Panama Papers leak reveals financial secrets

‘Nothing wrong’

It sounds like a storyline straight out of “Mr Robot.” The Internet was abuzz Monday with the revelations from a massive document leak that sheds light on the offshore financial activities of world leaders, celebrities, athletes and other public figures.

The International Consortium of Investigative Journalists and the German newspaper Suddeutsche Zeitung led an investigative effort involving more than 100 other news organizations into what has been billed as the largest document leak in history. The data from the powerful but low-profile global bank Mossack Fonseca, headquartered in Panama, encompasses some 11.5 million documents offering details on the inner-workings of 214,000 offshore companies tied to hundreds of elites in more than 200 countries.

Among the prominent targets of the investigation are Russian President Vladimir Putin. The documents detail how Putin shuffled some $2 billion through various offshore banks and shell companies over the years, according to the ICIJ. The documents span from the 1970s through the end of 2015.

“The Panama Papers expose offshore companies controlled by the prime ministers of Iceland and Pakistan, and the children of the president of Azerbaijan. They also include the names of at least 33 people and companies blacklisted by the US government because of evidence that they’ve done business with Mexican drug lords, terrorist organizations like Hezbollah or rogue nations, including North Korea and Iran,” the ICIJ said in announcing the publication.

The ICIJ said the investigation was conducted by 370 journalists from nearly 80 countries, including 31 in the US News organizations associated with the report include BBC Panorama, Le Monde, Univision, Columbia University, Fusion, the Miami Herald, the Charlotte Observer, the Toronto Star, the Irish Times and Panama’s La Prensa. There is no word on the source of the documents or whether there are plans to make them broadly available online a la WikiLeaks’ efforts.

The ICIJ published extensive information and data pulled from the documents on Monday and promised to divulge more details next month.

The Panama Papers cache adds to the growing list of massive document leaks enabled by the global interconnectivity of digital networks. The threat of damaging data breaches spilling out online through massive hacks of confidential information has become fodder for Hollywood thrillers of late, from Showtime’s “Homeland” to USA Networks’ “Mr Robot.”

The real-life drama of cyber-security vulnerabilities hit home in 2014 for Sony Pictures Entertainment when the studio became the target of a WikiLeaks-like document dump reportedly inflicted by a group tied to North Korea in protest of the studio’s Seth Rogen-James Franco comedy “The Interview,” which skewered North Korean leader Kim Jong-un. More than 18 months later Sony is still in recovering information and network functions lost or compromised in the November 2014 breach, and many of those stolen files remain readily accessible online.

LONDON/PANAMA CITY, April 4, (Agencies): Governments across the world began investigating possible financial wrongdoing by the rich and powerful on Monday following a leak of documents from a Panamanian law firm which allegedly showed how clients avoided tax or laundered money.

The documents detailed schemes involving an array of figures from friends of Russian President Vladimir Putin to relatives of the prime ministers of Britain, Iceland and Pakistan and as well as the president of Ukraine, journalists who received them said.

While the “Panama Papers” detail complex financial arrangements benefitting the world’s elite, they do not necessarily mean the schemes were all illegal.

The Kremlin said the documents contained “nothing concrete and nothing new” while a spokesman for British Prime Minister David Cameron said his late father’s reported links to an offshore company were a “private matter”.

Iceland’s Prime Minister Sigmundur Gunnlaugsson could not immediately be reached for comment on the naming of his wife in connection with a secretive company in an offshore haven which brought opposition calls for him to resign.

Pakistan denied any wrongdoing by the family of Prime Minister Prime Minister Nawaz Sharif after his daughter and son were linked to offshore companies.

Australia, Austria, Brazil, France and Sweden were among countries which said they had begun investigating the allegations, based on more than 11.5 million documents from law firm Mossack Fonseca, located in the tax haven of Panama. Banks as well as individual clients came under the spotlight.

The documents were leaked to the International Consortium of Investigative Journalists (ICIJ) and more than 100 other news organisations. Mossack Fonseca has denied any wrongdoing.

