The Panama Papers are an unprecedented leak of 11.5m files from the
database of the world’s fourth biggest offshore law firm, Mossack
Fonseca. The records were obtained from an anonymous source by the German newspaper Süddeutsche Zeitung, which shared them with the International Consortium of Investigative Journalists (ICIJ). The ICIJ then shared them with a large network of international partners, including the Guardian and the BBC.
What do they reveal?
The documents show the myriad ways in which the rich can exploit
secretive offshore tax regimes. Twelve national leaders are among 143
politicians, their families and close associates from around the world
known to have been using offshore tax havens. A $2bn trail leads all the way to Vladimir Putin.
The Russian president’s best friend – a cellist called Sergei Roldugin –
is at the centre of a scheme in which money from Russian state banks is
hidden offshore. Some of it ends up in a ski resort where in 2013
Putin’s daughter Katerina got married.
Among national leaders with offshore wealth are Nawaz Sharif,
Pakistan’s prime minister; Ayad Allawi, ex-interim prime minister and
former vice-president of Iraq; Petro Poroshenko, president of Ukraine;
Alaa Mubarak, son of Egypt’s former president; and the prime minister of Iceland, Sigmundur Davíð Gunnlaugsson.
An offshore investment fund run by the father of British prime minister David Cameron avoided ever having to pay tax in Britain by hiring a small army of Bahamas residents
to sign its paperwork. The fund has been registered with HM Revenue and
Customs since its inception and has filed detailed tax returns every
year.
A lengthier overview of the revelations can be found here.
What is Mossack Fonseca?
It is a Panama-based law firm whose services include incorporating
companies in offshore jurisdictions such as the British Virgin Islands.
It administers offshore firms for a yearly fee. Other services include
wealth management.
Where is it based?
The firm is Panamanian but runs a worldwide operation. Its website
boasts of a global network with 600 people working in 42 countries. It
has franchises around the world, where separately owned affiliates sign
up new customers and have exclusive rights to use its brand. Mossack
Fonseca 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.
Mossack Fonseca is the world’s fourth biggest provider of offshore
services. It has acted for more than 300,000 companies. There is a
strong UK connection. More than half of the companies are registered in
British-administered tax havens, as well as in the UK itself.
Are all people who use offshore structures crooks?
No. Using offshore structures is entirely legal. There are many
legitimate reasons for doing so. Business people in countries such as
Russia and Ukraine typically put their assets offshore to defend them
from “raids” by criminals, and to get around hard currency restrictions.
Others use offshore for reasons of inheritance and estate planning.
Are some people who use offshore structures crooks?
Yes. In a speech last year in Singapore, David Cameron
said “the corrupt, criminals and money launderers” take advantage of
anonymous company structures. The government is trying to do something
about this. It wants to set up a central register that will reveal the beneficial owners of offshore companies. From June, UK companies will have to reveal their “significant” owners for the first time.
What does Mossack Fonseca say about the leak?
The firm won’t discuss specific cases of alleged wrongdoing, citing client confidentiality. But it robustly defends its conduct.
Mossack Fonseca says it complies with anti-money-laundering laws and
carries out thorough due diligence on all its clients. It says it
regrets any misuse of its services and tries actively to prevent it. The
firm says it cannot be blamed for failings by intermediaries, who
include banks, law firms and accountants. Panama Papers reporting team: Juliette Garside, Luke Harding,
Holly Watt, David Pegg, Helena Bengtsson, Simon Bowers, Owen Gibson and
Nick Hopkins source: http://www.theguardian.com/international
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