Forty Ecuadorean economic entities and individuals, including right-wing opposition leader and wealthy banker Guillermo Lasso, have used Panamanian law firms, most notably the star of the Panama Papers, Mossack Fonseca, resulting in a total of more than US$2 billion in Ecuadorean wealth being based offshore in Panama, according to an investigation by Ecuadorean state newspaper El Telegrafo.
Over half of the 40 entities doing dealings in Panama have made transactions with Mossack Fonseca, the law firm made infamous through the Panama Papers for its role in helping world leaders and the wealthy elite hide their riches in shell companies and tax havens.
According to Internal Revenue Service data reported by El Telegrafo, 77 percent of Ecuadorean businesses have at least one foreign-based shareholder, and 20 percent of those are in tax havens. Over a decade after a banking crisis in Ecuador in the late 1990’s saw a major outflow of wealth, some US$4.1 billion now resides in offshore tax havens, or just over 4 percent of the country’s 2014 all-time high GDP of US$100.54 billion.
More than half of the offshore wealth, some US$2.4 billion, is based in Panama.
Among such offshore dealings is the Panama-based Banisi S.A., formerly known as Banco Guayaquil Panama S.A. and a subsidiary of Banisi Holdings S.A. Guillermo Lasso, former president of Banco Guayaquil, and his son Santiago Xavier are listed as directors of Banisi, and his other son Juan Emiliano is president.
The director of Lasso’s free-market think tank Fundacion Ecuador Libre and backer of his political party Creo, Pablo Arosemna Marriott, is also linked to Banisi as a backer of the parent company Banco Guayaquil, in which Lasso’s son Guillermo Enrique is a director.
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Lasso, along with his Creo party, was one of the key figures behind the opposition protests that hit Ecuador last year which were prompted by conservative discontent over government proposals for progressive tax policies targeting the rich.
The banker, who came in 30 percent behind President Rafael Correa when he ran for Ecuador’s top office in 2010, has much to gain from blocking inheritance laws as an earner of some US$70,000 per month, or about 16 years of wages in the salary of the average Ecuadorean worker.
Lasso was the minister of economy under the government of former President Jamil Mahuad, who oversaw the banking crisis starting in 1998 as a result of massive fraud in Ecuador’s biggest banks. The economic collapse saw some 70 percent of financial institutions go under and led to years of social and political crisis after many Ecuadoreans lost their life savings overnight.
Despite his role in the crisis, Lasso later became economic advisor under President Lucio Gutierrez, during which time he negotiated the controversial Free Trade Agreement for the Americas and coordinated a presidential visit with George W. Bush on the eve of the 2003 Iraq War.
Ecuadorean President Rafael Correa recently said that the country’s wealthiest people have hidden some US$30 billion in tax havens to the detriment of the national economy.