Web of corruption, tax avoidance and shady deals Law firm is secretive with big clients

Offshore bank accounts and other financial dealings in another country can be used to evade regulatory oversight or tax obligations. Often, companies or individuals use shell companies, initially incorporated without significant assets or operations, to disguise ownership or other information about the funds involved. Companies or trusts can be set up in offshore locations for legitimate uses such as business finance, mergers and acquisitions and estate or tax planning, according to the global money laundering watchdog, the Financial Action Task Force. The Financial Action Task Force and other regulatory agencies publish assessments identifying weaknesses in enforcement of anti-money laundering and counter-terrorism financing efforts of specific countries and territories. Financial and legal professionals get training on how to spot potential violations, since in some cases lawyers and bankers are unaware they are handling illicit transactions. The EU has stepped up efforts to crack down on tax avoidance by multinational corporations. The leaked files from Panama-based law firm Mossack Fonseca contain nearly 40 years of data and include information about more than 210,000 companies in 21 offshore jurisdictions, from Panama to Hong Kong. It’s good news that we are aware of these revelations because it will bring in tax revenue from those who have defrauded”

Francois Hollande,

Shell companies and other entities can be misused by terrorists and others involved in international and financial crimes to conceal sources of funds and ownership. The ICIJ says the files from Mossack Fonseca include information on

214,488 offshore entities

14,153 clients 200 countries

linked to

in and territories. Banking secrecy laws tend to obscure offshore financial dealings. But the disclosure of other leaked documents by the ICIJ and other organisations in late 2014 drew attention to sweet tax deals offered by the tiny European country of Luxembourg to multinational companies and ultra-wealthy individuals. In the 1980s, the Bank of Credit and Commerce International, an international bank founded by a Pakistani financier, was found to have been involved in wide-scale money laundering and other illegal financial dealings. —

There are a lot of journalists whose main profession is unlikely to be journalism: a lot of former officials from the (US) Department of State …..”

Dmitry Peskov,

panama city — Mossack Fonseca, the Panama-based law firm at the heart of the “Panama Papers” scandal, is a discreet outfit with a roster of big-name clients and a quiet reputation for hiding money from the tax man.

That cloak of secrecy it wrapped around itself was ripped apart on Sunday when media organisations around the world publishing information from a massive leak from the firm’s supposedly secure data center.

So too were the techniques allegedly used by Mossack Fonseca to make money trails murky, including slavish use of off-shore havens such as the British Virgin Islands and some Pacific Ocean nations.

The revelation detailing the off-shore structures of many wealthy clients is a “crime” and an “attack” on Panama, the law firm maintains.

“This is a crime, a felony,” Ramon

Nawaz Sharif does not own any company but having companies in the name of his children also raises questions.”

Umar Cheema of the Centre for Investigative

Reporting in Pakistan

Fonseca, one of the founders of Mossack Fonseca, said.

“This is an attack on Panama because certain countries don’t like it that we are so competitive in attracting companies,” he said.

So who runs Mossack Fonseca, whose headquarters are housed in a fairly non-descript mirrored building in Panama’s business district?

Juergen Mossack, one of the two lawyers who founded the firm more than three decades ago, was born in Germany in 1948 and moved to Panama with his family, where he obtained his law degree.

Mossack’s father was a Nazi in World War II, serving in Hitler’s Waffen-SS, according to the ICIJ, citing US Army records. It said “old intelligence files” showed the father had offered to spy for the CIA.

The other founder is Fonseca, born in 1952. He, too, got his law degree in Panama but also studied at the prestigious London School of Economics, and once said in an interview he had mulled becoming a priest.

Fonseca had a small business until he merged with Mossack and the two went after off-shore business by opening offices in the British Virgin Islands.

The ICIJ said the leak shows that half of the companies the law firm incorporated — more than 113,000 — were done so in that fiscal paradise.

But Mossack Fonseca also branched out to the Pacific, to a tiny island nation called Niue.

According to the ICIJ, by 2001 the firm was earning so much from its off-shore registrations on the island it was contributing 80 per cent to Niue’s annual budget.

When the British Virgin Islands was forced to clamp down on some methods that had previously permitted anonymous ownership of companies, Mossack Fonseca moved business to Panama and to the Caribbean island of Anguilla.

The law firm spent money to try to remove online references linking it to money laundering and tax evasion.

But other countries took an increased interest in what it was doing. In Brazil, it was named as being one of the parties within a huge bribery scandal unfolding involving the state oil company Petrobras.

It also came under scrutiny in the US state of Nevada, where a judge determined that it had wilfully tried to cover up its management role over its local branch there.

Last month, Fonseca — who had also been an advisor to Panamanian President Juan Carlos Varela since 2014 — declared he was taking a leave of absence.

The step was to “defend my honor” he said, as the Brazilian allegations piled up.