Panama Papers: unravelling the hidden wealth of the rich and powerful

In the largest cross-border media collaboration, journalists working in more than 25 languages dug into Mossack Fonseca's inner affairs and traced the secret dealings of the law firm's customers around the world.

More than 2,600 GB of data comprising more than 11 million documents about some 214,000 hidden offshore companies owned by prominent people, including some from India, together make up for one of the biggest revelations called Panama Papers

The disclosures over the weekend by the International Consortium of Investigative Journalists (ICIJ) reveal how the rich and powerful use tax havens to hide their wealth.

The documents were leaked from one of the world's lesser-known law firm Mossack Fonseca based in Panama.

ICIJ’s probe is unprecedented and is said to be larger than the US diplomatic cables released by Wikileaks in 2010 and the secret intelligence documents given to media houses by Edward Snowden in 2013.

The ICIJ, together with the German newspaper Suddeutsche Zeitung and more than 100 other media partners, including the Indian Express from India, spent a year sifting through 11.5 million leaked files. They exposed the offshore holdings of world political leaders, links to global scandals, and details of the hidden financial dealings of "fraudsters, drug traffickers, billionaires, celebrities, sports stars and more", the consortium said on its website.

The document trove includes nearly 40 years of data from the Panama law firm that has offices in more than 35 locations around the globe and is one of the world’s top creators of shell companies, corporate structures that can be used to hide ownership of assets, according to the consortium.

The files contain new details about major scandals ranging from England's most infamous gold heist, an unfolding political money laundering affair in Brazil and bribery allegations convulsing FIFA, which governs international soccer, the consortium said.

They also provide details of the hidden financial dealings of 128 other politicians and public officials around the world and show how a global industry of law firms and big banks sells financial secrecy to fraudsters and drug traffickers as well as billionaires, celebrities and sports stars.

"The Panama Papers expose offshore companies controlled by the prime ministers of Iceland and Pakistan, the king of Saudi Arabia and the children of the president of Azerbaijan. They also include the names of at least 33 people and companies blacklisted by the US government because of evidence that they've done business with Mexican drug lords, terrorist organisations [such as] Hezbollah or rogue nations, including North Korea and Iran."

The leaked data, the ICIJ said, pertains to more than nearly 40 years from the late 1970s through the end of 2015. It allows a never-before-seen view of the offshore world, providing a day-to-day, decade-by-decade look at how dark money flows through the global financial system, breeding crime and stripping national treasuries of tax revenues.

ICIJ’s analysis of the leaked records revealed information on more than 214,000 offshore companies connected to people in more than 200 countries and territories. The top leaders under the scanner include Russian President Vladimir Putin and Pakistan Prime Minister Nawaz Sharif among others.

The data includes e-mails, financial spreadsheets, passports and corporate records revealing the secret owners of bank accounts and companies in 21 offshore jurisdictions including Nevada, Hong Kong and the British Virgin Islands.

ICIJ’s data and research unit indexed, organised and analysed the 2.6 terabytes of data that make up the leak, using collaborative platforms to communicate and share documents with journalists working in 25 languages in nearly 80 countries. All this was kept under wraps for about eight months since the investigation started.

The documents show how Mossack Fonseca helped clients launder money, dodge sanctions and evade tax. The Panama company has, however, denied any wrongdoing. It says it has operated beyond reproach for 40 years and has never been charged criminally.

Gerard Ryle, director of the ICIJ, said the documents covered the day-to-day business at Mossack Fonseca over the past 40 years.

"I think the leak will prove to be probably the biggest blow the offshore world has ever taken because of the extent of the documents," he said.

Indians named under Panama Papers; AAP demands SC-monitored probe

The list revealing the offshore links of some of the planet’s most prominent people included more than 500 Indians.

The Indian Express ran several pages of the investigation reports alleging among other names that Bollywood superstars Amitabh Bachchan and Aishwarya Rai were directors in companies in Panama. The two did not immediately respond despite efforts to contact them.

Aishwarya Rai's media adviser told the paper that the information was false. While there was no reaction from those named in the Express report, the spokesperson for Aishwarya Rai said "no" when asked if she intended to issue a statement.

In 2004, India legally allowed investments abroad by companies, and later individuals, through the Liberalised Remittance Scheme.

