Sunday, December 5

Panama Papers leak of 11m documents reveals how the super rich hide their money



The largest ever leak of documents has revealed how an offshore law firm has helped its clients to hide their money in tax havens.

Dubbed the Panama Papers, the 11 million confidential documents from Mossack Fonseca show how the Panama-based firm has used shell companies to benefit the world’s rich and powerful. Some clients have laundered money, dodged sanctions and evaded tax.

The files show links to 72 current or former heads of state, including secret offshore companies linked to family and associates of Egypt’s former president, Hosni Mubarak, Syria’s president Bashar al-Assad, and Libya’s ex-leader Muammar Gaddafi.

Two close allies of the Russian President, Vladimir Putin, are linked to an alleged money-laundering ring.

At least $1bn (£700m) is thought to have been channelled from Bank Rossiya to an offshore company called Sandlewood, created by Mossack Fonseca. Bank Rossiya is a St Petersburg bank headed by Yuri Kovalchuk, a close ally of Mr Putin, and is subject to US sanctions after Russia’s invasion of Crimea in 2014.

The “Panama Papers” were leaked via German newspaper Süddeutsche Zeitung to the International Consortium of Investigative Journalists, which passed them to media outlets around the world. They will be the subject of a BBC Panorama documentary broadcast on Monday night.

The papers also implicate another Putin ally, concert cellist Sergei Roldugin, who is godfather to the Russian President’s daughter Maria and introduced him to his now ex-wife Lyudmila. Mr Roldugin owns 3.2 per cent of Ban Rossiya and has a long-standing 12.5 per cent stake in Russia’s biggest TV advertising agency, Video International, the leaks reveal.

They show how he has made a fortune of hundreds of millions of dollars, but attempts were made to keep his assets secret.

The files also reveal how Icelandic prime minister Sigmundur Gunnlaugsson failed to declare an interest in his country’s bailed-out banks when he entered parliament in 2009, after buying offshore company Wintris with his wife in 2007. Mr Gunnlaugsson is now facing calls for his resignation, but claims he has not broken any rules and his wife did not benefit financially from his actions.

Mossack Fonseca, responding to the leaks, said: For 40 years Mossack Fonseca has operated beyond reproach in our home country and in other jurisdictions where we have operations. Our firm has never been accused or charged in connection with criminal wrongdoing.

Gerard Ryle, director of the ICIJ, 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, he said.