The Panama Papers – just getting started!

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Most of us will have never heard of Mossack Fonseca, a law firm headquartered in Panama City, Panama, that has spent the past 40 years helping the world’s richest and most powerful citizens hide their money.

On Sunday we found out just what this firm does when the firm saw a massive leak of 11.5 million confidential documents which were obtained by the German newspaper Suddeutsche Zeitung (SZ) and shared with the International Consortium of Investigative Journalists (ICIJ).

So far, 72 current and former heads of state have been linked to offshore shell companies created by Mossack Fonseca. There are many perfectly legitimate reasons for why someone would want to create a shell company, but the arrangement is also used to skirt economic sanctions, evade taxes, and launder money.

Companies such as Mossack specialise in helping foreigners hide wealth. The main tools for doing so are anonymous shell companies (which exist only on paper) and offshore accounts in tax havens (which often come with perks such as banking secrecy and low to no taxes). These structures obscure the identity of the true owner of money parked in or routed through jurisdictions such as Panama.

The 2.6 terabytes of data in the documents are thought to contain information about 214,500 companies in 21 offshore jurisdictions and name over 14,000 middlemen (such as banks and law firms) with whom the law firm has allegedly worked.

Setting up offshore companies is common practice…but how these companies are used is the issue: early examples of questionable motives include Ukraine’s president, Petro Poroshenko, who promised to sell his business interests on taking office. He seems to have merely transferred assets to an offshore shell. Other heads of government, such as Russia’s Vladimir Putin and Iceland’s Sigmundur David Gunnlaugsson are suspected of hiding ownership of offshore assets by putting them in the names of friends or relatives.

Mr Gunnlaugsson appears to have now resigned after protests in Iceland. The first, not not the last, casualty.

Relatives of China’s Politburo Standing Committee and President Xi Jinping were connected to offshore companies. Access to the Panama Papers is substantially blocked in China.

The Papers also reveal that the president of the United Arab Emirates owns London properties worth more than GBP 1.2 billion (USD 1.7 billion) through offshore companies revealed in the so-called Panama Papers.

Sheikh Khalifa bin Zayed Al-Nahyan was among numerous public figures named as owners of billions of pounds of central London real estate.

Owning British property through offshore companies is perfectly legal, but it is controversial because such holdings obscure the identity of the owners, allowing them to avoid scrutiny and tax.

While examples of the offshore industry enabling dictators, terrorists and drug cartels will (rightly) capture much of the attention, it would be a shame if other miscreants escape. The global industry of service providers, which sell financial secrecy to those who can afford it, have in some cases done more than just feast on poorly designed tax policies.


Pan​ama has long been known as a key jurisdiction for offshore corporations, because of its well-established legal system and banking infrastructure.

But it is the British compliance and use of these offshore regimes that is the most telling.

London is indisputably the global capital of the tax avoidance industry and many of the biggest tax havens are British dependencies like the Cayman
Islands, Jersey, Guernsey, Bermuda, British Virgin Islands and the Isle of Man.

It is no surprise that when, in 1987, Mossack Fonseca established its first overseas branch, it did so in the British Virgin Islands. Since then, about 40 percent of the world’s offshore companies — more than 900,00 entities — have been incorporated in the UK’s Caribbean territory. ICIJ noted that half of the companies that appear in Mossack Fonseca’s files were incorporated in the British Virgin Islands

Guess what – the British Tory party is heavily bankrolled by the same City of London financial sector that has built up a lucrative trade in hiding people’s cash overseas.So do not expect David Cameron to quickly organise a summit on combating tax secrecy.


Mossack Fonseca says they have done nothing wrong and is accusing those responsible for the leak of having “unauthorised access to proprietary documents and information taken from our company” and of presenting this information out of context.

In a letter to the Guardian newspaper on Sunday, the company’s head of public relations threatened possible legal action over the use of “unlawfully obtained” information.

As these oligarchs and corporate empires hide their assets in tax shelters and offshore companies the tax burden on the working masses increases to pay for an aging population and for the effects of environmental and climate change.

The media know that their is a story here – a story that will embarrass some and anger many.

There is more to come.


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