On Sunday, a number of media outlets dropped a collaborative investigation that has been termed the “Panama Papers.” This mysterious label refers to 11.5 million documents, which have leaked from a Panamanian law firm, Mossack Fonseca (“the Firm”). The sheer number of these documents — originally obtained by German Newspaper Suddeutsche Zeitung — pales in comparison to their combined size, an enormous 2.6 TB, which makes this the biggest data leak the internet has ever seen. To put things in perspective, Wikileaks dropped about 1.6 GB of data in 2010 and is still causing a ruckus. Even Edward Snowden seems a little blown away right now:
In addition to size and scope (40 years of documents), this scandal has substance. The Panama Papers have revealed a wealth of tax evasion, money laundering, arms and drug deals, all of which were facilitated by Mossack Fonseca. The firm has worked with thousands of banks to help clients incorporate shell companies (often constructed to hide assets for tax evasion and, say, hiding assets from divorce lawyers) in jurisdictions like the British Virgin Islands. The leaks revealed shady practices ranging from backdating to more complicated fraud patterns for world leaders, drug dealers, and the exceedingly wealthy. Some clients in the latter category may not commit fraud, but the leak reveals exactly why folks have the heebie jeebies when hearing the term, “offshore banking.” Plenty of legit entities go offshore for various legal purposes, but so do clients who do very bad things. The firm has ties to at least 200,000 offshore companies, and their global dealings serve clients everywhere from Hong Kong to Russia. Panama also happens to be a tax haven, and the firm diverts money towards other tax havens, too.
Countless parties appear in the Panama Papers. Oddly enough, movie star Jackie Chan’s name pops up (because he manages six companies through the Firm), but the papers maintain they’ve found no evidence of wrongdoing on Chan’s part. In other words, Mossack Fonseca does possess legit clients, but the names of the fraudulent will surely override this firm’s reputation. The International Consortium of Investigative Journalists (“ICIJ”) published the most detailed glimpse into the documents, after the collaborative news outlets dug for a year. Several world leaders and sports figures have been implicated in fraudulent dealings, including the following:
- Russian President Vladimir Putin: Vlad the Bad’s offshore trail reveals $2 billion laundered in countless accounts by various associates. The primary front used by Putin is Sergei Roldugin, a cellist and long-term friend of the president, who is also godfather to one of Putin’s children.
- Iceland Prime Minister Sigmundur David Gunnlaugsson: After some dirty deeds with a British Virgin Islands offshore company, he evasively offloaded an offshore entity to his wife for $1. As a result, members of parliament have called for a snap election, which could oust him before the next planned election.
- Ukraine President Petro Poroshenko: He created a holding company in the British Virgin Islands, which saw him become sole shareholder of assets that he vowed to sell during his presidential campaign.
- British Prime Minister David Cameron’s Father: Billionaire Ian Cameron used the Firm to insulate his own investment company from taxes. Ironically, David has spent part of his tenure lobbying the UK to adopt tax-haven reforms.
- Soccer Player Lionel Messi: He and his father are linked to several companies managed by the firm, including Mega Star Enterprises, Inc., a Panama company owned by Messi and his father. Currently, Spain is investigating Messi for tax evasion.
- FIFA Officials: Several members of the international soccer association, including ethics committee member Juan Pedro Damiani and former vice president Eugenio Figueredo, are linked to seven offshore companies. Figueredo was one of several FIFA officials indicted in the 2015 FIFA corruption scandal, and FIFA is looking into his ties with Damiani.
In addition, the Panama Papers have linked the king of Saudi Arabia and many more world leaders to allegedly fraudulent financial activity. ICIJ has published a diagram of those implicated by the leak. Otherwise, the firm has sheltered accounts for many unsavory characters:
The firm’s customers have included Ponzi schemers, drug kingpins, tax evaders and at least one jailed sex offender. A U.S. businessman convicted of traveling to Russia to have sex with underage orphans signed papers for an offshore company while he was serving his prison sentence in New Jersey, the records show.
The fallout from the Panama Papers will undoubtedly be massive. South African news source eNCA reveals that tax investigations have commenced already in Australia and New Zealand for those who have been revealed as clients of Mossack Fonseca. And of course, none of this will go down without a fight. One of the firm’s founders is calling these investigations illegal (based upon the data being leaked) and an “attack” on the country of Panama.
ICIJ says their reporting isn’t over yet. They will drop an even more comprehensive list of those involved with Mossack Fonseca in May.