The Panama Papers — a set of 11.3 million documents containing the secrets of high-level business dealings touching on powerful people like Russian President Vladimir Putin and British Prime Minister David Cameron— has already been named the greatest digital information leak in history.
With 2.6 terabytes of data, and 100 media partners publishing reports, it’s easy to get lost in the whirlwind of information.
We’ve given a breakdown of the key elements, but sometimes an even more simplified version is helpful.
Situations like this are tailor-made for the expository subreddit /r/ExplainLikeImFive (ELI5) — a community dedicated to explaining concepts in a “friendly, simplified and layman-accessible” manner.
Within hours of The Panama Papers news breaking, a thread was posted on ELI5 for anyone who didn’t understand what was happening and why it mattered. Redditor DanGliesack was there to help.
The Panama Papers ELI5 thread is now the fifth-highest upvoted post of all time in the subreddit, and DanGliesack’s simple yet effective explanation is responsible for its success.
DanGliesack turned to piggy banks for his analogy to shell corporations and tax evasion.
“When you get a quarter you put it in the piggy bank,” the Redditor starts off. “The piggy bank is on a shelf in your closet. Your mom knows this and she checks on it every once in a while, so she knows when you put more money in or spend it.”
Here, “mom” is the government, and the piggy bank represents a bank account the company has opened in their native country. DanGliesack then compares setting up a shell corporation as the equivalent of hiding a different piggy bank in your friend Johnny’s house, where your mom can’t track its contents.
“Now in real life, many very important people were just caught hiding their piggy banks at Johnny’s house in Panama,” DanGliesack explains.
Read the full write-up below, and follow along with our continuing coverage on the Panama Papers here.
When you get a quarter you put it in the piggy bank. The piggy bank is on a shelf in your closet. Your mom knows this and she checks on it every once in a while, so she knows when you put more money in or spend it.
Now one day, you might decide “I don’t want mom to look at my money.” So you go over to Johnny’s house with an extra piggy bank that you’re going to keep in his room. You write your name on it and put it in his closet. Johnny’s mom is always very busy, so she never has time to check on his piggy bank. So you can keep yours there and it will stay a secret.
Now all the kids in the neighborhood think this is a good idea, and everyone goes to Johnny’s house with extra piggy banks. Now Johnny’s closet is full of piggy banks from everyone in the neighborhood.
One day, Johnny’s mom comes home and sees all the piggy banks. She gets very mad and calls everyone’s parents to let them know.
Now not everyone did this for a bad reason. Eric’s older brother always steals from his piggy bank, so he just wanted a better hiding spot. Timmy wanted to save up to buy his mom a birthday present without her knowing. Sammy just did it because he thought it was fun. But many kids did do it for a bad reason. Jacob was stealing people’s lunch money and didn’t want his parents to figure it out. Michael was stealing money from his mom’s purse. Fat Bobby’s parents put him on a diet, and didn’t want them to figure out when he was buying candy.
Now in real life, many very important people were just caught hiding their piggy banks at Johnny’s house in Panama. Today their moms all found out. Pretty soon, we’ll know more about which of these important people were doing it for bad reasons and which were doing it for good reasons. But almost everyone is in trouble regardless, because it’s against the rules to keep secrets no matter what.