“I think the leak will prove to be probably the biggest blow the offshore world has ever taken because of the extent of the documents,” ICJC director Gerard Ryle said.

The material covers a period over almost 40 years, from 1977 until last December, and allegedly show that some companies domiciled in tax havens were being used for suspected money laundering, arms and drug deals, and tax evasion.

Britain’s Guardian newspaper said the documents showed a network of secret offshore deals and loans worth $2 billion led to close friends of Putin, including concert cellist Sergei Roldugin. Reuters could not confirm those details.

Putin’s spokesman dismissed the reports, saying they aimed to discredit him ahead of upcoming elections.

Concocted

“This Putinophobia abroad has reached such a point that it is in fact taboo to say something good about Russia, or about any actions by Russia or any Russian achievements. But it’s a must to say bad things, a lot of bad things, and when there’s nothing to say, it must be concocted. This is evident to us.”

The British government asked for a copy of the leaked data, which could be embarrassing for Prime Minister Cameron, who has spoken out against tax evasion and tax avoidance.

His late father, Ian Cameron, is mentioned in the files, alongside some members of his Conservative Party in the upper house of parliament, former Conservative lawmakers and party donors, British media said.

Jennie Granger, director general of enforcement and compliance at HM Revenue and Customs, said the government had a great deal of information from a wide range of sources.

“We will closely examine this data and will act on it swiftly and appropriately,” she said.

Cameron’s spokeswoman declined to comment on whether the leader’s family had money invested in offshore funds set up by his father, saying it was a “private matter”.

The oppostion Labour Party’s finance spokesman, John McDonnell, tweeted: “Cameron promised and has failed to end tax secrecy and crack down on ‘morally unacceptable’ offshore schemes, real action is now needed.”

The Australian Tax Office said it was investigating more than 800 wealthy Mossack Fonseca clients and had linked more than 120 of them to an associate offshore service provider located in Hong Kong, which it did not name.

The head of Mossack Fonseca, Ramon Fonseca, has denied any wrongdoing but said his firm had suffered a successful but “limited” hack on its database. He described the hack and leak as “an international campaign against privacy”. Fonseca, who was up until March a senior government official in Panama, told Reuters the firm had formed more than 240,000 offshore companies, the “vast majority” used for “legitimate purposes”.

The papers also showed the use of offshore companies by Pakistini Prime Minister Nawaz Sharif’s family, including his daughter Mariam and son Hussain. Pakistani Information Minister Pervez Rasheed denied any wrongdoing on their part.

“Every man has the right to do what he wants with his assets, to throw them in the sea, to sell them, or to establish a trust for them. There is no crime in this in Pakistani law or in international law,” Rasheed said.

Media reports also said the leaked data pointed to a link between a member of global soccer body FIFA’s ethics committee and a Uruguayan soccer official who was arrested last year as part of a US probe into corruption in the sport.

FIFA’s ethics committee said Juan Pedro Damiani, a member of its judgment chamber, was being investigated over a possible business relationship with fellow Uruguayan Eugenio Figueredo, one of the soccer officials arrested in Zurich last year.

Damiani told Reuters in Montevideo he broke off relations with Figueredo when the latter was accused of corruption.

Austria’s financial markets regulator FMA is investigating whether lenders Raiffeisen Bank International and Hypo Landesbank Vorarlberg followed rules against money laundering after they were named in the “Panama Papers”.

Raiffeisen said it had complied but could not comment on specific cases. Hypo Landesbank Vorarlberg had no immediate comment.

Policy

The Norwegian government said Norwegian bank DNB DNB.OL must explain its policy of helping clients set up offshore companies in the Seychelles. “DNB says this should not have happened and that the bank should not have participated,” Trade and Industry Minister Monica Maeland said.

DNB said it regretted assisting about 40 customers in setting up the firms between 2006 and 2010, and that the practice had ended.

Dutch authorities said they would investigate allegations related to the Netherlands.

