'Panama Papers' revelations trigger global probes

April 4, 2016 | 05:46 pm PT
'Panama Papers' revelations trigger global probes
Mossack Fonseca law firm sign is pictured at the Neptune House building in the British colony of Gibraltar, April 4, 2016 : REUTERS/Jon Nazca
PARIS - Several countries launched tax evasion probes Monday after a massive leak of confidential documents lifted the lid on the murky offshore financial dealings of a slew of politicians and celebrities.

The scandal erupted on Sunday when media groups began revealing the results of a year-long investigation into a trove of 11.5 million documents from the Panamanian law firm Mossack Fonseca, which specialises in creating offshore shell companies.

Among those named in the "Panama Papers" are close associates of Russian President Vladimir Putin, relatives of Chinese leader Xi Jinping and Iceland's Prime Minister Sigmundur David Gunnlaugsson, as well as Barcelona striker Lionel Messi.

"We have opened an investigation for money laundering in relation to the law firm," a judicial source at Spain's National Court told AFP after the release of the documents, which named Oscar-winning Spanish film director Pedro Almodovar among others with offshore holdings.

Messi's family immediately came to his defence, saying he was innocent of all wrongdoing and "accusations he created a... tax evasion plot, including a network of money-laundering, are false and insulting".

Messi has been charged with tax fraud in a separate case that is due to go to trial in May.

Australia said it had launched a probe into 800 wealthy Mossack Fonseca clients. Prosecutors in France and tax authorities in the Netherlands also announced investigations, while the United States said it was reviewing the files.

In Iceland's capital Reykjavik, thousands took to the streets late Monday to demand the prime minister's resignation over allegations that he and his wife used an offshore firm to hide millions of dollars of investments.


People demonstrate against Iceland's Prime Minister Sigmundur Gunnlaugsson in Reykjavik,Iceland on April 4, 2016 after a leak of documents by so-called Panama Papers stoked anger over his wife owning a tax haven-based company with large claims on the country's collapsed banks. Photo by REUTERS/Stigtryggur Johannsson

- Kremlin denials -

The trove of documents was anonymously leaked to German daily Sueddeutsche Zeitung and shared with more than 100 media groups by the International Consortium of Investigative Journalists (ICIJ). More information is expected over the coming weeks.

The first revelations elicited a chorus of denials, including from the Kremlin, which suggested a U.S. plot after the leaks put a close friend of Putin's at the top of an offshore empire worth more than $2 billion that has made his circle fabulously wealthy.

"Putin, Russia, our country, our stability and the upcoming elections are the main target, specifically to destabilise the situation," said Kremlin spokesman Dmitry Peskov, claiming the journalists were "former officials from the (U.S.) Department of State, the CIA and other special services."

Offshore financial dealings are not illegal in themselves but may be used to hide assets from tax authorities, launder the proceeds of criminal activities or conceal misappropriated or politically inconvenient wealth.

Among other key findings of the probe, which named about 140 political figures, including 12 current or former heads of state:

-- The families of some of China's top brass -- including President Xi Jinping -- used offshore tax havens to conceal their fortunes, including at least eight current or former members of the Politburo Standing Committee, the ruling Communist Party's most powerful body.

-- Iceland's Prime Minister Sigmundur David Gunnlaugsson secretly owned millions of dollars in bank bonds at a time when his country's banking system was collapsing in 2008. He has so far steadfastly refused to step down.

-- A member of FIFA's ethics committee, Juan Pedro Damiani, had business ties with three men indicted in a corruption scandal.

-- A Panamanian shell company may have helped hide millions of dollars from a $40 million British gold bullion robbery at London-Heathrow Airport in November 1983 that is etched in criminal folklore, according to the ICIJ.

- 'An attack on Panama' -

The papers, from around 214,000 offshore entities covering almost 40 years, also name the president of Ukraine and the king of Saudi Arabia, as well as sporting and movie stars including Jackie Chan.

Ukrainian President Petro Poroshenko denied any wrongdoing, but he may face an attempt to impeach him.

French newspaper Le Monde cited documents showing that Syria used Mossack Fonseca to create shell companies to help it break international sanctions and fund its war effort.

Pascal Saint-Amans, head of tax policy at the OECD, said the leaks showed that Panama is now almost unrivalled as a world tax haven.

"Among the countries that refuse to automatically exchange information, there are Bahrain, Nauru, Vanuatu and Lebanon," he told AFP. "Switzerland is really making progress, so there is a concentration of problems in Panama."

One of the Panama law firm's founders, Ramon Fonseca, told AFP the leaks were "a crime, a felony" and "an attack on Panama".

Panama's government said it had "zero tolerance" for shady deals, and vowed to "vigorously cooperate" with any legal investigations.

More than 500 banks, their subsidiaries and branches have worked with Mossack Fonseca since the 1970s to help clients manage offshore companies. UBS set up more than 1,100 and HSBC and its affiliates created more than 2,300.

The documents show "banks, law firms and other offshore players often fail to follow legal requirements to make sure clients are not involved in criminal enterprises, tax dodging or political corruption," the ICIJ said.

Mossack Fonseca is already subject to investigations in Germany and Brazil, where it is part of a huge money laundering probe that has threatened to topple the current government.

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