Panama Papers: A Brief Summary

About one year ago, an anonymous source contacted Süddeutsche Zeitung (the largest subscription newspaper of Germany) to submit the stolen data of world’s fourth largest offshore law firm, Mossack Fonseca. Famously called as “Panama Papers” includes; 11.5 Million documents comprising e-mails, pdf files, photo files etc. This 2.6 Terabytes of data was researched and analyzed by Süddeutsche Zeitung in cooperation with International Consortium of Investigative Journalists (ICIJ).

What are the findings?

The data reveals that how rich people and companies avoid taxes by investing in offshore firms of tax-heaven countries like Panama. Apparently terror groups, mafias, drug & weapon dealers use such money to finance their activities. How civil wars in countries like Syria and other parts of the world are fed on it. Many influential people of the world are named in it and the list includes Russian President Vladimir Putin, Footballer Lionel Messi, Pakistani PM Nawaz Sharif, Indian actor Amitabh Bachchan and his daughter in law Aishwarya Rai Bachchan etc.

How Mossack Fonseca works?

Started by Jürgen Mossack & Ramón Fonseca Mora, the leaks reveal that it has acted for more than 300,000 companies. More than half of the companies are registered in British-administered tax havens. It has offices all over the world and has strong intermediately collaboration with various banks and asset management companies.

The business model of Mossack Fonseca is based on a simple principle: If someone wants to hide his money or its source, Mossack Fonseca helps to set an anonymous company. If required, it also provides a sham director for the company, thus hiding its true owner. The sham director can sign all the papers though things remain in control of its true owner. In this way the identity of true owner remains anonymous. These shell companies can buy stocks and invest into desired businesses in tax-heavens.

What Mossack Fonseca has to say?

On Monday, the firm has stated:

“Our industry is not particularly well understood by the public, and unfortunately this series of articles will only serve to deepen that confusion. The facts are these: while we may have been the victim of a data breach, nothing we’ve seen in this illegally obtained cache of documents suggests we’ve done anything illegal, and that’s very much in keeping with the global reputation we’ve built over the past 40 years of doing business the right way, right here in Panama.

Obviously, no one likes to have their property stolen, and we intend to do whatever we can to ensure the guilty parties are brought to justice.

But in the meantime, our plan is to continue to serve our clients, stand behind our people, and support the local communities in which we have the privilege to work all over the world, just as we’ve done for nearly four decades.”