Also named were Sameer Gehlaut of India Bulls, for properties owned in Bahamas, Jersey and the United Kingdom, and K.P. Singh of DLF for companies registered in the British Virgin Islands. Vinod Adani, elder brother of industrialist Gautam Adani, politician Shishir Bajoria from West Bengal and Anurag Kejriwal of Loksatta Party were also alleged to have set up companies in tax havens. Bajoria told the paper that "erroneous beneficial owner information" was given by mistake.

Many of the other persons named in the Express reports responded, some denying while others are maintaining that they had worked within the laws of the country.

Aam Aadmi Party demanded a Supreme Court-monitored probe against companies and people named in the Panama Papers.

AAP spokesperson Raghav Chadha said, "Prime Minister Narendra Modi himself has availed of the hospitality of industrialist Gautam Adani, whose brother's company is named in the Panama Papers investigation. Therefore, we don't trust the government for a fair probe into the matter.

"Therefore, a Supreme Court-monitored probe should be ordered in the Panama Papers investigations at the earliest," he said.

Panama leak shows New Zealand's 'shameful' tax haven status

New Zealand is shamefully complicit in international tax avoidance schemes through its lax trust law, experts and lawmakers said, following the massive document leak.

The papers showed a connection to foreign trusts in New Zealand. It was reported that Maltese Energy Minister Konrad Mizzi and the prime minister's chief of staff, Keith Schembri, were among those who set up trusts in New Zealand.

Massey University taxation specialist Deborah Russell said the leak shed light on New Zealand's role as an international tax haven.

"It's shameful for New Zealand to be caught up in international tax avoidance," Russell said.

"The loophole in our laws that allows New Zealand foreign trusts to escape taxation has been known about for years, but nothing has been done to shut it down. This makes us complicit in schemes to avoid tax."

She believed it would be comparatively easy to shut the loophole down by authorising the government's Inland Revenue Department (IRD) to share information about foreign trusts—including the identities of people putting the property into trusts—with the tax authorities of other countries.

"This would enable other countries to pursue people who are sheltering property and income in New Zealand foreign trusts," said Russell.

Opposition lawmakers said the revelations of rich foreigners hiding their wealth in New Zealand had undermined the country's reputation for honesty and transparency.

The Green Party said the IRD had warned the government in 2013 about the high risks of New Zealand foreign trusts, but the government had ruled out any reform to date.

Green Party finance spokesperson Julie Anne Genter cited an IRD e-mail dated March 24, 2016, that said: "In relation to the foreign trust tax rules, given wider government priorities the government will not be considering regulatory reform of the rules at this stage."

"How can we as a country work collaboratively with other countries to try and clamp down on tax avoidance by multinational companies while knowingly facilitating tax avoidance through our lax foreign trust laws?" Genter asked in a statement.

Revenue Minister Michael Woodhouse defended New Zealand's "very sound tax system with world-class tax rules."

"We tax people who live, work and do business here. We don't tax foreign income earned by foreigners. The same principles apply to trusts, and have done since 1988," Woodhouse said in a statement.

"It is ridiculous to suggest that New Zealand is a tax haven, as they thrive on secrecy."

New Zealand had a strong tax treaty network with the express purpose of discovering and preventing tax avoidance by exchanging information between tax jurisdictions.

The Organisation for Economic Co-operation and Development (OECD) group of developed countries had looked at New Zealand's foreign trust rules in the past and had no concerns with them, said Woodhouse.

"The tax treatment of foreign trusts may come up in the OECD's Base Erosion and Profit Shifting work programme in which case we would look at our own rules in the context of everyone else's," he said.

Russia dismisses reports linking Putin to offshore deals

The Kremlin on Monday, April 4, dismissed reports linking friends and relatives of Russian President Vladimir Putin to offshore deals worth billions of dollars.

"There are no details, all are based on allegations and speculation," Kremlin spokesman Dmitry Peskov said, demanding "professional results of the work of the journalistic community".

Peskov claimed the aim of the publication, though mentioning other countries and their leaders, obviously targeted Putin, "especially in the context of [the] upcoming parliamentary election and long-term prospects of [the] presidential election in two years."

An earlier report published on Thursday, March 31, alleged that a Putin associate had benefited from state construction contracts.

Prior to the publications, Peskov had said that the Kremlin expected that an outfit of international research in the West and in Russia was planning to publish "hoax material" on Putin, his family and friends.