In-brief: A massive leak of sensitive client data from a Panama-based law firm, Mossack Fonseca, has sent shockwaves around the world: exposing shell companies and other tax havens set up by the wealthy, elected officials and celebrities.
A massive leak of sensitive client data from a Panama-based law firm, Mossack Fonseca, has sent shockwaves around the world: exposing shell companies and other tax havens set up by the wealthy, elected officials and celebrities.
The data leak was first reported by the publication Suddeutsche Zeitung, which was contacted by an individual who had obtained more than 2.5 terabytes of data from the firm, including e-mail messages, financial statements and spreadsheets, photos and excerpts of an internal company database. The data stolen covers more than four decades, from the 1970s through 2016.
Little is known about the source of the breach, but the amount of data – 11.5 million documents – far eclipses that of other leaks, such as the leak of U.S. diplomatic cables reported by Wikileaks.
The stolen data – if accurate – lays bare the workings of a firm that appears to have made a business of creating so-called “off shore” and “shell” companies: corporations created in countries around the world that promise loose oversight and privacy. While such corporate entities are often legitimate, they are also commonly used to shield money from taxation or launder illicit proceeds.
Mossack Fonseca is a top facilitator of shell companies. The leaked internal files contain information on 214,488 offshore entities connected to people in more than 200 countries and territories, the International Consortium of Investigative Journalists (ICIJ) reported, saying it will produce a full list of the companies in May.
An analysis of the leaked data by ICIJ reveals links to both world leaders and their close associates, as well as known bad-actors. Included in the hoard are records of at least 33 people and companies that have been blacklisted by the U.S. government because of evidence of wrong doing. That list includes individuals with known associations to Mexican drug lords, rogue nations like North Korea and terrorist groups like Hezbollah, ICIJ said.
Global banks are the main drivers of business in the murky world of offshore corporations. The ICIJ and Suddeutsche Zeitung, working with scores of other news organizations and hundreds of journalists, have been pouring over the documents. Among other things: they have identified 15,600 paper companies that banks set up for clients who want keep their finances under wraps. The list of feeder banks include household names. Thousands of paper companies were created by international giants UBS and HSBC, the analysis showed.
A spokeswoman for Mossack Fonseca, Anna Claire, declined to answer questions by phone when contacted by Security Ledger.
The list of names attached to the leaked documents reads like a Who’s Who of international politics and entertainment. The Prime Minister of Iceland, Sigmundur David Gunnalaugsson and his wife have been connected to a shell company set up by Mossack Fonseca. Associates of Russian Premiere Vladimir Putin were linked to companies that have funneled some $2 billion out of that country.
“Putin associates disguised payments, backdated documents and gained hidden influence within the country’s media and automotive industries,” ICIJ reported.
This isn’t the first time that the firm’s name has come up in connection with suspect business practices. The firm’s name came up in documents seized in a 2014 raid by German Police of Commerzbank looking into links to money laundering and tax evasion. This report by the web site VICE links the firm to shell companies set up to hide money for Rami Makhlouf, a close associate of Syrian President Bashar al Assad who is believed to have amassed a multi billion dollar fortune by way of corrupt business dealings in Syria.