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Tax leaks expose world leaders

21Panama Papers’ reveal offshore havens of rich and powerful; govts begin probe

Governments across the world began investigating possible financial wrongdoing by the

rich and powerful yesterday after a leak of four decades of documents from a Panamanian

law firm that specialised in setting up offshore companies. Agencies

The “Panama papers” revealed financial arrangements of global politicians and public

figures including friends of Russian President Vladimir Putin, relatives of the prime

ministers of Britain, Iceland and Pakistan, and the president of Ukraine.

While holding money in offshore companies is not illegal, journalists who received the

leaked documents said they could provide evidence of funds hidden for tax evasion,

money laundering, sanctions busting, drug deals or other crimes.

The law firm, Mossack Fonseca, which says it has set up more than 240,000 offshore

companies for clients around the globe, denied any wrongdoing and called itself the

victim of a campaign against privacy.

The Kremlin said the documents contained “nothing concrete and nothing new” while a

spokesman for British Prime Minister David Cameron said his late father’s reported links

to an offshore company were a “private matter”.

Iceland’s Prime Minister Sigmundur Gunnlaugsson could not immediately be reached for

comment on the naming of his wife in connection with a secretive company in an

offshore haven, which brought opposition calls for him to resign.

Pakistan denied any wrongdoing by the family of Prime Minister Prime Minister Nawaz

Sharif after his daughter and son were linked to offshore companies. Ukrainian President

Petro Poroshenko did not comment on his reported offshore links.

Australia, Austria, France, Sweden and the Netherlands were among countries which said

they had begun investigating the allegations, based on more than 11.5 million documents

from Mossack Fonseca.

Banks came under the spotlight for allegedly helping clients hide their funds offshore.

The documents, covering a period from 1977 until last December, were leaked to more

than 100 news organisations around the world, cooperating with the International

Consortium of Investigative Journalists (ICIJ), a Washington, D.C.-based network.

“I think the leak will prove to be probably the biggest blow the offshore world has ever

taken because of the extent of the documents,” ICIJ director Gerard Ryle said.


Britain’s Guardian newspaper said the documents showed a network of secret offshore

deals and loans worth $2 billion led to associates of Putin, including concert cellist Sergei

Roldugin, a childhood friend of the president. Reuters could not confirm those details.

Putin’s spokesman dismissed the reports, saying they aimed to discredit him ahead of

upcoming elections.

“This Putinophobia abroad has reached such a point that it is in fact taboo to say

something good about Russia, or about any actions by Russia or any Russian

achievements. But it’s a must to say bad things, a lot of bad things, and when there’s

nothing to say, it must be concocted, he said.

The British government asked for a copy of the leaked data, which could be embarrassing

for Prime Minister Cameron, who has spoken out against tax evasion and tax avoidance.

His late father, Ian Cameron, a wealthy stockbroker, is mentioned in the files, alongside

some members of his Conservative Party, former Conservative lawmakers and party

donors, British media said.

Jennie Granger, head of enforcement and compliance at HM Revenue and Customs, said

the government would examine the information “and act on it swiftly and appropriately.”

Cameron’s spokeswoman declined to comment on whether the leader’s family had money

invested in offshore funds set up by his father, saying it was a “private matter”.

The opposition Labour Party’s finance spokesman, John McDonnell, tweeted: “Cameron

promised and has failed to end tax secrecy and crack down on ‘morally unacceptable’

offshore schemes, real action is now needed.”

The Australian Tax Office said it was investigating more than 800 wealthy Mossack

Fonseca clients and had linked more than 120 of them to an associate offshore service

provider located in Hong Kong, which it did not name.


The head of Mossack Fonseca, Ramon Fonseca, has denied any wrongdoing but said his

firm had suffered a successful but “limited” hack on its database. He described the hack

and leak as “an international campaign against privacy”.

Fonseca, who was up until March a senior government official in Panama, told Reuters

the firm had formed more than 240,000 offshore companies.

The papers also showed the use of offshore companies by Pakistini Prime Minister

Nawaz Sharif’s family, including his daughter Mariam and son Hussain. Pakistani

Information Minister Pervez Rasheed denied any wrongdoing on their part.

“Every man has the right to do what he wants with his assets, to throw them in the sea, to

sell them, or to establish a trust for them. There is no crime in this in Pakistani law or in

international law,” Rasheed said.

Media reports also said the leaked data pointed to a link between a member of global

soccer body FIFA’s ethics committee and a Uruguayan soccer official who was arrested

last year as part of a U.S. probe into corruption in the sport.


The revelations drew an angry reaction from some quarters. German Economy Minister

Sigmar Gabriel questioned the morals of the financial world.

“The greed of the super-rich is connected to the lack of conscience in the banking and

financial sector. Both damage the trust in the rule of law. We should not tolerate the fact

that one section of society works hard and sticks to the rules while another section cheats

society,” he told Sueddeutsche Zeitung.

The British-based Tax Justice Network said too many offshore lawyers, accountants and

bankers saw it as their role to shield their clients from financial regulations designed to

prevent money laundering, tax evasion and corruption.

“Mossack Fonseca has been one of the giants of the offshore world for decades. They had

a reputation for extreme secrecy and discretion on their clients’ behalf, which needless to

say was attractive to many clients engaged in tax evasion, fraud, hiding conflicts of

interest, and other white collar crimes,” director John Christensen said in a statement.

Panama was one of the most secretive havens in the world, but the international

community had done little to force improvements there or in many other jurisdictions,

including a network of British overseas territories, it said.

The Central American country has declined to sign up to global transparency rules.


Austria’s financial markets regulator FMA is investigating whether lenders Raiffeisen

Bank International and Hypo Landesbank Vorarlberg followed rules against money

laundering after they were named in the “Panama Papers”.

Raiffeisen said it had complied but could not comment on specific cases. Hypo

Landesbank Vorarlberg had no comment.

Norway and Sweden were looking into allegations their banks helped clients set up

offshore companies or accounts.

In Ukraine, lawmakers said parliament should investigate allegations President Petro

Poroshenko moved his confectionery business, Roshen, to the British Virgin Islands in

August 2014 as fighting between Ukraine and pro-Russian separatists peaked.

Who’re in the papers?

– There are links to 12 current or former heads of state 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


– 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; 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 is now facing calls for his resignation.

– 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.

Source: BBC

The secret files

– Include 11.5 million records, dating back nearly 40 years – making it the largest leak in

offshore history. Contains details on more than 214,000 offshore entities connected to

people in more than 200 countries and territories. Company owners in billionaires, sports

stars, drug smugglers and fraudsters.

– Reveal the offshore holdings 140 politicians and public officials around the world –

including 12 current and former world leaders. Among them: the prime ministers of

Iceland and Pakistan, the president of Ukraine, and the king of Saudi Arabia.

– Document some $2 billion in transactions secretly shuffled through banks and shadow

companies by associates of Russian President Vladimir Putin.

– Include the names of at least 33 people and companies blacklisted by the U.S.

government because of evidence that they’d been involved in wrongdoing, such as doing

business with Mexican drug lords, terrorist organizations like Hezbollah or rogue nations

like North Korea and Iran.

– Show how major banks have driven the creation of hard-to-trace companies in offshore

havens. More than 500 banks their subsidiaries and their branches – including HSBC,

UBS and Société Générale – created more than 15,000 offshore companies for their

customers through Mossack Fonseca.

Source: ICIJ