The recent leak of millions of documents dubbed the “Panama Papers” has created reputational disasters for politicians, corporations and countries involved in the scandal.
The papers imply that those involved have created shell companies with the help from a law firm, Mossack Fonseca. These companies help people shield their money from tax collectors, regulators and creditors. In other words, people are able to hide their money if they do not wish to pay tax in the country in which they reside or if their money has come through legitimate or possibly illegal means.
It must be said however that using these types of services are not illegal. However, public sentiment has reiterated that although it is legal, what has been occurring is morally and ethically wrong. This has meant that large corporations that have referred clients to the law firm such as UBS, HSBC and Société Générale have also come under considerable scrutiny.
The reputational disaster of the leak has exceeded and expanded beyond simply the law firm from where the leak originated. Unsurprisingly, there has been a snowball effect whereby influential people, corporations and countries have had their reputations tarnished. For example, the data leak has caused:
Damage to reputations has been widespread, so many companies, politicians and countries will have to work hard to regain their stakeholders's trust. When stakeholders' trust is lost, transparency is crucial, particularly for a crisis which calls into question a company’s business practices and integrity. Reassuring stakeholders is essential during a time when there is an increase in public, media and government scrutiny as well as criminal investigations. Mossack Fonseca have attempted to do this through the creation of a dedicated website to the scandal.
Companies can establish the facts and keep stakeholders up to date by setting up a dedicated website and using social media pages during a crisis in which speculation, rumour and ambiguity are rife.
However, during a crisis such as this, communication through all platforms and channels needs to be clear and concise. Long-winded or vague statements during a crisis can be detrimental to successful reputation management. Unfortunately, many politicians, and Mossack Fonseca have come under fire for this. David Cameron, openly admitted he could have managed the leak better.
If you or your organisation was linked to the scandal, how well would your crisis response strategy fair? Find out by taking our Crisis Diagnosis Test.