What are the Panama Papers?
A huge leak of documents that reveals the hidden wealth of the rich and powerful in tax heavens, under offshore schemes. The files, which date from before 1977, and go up to December last year, were leaked from one of the top 5 world’s most secretive companies that provides such legal services, the Panamanian law firm Mossack Fonseca. The leaked documents offer proof of how Mossack Fonseca accommodated clients who were seeking to hide assets, launder money, avoid tax and dodge sanctions.
Who leaked the Panama Papers?
The 11.5 million documents were obtained by the German newspaper Sueddeutsche Zeitung and shared with the International Consortium of Investigative Journalists (ICIJ).
The ICIJ worked with journalists from 109 media outlets in 76 countries, to analyze the documents in over a year. On Sunday, 3 April, Sueddeutsche Zeitung shared some of the information available on the Panama Papers and media organizations globally started reporting on them. However, not without bias, as in the original reporting, there was no mention of UK/USA shareholders and data.
Then, Wikileaks jumped in providing information on other territories and states, also suggesting it would publish the totality of the 2.6 terabyte documents, making it searchable for everyone. We hope they will hold on to that promise.
The original identity of the source is not known.
This is the biggest leak in history so far. In all, the details of 214,000 entities, including companies, trusts and foundations, were revealed. According to ICIJ and its partners, the files are mostly emails, but also images of contracts and passports are included.
Who is in the Papers?
Well, pick a state, any state in the world. Chances are someone with money and power is involved in the biggest financial and legal scandal on earth.
There are links to at least 12 current or former heads of state in the data and more than 60 relatives and associates of heads of state are also implicated. If you think only of dictators, think twice.
The Prime Minister of Iceland Sigmundur Gunnlaugsson, who actually ran away in the middle of an interview when asked about Panama Papers, the late father of UK Prime Minister David Cameron, the brother-in-law of China's President Xi Jinping, Ukraine's President Petro Poroshenko, Argentina's President Mauricio Macri and close associates of Russia's President, Vladimir Putin, are also mentioned.
The European Commission also faces its fair share of trouble, as Micaela Domecq Solis-Beaumont’s name came up in the leaked Panama Papers on tax havens. She is the wife of Miguel Arias Cañete, the climate action and energy commissioner.
Politicians are not the only ones involved; Football’s world governing body, Fifa will have to do some cleaning, as documents suggest that Uruguayan lawyer Juan Pedro Damiani and his firm provided legal assistance for at least seven offshore companies linked to the football corruption scandal of last May. Juan Pedro Damiani is a key member of Fifa’s ethics committee. The US inquiry last year led to the arrest of several prominent members of Fifa. Apparently there was more.
Also, Lionel Messi, who is already facing tax fraud charges in Spain, owned a Panama company, formed by Mossack Fonseca and has threatened to sue ICIJ for revealing the information.
These names are only the tip of the iceberg.
What did Mossack Fonseca do?
Mossack Fonseca is only one of the five big firms in this business. In short, it used all available means to cover the tracks of its clients under offshore schemes and other grey-zone financial tools, sometimes providing additional services like “discretionary portfolio management” and yacht/aircraft registration.
The leaked documents show that the goals were to hide the true owners of the money, the origins of the money, and/or to avoid paying tax on the money, all done in the most secretive way.
Mossack Fonseca was also involved in the incorporation of shell companies, which appear as legitimate businesses but are in fact empty shells that only manage money while hiding its real owners. One of its services was to provide bearer instruments, well known for money laundering and therefore gradually prohibited in most parts of the world. Bearer instruments are anonymous and the holder of the paper document has the rights of ownership or title to the underlying property, such as shares or bonds.
To conduct its business successfully Mossack Fonseca, moved fast and smoothly every time authorities would get closer to it. It was formed in Panama in 1986 but it has offices in 40 countries and more than 500 employees all over the world. In 1987 it expanded to the British Virgin Islands, in 1994 to Niue and later on to Samoa.
What do those involved have to say?
In a recent interview on Panamanian television, Ramon Fonseca, one of the two cofounders of Mossack Fonseca said that blaming the firm for its clientele’s business choices would be like blaming the automobile company that manufactured a car “if the car was used in a robbery”.
Mossack Fonseca’s spokesperson Carlos Sousa said that the firm “merely helps clients incorporate companies” adding that this does not lead to “establishing a business link with or directing in any way the companies so formed”.
The company replied to ICIJ’s questions that “for 40 years Mossack Fonseca has operated beyond reproach … Our firm has never been accused or charged in connection with criminal wrongdoing”.
As the story is still evolving, there are several reactions from persons mentioned in the documents with links to entities incorporated by Mossack Fonseca.
The European Commission, for instance, said there is no conflict of interest between Miguel Arias Cañete, the climate action and energy Commissioner, and his wife whose name came up in the files. “His declaration appears to be in compliance with the code of conduct for commissioners as it includes all the professional activities and financial interests of the commissioner’s wife that would pose a potential conflict of interest” Margaritis Schinas, the Commission’s chief spokesman, told reporters today.
The Prime Minister of Iceland is facing calls for his resignation, since both he and his wife are involved in the scandal. The very next day his implication was revealed massive demonstrations were organized in Iceland.
President Vladimir Putin’s spokesman Dmitry Peskov said the reports came from “journalists and members of other organizations actively trying to discredit Putin and this country's leadership”.
Downing Street has refused to comment on information showing that Prime Minister David Cameron’s late father, Ian, used offshore techniques for tax evasion.
Fifa said it is now also investigating Mr. Damiani, who only on Sunday said to Reuters he had broken off all relations with Fifa members under investigation regarding the previous corruption scandal, as soon as the latter had been accused. The leaked documents reveal the blatant lie.
As more information will be given to the public, more reactions will follow. Stay tuned.
Why does this matter?
This may seem like a Paper scandal but it is not. It has consequences on the lives of real people all over the world. As the details of the documents unfold, there are several cases of Ponzi schemes revealed, depriving everyday people from their money. 46.000 widows and orphans of mineworkers in South Africa were stolen from the paychecks which their survival depended on. The money was then hidden thanks to Mossack Fonseca.
The documents show a variety of wrondoings; fixed contracts’ bidding that cost taxpayers more money; instruments for sophisticated intractable tax evasion that cost states their balanced budgets; corruption at the highest level of political and financial decision making that directly affects democracy.
In a world where economics and politics collide and inequality rises, the biggest scandal on earth matters for each and every citizen. Follow us as we uncover the shadowy ways of power.
Should we release all 11 million #PanamaPapers so everyone can search through them like our other publications?
— WikiLeaks (@wikileaks) April 3, 2016