Since the expose’ of global corruption aka “Panama Papers”, secrets of the rich and famous are rocking the online news. The Panama-based law firm’s 11.5 M leaked files has been the caused of resignation calls, investigations and political tremors.
The so-called leaked documents exposes financial secrets of heads of states, billionaires, drug lords and athletes. But the latest and the King of Secrets leaked, was the offshore tax haven.
The leak includes 11.5 million confidential documents shedding light on the assets and shady fiscal dealings of everyone from the prime ministers of Iceland and Pakistan to soccer player Leo Messi, movie star Jackie Chan and associates of Russian President Vladimir Putin.
The leaked documents, dating as far back as 1977, come from a little-known but highly influential Panama-based law firm called Mossack Fonseca, which has 500 staff working in 40-plus countries. The firm is one of the world’s top creators of shell companies — corporate structures that can be used to hide ownership of assets.
German newspaper Süddeutsche Zeitung obtained the files from a source and shared them with global media partners, through the Washington-based International Consortium of Investigative Journalists.
Gabriel Zucman, an economist at the University of California at Berkeley and author of The Hidden Wealth of Nations: The Scourge of Tax Havens said:
“These findings show how deeply ingrained harmful practices and criminality are in the offshore world.”
Zucman, who was briefed on the media partners’ investigation, said the release of the leaked documents should prompt governments to seek “concrete sanctions” against jurisdictions and institutions that peddle offshore secrecy.
While offshore accounts are not in themselves illegal, the leaked records show they are often used to shield illicit dealings.
In a written response to questions from the media consortium, Mossack Fonseca said it “does not foster or promote illegal acts.”
“Your allegations that we provide shareholders with structures supposedly designed to hide the identity of the real owners are completely unsupported and false,” the firm said.
Mossack Fonseca Fact Sheet
There were plenty of reasons why the people behind the transaction might want it disguised, not least of all because the money trail came uncomfortably close to Russia’s Putin.
St. Petersburg-based Bank Rossiya, an institution whose majority owner and chairman has been called one of Putin’s “cashiers,” established the initial Virgin Islands company and directed the money flow.
The assets ended up in a corporation controlled, on paper, by one of Putin’s oldest friends, Sergey Roldugin, a classical cellist who is godfather to Putin’s eldest daughter.
The $200-million transaction was one of dozens totaling at least $2 billion US found in the Mossack Fonseca files involving people or companies linked to Putin. They formed part of a Bank Rossiya enterprise that gained indirect influence over a major shareholder in Russia’s biggest truckmaker and amassed secret stakes in a key Russian media property.
Suspicious payments made by Putin’s cronies may have in some cases been designed as payoffs, possibly in exchange for Russian government aid or contracts.
Last week, a Kremlin spokesperson accused the International Consortium of Investigative Journalists and its media partners of preparing fallacious attacks about the Russian president and people close to him.
Iceland Prime Minister Secrets Revealed!
Prime Minister Sigmundur David Gunnlaugsson of Iceland,, who with his wife controlled a secret offshore company in the British Virgin Islands when he was first elected to the country’s parliament in 2009, is also among the popular names in the leaked document.
The leaked files show his offshore corporation held bonds originally worth millions of dollars in three giant Icelandic banks that failed during the 2008 global financial crash. Gunnlaugsson’s government negotiated a deal with the banks’ creditors last year without disclosing his family’s financial stake in the outcome (he sold his stake in the offshore company for $1 to his wife shortly after first getting elected).
Gunnlaugsson has denied in recent days that his family’s financial interests influenced his stances.
The document leak also shows how the world’s biggest banks played a key role in creating offshore shell companies. The records show those banks used Mossack Fonseca’s services to incorporate at least 15,600 entities.
Among the financial institutions that regularly used the Panamanian law firm was Royal Bank of Canada, which with its subsidiaries set up 370 such corporations, the document leak reveals.
RBC spokeswoman Tanis Feasby said the bank has procedures in place to detect tax evasion efforts and undertakes a thorough background check on the identity of its clients before it ever goes ahead with any transaction.