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Panama Papers Leaks: Interesting Facts

April 4, 2016

 

 

Well, the world has already dubbed it as “the biggest leak in history.” For those uninitiated, I am talking about the Panama Papers leaks. About 11.5 million confidential documents of over 214,000 offshore companies and the identities of shareholders and directors have been leaked, much to the chagrin of the rich and famous. The enormity of the leak is such that it would dwarf the disclosures made by Wikileaks.

Here are some interesting facts on Panama Papers leaks that you must know before you can start analyzing its impact.

1. Have You heard of Mossack Fonseca?

This Panama-based law firm is in the business of incorporating companies in offshore jurisdictions like the British Virgin Islands and tax havens such as Switzerland and Cyprus. It charges a yearly fee for administering offshore firms. Wealth management is also one of its service offerings.

2. Mossack Fonseca and its UK Connection

Mossack Fonseca is the fourth largest provider of offshore services in the world. It has reportedly served more than 300,000 companies ever since its inception in 1977. The organization can’t deny the strong UK connection as over half of the companies are registered in the UK and British-administered tax havens.

3. Where is Mossack Fonseca located?

Headquartered in Panama, this law firm operates around the world. According to its official website, this Panamanian organization is operating in 42 countries with around 600 employees. It has franchises around the world. Apart from Switzerland, Cyprus, and the British Virgin Islands, the firm also operates in Guernsey, the Isle of Man, and Jersey – all independently-administered “territories for which the United Kingdom is responsible.”

4. What are the Allegations Against Mossack Fonseca?

The Panamanian company has been accused of helping foreign citizens evade their local tax laws and involving in money laundering schemes. It has also been accused of working for dictators in Middle East and Africa and helping them circumvent international sanctions by exploiting legal loopholes.

5. How much data have been leaked?

It is a no-brainier that the leak is bigger than the diplomatic cables of the US government released by WikiLeaks in 2010. The internal database of Mossack Fonseca has 11.5 million documents and 2.6 terabytes of information, which were distributed to about 400 journalists in more than 80 countries. These documents are now being analyzed.

6. Is Using Offshore Structure Legal?

Absolutely. It is completely legal to use offshore structures and there are legitimate reasons for doing so. Businessmen in some countries prefer to put their assets offshore so as to save them from “raids” by criminals. The second reason for stashing cash abroad is the need to get around hard currency restrictions.

7. What does Mossack Fonseca say about the leak?

Although the firm refuses to discuss alleged cases of wrongdoings, it fiercely defends its processes. According to Mossack Fonseca, the organization adheres to all anti-money-laundering laws and conducts thorough research on all its clients. The law firm is of the opinion that it should not be held responsible if the intermediaries like the banks and accountants have failed to prevent malpractices.

8. Who All are Scrutinizing the Panama Papers?

The Washington-based International Consortium of Investigative Journalists is analyzing the documents that were earlier given to the German news daily, Süddeutsche Zeitung. From political figures to celebrities, names of powerful people around the world have been disclosed.