Panama Papers

The Panama Papers are 11.5 million leaked documents that detail financial and attorney–client information for more than 214,488 offshore entities.  The documents, which belonged to the Panamanian law firm and corporate service provider Mossack Fonseca, were leaked in 2015 by an anonymous source, some dating back to the 1970s. The leaked documents contain personal financial information about wealthy individuals and public officials that had previously been kept private. While offshore business entities are legal, reporters found that some of the Mossack Fonseca shell corporations were used for illegal purposes, including fraud, tax evasion, and evading international sanctions. 

"John Doe", the whistleblower who leaked the documents to German journalist Bastian Obermayer from the newspaper Süddeutsche Zeitung (SZ), remains anonymous, even to the journalists on the investigation. "My life is in danger", he told them.  In a May 6 statement, John Doe cited income inequality as the reason for his action, and said he leaked the documents "simply because I understood enough about their contents to realise the scale of the injustices they described". He added that he has never worked for any government or intelligence agency. He expressed willingness to help prosecutors if immune to prosecution. After SZ verified that the statement did come from the Panama Papers source, the International Consortium of Investigative Journalists (ICIJ) posted the full document on its website. 

Because of the amount of data, SZ asked the ICIJ for help. Journalists from 107 media organizations in 80 countries analyzed documents detailing the operations of the law firm. After more than a year of analysis, the first news stories were published on April 3, 2016, along with 150 of the documents themselves. The project represents an important milestone in the use of data journalism software tools and mobile collaboration. The documents were quickly dubbed the Panama Papers. The Panamanian government strongly objects to the name; so do other entities in Panama and elsewhere. Some media outlets covering the story have used the name "Mossack Fonseca papers". 

In addition to the much-covered business dealings of British prime minister David Cameron and Icelandic prime minister Sigmundur Davíð Gunnlaugsson, the leaked documents also contain identity information about the shareholders and directors of 214,000 shell companies set up by Mossack Fonseca, as well as some of their financial transactions. Much of this information does not show anything more than prudent financial management. It is generally not against the law (in and of itself) to own an offshore shell company, although offshore shell companies may sometimes be used for illegalities.

The journalists on the investigative team found business transactions by many important figures in world politics, sports and art, and many of these transactions are quite legal. Since the data is incomplete, questions remain in many other cases; still others seem to clearly indicate ethical if not legal impropriety. Some disclosures – tax avoidance in very poor countries by very wealthy entities and individuals for example – lead to questions on moral grounds. According to The Namibian for instance, a shell company registered to Beny Steinmetz, Octea, owes more than $700,000 US in property taxes to the city of Koidu in Sierra Leone, and is $150 million in the red, even though its exports were more than twice that in an average month 2012–2015. Steinmetz himself has personal worth of $6 billion. Other offshore shell company transactions described in the documents do seem to have broken exchange laws, violated trade sanctions or stemmed from political corruption, according to ICIJ reporters. For example:

Uruguay has arrested five people and charged them with money-laundering through Mossack Fonseca shell companies for a Mexican drug cartel. Ouestaf, an ICIJ partner in the investigation, reported that it had discovered new evidence that Karim Wade received payments from DP World (DP). He and his long-time friend were convicted of this in a trial that the United Nations and Amnesty International said was unfair and violated the defendants' rights. The Ouestaf article does not address the conduct of the trial, but does say that Ouestaf journalists found Mossack Fonseca documents showing payments to Wade via a DP subsidiary and a shell company registered to the friend. Named in the leak were 12 current or former world leaders, 128 other public officials and politicians, and hundreds of other members of the elites of over 200 countries.

Customers may open offshore accounts for any number of reasons, some of which are entirely legal but ethically questionable. A Canadian lawyer based in Dubai noted, for example, that businesses might wish to avoid falling under Islamic inheritance jurisprudence if an owner dies. Businesses in some countries may wish to hold some of their funds in dollars also, said a Brazilian lawyer. Estate planning is another example of legal tax avoidance.

American film-maker Stanley Kubrick had an estimated personal worth of $20 million when he died in 1999, much of it invested in the 18th-century English manor he bought in 1978. He lived in that manor the rest of his life, filming scenes from The Shining, Full Metal Jacket and Eyes Wide Shut there as well. Three holding companies set up by Mossack Fonseca now own the property, and are in turn held by trusts set up for his children and grandchildren. Since Kubrick was an American living in Britain, his estate would otherwise have had to pay taxes to both governments and might have been forced to sell the property to have the liquid assets to do so. Kubrick is buried on the grounds along with one of his daughters and the rest of his family still lives there.

Source : Wikipedia