Sweden’s Financial Supervisory Authority (FSA) has contacted authorities in Luxembourg to ask for information related to allegations that banking group Nordea helped some clients to set up accounts in offshore tax havens

Nordea was fined the maximum 50 million crowns ($6.14 million) in May 2015 for deficiencies in its approach to tackling money laundering. Nordea said on Monday it did not help set up offshore companies except in exceptional circumstances, and it had taken measures in 2009 to ensure clients’ holdings and incomes were reported to tax authorities.

Meanwhile, French President Francois Hollande promised Monday that a massive leak of documents exposing the offshore dealings of wealthy individuals would lead to legal proceedings in France.

“All the information revealed will lead to investigations brought by the tax authorities and to legal proceedings,” Hollande said.

He thanked “the whistleblowers” for bringing the so-called Panama Papers to light.

“It’s good news that we are aware of these revelations because it will bring in tax revenue from those who have defrauded,” Hollande said.

The president said that in 2015, French individuals were found to have hidden 20 billion euros ($22.7 billion) from French tax authorities and the state “has already clawed back 12 billion euros”, although those cases were not linked to the Panama Papers.

“So I thank the whistleblowers, I thank the press which has taken action and I have no doubt that the investigators are absolutely ready and waiting to study these documents,” Hollande said.

“It is thanks to a whistleblower that we have this information. These whistleblowers do useful work for the international community, they take risks and they must be protected,” he said.

The German government on Monday said it hoped the revelations from the so-called “Panama Papers” will spur global efforts to combat tax evasion and money laundering.

“We hope the current debate will turn up the heat,” finance ministry spokesman Martin Jaeger told a news briefing.

German Finance Minister Wolfgang Schaeuble has long been at the forefront of the worldwide fight against fraud and tax havens.

“We can harness this momentum and express the hope that restrictions will be imposed,” but such practices “cannot be abolished with a simple click of the fingers,” Jaeger said.

Continued from Page 12 The meetings of the International Monetary Fund and the World Bank in Washington next week will provide an opportunity to put the issue back on the agenda.

“And we will take the initiative in this direction,” Jaeger pledged.

The vast stash of records was obtained from an anonymous source by German daily Sueddeutsche Zeitung and shared with media worldwide by the International Consortium of Investigative Journalists (ICIJ).

The documents, from around 214,000 offshore entities covering almost 40 years, came from Mossack Fonseca, a Panama-based law firm with offices in more than 35 countries.

Schaeuble has spearheaded calls in recent years for increased international coordination to curb tax evasion and money laundering.

“We have made more progress in the past three years than in the previous three decades,” his spokesman Jaeger said.

Two German banks named in media reports as allegedly helping world leaders and celebrities hide money in offshore accounts denied any wrongdoing in the affair.

Deutsche Bank said in an emailed statement it had “enhanced” its procedures for taking on new clients “and verifying with whom we are doing business, and our policies, procedures and systems are designed to ensure that we comply with all applicable rules and regulations”.

A spokesman for Hamburgbased Berenberg Bank said the group’s Swiss arm, Berenberg Bank (Schweiz) AG, “like many other banks, operates accounts for offshore companies”.

But these were all in line with legal regulations.

A spokesman for the bank said its compliance procedures “are regularly reviewed by independent external auditors to ensure they are effective”.

Ukrainian President Petro Poroshenko on Monday denied any wrongdoing after documents leaked from a Panama law firm showed him holding three offshore accounts that could be used as tax havens.

A year-long worldwide media investigation into a trove of 11.5 million documents found that the former Soviet state’s pro-Western leader had registered a company in the British Virgin Islands that he never disclosed in his income forms.

Existence

The Ukrainian leader did not deny the accounts’ existence but said they in no way broke either his country’s or international laws.

“I may be the first top official in Ukraine who treats declaring assets, paying taxes and conflict of interest issues profoundly and seriously, in full compliance with the Ukrainian and international private law,” Poroshenko said in a statement issued on Facebook.

