THE fallout from a huge leak of financial documents, dubbed “The Panama Papers”, looks set to grow, with more revelations expected in the coming week. A group of journalists from 78 countries has begun publishing stories exposing the hidden wealth of national leaders, state officials, celebrities and others, based on emails and other documents from the database of a Panamanian law firm, Mossack Fonseca. These contain details of secretive offshore structures used by Mossack’s clients. The British Virgin Islands is the most popular domicile for their anonymous shell companies (firms which exist on paper only, with no real employees or offices), with Panama in second place.
The activities these anonymous firms are used for appear to range from the perfectly legitimate, to tax evasion, to the deeply dodgy, including the looting of public wealth. (Mossack says it has never been charged with wrongdoing and conducts thorough due diligence.) Around 140 political figures, among them Russia’s president, Vladimir Putin, and his Chinese counterpart, Xi Jinping, are alleged to have links to the holders of the offshore accounts through family members or associates. Iceland’s prime minister is under pressure to resign: the files show that he transferred shares in an offshore company to his wife for a token sum. Several countries, including Sweden and Australia, have already opened investigations.
The papers suggest that the number of active offshore entities on Mossack’s books exploded between 1990 and 2008, but has since fallen back a bit. The decrease is probably due to the global financial crisis and the resulting increase in regulatory scrutiny.
Correction: This piece originally stated that journalists from 80 countries were publishing stories. That number has been updated