Structural studies of the global networks exposed in the Panama papers

Mayank Kejriwal,Akarsh Dang

doi:10.1007/s41109-020-00313-y

Abstract

In recent history, the Panama Papers have comprised one of the largest and most influential leaks detailing information on offshore entities, company officers and financial (and legal) intermediaries, and has led to a global exposé of corruption and tax evasion. A systematic analysis of this information can provide valuable insights into the structure and properties of these entities and the relations between them. Network science can be applied as a scientific framework for understanding the structure of such relational, heterogeneous datasets at scale. In this article, we use an existing, relational version of the Panama Papers to selectively construct various networks, and then study the properties of the underlying system using well-defined analytical methods from network science, including degree properties, country assortativity analyses, connectivity and single-point network metrics like transitivity and density. We also illustrate significant structural features in these networks by conducting a triad census and exploring the networks’ core-periphery structure. Together, these results are used to show that the Panama Papers constitute a distinct class of networks that differ significantly from ordinary social and information networks. We also propose, construct and analyze ‘higher-order’ networks from the raw data, such as a ‘social’ network of officers. We confirm that some of these higher-order networks also show significant non-random deviations from expected or typical behavior, including in their degree distributions.

Highlights

In 2015, an anonymous source leaked more than 11.5 million documents that detail financial and attorney-client information for more than 214,488 offshore entities
Their impact1 is already being felt in many governments; according to a recent report, more than 1.2 billion United States Dollars (USD) in back taxes and penalties have already been collected by governments around the world (Obermayer and Obermaier 2016)
It should be noted that International Consortium of Investigative Journalists (ICIJ) itself claims on its website, dedicated to the Panama Papers, that mere presence of an entity in the Panama Papers does not suggest that it is engaged in shadowy or illicit activities

Summary

Introduction

In 2015, an anonymous source leaked more than 11.5 million documents that detail financial and attorney-client information for more than 214,488 offshore entities. Numerous other references have built off of (Obermayer and Obermaier 2016), including work by Trautman (2016) on disclosures regarding the leaked documents, a discussion of the impact of bribery and corruption on the global community and issues surrounding tax evasion, (O’Donovan et al 2019) on how firms use secret offshore vehicles to ‘finance corruption, avoid taxes and expropriate shareholders’, and at least ten others (Cooley et al 2018; Ellis 2019; Heimann and Pieth 2017; Graves and Nabeelah 2019; Miller 2017; Miethe and Menkhoff 2017; Neu et al 2020; Radon and Achuthan 2017; Tuttle 2016) and (Nerudova et al 2020) Many of these works are more sociological, philosophical or legal in nature e.g., the work by Trautman was published in a law review, while the article by Radon and Achuthan (2017) was published in international affairs. We take their definitions from the ICIJ page for context:

Offshore Entity

Findings

Intermediary