What is the Panama Leak about?

The Panamian law firm, Mossack Fonseca has been playing its cards close to its chest all this while. It has now leaked out some confidential documents that tell us how the wealthy have hidden all their riches in tax havens for all these days. The company has been helping its clients conceal the origins of their money and hence avoid taxes or prevent judiciary sanctions. It has never been reproached for all the 40 years that it has been functioning. Leaked documents reveal offshore activities linked to heads of State and many other known personalities. Other named in the papers include government officials, their associates, known actors, football players and so many more from all round the world including Russia, Iceland and India of course.

Where did the leak come from?

The documents first came to light via an anonymous, encrypted e-mail to the Suddeutsche Zeitung, a newspaper company in Munich after which it leaked out about 2.6 TB of data. The leak started as a trickle but soon formed a flood. The German newspaper also stated “Contacts with Mossack Fonseca were run almost exclusively by fax about a German middleman in Luxembourg, Volker B., a former top manager of the former Dresdner Bank.” (source: Suddeutsche Zeitung, translated from German). The documents were first shared with International Consortium of Investigative Journalists (ICIJ). The ICIJ and Suddeutsche Zeitung were earlier seen to collaborate on stories about secret tax deals negotiated by the Luxembourg government in 2014. The source of the papers claimed that their life was in danger. Gerard Ryle, director of the International Consortium of Investigative Journalists, says the person was “concerned about what he or she saw in the documents.” In an interview with CNN. He also mentioned that he is convinced about the accuracy and authenticity of these documents because there was a smaller leak before they actually managed to get these documents and the names in the two match. The initial leak was intimated about to the German government and later other governments like the British and the US were also offered the documents. It is obviously very difficult to make up 11.5 million documents and now that ICIJ is going around asking the mentioned people, they claim the documents to be true. Some definitely deny the fact which is making things difficult. French president Francois Hollande commented saying that this leak is a great benefit for the international community and the sources of this should be protected.

How has it been working all this while?

The documents reveal that the law firm set up more than 300,000 shell companies, many in tax havens, to help clients conceal their assets. A shell corporation is a company which serves as a vehicle for business transactions without itself having any significant assets or operations and  tax haven is a state, country, or territory where, on a national level, certain taxes are levied at a very low rate or not at all. It also refers to countries which have a system of financial secrecy in place. Many of the shell companies were created for legitimate purposes. But the ICIJ said that thousands of them appear to have been used to dodge taxes, allow officials of corrupt governments to conceal vast wealth offshore or enable high-net-worth clients to hide assets from business partners and ex-spouses. Mossack Fonseca however don’t always know who these accounts are ultimately benefitting and hence the leaks do not show that there has been illegal activity in Mossfon.

What is the plan of action?

More inquiries are likely to be started in the days to come. The government in India is under significant pressure to reveal and recover black or untaxed money, a promise stressed by the PM in his election campaign. The Supreme Court is monitoring the findings of a Special Investigating Team or SIT of experts. The U.S. Department of Justice, which has entered into settlements with some of the banks named in the documents, is reviewing material, according to Peter Carr, a Justice Department spokesman. Mass protests in Iceland have taken place for the PM to quit but Iceland’s prime minister has turned down all calls for his resignation. But the country’s parliament has called for snap elections that could remove him from office.

The panama papers have been pulled of as the biggest leak in whistleblower history. The new era of megaleaks is already underway.The Panama Papers represent the fourth tax haven leak coordinated by the ICIJ since just 2013.

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