April 3, 2016 – An unprecedented leak of more than 11 million documents has revealed the hidden financial dealings of some of the world’s wealthiest people, as well as 12 current and former world leaders and 128 more politicians and public officials around the world.
More than 200,000 companies, foundations and trusts are contained in the leak of information which came from a little-known but powerful law firm based in Panama called Mossack Fonseca.
The law firm is one of the world’s top creators of shell companies, which can be legally used to hide the ownership of assets.
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The data includes emails, contracts, bank records, property deeds, passport copies and other sensitive information dating from 1977 to as recently as December 2015.
The year-long investigation was coordinated by the International Consortium of Investigative Journalists (ICIJ), who worked with hundreds of journalists from the world’s top media organisations including the ABC’s Four Corners program.
What the documents reveal is the inner workings of a global industry of law firms and big banks who sell financial secrecy to those who can afford it.
The ICIJ findings include evidence that:
Associates of Russian President Vladimir Putin secretly shuffled as much as $2 billion through banks and shadow companies
Icelandic Prime Minister Sigmundur David Gunnlaugsson and his wife secretly owned an offshore firm that held millions of dollars in Icelandic bank bonds during the country’s financial crisis.
The files also expose or identify:
Offshore companies controlled by the Prime Minister of Pakistan, the King of Saudi Arabia and the children of the President of Azerbaijan.
Offshore companies linked to the family of China’s top leader, Xi Jinping, as well as Ukrainian President Petro Poroshenko, who has positioned himself as a reformer in a country shaken by corruption scandals.
29 billionaires featured in Forbes Magazine’s list of the world’s 500 richest people.
33 people and companies blacklisted by the US Government because of evidence that they have done business with Mexican drug lords, terrorist organisations like Hezbollah or rogue nations like North Korea.
New details of offshore dealings by the late father of British Prime Minister David Cameron, a leader in the push for tax-haven reform.
Customers including Ponzi schemers, drug kingpins, tax evaders and at least one jailed sex offender.
Movie star Jackie Chan, who had at least six companies managed through the law firm.
As with many of Mossack Fonseca’s clients, there is no evidence that Chan used his companies for improper purposes. Having an offshore company is not illegal and for some international business transactions, it is a logical choice.
But the leaked data allows a never-before-seen view inside the offshore world — providing a day-to-day, decade-by-decade look at how dark money flows through the global financial system, breeding crime and stripping national treasuries of tax revenues.
Most of the services the offshore industry provides are legal if used by the law-abiding.
But the documents show the extraordinary lengths individuals will go to in order to hide the true owners of companies.
Mossack Fonseca offers extra services to provide “front people” known as nominees to act as shareholders, directors or even the owners of your company.
This can make it extremely difficult for authorities trying to investigate money laundering or follow the money through complex networks of offshore accounts.
Firm worked with more than 14,000 ‘middlemen’ on clients’ behalf
An ICIJ analysis of the leaked files found that more than 500 banks, their subsidiaries and branches had worked with Mossack Fonseca since the early 1970s to help clients manage offshore companies.
In all, the files indicate Mossack Fonseca worked with more than 14,000 banks, law firms, company incorporators and other middlemen to set up companies, foundations and trusts for customers.
The documents reveal that these offshore players often failed to follow legal requirements to ensure their clients were not involved in criminal enterprises, tax dodging or political corruption.
Mossack Fonseca says the middlemen are its true clients, not the eventual customers who use offshore companies.
The firm says these middlemen provide additional layers of oversight for reviewing new customers.
As for its own procedures, Mossack Fonseca says they often exceed “the existing rules and standards to which we and others are bound”.
Mossack Fonseca offers backdating of documents
The leaked files also show the firm regularly offered to backdate documents to help its clients gain advantage in their financial affairs.
It was so common that an email exchange from 2007 showed firm employees talking about establishing a price structure — clients would pay $8.75 for each month farther back in time that a corporate document would be backdated.
In a written response to questions from ICIJ and its media partners, the firm said it “does not foster or promote illegal acts”.
“Your allegations that we provide shareholders with structures supposedly designed to hide the identity of the real owners are completely unsupported and false,” the firm said.
The firm added that the backdating of documents “is a well-founded and accepted practice” that is “common in our industry and its aim is not to cover up or hide unlawful acts”.
The firm said it could not answer questions about specific customers because of its obligation to maintain client confidentiality.