first_imgThe numbers alone are overwhelming: 11.5 million documents, 4.8 million emails, 3 million database files, 2.1 million PDFs, totalling 2.6 terrabytes of data, containing information about 210,000 companies in 21 offshore jurisdictions, spanning almost 40 years (from 1977 to 2015). The greatest leak of internal data in history is bound to change the course of investigative journalism, exposing a widespread system of global tax evasion. From the first day of the massive-scale leak, it has been obvious that no country can claim to be unaffected.For the past week, more than a hundred media outlets around the world, coordinated by the Washington, DC-based International Consortium of Investigative Journalists (ICIJ), have been offering stories on the Panama Papers – leaked documents from the Panamanian law firm Mossack Fonseca, the world’s fourth biggest offshore law firm, which specialises in creating shell companies for their clients to use their assets in tax havens around the world. That individuals and companies use entities in tax havens for various purposes has been known for a long time, but never before has so much light been shed into this shadowy practice, which may be unethical but is certainly not always illegal. The leak has caused significant international controversy, with high-profile names of politicians and businessmen, celebrities and FIFA officials being linked in some way to entities established in tax havens. Among those who have used the firm’s services and expertise are suspected financiers of terrorists and war criminals in the Middle East; drug kings and queens from Mexico, Guatemala and Eastern Europe; nuclear weapons proliferators in Iran and North Korea; arms dealers in southern Africa; and the chief negotiator for the Greek debt under Antonis Samaras.The records were obtained from an anonymous source by the German newspaper Süddeutsche Zeitung, which had reported previously on a smaller leak of Mossack Fonseca files to German government regulators. A Süddeutsche Zeitung reporter named Bastian Obermayer says that he was contacted via encrypted chat by his source, offering some sort of data intended “to make these crimes public”. The German paper shared the documents with the ICIJ, which in turn shared them with a large network of international partners, including the ABC and the Australian Financial Review in Australia, The Guardian and the BBC in the UK, Le Monde in France and in Greece. Each organisation is examining the documents, trying to reveal the extent to which corporations and individuals in each country have been using the services of the Panamanian Firm, which operates on a global scale with franchises around the world. Mossack Fonseca has 600 operatives working in 42 tax havens, including Switzerland, Cyprus and the British Virgin Islands.From the first day of the massive-scale leak, it has been obvious that no country can claim to be unaffected. Major financial entities (such as HSBC and Société Générale) and individuals seem interconnected in the world of offshore banking, and at least 143 politicians and their families are deep into the practice – including 12 national leaders, not least among them Russian President Vladimir Putin, who is linked to $2 billion of hidden money through accounts held in the names of family members and his friend Sergei Roldugin, a celebrated cellist. UK Prime Minister David Cameron, came himself under scrutiny, after it was revealed that his late father, Ian Cameron, run an offshore investment fund that has paid no tax in the UK since it was founded in the 1980s. David Cameron, who has inherited 300,000 from his father admitted on Thursday that he did own shares of the Blairmore Investment Trust, established in Panama by Mossack Fonseca but he had sold them in 2010, before becoming PM.Other politicians include Nawaz Sharif, Pakistan’s prime minister; Ayad Allawi, ex-interim prime minister and former vice-president of Iraq; Petro Poroshenko, president of Ukraine (who was elected in May 2014 on a promise to clean up Ukraine’s corrupt politics and a couple of months later set up a secret offshore company in the British Virgin Islands, while his troops were fighting Russian troops and pro-Moscow rebels); Alaa Mubarak, son of Egypt’s former president; and the prime minister of Iceland, Sigmundur Davíð Gunnlaugsson. The latter has been the first prominent casualty from the leak, having resigned from office under public outrage after it was revealed that his family had sheltered money offshore. According to the Panama Papers, Gunnlaugsson and his wife, Anna Sigurlaug Pálsdóttir, bought a British Virgin Islands-based offshore company, Wintris Inc, in December 2007. Although there is no evidence of tax avoidance, evasion or dishonesty on the part of the couple, the company in question had big claims on Icelandic banks, which implies a great conflict of interest in a country that saw its bank sector collapse as a result of the Global Financial Crisis of 2008. Gunnlaugsson himself came to power defending the collapse of his country’s financial system against the demands of foreign creditors, whom he has repeatedly characterised as “vultures”. GREEK DEBT NEGOTIATOR IN THE FILES Greece has also been a country dealing with said “vultures”, being on the verge of default and financial catastrophe since 2010. One of the people who has been deeply involved in its plight has been Stavros Papastavrou, whose name appears among those of the key players of the Panama Papers. A lawyer and longtime Nea Dimokratia party operative, Papastavrou was appointed by the former prime minister, Antonis Samaras, as his deputy chief of staff for European and international affairs. As such, he quickly became chief negotiator with the