Panama Papers: what we know so far

Data leak shines light on secret offshore companies allegedly used to hide wealth and evade taxes

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A huge leak of data from Panama has exposed a web of secret offshore companies that has allegedly been used to hide wealth, evade taxes and launder money. Hundreds of politicians, business people and sportspeople, including 72 current or former heads of state, have been implicated in the findings published by the International Consortium of Investigative Journalists (ICIJ).

What has been leaked?

The report is based on a data leak from Mossack Fonseca, a Panamanian law firm, of 11.5m records for 214,488 entities connected to people in more than 200 countries or territories. The leak includes emails, financial spreadsheets, passport information and corporate records. It spans almost 40 years, from 1977 through to the end of 2015.

Who has been named so far?

The list of “power players” named in the Panama Papers includes 12 acting or former world leaders such as Mauricio Macri, president of Argentina; Sigmundur Gunnlaugsson, prime minister of Iceland, Petro Poroshenko, Ukraine’s billionaire president; and King Salman bin Abdulaziz of Saudi Arabia.

Their names are linked to offshore companies registered in Panama and other financial centres.

The list also covers 17 “relatives or associates” of world leaders such as childhood friends of Russian president Vladimir Putin, including the cellist Sergei Roldugin, a son of Malaysian prime minister Najib Razak and the deceased father of David Cameron, UK prime minister.

Another prominent person mentioned elsewhere is Lionel Messi, the Argentine football star.

Do the findings reveal wrongdoing?

The ICIJ said that “most of the services of the offshore industry are legal if used by the law abiding”. But the documents showed that banks, law firms and other offshore players often failed to follow legal requirements designed to ensure clients are not involved in criminal enterprises, tax dodging or political corruption.

It said its findings revealed cases of money laundering, tax evasion and sanctions-busting. This includes at least 33 people and companies blacklisted by the US government because of evidence of activities such as doing business with Mexican drug lords, terrorist organisations such as Hizbollah, and rogue nations including North Korea and Iran.

Mossack Fonseca told the ICIJ that it “does not foster or promote illegal acts”. It described the data theft as a crime and said privacy was “a fundamental human right that is being eroded more and more in the modern world”.

Are there precedents?

This is the latest in a series of leaks of data from firms operating in secretive jurisdictions including Switzerland and the British Virgin Islands. In 2013, for example, the ICIJ published data showing government officials in China, Russia, Mongolia and elsewhere were using secret companies and bank accounts. But the latest tranche of data is bigger and features more high profile figures than that involved in previous leaks.

Is Panama particularly secretive?

Panama has long had a reputation for secrecy and was perceived to be immune to international pressure because of the importance of its canal. Until recently, it was just one of many secretive jurisdictions. But as other tax havens have bowed to international pressure to become more transparent, its reputation as a haven for dirty money has become entrenched.

What will the impact be?

Tax authorities in countries such as Australia, New Zealand and the UK have already said they are ready to follow up allegations of tax evasion and money laundering resulting from the leak of the confidential data. But as well as affecting individuals, the release of the Panama Papers is likely to have a big impact on the global crackdown on tax havens.

Panama is the most significant financial centre to hold out against a global transparency initiative. It is one of just four jurisdictions — including Bahrain, Nauru and Vanuatu — that have refused to sign up to global transparency rules, apart from the US, which has adopted similar but different rules. The leaked data will shine a spotlight on Panama’s refusal to exchange tax data automatically with other countries and put pressure on legitimate businesses to consider whether to continue using the country.

Listen to the podcast: The Panama Papers and the role of tax havens

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