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The Panama Papers: Global Investigations Begin Following Damning Tax Haven Revelations

Iceland's Prime Minister is facing calls to step down, while authorities in various countries have launched investigations following the revelations of tax havens used by the world's wealthy.
I grattacieli di Panama, dove si trova la sede di Mossack Fonseca. Foto di Alejandro Bolivar/EPA

Global investigations have begun into the tax arrangements of rich and powerful people around the world, following a massive data leak from a Panama-based law firm which revealed a vast network of offshore companies set up for clients including world leaders.

The Australian Tax Office (ATO) said on Monday it was investigating more than 800 wealthy clients of Mossack Fonseca, the firm from whose files more than 11.5 million documents were leaked, and the British HM Revenue and Customs asked for a copy of the leaked data so it could "closely examine" the information and act on any possible tax evasion "swiftly and appropriately."


More than 70 current and former heads of state are among those implicated by the data, which was given to the German newspaper Süddeutsche Zeitung (SZ) more than a year ago and then shared with the International Consortium of Investigative Journalists (ICIJ) and more than 100 other news organizations around the globe.

"Currently 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 emailed to Reuters, which said it would work closely with the Australian Federal Police, the Australian Crime Commission and anti-money laundering regulator AUSTRAC to further cross-check the data from the documents. It did not name the Hong Kong company.

Related: The Panama Papers: Massive Leak Reveals the Global Elite's Secret Cash Havens

The 800 individuals under investigation include some taxpayers who had previously been investigated and others who had reported themselves to the tax office under a voluntary disclosure initiative, as well as a large number of taxpayers who had not previously come forward.

New Zealand's tax agency also said it was "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.

French President Francois Hollande said on Monday that his government would carry out its own investigations. "These revelations are good news because they will increase tax revenues from those who commit fraud," he told reporters as he visited a company in Paris' suburbs.


Sweden's Financial Supervisory Authority (FSA) said it had contacted authorities in Luxembourg to ask for information related to allegations that Swedish banking group Nordea helped some clients to set up accounts in offshore tax havens.

In Iceland, Prime Minister Sigmundur Davîo Gunnlaugsson is facing calls to step down due to the revelation he co-owned a shell company with his wife that stored some of her wealth, and did not disclose this on Iceland's parliamentary register of MPs' financial interests. When questioned about the company on camera by journalists from Swedish television company SVT he walked out of the interview.

The documents reveal a network of secret offshore deals and loans allegedly used by a circle of close associates of President Vladimir Putin to launder billions of dollars.

Offshore companies linked to Ukrainian President Petro Poroshenko, Pakistani Prime Minister Nawaz Sharif, Syrian President Bashar al Assad, and family members of Chinese President Xi Jinping and British Prime Minister David Cameron were also revealed by the files. Poroshenko has in the past "positioned himself as a reformer in a country shaken by corruption scandals," noted the ICIJ, while Cameron has repeatedly made public statements denouncing tax havens and claiming his government will take action against those who use them.

Saudi Arabia's King Salman is also implicated, apparently having used money from a company in the British Virgin Islands to pay for mortgages on luxury properties in London and for a yacht he keeps parked in Marbella, Spain. The vessel has its own banquet hall and enough space to comfortably sleep 30 guests.


Related: US Companies Stashed Trillions in Tax Havens Last Year

The leaked data also points to a link between a member of global soccer body FIFA's ethics committee and a Uruguayan soccer official who was arrested last year as part of a wide-ranging US probe into corruption in the sport.

FIFA's ethics committee said in a statement on Sunday that Juan Pedro Damiani, a member of the committee's judgment chamber, was being investigated over a possible business relationship with fellow Uruguayan Eugenio Figueredo, one of the soccer officials arrested in Zurich last year.

Damiani told Reuters in Montevideo on Sunday that he broke off relations with Figueredo when the latter was accused of corruption.

The leaked "Panama Papers" cover a period over almost 40 years, from 1977 until as recently as last December, and allegedly show that some companies domiciled in tax havens were being used for suspected money laundering, arms and drug deals, and tax evasion.

The head of Mossack Fonseca has denied any wrongdoing but acknowledged his firm had suffered a successful but "limited" hack on its database.

The firm's director, Ramon Fonseca described the hack and leak as "an international campaign against privacy."

Fonseca, who was up until March a senior government official in Panama, told Reuters on Sunday that the firm, which specializes in setting up offshore companies, has formed more than 240,000 such companies and noted the "vast majority" of these have been used for "legitimate purposes."


In a statement published by the Guardian, the firm said many of the people cited in press reports were not and never had been clients of Mossack Fonseca.

"For 40 years Mossack Fonseca has operated beyond reproach in our home country and in other jurisdictions where we have operations," it said.

In their reporting of the story, Chinese news outlets have avoided mentioning the names of senior Chinese officials who are named in the papers, according to BBC Monitoring. A Russian opposition newspaper has a seven-page spread about the allegations about Putin's friends, while two Ukrainian outlets are reporting the allegations about Poroshenko.

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