If you are a politician and need to hide your money from tax authorities, you can park your dollars in one of the safest places in the world, inside the banking system of the United States of America. The most powerful country in the world will protect your money and keep your secrets. Why take risks elsewhere when you can have South Dakota, Florida, or Delaware?

And there’s more: The US government can provide you with vital political support when you run into trouble at home. Case in point: Ecuador, where President Guillermo Lasso faces a major scandal as a result of the Pandora Papers’ revelations of his offshore assets. On October 19, US Secretary of State Antony Blinken paid a special visit to Ecuador, a move that has been presented by the Ecuadorian government as a show of support for the beleaguered president.

On October 10, the Ecuadorian National Assembly opened a formal investigation into the president’s finances. The legislative commission investigating Lasso seeks to establish whether he violated a law barring public officials, including presidents, from having assets in tax havens.

The law goes back to 2017, when a referendum was held asking Ecuadorians whether they agreed that “in order to be the holder of an elected office or to be a public official, an individual should be prohibited from having assets or capital of any nature in tax havens.” Fifty-five percent of Ecuadorians said “yes.” Public officials were given a year to comply or face dismissal.

When information first surfaced that Lasso controlled a complex web of assets in the Cayman Islands, Florida, and Delaware in 2016, his first reaction was denial. “That’s a lie,” Lasso said repeatedly in TV interviews (although he did admit to having a bank in Panama). But months later, he announced that he would effectively repatriate his assets if he were elected to the presidency.

Lasso was not elected in 2017. But when he announced he would run again in the 2021 elections, the ban on holding assets in tax havens was law. Lasso was required to provide a sworn affidavit that he did not hold any such assets. He provided it, and his candidacy was approved.

The Pandora Papers provide new evidence that Lasso has long had an intricate web of offshore shell companies registered in problematic jurisdictions. The new leak also adds a number of formerly unknown entities to the list of assets previously identified, including new companies in South Dakota.

Lasso’s first reaction to the leak, on October 5, was to announce in a nationally televised address that the Pandora Papers information was outdated and that he had since repatriated all of his assets to Ecuador. But in an October 13 interview, Lasso contradicted that statement.

Over the last few days, Lasso’s declarations have become increasingly volatile. On October 13, he accused the 600 journalists of the ICIJ consortium behind the Pandora Papers of being part of an “international plot” and a “global conspiracy to attack people and political leaders like me.” He accused George Soros of being behind the alleged plot, and denounced the German cable network Deutsche Welle for alleged bias. After his initial promise to cooperate with the parliamentary investigation, Lasso refused to attend the commission’s hearing when summoned on October 20.

Then on October 25, official Panamanian documents were made public, showing that Lasso transferred his shares in his bank in Panama to his children in October 2020. This appeared to confirm that he still owned these shares at the time of registering his candidacy in September 2020 and that he transferred these assets to his offspring, which does not qualify as divestment in Ecuadorian law.

Lasso is in a tight spot. If his candidacy was illegal all along, then he could be impeached. On top of that, he will have also committed perjury, which is a criminal offense. Lasso’s party holds less than 10 percent of seats in the National Assembly, and there are not that many other legislators aligned with the president. His approval ratings, moreover, have plummeted from 74 to 34 percent in less than three months.

The US government holds many of the keys to uncovering the truth about Lasso’s finances. President Biden has been outspoken against tax havens, including in his April State of the Union address. Opening up the shell companies of Latin America’s oligarch politicians in the United States would match his well-received words with concrete action.

- Guillaume Long is a senior policy analyst at CEPR. Prior to joining CEPR, Guillaume held several cabinet positions in the government of Ecuador, including Minister of Foreign Affairs, Minister of Culture, and Minister of Knowledge and Human Talent. Most recently, he served as Ecuador’s Permanent Representative to the United Nations in Geneva.

Source: CEPR.  A version of this op-ed was published by the Miami Herald on October 26, 2021.