Monday, April 4, 2016

Panama Papers: Huge leak exposes tax havens of world leaders

Asia Times - (From agencies)
Germany’s Süddeutsche Zeitung (SZ) has released the biggest leak in journalistic history, posting 11.5 million documents from a Panamanian law firm Mossack Fonseca online and providing “rare insights into a world that can only exist in the shadows.”
It exposes the offshore holdings of many wealthy individuals — among them 12 current and former world leaders — criminals and celebrities.
SZ said it received the law firm’s documents a year ago from an anonymous source who “wanted neither financial compensation nor anything else in return.”
The German paper obtained further documents in an investigation that followed, involving “400 journalists from more than 100 media organizations in over 80 countries.”
SZ said it decided to analyze the data in cooperation with the International Consortium of Investigative Journalists (ICIJ).
The data in the so-called Panama Papers, “provides rare insights into a world that can only exist in the shadows. It proves how a global industry led by major banks, legal firms, and asset management companies secretly manages the estates of the world’s rich and famous: from politicians, FIFA officials, fraudsters and drug smugglers, to celebrities and professional athletes,” the German newspaper wrote.
The information in the leak covers the activities of Mossack Fonseca, that has branches in Hong Kong, Miami, Zurich and more than 35 other places around the globe, over a period from the 1970s to spring 2016.
“The Panama Papers include approximately 11.5 million documents – more than the combined total of the Wikileaks Cablegate, Offshore Leaks, Lux Leaks, and Swiss Leaks,” SZ said.
ICIJ will release the full list of companies and people linked to the Panama Papers in early May. The data is presented in the form of e-mails, PDF files, photo files, and excerpts from the Panaman firm’s database.
The leak claims to expose the offshore holdings of 12 current and former world leaders, including Icelandic Prime Minister Sigmundur Gunnlaugsson, Pakistani Prime Minister Nawaz Sharif, King of Saudi Arabia Salman bin Abdulaziz Al Saud, Syrian President Bashar al-Assad and Ukrainian President Petro Poroshenko.
Among those named of Sharif’s family are his children — Maryam, who has been tipped to be his political successor and Hasan and Hussain, with the records showing they owned London real estate through offshore companies administrated by the firm.
“Nawaz Sharif does not own any company but having companies in the name of his children also raises questions,” Umar Cheema of the independent Center for Investigative Reporting in Pakistan.
Pakistan Opposition leader Imran Khan issued a swift call for action against Sharif after the release.
“Our stance vindicated again as Sharif’s wealth stashed abroad exposed,” he tweeted.

