have not done so in fear of risking their lucrative ties to US markets.

As mentioned above, Obama hopes that economic liberalization will pave the way to political liberalization as it has in so many other countries, though it might be some time before we see results on that front. But the more globally integrated Cuba becomes, the more it will be able to contribute not just to US and regional markets, but global affairs. Cuba has already sent large teams of doctors to Africa to combat Ebola, and has helped successfully mediate the decades long and bloody war between Colombia’s government and the FARC rebels. Despite its current ties to states like Iran and North Korea, it is to be hoped that stronger and more beneficial ties to nations aligned with the United States might be incentive enough to turn them away from this axis. Then this type of engagement would increase, and the world will very possibly be better for it.

Images courtesy of Shutterstock.

Bibliography:

DeYoung, Karen, Julie Vitkovskaya, Kennedy Elliott, Julie Tate, and Swati Sharma. "A Difficult History between U.S. and Cuba." The Washington Post. The Washington Post, 17 Dec. 2014. Web.

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Kornbluh, Peter, and William M. Leogrande. "The Real Reason It's Nearly Impossible to End the Cuba Embargo." The Atlantic. The Atlantic, 5 Oct. 2014. Web.

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Lukas, Aaron. "It’s Time, Finally, to End the Cuban Embargo." The Cato Institute (2001): n. pag. 14 Dec. 2001. Web.

"Obama Calls on US Congress to End Cuban Trade Embargo." Editorial. Al Jazeera. Al Jazeera, 22 Mar. 2016. Web.

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Roberts, Dan, Jonathan Watts, and Lisa O'Carroll. "Obama Appeals for Economic Revolution in Cuba with Call to Embrace Free Market." The Guardian. The Guardian, 22 Mar. 2016. Web.

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A Deadly Dance: The Police and the Mentally Ill

by B. Lana Guggenheim

Police brutality against citizens, particularly minorities, has been much discussed these past few years. However, one minority group has been ignored: the mentally ill. Across the USA, and beyond, police are frequently the first responders to situations involving the mentally ill, usually with dire consequences for the latter. Reliable statistics on police interaction are difficult to find, but anywhere from one-tenth to a quarter of all police interactions involve the mentally ill, approximately 15-20% of those in jail suffer mental illness, and about one quarter to one half of those shot by police struggled with mental illness. Estimates are that people with mental illness are sixteen times more likely to be killed by the police. While being ill is not a crime, being mentally ill is often criminalized, and problems involving or associated with people with mental illness often involve police, who are often not properly trained to handle such situations.

It is commonly but inaccurately thought that people with mental illness are likely to be violent or engaged in violent crime. While a small percentage are indeed more violent than the general population, this is not true for the majority. Most people with mental illnesses are not criminals, and of those who are, most are not violent. That these non-violent people in need of help often end up in jail or worse is an avoidable tragedy. After all, nurses and other medical staff are unarmed, unarmored, and they aid mentally ill patients every day, with no fatalities on either side.

Part of the problem is that our gutted health system cannot handle the burden of caring for the people who need it most. Many mental health clinics are closing, leaving their patients without the care they need, and they often end up on the streets as a result. And the top mental health institutions in the nation? They are found inside jails like in New York City’s Riker’s Island, Cook’s County, and Los Angeles County. Because the existing system withholds treatment until a mentally ill person becomes dangerous to themselves or others, police officers are forced to act as the front line in mental health work. Instead of treating the illness, people call the police and if things go relatively well, the ill person is arrested for things like loitering, shoplifting, or public urinating. Too often though, they get shot instead.

Riker's Island Correctional Facility

The lack of services is exacerbated by the lack of training. Many officers are ambivalent about being the front-line of mental health services, seeing it as outside their mandate to protect the safety of the public, and that caring for the mentally ill is properly the mandate of the healthcare system. This attitude is reinforced by the lack of training available to police officers about recognizing mental illness, mental health crisis intervention, and lack of contact or cooperation from mental health and emergency services. Police are trained to respond to criminal threats with shows of force and authority, which can escalate a crisis for a person suffering a breakdown. The resulting injuries and deaths are traumatic both for the officers, but especially for the victim, their friends and family, and the wider community as a whole.

