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What Are The Panama Papers? A Guide To The Biggest Financial Leak In History

by : UNILAD on : 04 Apr 2016 10:39
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The largest financial data leak in history has revealed how the rich and powerful use offshore tax havens to hide their wealth.

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But what does it all mean? Here’s what you need to know…

What is the leak?

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Over 11 million documents were leaked from Panamanian law firm Mossack Fonseca, one of the world’s most secretive companies, showing how the company has helped clients launder money and evade tax.

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Who is Mossack Fonseca?

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Mossack Fonseca is a Panama-based law firm. They provide services which include incorporating companies in offshore jurisdictions and also provide services in wealth management for a yearly fee – basically, according to reports, they’ve helped people avoid paying tax.

Who has been affected?

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Celebrities, British politicians and some of the world’s richest people are all affected by the leak – including the prime ministers of Iceland and Pakistan, Chinese president Xi Jinping, and those involved in Vladimir Putin’s inner circle. In total, 12 national leaders were named in the data leak.

Although Putin is not personally named in the papers, the reports show some of his closest friends have concealed millions in ways that would have been backed by his patronage.

The International Consortium of Investigative Journalists (ICIJ) wrote in its overview of the leak on Sunday: “The leak exposes the offshore holdings of 12 current and former world leaders and reveals how associates of Russian President Vladimir Putin secretly shuffled as much as $2 billion through banks and shadow companies.”

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Twenty-nine Forbes-listed billionaires are also named in the leak.

Is Britain involved?

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The ICIJ said: “The files contain new details about major scandals ranging from England’s most infamous gold heist, an unfolding political money laundering affair in Brazil and bribery allegations convulsing FIFA.”

The leak reveals six members of the House of Lords and three former Conservative MPs had offshore accounts, but the only British politicians named so far are Lord Ashcroft, Tory peer Baroness Pamela Sharples and former Conservative MP Michael Mates.

It has also revealed that dozens of donors to UK political parties had similar arrangements.

And David Cameron, who promised to end tax secrecy four years ago, now faces a ‘credibility test.’ He said in 2012: “Frankly some of these schemes where people are parking huge amounts of money offshore and taking loans back just to minimise their tax rates, it is not morally acceptable.”

Critics say little has been done though, with the Prime Minister due to hold his latest summit on the issue next month. Cameron will now come under intense pressure to abolish all the UK’s tax havens.

Cameron’s father, who died in 2010, is also reported in the findings – having used Mossack Fonseca to protect his investment fund, ­Blairmore Holdings Inc, from UK taxes.

How much data has been leaked?

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A lot. The leak is the biggest ever in history, with 11.5 million documents and 2.6 terabytes of information taken from Mossack Fonseca’s internal database.

To put it in perspective, the leak is larger than the 2010 US diplomatic cables released by WikiLeaks, and the secret intelligence documents given to journalists by Edward Snowden in 2013.

What does Mossack Fonesca say about the leak?

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The firm is defending its conduct, but will not discuss specific cases, citing client confidentiality, The Guardian reports.

Mossack Fonseca says offshore companies are used for legitimate purposes and says it conducts thorough due diligence. It says it regrets any misuse of its services and tries to actively prevent it.

How did the leak happen?

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The data was exposed by a group of international media outlets – including the International Consortium of Investigative Journalism (ICIJ) and German newspaper Sueddeutsche Zeitung – which first received the information over a year ago by an anonymous source.

Why should we care?

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Well, aside from being the biggest financial leak we’ve ever seen, the reports show how political and influential leaders have moved around millions, if not billions, of dollars using tax havens.

The leak contains information on a total of 214,488 offshore companies connected to people in more than 200 countries. It includes information on past and current political figures from Ukraine, Pakistan, Russia, Iceland, Saudi Arabia, and Argentina.

And for those not interested in politics, the 11 million leaked records include the names of 20 high-profile footballers, including Barcelona and Argentina star Lionel Messi. And the reports claim the law firm of a FIFA ethics watchdog had business relationships with three men in football’s global corruption scandal.

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Reports also say that more than 500 banks and their branches have worked with the Panama company since the 1970s, and according to the ICIJ website, global banks including HSBC, UBS, Credit Suisse, Deutsche Bank and others have worked with Mossack Fonseca to create offshore accounts.

They said:

The files list nearly 15,600 paper companies that banks set up for clients who want keep their finances under wraps, including thousands created by international giants UBS and HSBC.

Gerard Ryle, director of the International Consortium of Investigative Journalists (ICIJ), said the documents covered the day-to-day business at Mossack Fonseca over the past 40 years. He said: “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.”

Topics: Large, Sensitive

Credits

BBC and 1 other
  1. BBC

    Panama Papers: Mossack Fonseca leak reveals elite's tax havens

  2. ICIJ

    Giant Leak of Offshore Financial Records Exposes Global Array of Crime and Corruption