Last week the International Consortium of Investigative Journalists (ICIJ) released more documents from the Panama Papers, which revealed previously undisclosed records relating to offshore accounts with names and addresses of individuals all over the world. We have seen strong media coverage on the forty Mongolian names in the papers, which included S.Batbold, a former Prime Minister and member of parliament; D.Tsogtbaatar, former Minister of Construction and Urban Development; two daughters of former Prime Minister S.Bayar; and B.Chuluudai, Ulaanbaatar Mayor E.Bat-Uul’s son. President Elbegdorj used social media to express his ambiguous position, saying, “Everyone must abide by the law, and be responsible.” There are many “must do” things in Mongolia, but the tragedy of today’s governance is that these priorities have been ignored by our government officials. Politicians whose names were revealed in the Panama Papers mostly claimed that they do not currently hold any offshore accounts, or that they do not have money in them.Some of them said that they must have registered for them when they bought shares years ago. Every citizen has the right to know what an offshore account is, why hundreds of thousands of people and businesses use them, and whether offshore accounts will exist in the future or not. WHAT IS OFFSHORE FINANCE? The name "offshore" refers to something being conducted abroad for financial benefit. Offshore finance came into use in the 1950s when approximately 60 countries, most of which did not have many natural resources, adopted the practice. The term "offshore" is attributed to a service that allows prompt registration of a business, the opening of an international bank account, and being exempt from taxes in the account holder's home country. James Henry, a former chief economist at McKinsey, told The Guardian recently that approximately 20 trillion USD is stashed away in offshore accounts today. One study suggests that 2 trillion USD is in Switzerland, 1.9 trillion in the British Isles, 900 billion in Panama and the Caribbean Isles, and 700 billion in Hong Kong and Singapore. Opinions are divided due to a worldwide discussion taking place to ascertain whether this huge amount of money is the result of illegal criminal activities, such as tax avoidance. One group believes that the flow of capital must be as free and prompt as possible. They hold the stance that offshore finance is a matter of economic freedom, as long as taxes are paid. The other group believes that offshore accounts are the means of the corrupt – mostly politicians – to launder money from arms trading, human trafficking, and selling drugs. RELIABLE GUARANTEES AND FREE FLOW OF CAPITAL Regardless of their size, all businesses seek opportunities to save some of their legally acquired profits in a safe, reliable location, and to invest in countries where tax rates are lower. For these reasons, these businesses establish companies and look for means to trade stock on the international market. In order to meet this demand, offshore financial centers offer services that are allowed under their own country's legislation. Today, one cannot fathom the European capital market without Switzerland, or the Asian market without Singapore or Hong Kong. These countries ensure that their laws are implemented smoothly and financial services are reliable and fast. Therefore, a large number of companies register there to conduct transactions with minimal delay. Wealthy people in many developing countries decide to keep their capital in reliable offshore accounts despite the lower interest rates. This is mainly driven by the fear of civil war and political coups. Mongolia currently has 611 companies with foreign investments which are registered in 12 offshore locations. The Foreign Investment Agency reports that 272 of those companies are registered in the British Isles, 193 in Hong Kong, 68 in Switzerland, and the rest in Luxembourg, the Islands of Bahamas, Cyprus, the Cayman Islands, Panama, Ireland, Gibraltar, Belize, and Lichtenstein. It goes without saying that Mongolians do not believe that all of these companies are dealing with dirty money. Furthermore, there are no legal grounds to presume that any Mongolian business or individual who has registered an account in an offshore location and conducted transactions has committed a crime. CORRUPTION AND OFFSHORE ACCOUNTS The Guardian reported last week that 12 trillion USD is kept by developing countries in offshore locations. The biggest sums are held by Russia (1.3 trillion) and China (1.2 trillion). Since 2010, the increase in the amount of money kept in offshore accounts rose by eight percent a year for Russia, and nine percent a year for China. Thailand, Malaysia, and Indonesia have the next highest increases. These countries have recently seen a series of corruption scandals involving high profile politicians. It was widely reported that the wealthy families in oil-rich nations such as Angola and Nigeria are always afraid of having their capital taken away due to their governments being overthrown. The Panama Papers revealed the names of many statesmen from numerous countries. Following the release of the papers, the Prime Minister of Iceland gave up his position after it was revealed that he had 3.6 million USD in his offshore account and had never reported it. The governments of France, Great Britain, and New Zealand are checking into the offshore accounts that may have links to their politicians. Many countries believe that nations such as the United States and Great Britain should stop allowing money with unknown origins to be used for transactions and investments. In a similar fashion, Mongolia should also receive a written explanation from all of those people who have offshore accounts and who have previously held senior positions in the government. Mongolia’s corruption will be reduced if senior officials provide not only their income statements, but also expenditure statements. Members of Australia’s parliament are required to submit a report on where they have traveled abroad and who they have met with. It is time Mongolia adopted the same approach. It is not plausible to abolish offshore financial centers, thus the focus should be on collecting taxes. If the money that has flowed through offshore accounts is imposed a tax of one percent, it would add up to approximately 120 billion USD, which nearly equals global aid funds (131 billion USD). When its laws are not followed or implemented, a government weakens. If this continues, there is a stronger likelihood for violations of the law, avoidance of rules, and ignorance of rules. In such countries, the authorities get wealthier while the gap between the rich and poor widens. It leads to social instability and increasing crime, and causes the development of a country to fall behind by many years. A culture needs to be set in Mongolia so that corruption is relentlessly revealed and stopped, and people do not even think of committing this crime. We, the people of Mongolia, demand that the new authorities elected in the 2016 general elections implement the fight against corruption with strong leadership.