The Washington Post reports that most of the mentally ill killed by police are men, and over half of them white. Most of them died close to home. Often, the police are called by family members who are overwhelmed and worried about their relative’s erratic behavior. For example, Yvonne Mote of Alabama dialed 911 in March of last year hoping the police could help her schizophrenic brother, Shane Watkins. He was shot and killed by police instead. While an average of nine out of ten of the mentally ill confronted by police were armed with some kind of weapon, they were mostly less lethal than firearms, including toy guns, or knives, or even pens. A percentage of these people are military or police veterans suffering PTSD as well. And according to the data maintained by the FBI and other organizations, only three officers have been killed by edged weapons in the past decade. However, of the thousands killed by police over the years, only a few officers have been prosecuted. For example, Dallas police officers John Rogers and Andrew Hutchins were not indicted for killing mentally ill Jason Harrison for holding a screwdriver in Dallas in 2014.

Jason Harrison

Some police departments have changed their policies. One such is the Las Vegas police department, who adopted a use-of-force policy in 2009 that put the highest premium on the “sanctity of human life,” which stresses proportionality as a guiding principle to limit the use of force. Four years in, the police shootings have fallen by nearly half. However, restrictive policies are not a panacea, as while they lead to fewer injuries for officer and civilian alike, they also lead to more crime.

While it is tempting to advocate rebuilding both the law enforcement and healthcare systems from the ground up, it isn’t practical advice. A number of communities have recognized the terrible situation for what it is, and developed programs that foster collaboration between police and mental health service providers, with noticeable success. These programs can take a variety of forms, such as mobile teams of police and mental health professionals to respond to crisis events, reception centers where specially trained officers can address persons suspected of having mental illness, crisis intervention teams, and joint protocols between police and mental health clinics or hospitals. Police are trained to de-escalate a situation and increase meaningful communication, including nonverbal communication skills, such as recognizing body language and active listening, alongside verbal communication skills that focused on tone of voice, portrayed empathy, and establishing rapport, rather than the opposite. It is a drastic shift in culture and behavior of traditional policing.

Mental Health Liaison officer Grant Humerickhouse (right) assists
 training with the Madison Police Department

In communities where such programs have been instituted, such as in Houston, Texas, Memphis, Tennessee, and Akron, Ohio, results of implementing these programs have been positive. Results have included getting those in need access to the support they lack, including crisis centers. Individuals referred to mental health services experienced less frequent contact with the police, and in cases where police transported people in need to crisis centers and hospitals, an increased percentage of those transportations were voluntary rather than involuntary, and family members have reported greater comfort in calling the police to request help for a loved one, as well as openly acknowledge the mental illness of their relative. And the police department incurred fewer costs, including less frequent mobilization of high-cost SWAT teams. Interestingly enough, the average number of mental health calls also tended to increase, but the amount of time spent on each call decreased, along with a decreased use of force. This shows that trained officers were better able to both recognize and handle calls that involved individuals with mental illness.

However, relatively few officers have received crisis intervention training, nor is this policy pursued across the country. Combined with the cutbacks in mental health service, the future of more such collaborations looks shaky. That leaves too many people dangerously vulnerable, with nowhere else to turn.

Images courtesy of Daily Mail, Yelp, and the Madison, Wisconsin Police Department

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Actuaries: The Statistical Wizards

Numbers play a critical role in the daily lives of everyone around the world, whether we notice it or not. We make purchases, follow time schedules, and measure ingredients for recipes, but those are the numbers that most of us think about consciously when we are completing those related tasks. The numbers that are most important to our lives we may never even have given a thought to, such as our estimated life expectancy, the chances we get permanently injured on the job, or the amount we will need to contribute to our 401k plan each month to have a comfortable retirement. Thankfully, there are extremely well-trained financial professionals who do take the time to think about these crucially important figures and make the calculations that allow us to comfortably go on with our lives without too much worry. These skilled statisticians are known as Actuaries.

