What are the Panama Papers?

A 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. You can find our special report on the revelations here.
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. 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. 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.
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  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. 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.
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Panama Papers

The Panama Papers are 11.5 million leaked documents that detail financial and attorney–client information for more than 214,488 offshore entities.  The documents, which belonged to the Panamanian law firm and corporate service provider Mossack Fonseca, were leaked in 2015 by an anonymous source, some dating back to the 1970s. The leaked documents contain personal financial information about wealthy individuals and public officials that had previously been kept private. While offshore business entities are legal, reporters found that some of the Mossack Fonseca shell corporations were used for illegal purposes, including fraud, tax evasion, and evading international sanctions.

“John Doe”, the whistleblower who leaked the documents to German journalist Bastian Obermayer from the newspaper Süddeutsche Zeitung (SZ), remains anonymous, even to the journalists on the investigation. “My life is in danger”, he told them.  In a May 6 statement, John Doe cited income inequality as the reason for his action, and said he leaked the documents “simply because I understood enough about their contents to realise the scale of the injustices they described”. He added that he has never worked for any government or intelligence agency. He expressed willingness to help prosecutors if immune to prosecution. After SZ verified that the statement did come from the Panama Papers source, the International Consortium of Investigative Journalists (ICIJ) posted the full document on its website.
Because of the amount of data, SZ asked the ICIJ for help. Journalists from 107 media organizations in 80 countries analyzed documents detailing the operations of the law firm. After more than a year of analysis, the first news stories were published on April 3, 2016, along with 150 of the documents themselves. The project represents an important milestone in the use of data journalism software tools and mobile collaboration. The documents were quickly dubbed the Panama Papers. The Panamanian government strongly objects to the name; so do other entities in Panama and elsewhere. Some media outlets covering the story have used the name “Mossack Fonseca papers”.

 

In addition to the much-covered business dealings of British prime minister David Cameron and Icelandic prime minister Sigmundur Davíð Gunnlaugsson, the leaked documents also contain identity information about the shareholders and directors of 214,000 shell companies set up by Mossack Fonseca, as well as some of their financial transactions. Much of this information does not show anything more than prudent financial management. It is generally not against the law (in and of itself) to own an offshore shell company, although offshore shell companies may sometimes be used for illegalities.
The journalists on the investigative team found business transactions by many important figures in world politics, sports and art, and many of these transactions are quite legal. Since the data is incomplete, questions remain in many other cases; still others seem to clearly indicate ethical if not legal impropriety. Some disclosures – tax avoidance in very poor countries by very wealthy entities and individuals for example – lead to questions on moral grounds. According to The Namibian for instance, a shell company registered to Beny Steinmetz, Octea, owes more than $700,000 US in property taxes to the city of Koidu in Sierra Leone, and is $150 million in the red, even though its exports were more than twice that in an average month 2012–2015. Steinmetz himself has personal worth of $6 billion. Other offshore shell company transactions described in the documents do seem to have broken exchange laws, violated trade sanctions or stemmed from political corruption, according to ICIJ reporters. For example:
Uruguay has arrested five people and charged them with money-laundering through Mossack Fonseca shell companies for a Mexican drug cartel. Ouestaf, an ICIJ partner in the investigation, reported that it had discovered new evidence that Karim Wade received payments from DP World (DP). He and his long-time friend were convicted of this in a trial that the United Nations and Amnesty International said was unfair and violated the defendants’ rights. The Ouestaf article does not address the conduct of the trial, but does say that Ouestaf journalists found Mossack Fonseca documents showing payments to Wade via a DP subsidiary and a shell company registered to the friend. Named in the leak were 12 current or former world leaders, 128 other public officials and politicians, and hundreds of other members of the elites of over 200 countries.Customers may open offshore accounts for any number of reasons, some of which are entirely legal but ethically questionable. A Canadian lawyer based in Dubai noted, for example, that businesses might wish to avoid falling under Islamic inheritance jurisprudence if an owner dies. Businesses in some countries may wish to hold some of their funds in dollars also, said a Brazilian lawyer. Estate planning is another example of legal tax avoidance.

American film-maker Stanley Kubrick had an estimated personal worth of $20 million when he died in 1999, much of it invested in the 18th-century English manor he bought in 1978. He lived in that manor the rest of his life, filming scenes from The Shining, Full Metal Jacket and Eyes Wide Shut there as well. Three holding companies set up by Mossack Fonseca now own the property, and are in turn held by trusts set up for his children and grandchildren. Since Kubrick was an American living in Britain, his estate would otherwise have had to pay taxes to both governments and might have been forced to sell the property to have the liquid assets to do so. Kubrick is buried on the grounds along with one of his daughters and the rest of his family still lives there.

Source : Wikipedia