Panama Papers Leak - Scope and Impact

• Analysis
• 07-April-2016

Way back in 1914, Panama – the country joining Central and South America – was in news for one of the world’s best engineering marvel – the Panama Canal. The 48-mile canal has been a big aid in easing out businesses across the two oceans (Atlantic and Pacific oceans). And now again, in 2016 it brings quakes in the financial world and becomes front page news.

PANAMA PAPERS LEAK – the words every media is highlighting since the past few days.

WHAT IS IT? 
A mammoth set of documents - 11.5 million financial and legal records- from a company named Mossack Fonsec, a Panamanian wealth management firm founded by Jürgen Mossack. The documents include emails, financial spreadsheets, passports and corporate records.

HOW DID IT LEAK?
Süddeutsche Zeitung - the German newspaper received the documents from an unknown source almost a year back. The files were then shared with the International Consortium of Investigative Journalists (ICIJ) and reporters from over 100 news agencies around the world.

WHO IS MENTIONED? 
Political leaders, Banks, Criminals, Celebrities, Athletes, Billionaires their relatives and associates from 200 countries across the globe.
Some names are President Mauricio Macri of Argentina; President Petro O. Poroshenko of Ukraine; Mr. Gunnlaugsson, the then prime minister of Iceland; Prime Minister Nawaz Sharif of Pakistan; King Salman of Saudi Arabia; the former emir of Qatar, Hamad bin Khalifa al-Thani, and its former prime minister, Hamad bin Jassim bin Jaber al-Thani; and the Argentine soccer star Lionel Messi, according to the consortium.

WHAT DOES IT DISCLOSE?
Offshore holdings, shell companies, black money, money laundering details through email chains, invoices and documents.

WHY THE BUZZ? 
World’s rich and powerful hide assets and set up companies in far-flung jurisdictions to save tax, dodge sanctions and hide black money. This money is then used for bribes, arms deals, tax evasion, financial fraud and drug trafficking.

LATEST IMPACT OF PANAMA PAPERS LEAKS

• Prime Minister of Iceland recently resigned from his post after the documents revealed his role in the ownership of an offshore company - Wintris Inc. The leaked papers show that the company held millions of dollars in Icelandic bank bonds when Iceland was undergoing financial crisis. The opposition and people’s protests compelled him to leave his post.
• President Poroshenko of Ukraine has been found to be a sole shareholder of an offshore company, Prime Asset Partners Limited, according to the documents from Mossack Fonsecas. The assets he has sold during the elections were actually transferred to this offshore company, though the President has communicated to the media that he has been lawful in his transactions.
• Other big shots that are known to have connections with the names/companies mentioned in the documents are U.K. Prime Minister David Cameron (his late father’s offshore company), Pakistan’s Prime Minister Nawaz Sharif (his 3 children’s link to a number of offshore companies), Russia’s President Vladimir Putin (his friends’ role in related transaction accounting to $2 billion in offshore companies).

GOVERNMENT/ REGULATORY BODY RESPONSE 

Governments and other regulatory bodies are investigating the findings of ICIJ and other journalists. UK, Australia, France, New Zealand, Austria and India have started investigations in this regard.
Britain’s HM Revenue and Customs have asked ICIJ for access of the documents as it is revealed that UK is one of the 5 biggest sources of money flowing through the law firm – Mossack Fonseca.
The French government sees the leak as good news has tax revenue will be increased from those who commit wrong. Sweden and Norwegian Tax Administrations are also trying to clear the mist against the banks mentioned in the documents by investigating.
The reactions from the convicted firms and people have thus far been varying. Some are being defensive and are taking the judiciary channel to clear out the fog.