European Union, the International Monetary Fund and the European Central Bank ‘Troika’ of creditors over the Greek bailout, gaining the full trust of Samaras, who was quoted as saying: “If only Greece had ten Papastavrou!”The ICIJ mentions his name as being implicated in a tax-evasion probe about an undeclared bank deposit of about $6.9 million in an HSBC Swiss bank account. Papastavrou denied the money was his, but nonetheless agreed to pay a $3.6 million fine last February to settle charges of tax evasion and money laundering. As shown in the Panama Papers, even at the time when he was working for the Greek government, he has been involved in multiple offshore foundations. From 2005 to 2014 he was a member of the councils of the now defunct Green Shamrock Foundation and Diman Foundation, while in 2006 he became the deputy chairman of Aisios Foundation, which still exists today. Asked to comment, he claimed he had “no ownership interest in these entities of any kind” and “was under no obligation” to declare them to tax authorities. Even after this revelation, Nea Dimokratia insists on backing him; the party’s deputy leader, MP Adonis Georgiadis, in a radio interview on Tuesday, insisted that the Greek state should name a street after Papastavrou. Less prominent has been the late Vlassis Kabouroglou, whose name was involved in an investigation on bribery and corruption, regarding the purchase of the anti-missile system Tor-M1 by the Greek Ministry of Defence, in a high- profile legal case that has seen the former minister and leading member of the Greek socialist party PASOK, Akis Tsohatzopoulos, being incarcerated. Tsohatzopoulos’ right hand man, Nikolaos Zigras, in his court statement, had named Kabouroglou as the organiser of the illegal payments connected to the missile and submarine purchase deals; investigation on this has stopped since Kabouroglou’s death in Jakarta, Indonesia, in October 2012. According to the Panama Papers, Kabouroglou was the managing director of Drumilan International Hellas S.A., a company in charge of going through with the sale. Appointed to the position by the Syrian businessman Fouad Al-Zayat (who has been tried in absentia in Greece and sentenced to life for bribery and 17 years for money laundering), Kabouroglou was suspected of being responsible for transfers amounting to $25 million, to two of Al-Zayat’s offshore companies, Drumilan International Ltd and Drumilan Offset Program Ltd. The Panama Papers show Kabouroglou associated with a series of other offshores related to arms dealing, either as founder (often along with his wife and another woman), or as holder of bearer shares. Another Greek name appearing in the Panama Papers is related to a case of massive bank fraud in Ireland. Apparently, Mossack Fonseca had been used by Achilleas Kallakis and an associate, who took £740m from Allied Irish Banks in one of the biggest scams ever to befall an Irish corporation. Kallakis, who changed his name from Stefanos Michalis Kollakis, was jailed for 11 years after being found guilty by a London court in 2013 of defrauding AIB of £740 million using deception and forgery. During the trial Kallakis argued that the web of Virgin Island-based offshore companies that received the loans from AIB were owned by an entity called the Hermitage Syndicated Trust, of which he was just an advisor. The leaked Mossack Fonseca files show that it provided nominee directors to a Panama-based company called FTS Worldwide Corporation, which acted as trustee to the Hermitage Syndicated Trust. The leaks show Mossack Fonseca operatives acting as nominee directors, signing loan applications to Barclays Bank on behalf of FTS, and granting power of attorney over FTS to a man in Switzerland, who in turn signed documentation to be used for the Barclays loan application.The Kallakis property portfolio in London was built up using loans from AIB, Barclays, and Bristol & West, which became part of Bank of Ireland. During the trial it emerged that AIB had been expanding its loan book in England during the period of the scam, with more than 50 per cent of the expansion going to Kallakis and his associate. The wider AIB group was subsequently bailed out by the Irish state.Greek media are also interested in revelations regarding German entities, given the strenuous relations between the two countries – especially after the scandal that saw Siemens bribing Greek officials for the contracts of security systems during the Olympics. Siemens seems to occupy a prime position in the papers as high-ranking employees are shown to have deposited undeclared money in offshore companies. Apart from that, the papers show that Deutche Bank, the biggest German bank, had utilised “more than 400 offshore companies up to 2007” while adding that “many thousands of Germans used these Mossack Fonseca fronting companies”. (L) Stavros Papastavrou; (R) Achilleas Kallakis.HUNDREDS OF AUSTRALIAN CASES The Panama Papers database also features hundreds of Australian citizens as well as dozens of Australian law firms, banks, accountants and major companies including BHP and Wilson which use Mossack Fonseca to incorporate companies in tax havens. Documents also reveal there are 77 Australian intermediaries or clients of Mossack Fonseca that help the law firm incorporate companies in tax havens.So far, very few names have seen the light of day – among them former opal miner Maxwell John Reid, who moved $100 million through Mossack Fonseca weeks after completing a prison sentence for 66 fraud-related charges. The Australian media have singled out some other individuals; among them John Patrick Gillespie, a man with a long criminal history, who was convicted over his role in one of Australian racing’s most infamous