The Panama Papers Explained

On April 4, 2016, an anonymous source leaked information  from the inside of a Panamanian law firm, Mossack Fonseca. The source leaked eleven million documents, and 2.6 terabytes of data revealing a worldwide circle of powerful and rich men and women who where engaged in various forms of illegal tax evasion, drug smuggling and human trafficking. This was the largest data leak in history.

Much of this corruption dates back almost 4 decades, and involves more then 130 politicians and world leaders, including the Prime Minister of Iceland, Jackie Chan, Simon Cowell, and most prominently, Russian president Vladimir Putin, who denies all connections to the scandal. The family of Xi Jinping, the leader of China, was also connected, leading to censorship of all coverage of the Panama Papers in China. The allegations connected huge numbers of people to offshore bank accounts and “shell companies,” or fake companies. These companies exploit a tax loophole that gives people who invest in companies a tax break.

One of the most immediate reactions has been calls for the Prime Minister of Iceland, Sigmundur David Gunnlaugsson, to resign after he said he would not in a television interview. After massive protests (relative to the population of Iceland), Gunnlaugsson asked his deputy to be Prime Minister for an “unspecified amount of time,” even though much of the media is saying he officially resigned. However, he only temporarily handed over control to someone else. Gunnlaugsson was the sole shareholder in an offshore, or “fake” company called Wintris, which had bonds in the Icelandic banks which crashed in 2008. This led to a conflict of interest, leading to the protests and his “resignation”.

The Panamanian firm that was involved, Mossack Fonseca, was essentially creating fake business. This led to several trillions of dollars that went untaxed. The firm also assisted in providing fuel for the Syrian Air Force, which committed hundreds of war crimes in the past years, including dropping barrel bombs on hospitals, civilian homes, and schools.

One of the ringleaders of this scam was involved in the slavery and rape of Russian girls as young as 13. The firm decided it was not obliged to inform the authorities that its client was a pedophile. Similarly, an oil company paid Mossack to help avoid their taxes, so the companies address was changed to Uganda. This meant that there were 400 million dollars of unpaid taxes that were evaded by these millionaires, an amount which is more then Uganda’s health budget. If this tax was paid, millions would have gotten better health services and education, and thousands of lives would have been saved. A British banker also was found to have funded North Korean weapons through Mossack.

Mossack Fonseca claims that they were hacked, and no one on the inside leaked this information. In a statement to the Miami Herald, Mossack says that it “regrets” any misuse of its services, and that that it is “legal and common for companies to establish commercial entities in different jurisdictions for a variety of legitimate reasons”. While this is true, it is clear now that what Mossack Fonseca was doing was both illegal and illegitimate. Corruption is always going to exist, but it is even more shocking when the corruption is among world leaders.

 

Read More:

https://panamapapers.icij.org

http://www.cnn.com/2016/04/04/world/panama-papers-explainer/

http://panamapapers.sueddeutsche.de/articles/56febff0a1bb8d3c3495adf4/