Journalist Says Corporate Tax Evasion is Rampant in Ecuador

Award-winning Argentine journalist Pedro Brieger said Friday that corporations and businesses in Ecuador are notorious for using tax havens to hide money and avoid paying domestic taxes.

“Ecuador is ranked high with companies and entrepreneurs who used not only Panama, but other tax havens, to take money out of the country. We're talking about millions of dollars,” Brieger told Radio La Plata.

Brieger is visiting Ecuador as part of an effort by local media outlets to investigate the information revealed as a result of the Panama Papers leak by the International Consortium of Investigative Journalists (ICIJ), which is expected to release a searchable database of more documents on Monday.

RELATED:
Popular Argentine Journalist Latest Victim of Media Witch Hunt

Ecuadorean President Rafael Correa has repeatedly called for all of the documents to be released, as the first batch contained only a select amount of documents selected by journalists affiliated with the ICIJ.

The Correa government has tried to close domestic tax loopholes and introduced legislation in 2015 to crackdown on the use of tax havens by companies and wealthy individuals. That legislation was eventually withdrawn in favor of a national dialogue after violent right-wing protests threatened to destabilize the country. 

Those same protests were encouraged by the country's private media, which has come to occupy a political role in Ecuadorean society. 

“Tax evasion is one of the favorite games of the most powerful in Ecuador, the United States, Indonesia, Argentina, in any place,” said Brieger.

He argues that the cooperation between private media outlets and large corporations is a key component of the tax evasion scheme.

IN DEPTH:
Latin American Elites and the Panama Papers

“So there really is a very perverse game among businessmen, political leaders, media outlets, who avoid paying domestic taxes (by) taking money out of the country,” said Breiger. 

He added that the issue invariably has a political element, since many corporations are at odds with the Correa government precisely over its efforts to eliminate tax evasion schemes.

The issue of domestic tax evasion has grown in importance in Ecuador after a 7.8 magnitude earthquake struck the country last month, with recovery costs pegged at US$3 billion. 

The recovery of lost tax income would serve to help fund reconstruction in the affected regions of the country.