Panama Papers: A Shot Heard Round The World

April 5, 2016

Standing on Shaky Ground

An anonymous person has leaked more than 11 million documents documenting how the rich and powerful hide their money in offshore tax havens. The documents were published Sunday by the International Consortium of Investigative Journalists (ICIJ), Süddeutsche Zeitung, the German newspaper, and several news organizations around the world, including the BBC, after a yearlong investigation. The actions described in the documents are not necessarily illegal, but some of the documents reveal a clandestine web of shell companies, their real owners concealed under layers of secrecy, and connections to firms in different tax havens. A coalition of more than 100 news organizations published a review of the documents yesterday. USA Today describes the treasure trove,

The cache exposes assets of everyone from political officials to billionaires to celebrities to sports stars that were previously undisclosed. The documents expose holdings of 12 current and former world leaders and details of the hidden financial dealings of 128 more politicians and public officials worldwide. Included: At least 33 people and companies blacklisted by the U.S. government because of links to wrongdoing, such as doing business with Mexican drug lords, terrorist groups or rogue nations such as North Korea and Iran. According to Sueddeutsche Zeitung, the Munich-based newspaper that obtained the trove of documents more than a year ago from an anonymous source tied to Mossack Fonseca [a law firm in Panama with 40 offices around the world], the “Panama Papers” include approximately 11.5 million documents — more than the combined total of the Wikileaks Cablegate, Offshore Leaks, Lux Leaks and Swiss Leaks.

The leak of documents shows how the rich and famous can exploit offshore tax shelters and reveals an unprecedented pattern of corruption worldwide for 40 years, including maneuvers by major banks who created the hard-to-trace companies. World leaders or associates who have embraced anti-corruption platforms are featured throughout. The papers also allege a billion-dollar money laundering ring run by a Russian bank tied to associates of Russian President Vladimir Putin.

Difficult at this point to determine who violated any laws. Tax avoidance is a lawful standard-operating procedure for the rich. Tax evasion, however, and money laundering are crimes. The use of multiple transactions by shell companies that consist of little more than a name and a P.O. box, together with nominee owners who conceal the real parties in interest is inherently suspicious. Mossack Fonseca, the Panama law firm, specializes in creating opaque financial transactions involving equally opaque offshore banks.

Sorting through it all is going to take some time.


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