Tax scandal forces closure of Panama Papers law firm

Reputational harm, ‘financial siege’ blamed for company’s demise

Mossack Fonseca, the offshore law firm behind the Panama Papers, is dead.

The Panamanian firm that gained international notoriety two years ago when its internal database was leaked, revealing decades of questionable business practices that facilitated money laundering, corruption, bribery and tax evasion, will close its remaining offices by the end of the month.

According to a statement obtained by the International Consortium of Investigative Journalists, the firm blamed the Panama Papers scandal for its demise.

“The reputational deterioration, the media campaign, the financial siege and the irregular actions of some Panamanian authorities have caused irreparable damage, whose obligatory consequence is the total cessation of operations to the public,” the statement said.

The firm also said it would “continue to call for justice” and would cooperate with authorities to “demonstrate that no crime has been committed.”

The law firm, which once boasted 600 employees in 40 offices on tropical islands, European duchies and Asian city states, administered 214,000 offshore entities tied to 12 current or former heads of state, 140 politicians and others.

The Panama Papers revelations prompted the prime ministers of Iceland and Pakistan to resign.

Mossack Fonseca has grown smaller since the Panama Papers went public. It was raided by authorities in Panama and El Salvador, hit with a record fine in the British Virgin Islands and shut down its offices in the British overseas territories and United States.

Tax collectors around the world have recouped more than $500 million from people named in the leak.

The Panama Papers investigations have helped catalyze global public opinion against tax havens for helping criminals and corrupt politicians launder their illicit funds, concealing trillions from public tax coffers around the world.

Canadians alone have parked more than $250 billion in the 10 most popular tax havens.

The investigation was the biggest journalistic collaboration in history. More than 400 journalists from 80 countries — including the Star and CBC/Radio-Canada — produced more than 5,000 articles and reports, which were recognized with top journalism awards including a Pulitzer Prize, the Prix Europa, and a British Journalism Award.

Politicians have credited the leak with paving the way for international agreements to crack down on corporate tax avoidance and the abuse of tax havens.

Over the last two years, Ottawa has committed more than $1 billion to the Canada Revenue Agency to beef up enforcement, targeting sophisticated offshore schemes and the tax professionals who design them.