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| The office of Panamanian law firm Mossack Fonseca (Picture: EPA/Alejandro Bolivar) |
If you have just woken up this morning you may have seen that most European
national newspapers are running stories on something called The Panama
Papers.
So, what are they?
The Panama Papers are an unprecedented leak of 11.5 million files
from the database of Mossack Fonseca – which is the fourth biggest
offshore law firm based in, you guessed it, Panama.
The files have exposed the offshore financial dealings of the rich
and famous, including Russian President Vladimir Putin and household
names like footballer Lionel Messi. Amongst other things they show that banks, companies and aides close
to Putin allegedly shuffled as much as $2 billion using offshore
companies.
Why should we care?
Well, aside from being the biggest leak in history they show how
political leaders have potentially moved around millions of dollars
using tax havens.
In total, the leak contains information on 214,488 offshore entities connected to people in more than 200 countries.
It includes information on past or present political figures
from Iceland, Ukraine, Pakistan, Saudi Arabia, Russia and Argentina.
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| Russian President Vladimir Putin is also mentioned (Picture: Mikhail Svetlov/Getty Images) |
Including Iceland’s prime minister, Sigmundur David Gunnlaugsson
who you may have seen flying around in a GIF this morning, following a
tense interview with SVT in Sweden.
For those not so interested in politics other major world figures are mentioned.
For instance, Messi, and his father, own a shell company, Mega Star
Enterprises, which is reported to have been previously unknown to
Spanish investigators probing the Barcelona forward’s tax affairs.
Also suspended UEFA chief Michel Platini is alleged to have turned to
the law firm to help him administer an offshore company created in
Panama in 2007. Reports also say that more than 500 banks, their subsidiaries and
branches have worked with Mossack Fonseca since the 1970s to help
clients manage offshore companies.
According to the media group’s website, global banks including HSBC,
UBS, Credit Suisse, Deutsche Bank and others have worked with Mossack
Fonseca to create offshore accounts.
How did the leak happen?
The law firm was founded by German-born Juergen Mossack and is one of
the world’s biggest creators of shell companies – a non-trading company
used for financial manoeuvres. It was exposed by an international coalition of media outlets
including the International Consortium of Investigative Journalism
and German newspaper Sueddeutsche Zeitung, which first received the data
more than a year ago via an anonymous source.
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| Sigmundur Gunnlaugsson is mentioned in the leaked files (Picture: Arnaldur Halldorsson/Bloomberg via Getty Images) |
The ICIJ said the documents included emails, financial spreadsheets,
passports and corporate records detailing how powerful figures used
banks, law firms and offshore shell companies to hide their assets. The
data spanned nearly 40 years, from 1977 through to the end of 2015.
What has the reaction been?
Not everyone is happy.
Vladimir Putin’s spokesman, Dmitry Peskov, told reporters the Kremlin
had received ‘a series of questions in a rude manner’ from an
organisation that he said was trying to smear the Russian president.
‘Journalists and members of other organisations have been actively
trying to discredit Putin and this country’s leadership,’ Mr Peskov
said.
Whilst, HSBC said many of the allegations are historical.
‘The allegations are historical, in some cases dating back 20 years,
pre-dating our significant, well-publicised reforms implemented over the
last few years,’ HSBC spokesman Rob Sherman said.
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| Lionel Messi is mentioned in the leak (Picture: Getty) |
‘We work closely with the authorities to fight financial crime and implement sanctions.’
Panama’s president said his government will co-operate ‘vigorously’ with any judicial investigation arising from the leak.
President Juan Carlos Varela said the revelations should not detract
from his government’s ‘zero tolerance’ for any illicit activities in
Panama’s finance industry.
Meanwhile, Mossack Fonseca has strongly defended its actions.
Ramon Fonseca of the firm said it had no control of how its clients might use offshore vehicles created for them.
‘We are not responsible for the actions of a corporation that we set up,’ he told Panama’s Channel 2.
But is any of this actually illegal?
In many respects this is the key point, using offshore structures is
entirely legal, with the point being about how influential figures have
taken advantage of tax havens.
The Guardian UK, which was involved in the release of the data, says
there are plenty of legitimate reasons for wanting to use them.
A lot of Russians and Ukrainians use the accounts to stop their money being raided by criminals.
That doesn’t stop the channels being used by crooks as well with
David Cameron saying last year that money launderers can take advantage
of anonymous structures.
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