“Having become president, I stopped participating in the management of my assets, having delegated this responsibility to the respective consulting and law firms,” he added.

The tycoon-turned-president’s attempts to distance himself from the scandal come with the wartorn country already engulfed in a months-long political crisis that has paralysed the government and delayed the release of vital Western aid.

None of the three accounts associated with Poroshenko’s offshore firm held more than 2,000 euros ($2,270).

But the “Panama Papers” report said they may have been a haven used by the president to avoid paying taxes on his profitable candy empire.

“Poroshenko was busy setting up an offshore tax haven for his business assets as Ukraine was suffering its worst defeat in Russia’s war against Ukraine in the summer of 2014,” the report said.

“Poroshenko’s action might be illegal on two counts: he started a new company while president and he did not report the company on his disclosure statements,” it added.

Radical Party leader Oleg Lyashko — an outspoken populist who holds 21 of the 450 seats in Ukraine’s parliament — said he has “initiated the start of impeachment proceedings” against the president over the revelations.

Lyashko’s efforts are unlikely to get very far because Ukraine still lacks a law spelling out how such impeachment hearings may proceed. They could also only begin after the case is studied by the country’s constitutional and supreme courts.

Ukraine’s prosecutor general’s office said it had studied the leaked information and “found no evidence of a crime”.

Cyprus-based lender RCB said on Monday it had never provided unsecured loans, in a reference to a report by Britain’s Guardian newspaper of its alleged role in helping people close to Vladimir Putin amass fortunes.

Reuters could not independently confirm the allegations, which RCB said were ‘unfounded’ and ‘duly refuted as untrue’.

In another statement sent to Reuters, the Cyprus Central Bank said it was ‘evaluating’ the information for possible links to the Cypriot banking system. It would take appropriate action if necessary, it said, without elaborating.

“RCB Bank, as a principal (sic), did not and does not provide unsecured loans,” RCB bank, which is affiliated with the Russian stateowned bank VTB and regulated by the Central Bank of Cyprus, said in a statement emailed to Reuters.

“The Bank always acts in a transparent manner and all information about its activities is available to the relevant Cypriot and European authorities.”

The Guardian newspaper on Sunday alleged that RCB and other banks had extended “enormous unsecured loans” to entities linked to close Putin acquaintances.

It followed a massive leak of documents from a Panamanian law firm allegedly detailing ways in which hundreds of thousands of clients had evaded tax and laundered money spanning a period of almost 40 years.

Secret

The Guardian said the documents showed a network of secret offshore deals and loans worth $2 billion led to close friends of the Russian president.

Cyprus has close business ties with Russia. Russian businesses bore the brunt of a ‘bail-in’ on deposits that were converted to equity to recapitalise the country’s largest lender, Bank of Cyprus in 2013.

A second bank, Laiki, was wound down.

RCB and another Cypriot systemic bank, Hellenic, were never considered for a bail-in because they had none of the heavy exposure the other two banks had to Greece’s debt crisis.

In the sports world, disgraced FIFA officials, suspended UEFA chief Michel Platini and Barcelona superstar Lionel Messi were amongst the names found Sunday in leaked documents which reveal offshore financial dealings.

‘The Panama Papers’ claim the law firm of a FIFA ethics watchdog had business relationships with three men recently indicted in football’s global corruption scandal.

Documents also bring to light how some players use offshore companies to bank money from image rights deals.

The findings are the result a year-long investigation by the International Consortium of Investigative Journalists (ICIJ), the German newspaper Suddeutsche Zeitung and other media outlets.

The records show that a law firm belonging to Juan Pedro Damiani, a member of FIFA’s Independent Ethics Committee, did work for offshore companies linked to Eugenio Figueredo, a former FIFA vice president who has been indicted in the US on wire fraud and money laundering charges.

“The records do not show illegal conduct by Damiani or his law firm. But they do raise new questions for Damiani and FIFA,” said the report issued by the ICIJ.

A spokesman for the ethics panel told the ICIJ that Damiani had informed the committee in March that he has had business ties to Figueredo.

