Washington: Europe's top economies called for a crackdown on tax havens and urged G20 countries to rip away the secrecy protecting shell companies, as the Panama Papers scandal claimed Spain's industry minister as the latest political victim today.
In the strongest reaction yet to the leaked Panama Papers, the finance ministers of Britain, France, Germany, Italy and Spain proposed a blacklist of havens like Panama if they failed to share corporate registry data.
"Today we deal another hammer blow against those who hide their illegal tax evasion in the dark corners of the financial system," British Finance Minister George Osborne said.
Spain's industry minister Jose Manuel Soria stepped down today after being named in the leaked papers, citing "mistakes" in explaining his alleged offshore interests and "the obvious harm that this situation is doing to the Spanish government".
Soria's troubles began Monday when Spanish online daily El Confidencial, which has had access to the Panama Papers, said he was an administrator of an offshore firm in 1992.
Soria called a news conference to deny any link to the company, but as the week went by, more allegations emerged from other media outlets, revealing further alleged connections to offshore havens. It is unclear as yet whether any of his alleged actions were illegal.
In their joint statement during a meeting of the World Bank and International Monetary Fund in Washington, the five EU ministers said: "The recent extensive leaks from Panama show the critical importance of the fight against tax evasion, aggressive tax planning and money laundering."
World Bank President Jim Yong Kim said the illicit financial activities enabled by tax havens undermined the fight against poverty.
"When taxes are evaded, when state assets are taken and put into these havens, all of these things can have a tremendous negative effect on our mission to end poverty and boost prosperity," he said.
The joint European move was a reaction to the leak of thousands of documents on anonymously-owned shell companies from Mossack Fonseca, a Panamanian law firm that specialized in setting up such firms.
The trove showed the use of shell companies by prominent politicians including close associates of Russian President V Putin, family members of Chinese leaders, British Premier David Cameron, and the leaders of Iceland and Argentina.
The leak placed Panama in the spotlight as one of the leading havens that have not joined an agreement on sharing information on bank accounts and other assets.
The five threatened to create a blacklist of countries which do not cooperate on sharing data. "We want to have lists which make it possible to place sanctions on countries which don't respect the rules," French Finance Minister Michel Sapin said.
Under pressure, Panama yesterday said it was ready to begin working together with the "Common Reporting Standard" system on sharing information about assets and accounts.