A huge leak of confidential documents has revealed how the rich and powerful use tax havens to hide their wealth. Eleven million documents were leaked from one of the world’s most secretive companies, Panamanian law firm Mossack Fonseca. They show how Mossack Fonseca has helped clients launder money, dodge sanctions and evade tax.
The documents show links to 72 current or former heads of state in the data, including dictators accused of looting their own countries. Gerard Ryle, director of the International Consortium of International Journalists, said the documents covered the day-to-day business at Mossack Fonseca over the past 40 years.
“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,” he said.
The documents show how the company has helped clients launder money, dodge sanctions and evade tax. The data contains secret offshore companies linked to the families and associates of Egypt’s former president Hosni Mubarak, Libya’s former leader Muammar Gaddafi and Syria’s president Bashar al-Assad.
It also reveals a suspected billion-dollar money laundering ring that was run by a Russian bank and involved close associates of President Putin. Putin’s name is not included in the leaked documents but his friends and associates appear to have earned millions of pounds from deals that would have been difficult to secure without his patronage. Associates of Putin secretly shuffled as much as $2 billion through banks and shadow companies.
Files reveal the offshore holdings of 140 politicians and public officials from around the world. Current and former world leaders in the data include prime ministers of Pakistan, the presidents of Ukraine, the UAE and Argentina, the king of Saudi Arabia, and the former prime ministers Iraq, Jordan, Sudan and Qatar.
Mossack Fonseca data also shows how Icelandic Prime Minister Sigmundur Gunnlaugsson had an undeclared interest in his country’s bailed-out banks. Mr Gunnlaugsson has been accused of hiding millions of dollars of investments in his country’s banks behind a secretive offshore company.
The cache of 11.5 million records shows how a global industry of law firms and big banks sells financial secrecy to politicians, fraudsters and drug traffickers as well as billionaires, celebrities and sports stars.
“These findings show how deeply ingrained harmful practices and criminality are in the offshore world,” said Gabriel Zucman, an economist at the University of California, Berkeley and author of “The Hidden Wealth of Nations: The Scourge of Tax Havens.” Zucman, who was briefed on the media partners’ investigation, said the release of the leaked documents should prompt governments to seek “concrete sanctions” against jurisdictions and institutions that peddle offshore secrecy.
World leaders who have embraced anti-corruption platforms feature in the leaked documents. The files reveal offshore companies linked to the family of China’s top leader, Xi Jinping, who has vowed to fight “armies of corruption,” as well as Ukrainian President Petro Poroshenko, who has positioned himself as a reformer in a country shaken by corruption scandals.
At least eight top Chinese officials are linked to offshore deals through associates. They include the brother-in-law of Chinese president Xi Jinping, whose offshore firms went dormant before Xi came into power, and the granddaughter of a former top leader who bought an offshore company for just $1. Family members of at least eight current or former members of Communist Party’s Politburo Standing Committee, the country’s supreme governing body, hold offshore companies.
The files also contain new details of offshore dealings by the late father of British Prime Minister David Cameron, a leader in the push for tax-haven reform. Lord Ashcroft, Baroness Pamela Sharples and former Tory MP Michael Mates are among the British politicians named in the data release.
The leaked records — which were reviewed by a team of more than 370 journalists from 76 countries — come from a little-known but powerful law firm based in Panama, Mossack Fonseca, that has branches in Hong Kong, Miami, Zurich and more than 35 other places around the globe.
The firm is one of the world’s top creators of shell companies, corporate structures that can be used to hide ownership of assets.
Mossack Fonseca’s fingers are in Africa’s diamond trade, the international art market and other businesses that thrive on secrecy. The firm has serviced enough Middle East royalty to fill a palace. It’s helped two kings, Mohammed VI of Morocco and King Salman of Saudi Arabia, take to the sea on luxury yachts.
The files include a convicted money launderer who claimed he’d arranged a $50,000 illegal campaign contribution used to pay the Watergate burglars, 29 billionaires featured in Forbes Magazine’s list of the world’s 500 richest people and movie star Jackie Chan, who has at least six companies managed through the law firm.
The files contain new details about major scandals ranging from England’s most infamous gold heist to the bribery allegations convulsing FIFA, the body that rules international soccer.
In February 2015, Süddeutsche Zeitung reported that German law-enforcement agencies had launched a series of raids targeting one of the country’s biggest banks, Commerzbank, in a tax-fraud investigation that authorities said could lead to criminal charges against Mossack Fonseca employees.
In Brazil, the law firm has become a target in a bribery and money laundering investigation dubbed “Operation Car Wash” (“Lava Jato,” in Portuguese), which has led to criminal charges against leading politicians and an investigation of popular former president Luiz Inacio Lula da Silva. The scandal threatens to unseat current President Dilma Rousseff.
In January, Brazilian prosecutors labeled Mossack Fonseca as a “big money launderer” and announced they had filed criminal charges against five employees of the firm’s Brazilian office for their role in the scandal.
In the largest media collaboration ever undertaken, journalists working in more than 25 languages dug into Mossack Fonseca’s inner workings and traced the secret dealings of the law firm’s customers around the world.
“Crime of the Century” – Before dawn on Nov. 26, 1983, six robbers slipped into the Brink’s-Mat warehouse at London’s Heathrow Airport. The thugs tied up the security guards, doused them in gasoline, lit a match and threatened to set them afire unless they opened the warehouse’s vault. Inside, the thieves found nearly 7,000 gold bars, diamonds and cash.
Documents within Mossack Fonseca’s files reveal that the law firm and its co-founder, Jürgen Mossack, may have helped the conspirators keep the spoils out of the hands of authorities by protecting a company tied to Gordon Parry, a London wheeler-dealer who laundered money for the Brink’s-Mat plotters.
The offshore system relies on a sprawling global industry of bankers, lawyers, accountants and these go-betweens who work together to protect their clients’ secrets. These secrecy experts use anonymous companies, trusts and other paper entities to create complex structures that can be used to disguise the origins of dirty money.
“They are the gasoline that runs the engine,” says Robert Mazur, a former U.S. drug agent and author of The Infiltrator: My Secret Life Inside the Dirty Banks Behind Pablo Escobar’s Medellín Cartel. “They’re an extraordinarily important piece of the formula of success for criminal organizations.”
Tax authorities in Australia and New Zealand are already probing local clients of the Panama-based law firm at the center of the massive data leak for possible tax evasion. The Australian Tax Office (ATO) said it is investigating more than 800 wealthy clients of Mossack Fonseca. New Zealand’s tax agency said it is “working closely” with its tax treaty partners to obtain full details of any New Zealand tax residents who may have been involved in arrangements facilitated by Mossack Fonseca.