Panama Papers: Biggest Offshore Data Leak in History

World News
06/04/2016 11:30

The Panama Papers is an unprecedented investigation that reveals the offshore links of some of the globe’s most prominent figures, writes African Network of Centers for Investigative Reporting (ANCIR). The International Consortium of Investigative Journalists (ICIJ), together with the German newspaper Suddeutsche Zeitung and more than 100 other media partners, including the ANCIR, spent a year sifting through 11.5 million leaked files to expose 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 trove of documents is likely the biggest leak of inside information in history. It includes nearly 40 years of data from a little-known but powerful law firm based in Panama, Mossack Fonseca.

ANCIR writes that, "ANCIR and its media partners’ investigations led to findings around Uganda’s missing taxes from oil revenue; a mega-infrastructure deal in Namibia connected to a FIFA-related entity; secrecy in Steinmetz’s diamond empire; and hidden players in Angola’s Sovereign Wealth Fund, to mention a few. Further explosive stories from Zimbabwe, Kenya, South Africa and Nigeria will follow this week. But the data revealed something far more insidious than a willingness to look past illegal activities. It reflects a deliberate design on the part of companies like Mossack Fonseca to commercialise the inherent weaknesses of national and international legal and financial regimes by bulldozing the substance, process and purpose of 'due diligence'. Thanks to these structures – banking secrecy, opaque shell entities, use of nominees to conceal beneficial owners etc - each year, the continent loses some $150 billion to illicit financial flows."

The Organisation for Economic Co-operation and Development (OECD), which has been a global leader in the fight against tax fraud and tax evasion, calls Panama, "the last major holdout that continues to allow funds to be hidden offshore from tax and law enforcement authorities ... Just a few weeks ago, we told G20 Finance Ministers that Panama was back-tracking on its commitment to automatic exchange of financial account information. The consequences of Panama’s failure to meet the international tax transparency standards are now out there in full public view. Panama must put its house in order, by immediately implementing these standards." Nevertheless, the OECD writes that the Panama Papers also "show a decline in the use of offshore companies and bearer share companies, which is a testament to the incredible transformation effected in the last 7 years to establish robust international standards on tax transparency, including on beneficial ownership: 132 jurisdictions have committed to the standard on exchange of information ‘on request.’ Of those, 96 jurisdictions will introduce automatic exchange of financial account information within the next 2 years."

Among the more sensational stories making the headlines, the leak from Mossack Fonseca allegedly reveals how associates of Russian President Vladimir Putin were involved in a web of secret offshore deals and loans worth as much as $2 billion - some of which is said to show up in a ski resort where Putin’s daughter Katerina got married in 2013 - and allegedly details business ties between a member of FIFA's ethics committee and men indicted for corruption. CNN reports that the Kremlin has dismissed the allegations as "a series of fibs" aimed at discrediting Putin ahead of elections, while the FIFA official has described them as "ridiculous" and "outrageous." But some governments are acting on the information - the U.K., France, Australia and Mexico have pledged to investigate for possible cases of tax evasion. The leak has already caused the resignation of Iceland's Prime Minister Sigmundur David Gunnlaugsson. Gunnlaugsson had been under intense pressure to step down since leaked documents from Mossack Fonseca revealed his links to an offshore company, triggering mass protests in the capital. Meanwhile, the Irish Independent writes that, "The massive leak is bigger than that of whistleblower Edward Snowden in the US, and the publication by Wikileaks of secret American documents," while Fortune wonders why so few of ICIJ's media partners are located in the United States.