NEW YORK (TIP): The Panama Papers is a global investigation into the sprawling, secretive industry of offshore that the world’s rich and powerful use to hide assets and skirt rules by setting up front companies in far-flung jurisdictions.
Based on a trove of more than 11 million leaked files, the investigation exposes a cast of characters and a shadowy industry that uses offshore companies to facilitate bribery, arms deals, tax evasion, financial fraud and drug trafficking. The people it allegedly exposed ranged from political leaders like Russian President Vladmir Putin and Pakistan Prime Minister Nawaz Sharif, President of Argentina, Iceland’s Prime Minister who has since resigned in the wake of disclosures, and the King of Saudi Arabia as well as 500 Indians including Bollywood actors Amitabh Bachchan and Aishwarya Rai Bachchan.
Eleven million leaked documents held by the Panama-based law firm Mossack Fonseca were passed to German newspaper Sueddeutsche Zeitung, which then shared them with the International Consortium of Investigative Journalists.The ICIJ then worked with journalists from 107 media organizations in 76 countries to analyze the documents for over a year.
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 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.
What is Mossack Fonesca?
Mossack Fonseca is the world’s fourth biggest provider of offshore services and its services include incorporating companies in offshore jurisdictions such as the British Virgin Islands. It administers offshore firms for a yearly fee. Other services include wealth management. It has acted for more than 300,000 companies.
The firm is Panamanian but, according to its website, has a global network with 600 people working in 42 countries. It has franchises around the world, where separately owned affiliates sign up new customers and have exclusive rights to use its brand.
Mossack Fonseca operates in tax havens including Switzerland, Cyprus and the British Virgin Islands, and in the British crown dependencies Guernsey, Jersey and the Isle of Man.
More than half of the companies are registered in British-administered tax havens, as well as in the UK itself.
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.
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.
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.
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.
Some of the main allegations center 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.
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.
The major data leak triggered a series of probes by various state authorities across the globe.
After vowing to “vigorously cooperate” with any legal probe, the Panama prosecutors on Monday said, “The facts described in national and international communication media publications under the term ‘Panama Papers’ will be the subject of criminal investigation.”
The people of Iceland protested to oust their Prime Minister Sigmundur Gunnlaugsson, while China censored the access to sites and media coverage on the Panama Papers after President Xi Jinping was also implicated in the matter.
India too reacted sharply to the exposè and set up a multi-agency probe group comprising of the Reserve Bank of India and the Central Bureau of Direct Taxes (CBDT) to probe the list of 500 Indians including celebrities and industrialists.