In 2015 an anonymous source calling themselves "John Doe" contacted a reporter at the German newspaper Süddeutsche Zeitung with an offer: internal files from a Panamanian law firm. The leak grew to 11.5 million documents. The newspaper shared them with the International Consortium of Investigative Journalists, and hundreds of reporters in about 80 countries worked on them in secret for a year.

Kleptocracy and offshore finance

When rulers treat the state as a source of private wealth, scholars speak of kleptocracy, rule by thieves. Kleptocrats face a practical problem: stolen money is unsafe at home, where a future government might seize it. They need to move it to stable countries with strong property rights, and to hide whose it is. The tools are shell companies, firms that exist only on paper, along with trusts and accounts in secrecy jurisdictions. Lawyers, accountants, bankers and estate agents who help, knowingly or not, are sometimes called professional enablers.

The Panama Papers, published in April 2016, were leaked records of a law firm's offshore clients. The firm, Mossack Fonseca, had set up more than 200,000 offshore companies. Within days, Iceland's prime minister, Sigmundur Davíð Gunnlaugsson, resigned after the files showed that he and his wife had owned an offshore company with claims on failed Icelandic banks. In Pakistan, the files led to an inquiry and, in 2017, the disqualification of Prime Minister Nawaz Sharif. Owning an offshore company is not itself illegal, and such companies have legitimate uses. The problem is anonymity, which makes theft, tax evasion and sanctions evasion easy.

One response is the beneficial ownership register, a list of the real people who ultimately own or control a company. Its purpose is to reveal the real people behind shell companies. Britain opened a public register in 2016. But in 2022 the Court of Justice of the European Union ruled that fully public ownership registers breached privacy rights, and several countries closed theirs to the general public. The case shows a real tension between transparency and privacy.

Whistleblowers

Corruption is usually known to insiders first. Whistleblowers risk their careers and sometimes their lives, so laws try to protect and reward them. The United States' False Claims Act, first passed in 1863 to fight fraud by Civil War suppliers, lets citizens sue on the government's behalf and keep part of the recovery. Since 2010 the Securities and Exchange Commission has paid whistleblowers a share of sanctions recovered with their help, between 10 and 30 percent in larger cases. A 2019 European Union directive requires member states to protect people who report breaches of EU law from retaliation.

A free press

Journalists turn information into consequences. Many cases in this course, from Tweed to 1MDB, broke through reporting. The work can be deadly. The Maltese journalist Daphne Caruana Galizia was killed by a car bomb in 2017. In February 2018 the Slovak reporter Ján Kuciak, who was investigating links between businessmen, organized crime and politicians, was murdered with his fiancée, Martina Kušnírová. Mass protests led the prime minister to resign weeks later. In 1914 Louis Brandeis, later a Supreme Court justice, wrote that "Sunlight is said to be the best of disinfectants."

What works

Some of the best evidence comes from field studies. In Uganda in the early 1990s, a survey found that schools received on average only about 13 percent of the central government grants meant for them; officials along the way kept the rest. The government began publishing monthly grant transfers in newspapers, and the share of grants reaching schools rose sharply, to around 80 percent by 2001, according to the economists Ritva Reinikka and Jakob Svensson, though other reforms happened at the same time. In Brazil, the federal government began randomly auditing municipalities in 2003. Claudio Ferraz and Frederico Finan found that published audits reduced re-election of corrupt mayors, especially where local radio spread the news.

A pattern emerges. Transparency works when someone can act on it: voters, courts, auditors or a free press. Information without an audience changes little. Durable change also tends to involve simpler rules, credible enforcement that reaches the top, decent pay and, above all, a shift in what people expect of each other. The political scientist Alina Mungiu-Pippidi describes the goal as a move from a society where treatment depends on whom you know to one where the state treats everyone the same, which is also the promise of equal citizenship.

Worked example

A new government inherits a health ministry where medicines vanish between warehouse and clinic. Drawing on this course, it publishes every delivery online and posts it at each clinic, giving transparency an audience. It lets patients report missing medicines by text message, protects nurses who report theft, invites journalists to check the data, and sends auditors to a random sample of clinics each month. It also raises pay for warehouse staff and announces a fresh start, with no pursuit of small past thefts but firm action from a set date. None of this guarantees success, but each step attacks a cause identified earlier: monopoly, discretion, weak accountability and the shared expectation that everyone steals.