The Panama Papers are A huge leak of documents that has lifted the lid on how the rich and powerful use tax havens to hide their wealth. The files were leaked from one of the world’s most secretive companies, a Panamanian law firm called Mossack Fonseca.
What are the Panama Papers?
The files show how Mossack Fonseca clients were able to launder money, dodge sanctions and avoid tax.
In one case, the company offered an American millionaire fake ownership records to hide money from the authorities.
This is in direct breach of international regulations designed to stop money laundering and tax evasion.
It is the biggest leak in history, dwarfing the data released by the Wikileaks organisation in 2010.
For context, if the amount of data released by Wikileaks was equivalent to the population of San Francisco, the amount of data released in the Panama Papers is the equivalent to that of India.
Who is in the papers?
There are links to 12 current or former heads of state and government in the data, including dictators accused of looting their own countries.
More than 60 relatives and associates of heads of state and other politicians are also implicated.
The files also reveal a suspected billion-dollar money laundering ring involving close associates of Russia’s President, Vladimir Putin.
Also mentioned are the brother-in-law of China’s President Xi Jinping; Ukraine President Petro Poroshenko; Argentina President Mauricio Macri; the late father of UK Prime Minister David Cameron and three of the four children of Pakistan’s Prime Minister Nawaz Sharif and also including Australians.
The documents show that Iceland’s Prime Minister, Sigmundur Gunnlaugsson, had an undeclared interest linked to his wife’s wealth. He has now resigned.
The scandal also touches football’s world governing body, Fifa.
Part of the documents suggest that a key member of Fifa’s ethics committee, Uruguayan lawyer Juan Pedro Damiani, and his firm provided legal assistance for at least seven offshore companies linked to a former Fifa vice-president arrested last May as part of the US inquiry into football corruption.
The leak has also revealed that more than 500 banks, including their subsidiaries and branches, registered nearly 15,600 shell companies with Mossack Fonseca.
Lenders have denied allegations that they are helping clients to avoid tax by using complicated offshore arrangements.
How do tax havens work?
Although there are legitimate ways of using tax havens, most of what has been going on is about hiding the true owners of money, the origin of the money and avoiding paying tax on the money.
You can read more on how tax havens work easily on the Internet.
Some of the main allegations centre on the creation of shell companies, that have the outward appearance of being legitimate businesses, but are just empty shells. They do nothing but manage money, while hiding who owns it.
One of the media partners involved in the investigation, McClatchy, has more on how shell companies work
The Panama Papers are 11.5 million leaked documents that detail financial and attorney–client information for more than 214,488 offshore entities.
The documents, some dating back to the 1970s, were created by, and taken from, Panamanian law firm and corporate service provider Mossack Fonseca.
https://www.theguardian.com/news/2016/apr/03/what-you-need-to-know-about-the-panama-papers
https://www.bbc.com/news/world-35954224