The Panama Papers Leak: An Overview

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A searchable database of more than 200,000 Panamanian shell companies was released online overnight, as part of an international journalism group’s effort to reveal the secrets of the offshore financial world.

The database features information derived from millions of leaked documents created by the Panamanian law firm Mossack Fonseca, which specialised in setting up secret shell companies for clients ranging from corporate executives and wealthy celebrities to relatives and associates of heads of state like Russian President Vladimir Putin and British Prime Minister David Cameron.

Mossack Fonseca’s Australian client list can be searched on The Australian Financial Review’s dedicated Panama Papers site from 4 am on Tuesday as part of a release by the International Consortium of Investigative Journalists, with Chinese investors comprising more than a fifth of the total identifiable Australian-based names.

The International Consortium of Investigative Journalists, a group which includes reporters and editors from more than 80 countries including Neil Chenoweth of the Financial Review, has already published an assortment of stories based on the documents, alleging how the shell companies were used by the wealthy to conceal their fortunes and evade taxes. The 11.9 million records, which an anonymous whistle-blower leaked last year to the German newspaper Suddeutsche Zeitung, have also led to published stories alleging that secret offshore companies have been used by money launderers, art smugglers, international criminals and repressive governments like Syria.

TRADE SECRETS

Australians are among hundreds of wealthy clients of Panama-based law firm Mossack Fonseca.
It’s not illegal to create a shell company — and they can be used for legitimate purposes, such as protecting trade secrets. However, because shell companies can also obscure the identities of their owners, they’re sometimes used for illegal purposes.

Mossack Fonseca has denied any wrongdoing, and said that on the few occasions it learned that clients were using shell companies for illicit activity it ended its relationship with them. The firm also issued a “cease and desist” order last week warning the ICIJ it will face legal sanctions if it released the leaked records.

By releasing a massive trove of the documents in a searchable form, the ICIJ said it hopes to increase public awareness about the ways the offshore banking system enables wealthy individuals to dodge taxes and corrupt government officials to hide their plunder.

The ICIJ, which is based in Washington D.C., said it had culled the records and omitted details that might violate the privacy of the shell companies’ owners — information such as bank accounts and financial transactions, e-mails and other correspondence, passports and telephone numbers.

‘PUBLIC INTEREST’

“The selected and limited information is being published in the public interest,” the ICIJ said in a statement on its website.

The release comes as governments around the world are pushing measures that would require greater disclosure about the ownership of companies. U.S. President Barack Obama last week called for stricter reporting requirements for companies that register in states like Nevada and Delaware, which have been criticized as domestic tax havens. The UK has announced it will require names of the beneficial owners of any company registered in England or any of its territories or Crown dependencies, and this week Cameron is hosting an anti-corruption summit where offshore secrecy is expected to be a major part of the agenda.

The source of the records — a whistle-blower identified only as “John Doe” — issued an 1800-word statement last week, citing “income equality” as the motive behind the leak. The whistle-blower offered to assist authorities in making criminal cases in exchange for immunity from prosecution.

“Banks, financial regulators and tax authorities have failed,” John Doe wrote in the essay.

“Decisions have been made that have spared the wealthy while focusing instead on reining in middle- and low-income citizens.”

Contact the experienced in the Business Law Group at Maya Murphy, P.C. today at (203) 221-3100 or at JMaya@Mayalaw.com.

Source: Financial Review