The What’s What and Who’s Who of the Panama Papers Leak

Panama Papers Leak: With so many investigations and so many threads to unravel, here’s what we think you should know.

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Explainers
4 min read
A marquee of the Arango Orillac Building lists the Mossack Fonseca law firm in Panama City, Sunday, April 3, 2016. German daily Sueddeutsche Zeitung says it has obtained a vast trove of documents detailing the offshore financial dealings of the rich and famous. (Photo: AP)

On Sunday, over 100 news organisations from around the world dropped simultaneous investigations into a massive leak of data belonging to Mossack Fonseca, a Panamanian firm specialising in establishing shell corporations, which revealed how the world’s ultra-wealthy — including major world leaders and their associates — hide their money.

How Big is the Leak?

The leak is one of the biggest ever – larger than the US diplomatic cables released by WikiLeaks in 2010, and the secret intelligence documents given to journalists by Edward Snowden in 2013. There are 11.5 million documents and 2.6 terabytes of information drawn from Mossack Fonseca’s internal database.

German newspaper Süddeutsche Zeitung was the first outlet to receive the leaked files.

The International Consortium of Investigative Journalists’ analysis of the leaked records revealed information on more than 214,000 offshore companies connected to people in more than 200 countries and territories. The data includes emails, financial spreadsheets, passports and corporate records revealing the secret owners of bank accounts and companies in 21 offshore jurisdictions, including Nevada, Hong Kong and the British Virgin Islands.

(Courtesy: <i><a href="http://panamapapers.sueddeutsche.de/articles/56febff0a1bb8d3c3495adf4/">Süddeutsche Zeitung</a>)</i>
(Courtesy: Süddeutsche Zeitung)

Who Are the Indians Implicated in the List?

An Indian Express investigation reveals over 500 Indians figure on the firm’s list of offshore companies, foundations and trusts.

  • The list includes film stars Amitabh Bachchan and Aishwarya Rai Bachchan to corporates including DLF owner KP Singh and nine members of his family, and the promoters of Apollo Tyres and Indiabulls to Gautam Adani’s elder brother Vinod Adani.
  • Two politicians who figure on the list are Shishir Bajoria from West Bengal and Anurag Kejriwal, the former chief of the Delhi unit of Loksatta Party.
  • Mumbai gangster the late Iqbal Mirchi is also named.
  • The list includes businessmen with addresses in nondescript neighbourhoods in Panchkula, Dehradun, Vadodara and Mandsaur.
  • The data also reveals details deals unknown so far, in some cases involving the government.

What is Mossack Fonseca?

It is a Panama-based law firm whose services include incorporating companies in offshore jurisdictions such as the British Virgin Islands. It administers offshore firms for a yearly fee. Other services include wealth management.

The firm’s operations are diverse and international in scope, but their speciality is helping foreigners set up Panamanian shell companies to hold financial assets while obscuring the identities of their real owners. Since its founding in 1977, it’s expanded its interests outside of Panama to include over 40 offices worldwide, helping a global client base to work with shell companies not just in Panama but also the Bahamas, the British Virgin Islands, and other notorious tax havens around the world.

What Are Shell Companies?

Sometimes a person or a well-known company or institution wants to buy things or own assets in a way that obscures who the real buyer is.

The typical reason is routine corporate secrecy. Companies don’t like to tip their hand to what they are doing and the use of shell companies to undertake not-ready-for-public-announcement projects can be a useful tool.

Shell companies are often sometimes used for simple privacy reasons. An athlete, actor, or other celebrity who wants to buy a house without his name appearing in the media might want to pay a lawyer to set up a shell company to do the purchasing. Generally real estate transactions are a matter of public record.

Are Offshore Shell Companies Legal?

Yes, they are but sometimes this secrecy can be used for illegitimate purposes. This is particularly true for shell companies set up in international centres of banking secrecy that offer a level of anonymity and obscurity that goes beyond simply making it hard to look up the real owner’s name online. And that’s where the shady stuff begins.

What do the Panama Papers Documents Reveal?

We’ve known for a long time that the ultra-wealthy hide their money using shell corporations, the leaked files nail down the specifics — names, bank accounts, the works — and the scope of the issue.

This video from the Guardian breaks down very clearly how Mossack Fonseca enabled Vladimir Putin, probably the most influential person implicated in the leak, to conceal a billion dollars (and then spend it, discreetly).

Who Else is Named?

Among those implicated are also the sitting presidents of Argentina and Ukraine, the prime minister of Iceland, the king of Saudi Arabia and so many more.

The ICIJ lays out those implicated here.

(Courtesy: ICIJ)
(Courtesy: ICIJ)

How Much Money is Parked in Offshore Tax Havens?

Vox quotes Gabriel Zucman, an economics professor at UC Berkley, who has made the most detailed study of the question for his book The Hidden Wealth of Nations and estimates that it totals at least $7.6 trillion. That’s upwards of 8 percent of all the world’s financial wealth, and it’s growing fast. Zucman estimates that offshore wealth has surged about 25 percent over the past five years.

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