However, the panel has launched an investigation into Damiani’s relationship with Figueredo.

Damiani told the ICIJ, through a spokesperson, that he wasn’t authorised to make statements while officials in Uruguay are investigating allegations of corruption related to FIFA.

“He added, however, that he taken a lead in reporting corrupt practices within FIFA to Uruguayan authorities and to the soccer organisation’s ethics committee,” said the report.

The 11 million leaked records from the files of Mossack Fonseca,

Continued on Page 14

a Panama-based law firm, include the names of 20 high-profile footballers.

The most high-profile of all is Argentina and Barcelona star Messi.

Messi and his father Jorge are already due to stand trial in May charged with tax fraud for allegedly failing to declare 4.16 million euros ($4.69 million) in taxes related to his image rights between 2007 and 2009 through front companies in Belize and Uruguay.

The pair are accused of ceding the player’s image rights to the companies in order to avoid declaring money made from lucrative deals with sponsors in Spain. Both men deny any wrongdoing. The ICIJ said the documents also allege that Platini turned to Mossack Fonseca to help him administer an offshore company created in Panama in 2007.

Platini is serving a six-year ban from all football-related activity for an ethics breach after former FIFA president Sepp Blatter approved a $2 million payment to the Frenchman in 2011 for consultancy work done without a contract a decade earlier.

Late Sunday, Platini’s communications service told AFP that his entire financial records and properties had been made known to the Swiss authorities since 2007.

It was made clear that any defamatory comments published could lead to legal action.

Elsewhere, Bollywood’s Amitabh Bachchan and martial arts movie star Jackie Chan are among celebrities who feature Monday in a massive leak of documents, some of which reveal hidden offshore assets.

Bollywood legend Bachchan, simply known as the “Big B” in India, was appointed director of at least four shipping companies registered in offshore tax havens and set up 23 years ago.

The authorised capital of these companies ranged from just $5,000 to $50,000 but they traded in ships worth millions of dollars, according to the Indian Express newspaper.

The Express is among more than 100 media groups which have investigated a massive leak of 11.5 million documents from Mossack Fonseca, a Panama-based law firm with offices in 35 countries.

Resigned

Bachchan, who has long since resigned from the companies and has not commented on the documents, is not the only member of his famous family named in the leaks.

His daughter-in-law, actress Aishwarya Rai Bachchan, was also director and shareholder of an offshore company, along with members of her family, before it was thought to have been wound up in 2008, according to the newspaper. The media adviser of the former Miss World winner has rejected the documents as “totally untrue and false”.

As with many of Fonseca’s clients, there is no evidence that the Bollywood A-listers used their companies for improper purposes and having an offshore entity is not illegal.

But the documents, naming more than 500 Indians including real estate tycoons in Fonseca’s list of offshore companies, foundations and trusts, come at a sensitive time in India.

Prime Minister Narendra Modi’s government has vowed to crack down on the “menace” of so-called black money — vast sums stashed abroad to keep them secret from Indian tax authorities.

Hong Kong film star Jackie Chan has also been revealed to have at least six companies represented by Fonseca’s firm, though he too may have used the companies legitimately for business purposes rather than for tax avoidance.

The stash of records was obtained from an anonymous source by German daily Sueddeutsche Zeitung and shared with media worldwide. The documents, from around 214,000 offshore entities, cover almost 40 years.

Syria’s regime has been able to circumvent international sanctions and fund its war effort through shadow companies, according to leaked “Panama Papers” seen by French daily Le Monde.

The newspaper reported on Monday that three Syrian companies, Pangates International, Maxima Middle East Trading, and Morgan Additives Manufacturing, used the services of Panama-based law firm Mossack Fonseca to create shadow companies in the Seychelles.

Le Monde, a partner in the yearlong worldwide media investigation into a trove of 11.5 million documents leaked from Mossack Fonseca, said the shadow companies were “a way for the Syrian regime to circumvent international sanctions imposed since the start of the war”.