scandals. In 1984 in Brisbane he was part of a plot that saw the horse Bold Personality painted and substituted for the long-priced Fine Cotton in a race it won at Eagle Farm. In 1992, he became a founding director of two companies, International Millionaire’s Club and International Horseowner’s Club. Both were incorporated in the British Virgin Islands and the Bahamas by Mossack Fonseca. The companies were deregistered in 1995.Another Australian name is that of Murray Priestley, former Lifestyle Trader chief executive, banned from providing financial services by the Australian Securities and Investments Commission (ASIC) for engaging in deceptive conduct” and offered clients “misleading advice”. At the time, he was a director of a company registered by Mossack Fonseca. After the law firm became aware of Mr Priestley’s ban, it sought additional due diligence information but it appears requests went unanswered. Despite the ban, Mr Priestley and his company Alpha Holdings Management remain active, according to the leaked documents.Also of interest is Warren Black, a Perth-based accountant and former ATO employee who runs a company called Wealth Safe (on the website he advertises his ability to help people avoid taxation); he also appears in ICIJ data as a director and shareholder of a Mossack Fonseca-managed company called Wealth Grow International Limited, which was incorporated in the Seychelles in March 2015 (although there is no suggestion of any illegal activities related to him, or the company). Also of interest to Australia are the Chinese names revealed in the papers. At least eight current or former members of China’s top ruling body, the politburo standing committee, are mentioned, possessing offshore companies arranged through Mossack Fonseca. Those reportedly named in the leaked database from the firm include Deng Jiagui, the brother-in-law of the Chinese president, Xi Jinping, and Li Xiaolin, the daughter of former premier Li Peng, a Communist party hardliner who became known as the ‘Butcher of Beijing’ for his role in ordering the 1989 military crackdown on Tiananmen protesters. Another member of the ‘red elite’ is Jasmine Li, granddaughter of a powerful Chinese leader, who became the sole shareholder in two British Virgin Islands companies while still a teenager. Other prominent figures who have taken advantage of offshore companies include the brother-in-law of the president Xi Jinping, and the son-in-law of Zhang Gaoli, another member of China’s top political body, the politburo standing committee. Chinese news groups have been ordered to purge all mention of the Panama Papers from their websites and warned of harsh punishment if they are found to have published material “attacking China”.THE END OF CAPITALISM? This first course of events is just a foreshadowing of the effect that the full revelation of names implicated in the papers (scheduled to take place in May) will have. For the moment, the Panama Papers have managed to set the agenda of an international debate on tax avoidance and entitlement in a globalised economy. In an editorial, Time magazine even spoke of the end of capitalism as we know it, while Barack Obama made the highest profile intervention yet in favour of the global reform of tax avoidance. Addressing reporters at the White House, the US president said: “There is no doubt that the problem of global tax avoidance generally is a huge problem. The problem is that a lot of this stuff is legal, not illegal.”The US president added that the leak from Panama illustrated the scale of tax avoidance involving Fortune 500 companies, running into trillions of dollars worldwide.“We shouldn’t make it legal to engage in transactions just to avoid taxes,” he said, praising instead “the basic principle of making sure everyone pays their fair share”.HOW DID MOSSACK FONSECA REPLY “We cannot provide responses to questions that pertain to specific matters, as doing so would be a breach of our policies and legal obligation to maintain client confidentiality,” Mossack Fonseca stated to “The Guardian”, after the revelation of the leaked archives. “However, we can confirm the parties in many of the circumstances you cite are not and have never been clients of Mossack Fonseca.“It is legal and common for companies to establish commercial entities in different jurisdictions for a variety of legitimate reasons, including conducting cross-border mergers and acquisitions, bankruptcies, estate planning, personal safety, restructuring and pooling of investment capital from different jurisdictions in neutral legal and tax regimes that does not benefit or disadvantage any one investor.“In addition, we have always complied with international protocols … to assure as is reasonably possible, that the companies we incorporate are not being used for tax evasion, money laundering, terrorist finance or other illicit purposes. We regret any misuse of companies that we incorporate or the services we provide and take steps wherever possible to uncover and stop such use. If we detect suspicious activity or misconduct, we are quick to report it to the authorities. Similarly, when authorities approach us with evidence of possible misconduct, we always cooperate fully with them. “Most of the persons mentioned by you are not our clients nor do they appear in our database as persons related to the companies we formed. Due diligence procedures were carried out in accordance with the laws in place at the time the companies and cases you made reference to were incorporated and in existence”.Sources: ICIJ, Times, New York Times, The Guardian, The Irish Times, Facebook Twitter: @NeosKosmos Instagramlast_img

Leave a Reply

Your email address will not be published. Required fields are marked *