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‘Panama papers': Mass tax info leak reveals secret offshore dealings of Putin aides, world leaders, stars

by April 4, 2016 General

A massive leak of 11.5 million tax documents on Sunday exposed the secret offshore dealings of aides to Russian President Vladimir Putin, world leaders and celebrities, including Barcelona forward Lionel Messi.

An investigation into the documents by more than 100 media groups, described as one of the largest such probes in history, revealed the hidden offshore dealings in the assets of around 140 political figures — including 12 current or former heads of state.

The vast stash of records was obtained from an anonymous source by German daily Sueddeutsche Zeitung and shared with media worldwide by the International Consortium of Investigative Journalists (ICIJ).

The documents, from around 214,000 offshore entities, came from Mossack Fonseca, a Panama-based law firm with offices in more than 35 countries.

Though most of the alleged dealings are said by the ICIJ to be legal, they are likely to have a serious political impact on many of those named.

ICIJ director Gerard Ryle said the documents covered the day-to-day business at Mossack Fonseca over the past 40 years.

“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,” he said.

Among the main claims of the ICIJ investigations:

Close associates of Putin, who is not himself named in the documents, “secretly shuffled as much as $2 billion through banks and shadow companies,” the ICIJ said.

The files identified offshore companies linked to the family of Chinese President Xi Jinping, who has led a tough anti-corruption campaign in his country, the ICIJ said.

In Iceland, the files show Prime Minister Sigmundur David Gunnlaugsson and his wife secretly owned millions of dollars of investment in his country’s banks during the financial crisis through an offshore company.

The law firm of a member of FIFA’s ethics committee, Juan Pedro Damiani, had business ties with three men indicted in a corruption scandal: former FIFA Vice President Eugenio Figueredo, as well as Hugo Jinkis and his son, Mariano, who were accused of paying bribes to win soccer broadcast rights in Latin America.

Argentine soccer great Messi and his father owned a Panama company, Mega Star Enterprises Inc., a shell company that had previously not come up in Spanish investigations into the father and son’s tax affairs.

Also in the world of soccer, Francetv Info named UEFA President Michel Platini as the beneficiary of a Panama-based tax company, adding, however, that no illegal activity was alleged.

Platini’s communications service said in a statement sent to AFP that “all of his accounts and assets are known to the tax authorities in Switzerland, where he has been a tax resident since 2007.

Iceland’s Gunnlaugsson is expected to face a no-confidence vote this week over allegations he used a secret offshore firm called Wintris Inc. to hide millions of dollars in the British Virgin Islands.

Visibly irritated, he refused to answer reporters’ questions during an interview broadcast on Swedish television Sunday evening.

“I have never hidden assets,” Gunnlaugsson told a journalist from the Swedish SVT channel before leaving the room. His spokesman insisted he and his wife have scrupulously followed the law.

At least 33 people and companies listed in the documents were blacklisted by the U.S. government for wrongdoing, such as North Korea and Iran, as well as Lebanon’s Islamist group Hezbollah, the ICIJ said.

The leaked data, covering 1975 to the end of last year, provide what the ICIJ described as a “never-before-seen view inside the offshore world.

The massive leak of documents recalls Wikileaks’ exploits of 2010 — which included the release of 500,000 secret military files on the wars in Afghanistan and Iraq and 250,000 diplomatic cables, and infuriated the U.S.

However, in terms of size, “the ‘Panama Papers’ is likely the biggest leak of inside information in history,” according to ICIJ.

“It is equally likely to be one of the most explosive in the nature of its revelations,” the group added.

Names also figuring in the leak included the president of Ukraine, the king of Saudi Arabia and the prime minister of Pakistan, the ICIJ statement said.

The documents show that “banks, law firms and other offshore players often fail to follow legal requirements to make sure clients are not involved in criminal enterprises, tax dodging or political corruption,” the ICIJ said on its website.

“The files show that these fixers and middlemen protect themselves and their clients by concealing suspect transactions. In some instances, they work to head off official investigations by backdating and destroying documents,” it added.

“These findings show how deeply ingrained harmful practices and criminality are in the offshore world,” said Gabriel Zucman, an economist at the University of California, Berkeley, cited by the consortium.

The leaked documents were reviewed by a team of more than 370 reporters from over 70 countries, according to the ICIJ.

The BBC cited Mossack Fonseca as saying it had operated “beyond reproach” for 40 years and had never been charged with any criminal wrongdoing.

It was not immediately clear who was the original source of the leaked documents.

The huge data leak from the Panama law firm suggesting it hid billions of dollars in assets of global politicians, sports stars and entertainers threatened Sunday to dramatically boost the country’s reputation as an offshore haven for money laundering.

Panama, a small nation of just 4 million people, has a booming financial services sector that, including revenue from its famous canal, accounts for nearly 80 percent of gross domestic product.

It has one of the best sustained economic growth rates in Latin America, low inflation, and uses the dollar as its currency.

Successive governments have strenuously sought to portray the country as a business-friendly financial hub akin to Singapore that actively encourages banking and investment.

But they have found it hard to shake a widely held image of Panama as a place where shady deals are done in secret to hide money from tax authorities and launder the proceeds of the rich, the powerful and the criminal.

After coming under heavy scrutiny in recent years from other countries, especially the United States, Panama has cleaned up its act somewhat, enough to get off an international “blacklist” of suspected money-laundering states.

In February, Panama was also taken off a “gray list” of nations with lax financial laws, but still flagged as having deficiencies in fighting money laundering.

Sunday’s revelations, published under the title “The Panama Papers,” could put the progress it has made at risk.

Although the media investigation into the data leak notes that many of the transactions may not in themselves be illegal, they were often politically unpalatable — and were facilitated by Panama’s tardiness in fully applying international transparency rules.

Despite foreign pressure Panama has dragged it feet on exchanging financial information with other countries and lifting its banking secrecy.

“Panama has become the most opaque place on Earth,” the director of the Center for Tax Policy in the Organization for Economic Cooperation and Development (OECD), Pascal Saint-Amans, told France’s iTele network on Sunday.

The Tax Justice Network, an advocacy group, in December said: “Panama thumbs its nose at transparency.”

Transparency International, a corruption watchdog, ranks the country 72 out of 168 in the world (168 being the least transparent), with a pretty secretive financial system put at 14 out of 71 jurisdictions.

Last month, Panamanian Foreign Minister and Vice President Isabel De Saint Malo told BBC radio her country was “completely committed” to exchanging financial information. But she said Panama was “concerned about the cost to our financial institutions” under proposed reporting guidelines.

She was also asked specifically about the Panama-based law firm at the center of the data leak scandal, Mossack Fonseca, and its role in a huge bribery case unfolding in Brazil involving the state oil company Petrobras.

“I think that needs to be cleared up,” she admitted in the March 7 interview.

She stated, however: “Our financial sector abides by the highest standards internationally.”