Xi’s family implicated
The files reveal offshore companies linked to the family of China’s top leader, Xi Jinping, who has vowed to fight “armies of corruption.”
The families of at least eight current and former members of China’s supreme ruling body, the politburo, have been found to have hidden wealth offshore.
They include Xi’s brother-in-law Deng Jiagui, who in 2009 — when his famous relation was a member of the Politburo Standing Committee but not yet president — set up two British Virgin Islands companies.
Xi has been dogged by foreign media reports of great family wealth. The claims are ignored by mainstream Chinese outlets.
In 2012, the Bloomberg news agency published investigations into the vast wealth said to have been amassed by Xi’s family, revealing that Deng and his wife had accumulated several hundred million dollars in company shares and property assets.
Since becoming president that same year, Xi has staked his reputation on pushing for transparency by initiating a vast anti-graft campaign to clean the party’s ranks of corruption and to reassert his authority.
The daughter of former premier Li Peng — who was in power from 1987 to 1998 — was also identified in the documents.
They revealed that Li Xiaolin, the former vice president of state-run power company China Power Investment Corporation, was the beneficiary of a Liechtenstein foundation controlling a firm registered in the British Virgin Islands during the period when her father was in office.
A granddaughter of Jia Qinglin, a former member of the Politburo Standing Committee, Li Xiaolin was also the sole shareholder in several offshore companies, through which she discretely controlled companies within China.
The files also contain new details of offshore dealings by the late father of British Prime Minister David Cameron.
It provides data on the financial activities of more than 120 other politicians and public officials from different countries.
The Putin connection
The leaked papers reveal a suspected money laundering ring run by a Russian bank and linked to a close associates of President Putin.
The bank is Rossiya facing US and EU sanctions after Russia’s annexation of Crimea and the Putin associate involved is concert cellist Sergei Roldugin who is godfather to the president’s daughter Maria.
‘The artist, the head of state and the hidden money’ is probably the most spectacular story that can be found in the 2.6 terabytes of data of Mossack Fonseca.
Roldugin’s name appears in the documents again and again in connection with the same number of companies.
The papers suggest that around $2 billion flowed into a network of secret offshore companies, and that millions of this dirty money went not only to Putin’s closest circle, but to the family as well. For years, it was speculated that Putin could have had a secret fortune. But the money trail never led so close to him as through the Panama Papers.
Some of the money showed up in a ski resort at the pompous wedding of Putin’s second daughter Katerina in 2013.
Political storm brewing in Iceland
The leaked papers also reveal how Icelandic Prime Minister Sigmundur Gunnlaugsson hid millions of dollars of investments in his country’s banks behind a secretive offshore company Wintris in 2007.
He did not declare an interest in the company when entering parliament in 2009 and sold his 50% of Wintris to his wife for $1 (70p), eight months later.
Gunnlaugsson is facing calls for snap elections after the offshore wealth revelations. He says he has not broken any rules, and his wife did not benefit financially from his decisions.
On Sunday, he walked out of an interview on the tax haven question.
Bollywood stars among the list
The leaked data features over 500 Indians linked to offshore firms, reports The Indian Expresswhich was a partner for The Panama Papers project.
Among those who figure on the list are film stars Amitabh Bachchan and his daughter-in-law Aishwarya Rai Bachchan, Delhi Land and Finance owner K P Singh and nine members of his family, promoters of Apollo Tyres and Indiabulls and business tycoon Gautam Adani’s elder brother Vinod Adani.
Mumbai’s late gangster Iqbal Mirchi and two politicians Shishir Bajoria from West Bengal state and Anurag Kejriwal, the former chief of the Delhi unit of Loksatta Party, also figure on the list.
The Indian Express said while the Reserve Bank India let individuals buy shares under liberalised remittance scheme, it never permitted them to set up companies abroad. The Mossack Fonseca documents allegedly show companies were set up long before the rules were changed, and the purpose may have been to park foreign exchange in a tax haven.
‘Colossal betrayal of taxpayers’
Oxfam Ireland Chief Executive Jim Clarken described the revelations as a colossal betrayal of taxpayers.
Clarken said: “This exposé offers a rare glimpse into the murky practices of tax dodging – and the sheer size and scale revealed is staggering.
“It shines a light on a toxic global tax system exploited by professional enablers on behalf of those rich enough to hire them. It is the wealthiest individuals and companies, who in a progressive tax system should be paying the most in tax, who have the biggest incentives to exploit this weak architecture to avoid paying their fair share.
Fonseca’s response
The company has denied any wrong doing and said that it has operated “beyond reproach for 40 years” and has never been charged with criminal wrong-doing.
“We cannot provide responses to questions that pertain to specific matters, as doing so would be a breach of our policies and legal obligation to maintain client confidentiality,” it said.
Mossack Fonseca’s co-founder, Ramón Fonseca, had said in a recent interview on Panamanian television that the law firm has no responsibility for what clients do with the offshore companies that the firm sells.
He compared the firm to a “car factory” whose liability ends once the car is produced. Blaming Mossack Fonseca for what people do with their companies would be like blaming a car maker “if the car was used in a robbery,” he said.
Tax authorities begin probes
Tax authorities in Australia and New Zealand are probing local clients of Mossack Fonseca.
The Australian Tax Office (ATO) said on Monday it is investigating more than 800 wealthy clients of Mossack Fonseca.
“We have identified over 800 individual taxpayers and we have now linked over 120 of them to an associate offshore service provider located in Hong Kong,” the Australian tax office said in a statement. It did not name the Hong Kong company.
New Zealand’s tax agency on Monday said it is “working closely” with its tax treaty partners to obtain full details of any New Zealand tax residents who may have been involved in arrangements facilitated by Mossack Fonseca.
John Nash, the New Zealand agency’s international revenue strategy manager, said there is an “active compliance programme focussed on those who engage in abusive offshore arrangements and don’t meet their tax obligations.”
Meanwhile, the Panama’s government vowed to “vigorously cooperate” with any legal probe that might be launched in the wake of the “Panama Papers” data leak.
“The Panamanian government will vigorously cooperate with any request or assistance necessary in the event of any legal action occurring,” it said in a statement.

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