Panama Papers Q&A: What is the scandal about?

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panamaA huge leak of documents has lifted the lid on how the rich and powerful use tax havens to hide their wealth. The files were leaked from one of the world’s most secretive companies, a Panamanian law firm called Mossack Fonseca.

What are the Panama Papers?

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.

It is the biggest leak in history, dwarfing the data released by the Wikileaks organisation in 2010. For context, if the amount of data released by Wikileaks was equivalent to the population of San Francisco, the amount of data released in the Panama Papers is the equivalent to that of India.

 

Who is in the papers?

There are links to 12 current or former heads of state and government in the data, including dictators accused of looting their own countries.

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.

Graphic

Also mentioned are the brother-in-law of China’s President Xi Jinping; Ukraine President Petro Poroshenko; Argentina President Mauricio Macri; the late father of UK Prime Minister David Cameron 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. He has now resigned.
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 inquiry into football corruption.
The leak has also revealed that more than 500 banks, including their subsidiaries and branches, registered nearly 15,600 shell companies with Mossack Fonseca.
Lenders have denied allegations that they are helping clients to avoid tax by using complicated offshore arrangements.

Chart showing the ten banks that requested most offshore companies for clients

How do tax havens work?

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.
You can read more on how tax havens work here.
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.
One of the media partners involved in the investigation, McClatchy, has more on how shell companies work in this video.

What do those involved have to say?
Mossack Fonseca says it has operated beyond reproach for 40 years and never been accused or charged with criminal wrong-doing.
Mr 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”. Publication of the leaks may be down to “former employees of the State Department, the CIA, other security services,” he said.
In an interview with a Swedish television channel, Mr Gunnlaugsson said his business affairs were above board and broke off the interview.
Fifa said it is now investigating Mr Damiani, who told Reuters on Sunday that he broke off relations with the Fifa member under investigation as soon as the latter had been accused of corruption.
Who leaked the Panama Papers?
The 11.5m documents were obtained by the German newspaper Sueddeutsche Zeitung and shared with the International Consortium of Investigative Journalists (ICIJ).
The ICIJ then worked with journalists from 107 media organisations in 76 countries, including UK newspaper the Guardian, to analyse the documents over a year.
The BBC does not know the identity of the source but the firm says it has been the victim of a hack from servers based abroad.

BBC graphic comparing size of Panama Papers data leak to other recent leaks

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.
How can I read the papers?
So far, a searchable archive is not available at the moment.
There is a huge amount of data, and much of it reportedly includes personal information (including passport details), and does not necessarily include those suspected of criminal activity.
Having said that, there is plenty of information out there. The ICIJ has put together a comprehensive list of the main figures implicated here – you can also search by country.
You can sign up on the ICIJ’s website for any major updates on the Panama Papers here.

BBC

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8 responses to “Panama Papers Q&A: What is the scandal about?”

  1. 5thDrawer Avatar
    5thDrawer

    Making it a little mucky for the High Mucky-Mucks. ;-)))

    1. 5thDrawer Avatar
      5thDrawer

      Although MANY of us feel the ‘Rich&Famous’ get away with anything, most of those who are in these ‘tax-havens’ probably comply with the applicable ‘Laws’ of their countries, and use honest accountants who can try to understand them.
      If there are no good laws being made to cover the circumstance, blame the ones who were supposed to be ‘taking care’ of doing that. And then bring those ‘to the light’.
      If the ‘Law’ allows certain ‘investments’ to be made, then only the ones who feel they are ‘above all Law’, AND acted that way, should be made ‘Infamous’ by ‘Leaks’ of the documentation.
      Perhaps out of all this, some Laws will be ‘adjusted’.
      Which will still not change the perceptions about the ‘Rich&Famous’ … of course. 😉

      1. Hind Abyad Avatar
        Hind Abyad

        It’s just distraction…what’s the fuss about if it’s legal, anyway, not my domain but i noticed names in media are countries West doesn’t “like”

        http://www.sott.net/article/315794-Disinfo-campaign-commences-Panama-leaks-target-Wests-enemies-ignore-NATO-crimin

        1. 5thDrawer Avatar
          5thDrawer

          Probably not in Russian Media, however … ;-))

          1. Hind Abyad Avatar
            Hind Abyad

            Americans neither ex: Max factor etc…

  2. 5thDrawer Avatar
    5thDrawer

    What’s it’s about?? SHOWTIMES ….
    “Showtime’s new drama Billions proceeds from the basic assumption that the real money is made by traders operating on inside information. Go ahead. Watch it, then go take a look at your RRSP statement and try to remember the last time it grew by 10 or 15 per cent in a single year.”

    Panama Papers ..
    http://www.cbc.ca/news/business/panama-papers-neil-macdonald-1.3520491

  3. MekensehParty Avatar
    MekensehParty

    The “leaks” war has been on for quite some time
    Those who were genuinely happy with Snowden’s work should be super happy now
    Those who were happy with Snowden’s leaks because they hurt the US are reviewing their tactics and strategies now that they realize that leaks are a double edge swords, especially the ones who proudly gave the guy asylum and who are, as the new leaks show, up to their nose in laundering billions of the country’s money while poverty rises to highs not seen since the 90s (A poor Russian’s salary is $153/month – yes $5 a day, not to mention China’s $1 a day)
    So here we go, you call yourself a champion of transparency, remember that EVERYTHING can be transparent too.

  4. Hind Abyad Avatar
    Hind Abyad

    “It’s the biggest leak in history, dwarfing the data released by the Wikileaks organization in 2010. For context, if the amount of data released by Wikileaks was equivalent to the population of San Francisco, the amount of data released in the Panama Papers is the equivalent to that of India,” (BBC News, April 5th).

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