Noticias

Pandora Papers: legal is not necessarily ethical

This article first appeared on La Tercera on October 18, 2021.

Much has already been said about the Pandora Papers, tax havens, and other scandals related to this worldwide journalistic investigation. However, I would like to dwell on an issue as relevant as ethics and the need to raise the current standard, that which measures more rigorously the moral yardstick depending on who the adversary is, and not based on one’s correctness.

In this context, and view of the investigation being carried out by the Public Prosecutor’s Office regarding the controversial third clause in the purchase and sale of the Dominga mining company -subscribed in a contract in the British Virgin Islands-, there is concern about the possible existence of a conflict of interest since the business depended on the decisions made by the government of President Sebastián Piñera.

And that is when we see that what is legal is not necessarily ethical and that crossing the line may be easier or more common than we think. In this case, the investigation will shed light on what is to come in legal or criminal matters, but for the time being, it is an example of the fact that a probative action cannot be conditioned to what law allows, even less today, during a crisis of confidence, with a citizenry tired of impunity and demanding more and more equity and transparency.

As long as we do not know the truth, unrestricted defenses or accusations of falsehood are striking when the desired signal is the invitation to investigate the facts and that there is total transparency in the case.

Conflicts of interest affect public faith because they can become acts of corruption, and the fact that they are not transparent makes it easier for that to happen. If the ethical compass is lost, there are not enough laws to help recover it. And it is not that we want more laws, but that we eradicate the idea that “if it is not forbidden, it is allowed”.

A concrete example is given by Pedro Velásquez, the former mayor of Coquimbo convicted for fraud against the Treasury who is now a candidate for senator. The law forbids him to be a candidate for mayor…, but he can be a parliamentarian without problems. Legally, but ethically unjustifiable.

On the other hand, Chile is a very small country, with a small society, where almost 50% of the companies are family businesses, closed environments that know each other, and where it is easier to privilege the friend or overlook conflicts or potential conflicts of interest. So, even though we have good laws, such as the lobbying law, these are not enforced, because we are used to the fact that a call is faster than asking for a formal meeting. The issue is what that call will look like when in a few more years it comes to light.

The above leads us to the importance of exposing ourselves to ethical dilemmas that allow us to make decisions regarding the gray areas we face every day, and for which we should not always take the easiest path or one that is legal, but smells ugly.

And just as not everything is black and white, not everyone who uses tax havens to set up offshore companies is corrupt. However, even though they are legal, the opacity and lack of transparency of these structures open the door to irregularities such as money laundering or money concealment. And it is at this point where it is urgent to create a registry of final beneficiaries of companies, especially those with complex networks, to know the final destination of the money, combat corruption, limit conflicts of interest, and anti-competitive practices.

The Senate is currently discussing the bill that modifies the public procurement system and creates the first registry of final beneficiaries of companies that carry out contracts with the public sector, seeking to extend this registry to companies from all sectors and not limit it to State suppliers. The senators asked the Ministry of Finance for a copy of the OECD report with the recommendations for the implementation of this system among private companies, which is a great step forward.

In life and business, the ethical line can be fine, and we must know how to distinguish it and, above all, question the gray areas. Ultimately, probity – or the lack of it – depends on each individual, but in the long run, it involves and affects us all.

By: Susana Sierra

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