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Panama Papers: What Have We Learned So Far in Offshore Data Leak?

World leaders, billionaires, celebrities and sports stars have been implicated in the Panama Papers, which at 2,600 gigabytes stands as the biggest data leak in history.
/ Source: Reuters

World leaders, billionaires, celebrities and sports stars have been implicated in the Panama Papers, which at 2,600 gigabytes stands as the biggest data leak in history.

The cache includes 11.5 million records that shine a light on the network of law firms and big banks that offer financial secrecy and investments in low-tax regimes.

The data, leaked from Panama law firm Mossack Fonseca and reported by a network of media outlets in co-ordination with the U.S.-based International Consortium of Investigative Journalists (ICIJ), covers nearly four decades from 1977 to the end of 2015 and lists nearly 15,600 companies set up for clients around the world.

The company maintains it has done nothing illegal, and has filed a complaint with prosecutors alleging that the data was stolen in a hacking attack.

Governments around the world have begun investigations into revelations. In the U.S., the Justice Department said it was “reviewing” the papers for any potential law violations. Germany said it would extend its money-laundering regulations in response to the leak.

What have we learned so far?

Nineteen wealthy foreign nationals — including eight linked to crimes in their home countries —created shell companies in order to buy luxury Miami real estate, the Miami Herald reported. Paulo Octávio Alves Pereira, a Brazilian politician under indictment for corruption, was the owner of an offshore company, formed with help from Mossack Fonseca, that bought a $3 million oceanfront condominium in 2011, it said.

No Americans have been named so far in reporting of the data, which analysts believe is due to the scale of the task in scouring the documents and the fact that U.S. taxes are low compared to other developed countries, reducing the appeal of offshore investments. Delaware, Nevada and the U.S. Virgin Islands are known in particular for loose regulations and low taxes, making them attractive places individuals to mask their activities and assets behind a corporate facade.

As much as $21 trillion in global wealth is hidden behind largely-untraceable shell companies such as those exposed in the Panama Papers, according to watchdog group Financial Accountability and Corporate Transparency Coalition.

Mossack Fonseca and one of its founders, Jurgen Mossack, helped protect a shell company belonging to one of the men who handled the proceeds of the $100 million Brink's-Mat robbery of 1983 — one of the most brazen and lucrative heists in modern history, the BBC reported. The law firm “may have helped the conspirators keep the spoils out of the hands of authorities,” the ICIJ says.

Vladimir Putin is not named in the documents but there are allegations of a $2 billion money-laundering ring that has links to his associates. Analysts told CNBC that, even in an election year, the revelations were more of an embarrassment than a serious problem for the Russian president. A key figure mentioned in the papers is Sergei Roldugin, a wealthy cellist who is godfather to Putin’s eldest daughter, according to the Financial Times. The Kremlin has accused the U.S. and media of trying to smear the Putin regime.

Iceland's Prime Minister became the first casualty of the revelations Tuesday, stepping down after it emerged that his wife owned an offshore firm with big claims on the country's collapsed banks. Angry crowds demanded Sigmundur David Gunnlaugsson’s resignation, accusing him of a conflict of interest because his government was involved in striking deals with claimants against the bankrupt banks.

Hong Kong-born action movie star Jackie Chan has a least six companies managed through Mossack Fonseca, the ICIJ says.

Global soccer star Lionel Messi and his father were owners of a Panama shell company called Mega Star Enterprises Inc. However, the Barcelona FC player is suing Spanish newspaper El Confidential, which reported that the company was used to avoid tax, saying the firm was “completely inactive.”

In China, relatives of at least eight past or present members of the ruling Communist Party’s powerful Politburo Standing Committee have held companies registered in tax shelters the Cook Islands or British Virgin Islands, the ICIJ says. Internet censors blocked searches for news reports mentioning the rulers involved, who include President Xi Jinping.

The family of Azerbaijan’s president, Ilham Aliyev used foundations and companies in Panama to hold secret stakes in gold mines and London real estate, the ICIJ says, while the children of Pakistan’s PM Nawaz Sharif also owned London real estate through companies created by Mossack Fonseca.

Ukraine’s president Petro Poroshenko moved his chocolate business, Roshen, to the British Virgin Islands during the recent turmoil but he said Wednesday that he set them up in order to separate his business and political interests after becoming president in 2014. The arrangement is “absolutely normal,” he told reporters.

Workers for French far-right lawmaker Marine Le Pen arranged a complex offshore system to hide money, Le Monde reported. The aides told the newspaper that there was no link between the money and Le Pen's campaign funds.

How did the leak come about?

The documents were initially leaked to the Süddeutsche Zeitung by an anonymous source who was not interested in financial compensation, the German newspaper said. Realizing the scale of the leak and the task facing its reporters, the newspaper shared the documents with other outlets around the world via the ICIJ. The newspaper says it doesn’t know how its source obtained the data, which came to it over a period of months.

Ramon Fonseca, founding partner of Mossack Fonseca, said late Tuesday that his company was the victim of a hack in Europe and has filed a complaint with state prosecutors in Panama.

"We rule out an inside job. This is not a leak. This is a hack," said Fonseca, 63. "We have a theory and we are following it," he added, without elaborating. "We have already made the relevant complaints to the Attorney General's office, and there is a government institution studying the issue."

Fonseca dismissed the significance of the revelations, saying: "I guarantee you that we will not be found guilty of anything. This is a tropical storm, like the ones we have here in Panama where once it passes the sun will come out.”

Russia’s Kremlin spokesman Dimitry Peskov — whose wife is named in the leaked documents as director of an offshore company – said Monday that the whole exercise had been “well-orchestrated” and was an attempt to discredit Vladimir Putin.

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