How world’s rich & powerful hid money

Millions of confidential documents have been leaked from one of the world's most secretive law firms, exposing how the rich and powerful have hidden their money. The unprecedented cache of papers show the inner workings of the law firm Mossack Fonseca, which is based in Panama. The documents, dubbed “The Panama Papers”, reveal links to 72 current or former heads of state and accuse some of them of having vested interests in their own banks and looting their own countries.

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The data shows links to families and associates of some of the most powerful people in the world, including the former president of Egypt, Hosni Mubarak, the former Libyan leader, Muammar Gaddafi and the current president of Syria, Bashar al-Assad. 

In the UK, several elected officials are involved with the law firm, including Baroness Pamela Sharples, the MP Michael Mates and the former deputy chairman of the Conservative Party Michael Ashcroft. All three provided responses to the International Consortium of Investigative Journalists (ICIJ) and have either denied any financial benefit to the offshore companies or have completely denied the allegations of working with the law firm.

Two close allies of the Russian President, Vladimir Putin, are linked to an alleged money-laundering ring thought to be worth $1billion, run by a bank based in St Petersburg, Bank Rossiya. One of those is the concert cellist Sergei Roldugin, who has known Putin for many years, is godfather to Putin's daughter Maria, and introduced him to his now ex-wife Lyudmila. The bank in question has already faced sanctions from the European Union and the US after Russia's invasion of Crimea in 2014.

The papers were initially leaked via the German newspaper Süddeutsche Zeitung to the ICIJ. Gerard Ryle, director of the ICIJ, who has been analysing the documents, along with 107 media outlets across more than 70 countries, told the BBC: “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.” The leak will be the subject of a Panorama documentary tonight. The source of the leak remains unidentified. Another accusation in the files is that the prime minister of Iceland, Sigmundur Gunnlaugsson, had an undeclared interest in the bailed-out banks in the country, hiding millions of dollars in Iceland's banks via an opaque offshore company.

Iceland was one of the few countries following the 2008 financial crisis to jail several of its bankers, who were accused of taking excessive risk which led to the collapse of their economy. Yet Gunnlaugsson and his wife bought Wintris, an offshore company, in 2007 but did not declare an interest in the company when they entered Parliament. The company was used to invest millions of inherited money. He then sold his 50 per cent stake in Wintris to his wife for 70 pence ($1) eight months later. Gunnlaugsson has faced calls for his resignation but has reportedly said he has done nothing illegal and his wife has not benefitted financially from the arrangement.

Offshore companies are often located in countries such as Panama and are subject to their own tax rules, often functioning as tax loopholes or requiring much lower taxes than in an investor's home country.

The law firm documents additionally show how individuals could take out large amounts of cash without revealing who they are to the public. In one case, the firm acted on behalf of a man who pretended to be the owner of $1.8m so that the real owner could take out the money without revealing their identity.

The ICIJ has listed 140 politicians from more than 50 countries who are linked to offshore companies in 21 tax havens, including countries such as Argentina, Georgia, Iraq, Jordan, Qatar and Ukraine.

Mossack Fonseca said it has operated "beyond reproach" for 40 years and has never been acused or charged with criminal wrong-doing.

“If we detect suspicious activity or misconduct, we are quick to report it to the authorities,” it said in a statement. “Similarly, when authorities approach us with evidence of possible misconduct, we always cooperate fully with them.”  — The Independent

The lawyers whose firm is at the centre of global controversy

John le Carre's 1996 novel, The Tailor of Panama, tells the story of Harry Pendel, a British tailor who serves the great and good but whose refusal to come clean about his past almost leads to his downfall. In Panama, he believes, discretion is the only way. For more than four decades, the law firm Mossack Fonseca — whose saga may even have been beyond le Carre’s imagination — has adopted a similar strategy of discretion and survival. If the documents obtained and analysed by the International Consortium of Investigative Journalists (ICIJ) are to be believed, the firm that has its headquarters not far from those of the fictional Harry Pendel, has had financial dealing with a total of 128 politicians and public officials around the world. The company has denied any wrongdoing. The ICIJ says the documents provide an insight into the financial affairs of 12 current and former world leaders. The company was formed in 1977 by Jurgen Mossack and Ramón  Fonseca, and specialises in commercial law, trust services, investor advisory and international structures. Its website says it can help reduce costs, incorporate and manage Private Interest Foundations, conduct business in any country and carry out transactions in any chosen currency. Its offices are supported by "secure, state-of-the-art technology that is upgraded continually". The ICIJ says that Mossack is a German immigrant whose father sought a new life in Panama for his family after serving in Hitler's Waffen-SS during World War II. The elder Mossack also offered to spy for the US government on "former Nazis turned Communist or unconverted Nazis cloaking themselves as Communists,"according to US intelligence files obtained by the ICIJ. Jurgen Mossack studied at the Santa Maria La Antigua University School of Law in Panama. Fonseca is an award-winning novelist who has worked in recent years as an adviser to Panama's president, it said. From its base in Panama City, the company has created and established anonymous companies in Panama, the British Virgin Islands and other financial havens. “The law firm has worked closely with big banks and big law firms in places like The Netherlands, Mexico, the United States and Switzerland, helping clients move money or slash their tax bills, the secret records show,” the ICIJ said. An ICIJ analysis of the leaked files found that more than 500 banks, their subsidiaries and branches have worked with Mossack Fonseca since the 1970s to help clients manage offshore companies. — Andrew Bucombe