Actuaries analyze the financial costs of risk and uncertainty. They utilize mathematics, statistics, and financial theory to assess the risk that an event will occur, and they help businesses and clients develop policies that minimize the cost of that risk. Actuarial work is essential to the insurance industry. Most actuarial work today is done with computers. Actuaries use database software to compile information, and use advanced statistics & modeling software to forecast the probability of an event occurring, the potential costs if it does occur, and whether the insurance company has enough money to pay future claims. Actuaries typically work in teams consisting of other financial professionals, including accountants, insurance underwriters, and financial analysts. There are many different types of specialist actuaries, depending on the type of insurance or financial product or service they are analyzing. Some examples of specialist actuaries are health insurance actuaries, property & casualty insurance actuaries, and pension & retirement benefits actuaries.

Becoming an actuary is a difficult and time-consuming process, which is one of the reasons the profession is relatively small; there were only 24,600 actuaries practicing in the US in 2014. To enter the actuarial field, one must complete a bachelor's degree, generally in mathematics, actuarial science, statistics, or some other analytical field. Related coursework in economics, applied statistics, corporate finance, and computer science are all very useful for prospective actuaries, as they will help with daily tasks actuaries in the workforce deal with. Once graduated with a bachelor's degree, a prospective actuary must take a series of exams to be licensed as an Associate Actuary by one of the 2 main certifying boards. There is also a higher Fellow designation that requires more work experience & exam passing. Typically, it takes between 4 & 6 years post-college for an actuary to gain Associate status, as the exam process is very intense. Most actuaries do not regret their choice, however, as the career is quite lucrative; the mean annual salary in 2014 for actuaries was $110,090, substantially greater than the national average.

If you are interested in learning more about a career in the Actuarial field, check out our infographic below, it is full of helpful information to start you on your journey to a great professional career. For even more information, be sure to come back to our Facebook, Twitter, and Instagram pages all week long to learn more about Actuaries and what a career in this rapidly growing field is actually like.

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Risk Management Expertise: Insurance Underwriters

2015 has been a year of ups & downs for most of the world, but now it is nearing an end. As we approach December 31, and consequently the start of a new year, one thing that many people forget about or just avoid for the vast majority of the calendar year pops up once again: insurance. There may be some of our readers who view insurance as a necessary evil, something that nobody really ever wants, but we all need in case of disaster. Even more people see insurance companies as "black boxes" that take in all of their information & then spit out a rate quote that seemingly has nothing to do with any of the information that was provided besides being way too expensive. However, there are people working behind the scenes at these insurance companies, as well as at other businesses, to analyze the risks presented by the people & corporations applying for various forms of insurance & come up with an appropriate premium amount to cover the risk taken by the insurer. These professionals are called Insurance Underwriters.

Insurance Underwriters decide whether to provide insurance and under what terms. They evaluate insurance applications and determine coverage amounts and premiums. Underwriters analyze the risk factors on an application & must achieve a balance between risky and cautious decisions. If underwriters allow too much risk, the insurance company will pay out too many claims. But if they

don't approve enough applications, the company will not make enough money from premiums. Most insurance underwriters specialize in one of three broad fields: life, health, and property and casualty. Although job duties are similar, the criteria that underwriters use vary. For example, for someone seeking life insurance, underwriters consider age and financial history. For someone applying for car insurance (a form of property and casualty insurance), underwriters consider the person's driving record. Underwriting as a profession most likely got its start in the Age of Imperialism (1700s - 1800s), as banks like Lloyd's of London accepted risks related to long sea voyages in exchange for premiums. The financier who is accepting the risk would put together a contract & quite literally sign their name underneath the area specified for risk information. Hence, we now use the term "underwriting"!

If you want to learn more about the Insurance Underwriting profession, check out our infographic below, which details job duties, how to get into the field, salaries & benefits, as well as statistics on the professionals who comprise the underwriting occupation today. We will be posting insurance underwriting related content all week on our Facebook & Twitter pages, so be sure to stay tuned for more interesting & insightful information!

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