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Panama Papers: Everything you should know

Apr 6, 2016 15:42 IST

Panama Papers is a massive leak of 11.5 million documents from a law firm that reveals how the world’s current rich people, politicians and celebrities hide their money in Panama.

The leak came in news on 3 April 2016 after a German newspaper Suddeutsche Zeitung published a report on the same.

It said that Panama's Mossack Fonseca, one of the world's most secretive offshore law firms, operated with impunity for decades in its efforts to help clients launder money and avoid tax.

The newspaper said over a year ago, an anonymous source contacted it and submitted encrypted internal documents from Mossack Fonseca that sells anonymous offshore companies around the world.

The newspaper shared the documents with the International Consortium of Investigative Journalists (ICIJ). The ICIJ then shared them with a large network of international partners.

Panama papers

The documents, dubbed the Panama Papers, were obtained by the Munich-based daily newspaper. It shared them with the Washington-based International Consortium of Investigative Journalists (ICIJ) and other international news outlets. In total, some 107 media outlets in 78 countries investigated the data.

The documents link at least 12 current and former heads of state and 143 other politicians to illicit financial transactions.

The ICIJ said, names figuring in the leak included aides to Russian President Vladimir Putin, Malaysian Prime Minister Najib Razak's son Nazifuddin, family of Chinese President Xi Jinping, former Chinese Premier Li Peng's daughter Li Xiaolin, children of Pakistan's Prime Minister Nawaz Sharif, the President of Ukraine, the prime minister of Iceland, Sigmundur Gunnlaugsson and celebrities including Barcelona forward Lionel Messi.

Meanwhile, Panama's government has vowed to vigorously cooperate with any legal probe that might be launched in the wake of the "Panama Papers" data leak. The law firm Mossack Fonseca has termed the revelation as a crime.

What do they reveal?

Termed as the biggest leak in the history, Panama Papers reveals the set of 11.5 million documents and 2.6 terabytes of information. It provides detailed information (identities of shareholders and directors of the companies) about more than 214000 offshore companies listed in corporate service provider Mossack Fonseca.

It shows countless ways being used by wealthy to exploit secretive offshore tax regimes.

The leak is larger than the US diplomatic cables released by WikiLeaks in 2010, and the secret intelligence documents given to journalists by Edward Snowden in 2013. There are 11.5m documents and 2.6 terabytes of information drawn from Mossack Fonseca’s internal database.

Impact

The leak had a huge impact across the world and they are

• Indian Prime Minister Narendra Modi ordered an inquiry, and subsequently the government announced that it constituted a special multi-agency group comprising officers from the investigative unit of the Central Board of Direct Taxes and its Foreign Tax and Tax Research division, the Financial Intelligence Unit and the Reserve Bank of India.

• Two days after the initial media coverage of the scandal, the Prime Minister of Iceland, Sigmundur Gunnlaugsson, resigned from his office. He resigned amid the controversy over his offshore holdings revealed in the Panama Papers leak.

• The president of the Chilean branch of Transparency International, Gonzalo Delaveau, resigned after documents from a Panamanian law firm showed he was linked to at least five offshore companies.

• France that opened a probe in the issue also added Panama to its tax havens list

Mossack Fonseca

Mossack Fonseca & Co. is a Panamanian law firm and corporate service provider with more than 40 offices worldwide. The firm founded in 1977 is a leading global company which provides comprehensive legal and trust services.

It specializes in commercial law, trust services, investor advisory and international structures. It also offers intellectual property protection and maritime law services.

It operates in tax havens including Switzerland, Cyprus and the British Virgin Islands, and in the British crown dependencies Guernsey, Jersey and the Isle of Man.

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