The three firms are under US sanctions for allegedly providing petroleum supplies to President Bashar al-Assad’s regime likely to be used by his military, including aviation fuel.

Since the start of Syria’s war in 2011, tens of thousands of people have been killed and thousands of homes destroyed in air raids and barrel bomb strikes.

Le Monde said the leaked documents show Mossack Fonseca continued to work with at least one of the companies, Pangates, until at least nine months after the sanctions were announced.

Pangates belongs to the Damascusbased Abdulkarim group, which is close to the Syrian government, Le Monde said.

The probe, coordinated by the International Consortium of Investigative Journalists, has exposed a tangle of financial dealings by global elites.

Assad’s billionaire cousin Rami Makhlouf, who is facing sanctions, was also shown by the leaks as long having registered companies in tax havens.

Syria’s most notorious and powerful tycoon, Makhlouf founded shadow companies such as Drex Technologies SA, which was registered in the British Virgin Islands in 2000 and which it took Mossack Fonseca a decade to grow concerned about, Le Monde reported.

In 2011, the law firm cut ties with Makhlouf, just after the outbreak of the revolt calling for Assad’s ouster.

Spanish prosecutors opened a money laundering probe on Monday after a massive leak of documents exposing the offshore financial dealings known as the Panama Papers, a judicial source said.

The investigation follows the leak of more than 11.5 million documents from the files of law firm Mossack Fonseca, based in the tax haven of Panama, revealing details of hundreds of thousands of clients, including in Spain.

Clients

The clients in Spain include the family of Barcelona football star Lionel Messi, an aunt of Spain’s King Felipe VI, Pilar de Borbon, and Oscar-winning Spanish director Pedro Almodovar.

“We have opened an investigation for money laundering in relation to the law firm” Mossack Fonseca, a judicial source at the National Court, Spain´s top criminal court, told AFP.

The scandal erupted Sunday when media groups made public the results of a year-long worldwide investigation onto the trove of documents, which cover a period from 1977 until last December and expose a tangle of offshore financial dealings by the elite.

It comes at a time of mounting public concern in Spain over corruption scandals which have hit political parties of both the left and right, unions, footballers and even the royal family at a time of sky-high unemployment and government austerity measures.

While offshore holdings can be legal, they can also be used to hide wealth. “Having an offshore holding is not a crime. What matters is knowing if these holdings in Panama, with Spanish shareholders or owners, are fullfilling their fiscal obligations,” Spanish Justice Minister Rafael Catala said earlier on Monday when asked about the case.

Argentine President Mauricio Macri’s political opponents urged him Monday to clarify his links to a company named in the Panama Papers offshore finance scandal.

The conservative president, his father, and his brother Mariano were on the board of directors of Fleg Trading, an offshore company registered in the Bahamas, the newspaper La Nacion reported.

Several top members of the Renewal Front, a center-right alliance that forms part of the political opposition, called for Macri to explain his role.

“There must be no doubt over the president’s image. He should be on national television giving a very good explanation,” said Marco Lavagna, a senior Renewal Front lawmaker.

The government said in a statement on Sunday that Macri was never a stakeholder in the company and was therefore not obliged to declare his “circumstantial” role as director.

The company was registered in the Bahamas in 1998 and operated until 2009, when Macri was mayor of Buenos Aires, La Nacion said.

He took office as president of Argentina in December last year after beating his leftist rival in a runoff election. During campaigning he vowed to fight corruption.

La Nacion is one of more than 100 newspapers that published leaked documents revealing offshore accounts allegedly used by public figures worldwide to avoid tax.

Before becoming president, Macri was convicted of tax evasion in 2001 for activities in an auto company that he founded with his father.

The families of some of China’s top communist brass -- including President Xi Jinping -- used offshore tax havens to conceal their fortunes, a treasure trove of leaked documents has revealed. At least eight current or former members of the Politburo Standing Committee, the ruling Communist Party’s most powerful body, have been implicated, highlighting the hot-button issue of wealth among China’s ruling elite.