Triggering unprecedented jolts around the world over the new tax haven in Panama, 11.5m files from the database of the world’s fourth biggest offshore Panama-based law firm, Mossack Fonseca, were released to certain media houses by the International Consortium of Investigative Journalists (ICIJ), which gave it the name “Panama Papers”. The documents, from around 2,14,000 offshore entities covering almost 40 years since 1977, came from Mossack Fonseca, a law firm with offices in more than 35 countries.
The records were obtained from an anonymous source by the German newspaper Süddeutsche Zeitung, which shared them with the ICIJ. The ICIJ worked with journalists from 109 media organisations in 76 countries, including UK newspaper The Guardian, to analyse the documents over a year. Then ICIJ shared the documents with a large network of international partners, including The Guardian and the BBC.
Panama is one of popular tax havens in the Caribbean. Although there are legitimate ways of using tax havens, most of what has been going on is about hiding the true owners of money, the origin of the money and avoiding paying tax on the money.
The documents show the myriad ways in which the rich can exploit secretive offshore tax regimes. The files show how Mossack Fonseca clients were able to launder money, dodge sanctions and avoid tax.
In one case, the company offered an American millionaire fake ownership records to hide money from the authorities. This is in direct breach of international regulations designed to stop money laundering and tax evasion.
There are links to 12 current or former heads of State in the data. More than 60 relatives and associates of heads of state and other politicians are also implicated. The files also reveal a suspected billion-dollar money laundering ring involving close associates of Russia’s President Vladimir Putin. Also mentioned are the brother-in-law of China’s President Xi Jinping; Ukraine President Petro Poroshenko; Argentina President Mauricio Macri; a nephew of South African President Jacob Zuma, the son of Ghana’s former president John Agyekum Kufuor, the late father of UK Prime Minister David Cameron, the king of Saudi Arabia, and three of the four children of Pakistan’s Prime Minister Nawaz Sharif. The documents show that Iceland’s Prime Minister Sigmundur Gunnlaugsson had an undeclared interest linked to his wife’s wealth.
Putin’s spokesman Dmitry Peskov said the reports were down to “journalists and members of other organisations actively trying to discredit Putin and this country’s leadership”.
The scandal also touches football’s world governing body, Fifa. Part of the documents suggest that a key member of Fifa’s ethics committee, Uruguayan lawyer Juan Pedro Damiani, and his firm provided legal assistance for at least seven offshore companies linked to a former Fifa vice-president arrested last May as part of the US enquiry into football corruption.
Some of the main allegations centre on the creation of shell companies, that have the outward appearance of being legitimate businesses, but are just empty shells. They do nothing but manage money, while hiding who owns it.
Mossack Fonseca says it has operated beyond reproach for 40 years and never been accused or charged with criminal wrong-doing.
It is the biggest leak in history. In all, the details of 214,000 entities, including companies, trusts and foundations, were leaked. The information in the documents dates back to 1977, and goes up to December last year. Emails make up the largest type of document leaked, but images of contracts and passports were also released.