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Panama papers: Major leak exposes elite’s tax havens

Rodrigo Arangua, AFP | Aerial view of Panama, where Mossack Fonseca is based, on March 23, 2015

A massive leak of 11.5 million tax documents has revealed how the world’s rich and powerful use the offshore industry to hide money and skirt national regulations.

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The so-called Panama Papers expose the offshore holdings of 12 current and former world leaders and provide details of secret financial dealings of more than 120 politicians and celebrities, according to the International Consortium of Investigative Journalists (ICIJ).

The documents also reveal how businessmen used offshore networks to help criminal organisations thrive and allow repressive regimes to stifle opponents.

The files allegedly expose offshore companies controlled by the prime ministers of Iceland and Pakistan, and the king of Saudi Arabia.

They have also linked associates of Russian President Vladimir Putin and the family of Chinese President Xi Jinping to offshore accounts.

Celebrities already under scrutiny for questionable financial dealings, including football star Lionel Messi and disgraced UEFA chief Michel Platini, are also named in the report.

The vast stash of records was obtained from an anonymous source by German daily Sueddeutsche Zeitung and shared with dozens of media outlets worldwide, including the Guardian, the BBC and French daily Le Monde.

The Panama Papers is described by the ICIJ as “one of the biggest leaks and largest collaborative investigations in journalism history”, bigger even than the Wikileaks' exploits of 2010 – which included the release of 500,000 secret military files on the wars in Afghanistan and Iraq and 250,000 US diplomatic cables.

"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," said ICIJ director Gerard Ryle.

‘Legal structures’

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.

The head of the law firm, Ramon Fonseca, denied any wrongdoing, claiming his firm has fallen victim to “an international campaign against privacy”.

The group, which specialises in setting up offshore companies, had suffered a successful but “limited” hack, Fonseca told Reuters by telephone.

Fonseca, who was also until March a senior government official in Panama, said his firm has formed more than 240,000 companies, adding that the “vast majority” have been used for “legitimate purposes”.

He emphasised that the firm is not responsible for the activities of the companies it incorporates. “We’re dedicated to making legal structures which we sell to intermediaries such as banks, lawyers, accountants and trusts, and they have their end-customers that we don’t know,” he said.

The British Virgin Islands and Panama itself were the two most popular tax havens for the 210,000 companies that appear in the Panama Papers.

Gunnlaugsson under fire

Though most of the alleged dealings are said by the ICIJ to be legal, they are likely to have a serious political impact on many of those named.

Iceland's Prime Minister Sigmundur David Gunnlaugsson is expected to face a no-confidence vote this week over allegations he used a secret offshore firm called Wintris Inc. to hide millions of dollars in the British Virgin Islands.

The files show he secretly owned millions of dollars of investment in his country's banks during the financial crisis through an offshore company.

"I have never hidden assets," Gunnlaugsson told a journalist from the Swedish SVT channel.

Gunnlaugsson later told privately held Icelandic television Channel 2 that he did not plan to resign, despite opposition calls to do so.

“The government has had good results. Progress has been strong and it is important that the government can finish their work,” he said. “I will listen to the peoples’ stand in the next elections.”

Putin reacts with anger

The Kremlin, meanwhile, has reacted with anger to the allegations against Putin contained in the documents, saying they are an attempt to destabilise the country.

"Putin, Russia, our country, our stability and the upcoming elections are the main target, specifically to destabilise the situation," Kremlin spokesman Dmitry Peskov, who himself figures in the leaked documents, told journalists in Moscow.

The leaked documents show that banks, companies and close associates to Putin "secretly shuffled as much as $2 billion (1.75 billion euros) through banks and shadow companies", according to the ICIJ.

The allegations were not aired by Russian state TV.

At least 33 people and companies listed in the documents were blacklisted by the US government for wrongdoing, including dealings with North Korea and Iran, as well as Lebanon's Islamist group Hezbollah, the ICIJ said.

Names also figuring in the leak included Ukrainian President Petro Poroshenko, martial arts film star Jackie Chan, recently-elected Argentinian President Mauricio Macri, President of the United Arab Emirates Khalifa bin Zayed bin Sultan Al Nahyan and the late father of British Prime Minister David Cameron, Ian Cameron.

(FRANCE 24 with AFP, REUTERS)

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