Over the weekend a German newspaper revealed a trove of evidence linking world leaders
to tax evasion, money laundering, and bypassing sanctions.
The “Panama Papers” are a collection of 11 and a half million documents concerning
offshore companies and tax havens spanning from the 1970s to 2015.
Implicated are heads of state in Argentina, Iceland, Saudi Arabia, the United Arab Emirates,
and Ukraine, as well as other influential people in 40 other governments.
So, what exactly is in the Panama Papers?
Well, in August of 2015, an anonymous source provided German newspaper Suddeutsche Zeitung
with 2.6 terabytes worth of documents, the biggest data leak in history.
In order to research and report on the information, Suddeutsche Zeitung reached out to the International
Consortium of Investigative Journalists and roughly 400 journalists at more than 100 media
organizations.
After a year of investigations, what they discovered was evidence that a Panamanian
law firm, known as Mossack Fonseca, had helped their clients hide taxable income from foreign
governments, avoid international sanctions, and even launder potentially illegal funds.
Mossack Fonseca was able to do this by creating “shell companies” for their clients in
Panama’s tax-free haven.
These companies largely exist to hold customer money as an “investment”, instead of declaring
it as profit or income, and thus having to pay taxes on it.
These companies also muddy the connection between the source of the funds, and where
they end up.
One of the larger reveals in the “Panama Papers” was that the Prime Minister of Iceland
used a Panamanian shell company to invest money in three failing Icelandic banks.
By not declaring his financial involvement in the outcome of banking negotiations, there
was evidently a large conflict of interest.
An estimated ten thousand Icelandic citizens protested in the capital, and within days
the Prime Minister resigned.
Other documents show that by way of these shell companies, Syria was able to circumvent
international sanctions in order to purchase fuel for its air force.
And there are also instances where close friends of Russian President Vladimir Putin made deals
with a sanctioned Russian bank through shell corporations.
The next few months of disclosures are expected to uncover a tangled web of behind-the-scenes
illegal banking among the world’s most powerful people.
But whether those named in the documents will ever be prosecuted, or if these revelations
will spark revolutions, is yet to be seen.
As details continue to emerge, you probably won’t be surprised at some of the more corrupt
country leaders implicated in the scandal.
Check out our playlist on corruption at the top, starting with our video on some of the
world’s most corrupt countries.
You can also click the video below to learn about why one of the most authoritarian and
restrictive leaders, Russian President Vladimir Putin, is still adored by his constituents.
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