[BreachExchange] Fallout From Panama Papers Echoes Around The World

[Audrey McNeil]

http://wuis.org/post/fallout-panama-papers-echoes-around-world#stream/0

One law firm, 11.5 million files.

The massive trove of emails, contracts and other papers from Panamanian law
firm Mossack Fonseca is being called the largest document leak in history.

For more than a year, a huge team of international investigative
journalists sifted through the data. On Sunday, the German paper
Süddeutsche Zeitung and members of the International Consortium of
Investigative Journalists began publishing stories linking titans of
business and politics — including 12 former and current heads of state — to
secret offshore bank accounts and shell companies set up by Mossack Fonseca.

As we reported yesterday, much of the behavior revealed by the leaked
documents isn't itself a crime — it's legal to have offshore bank accounts.
But the accounts can be used to launder money or hide incriminating
connections. The team of journalists has said it would release a full list
of people and corporations involved next month.

Around the world, the revelations are prompting public backlash, official
investigations and at least one high-profile resignation.

In some countries, though, they're being met by a different kind of
resignation — a familiar sigh, and collective shrug.

Here's a sampling of the fallout so far.

Iceland

The prime minister of Iceland resigned on Tuesday after widespread outrage,
massive street protests and calls for him to step down.

The Panama Papers say that Sigmundur David Gunnlaugsson and his wife had
secretly set up offshore accounts through a shell company that was seeking
money from failed Icelandic banks that received government bailout funds.

"Gunnlaugsson said he and his wife paid all their taxes and have done
nothing illegal," The Associated Press reports. "He also said his financial
holdings didn't affect his negotiations with Iceland's creditors during the
country's acute financial crisis. Those assertions did little to quell the
controversy."

Russia

While Russian President Vladimir Putin isn't directly implicated in the
leaked documents made public so far, many members of his close personal
circle are — a network of rich, powerful friends explored by The Guardian.

Putin's spokesman has fired back, calling the allegations "Putinphobia" and
saying the publication of the Panama Papers was intended to destabilize
Russia as it heads toward elections, the newspaper reports.

The United States

Many of the largest media outlets in the U.S., including NPR, were not part
of the international team of investigators working with the data behind the
Panama Papers. Exceptions include the Miami Herald, The Charlotte Observer
and Fusion.

Relatively few Americans — just over 200 — have been identified, according
to the reports published so far. Fusion spoke to experts who said that is,
in part, because Americans can form offshore companies without needing to
leave the U.S.

But the Justice Department says it will review the documents and that it
"takes very seriously all credible allegations of high level, foreign
corruption that might have a link to the United States."

Speaking Tuesday, President Obama criticized loopholes that allow
tax-dodging.

"A lot of it's legal, but that's exactly the problem," he said.

Chile

The head of the Chilean office of Transparency International — an
anti-corruption watchdog — stepped down Monday, after the leaked documents
tied him to offfshore companies.

The Associated Press reports on Gonzalo Delaveau's resignation:

"Jose Ugaz, chair of the Berlin-based group, said he was deeply troubled by
revelations that Delaveau, a lawyer, was linked to five companies domiciled
in the Bahamas.

"Delaveau is not accused of any wrongdoing but Ugaz said his continued
affiliation with Transparency International is incompatible with the
group's aims to register the beneficial owners of all shell companies to
make it harder for the corrupt to hide illicit wealth."

France

After the revelations, French government says it will put Panama on its
blacklist of uncooperative tax jurisdictions — again.

"French finance minister Michel Sapin said France had previously taken
Panama off a tax-haven blacklist because the country convinced French
officials it respected international tax principals," NPR's Eleanor
Beardsley reports.

But the Panama Papers changed their minds.

Argentina

Current President Mauricio Macri, soccer star Lionel Messi and a close
associate of former President Nestor Kirchner have all been implicated by
the papers.

That's a problem for Macri, who campaigned on an anti-corruption platform
vowing to clean up the mess left by former President Cristina Kirchner,
Nestor's widow.

There are calls for an investigation, NPR's Lourdes Garcia-Navarro reports.

Brazil

The data breach has revealed more than 100 accounts that Brazilian
investigators didn't know about, linked to seven political parties, Lourdes
reports.

But ...

"Brazil has had so many corruption disclosures lately, and its in the
middle of a political crisis — so this is just one more to the list," she
says.

The United Kingdom

Prime Minister David Cameron isn't named in the data leak, according to
reporters investigating the papers, but his father is.

"David Cameron's father ran an offshore fund that avoided ever having to
pay tax in Britain by hiring a small army of Bahamas residents — including
a part-time bishop — to sign its paperwork," The Guardian writes.

That's led to pressure on the prime minister to discuss whether any of his
family's money is still being held in that offshore account, a question his
office first refused to discuss.

His spokesman's description of the question as "a private matter" earned
him the mockery of former NSA contractor and leaker Edward Snowden.

Later a spokesperson for Downing Street said the prime minister's immediate
family doesn't benefit from offshore funds, without addressing whether they
had ever done so in the past.

Pakistan

The public response in Pakistan has similarly been devoid of shock, NPR's
Philip Reeves reports from Islamabad.

While the family of Prime Minister Nawaz Sharif is implicated by the papers
— which has been seized upon by the local media and some members of the
opposition — it comes as no surprise to the country's citizens that the
ruling class is corrupt, Phil says.

Spain

Cultural icons were among those named by the Panama Papers in Spain
--director Pedro Almodóvar and his brother, the aunt of Spain's king, and
soccer star Messi, who plays for Barcelona.

But like in Pakistan, the public outcry has been muted, Lauren Frayer
reports for NPR from Madrid.

"Spaniards tend not to be terribly surprised these days about corruption or
money-laundering allegations," she says, noting that Messi was already
awaiting trial for tax fraud.

China

The Panama Papers implicate the families of several Chinese politicians,
including the brother-in-law of President Xi Jinping.

China has dismissed the reports as "groundless," The Associated Press
reports.

In 2012, Bloomberg reported on the vast wealth of Xi's in-laws, noting that
much of it was "obscured from public view by multiple holding companies,
government restrictions on access to company documents and in some cases
online censorship."

While the revelations aren't entirely new, NPR's Anthony Kuhn reports, they
have been heavily censored by China.

Searching for the Panama Papers in China will return results about Lionel
Messi, and other non-Chinese people in the papers, but nothing about
Chinese figures, the AP writes.

Anthony also notes that the same international team of investigative
reporters behind the Panama Papers have previously faced intimidation from
China's government related to a different investigation, causing Chinese
members of the cooperative effort to withdraw.

... and, of course, in Panama

As the fallout from the leak continues, Panama is attempting to fight its
reputation as a haven for tax-evaders and money-launderers, the AP reports.

"Panamanians have long shrugged off their country's checkered reputation as
a financial haven for drug lords, tax dodgers and corrupt oligarchs. They
like to joke that if they're crooks, they've learned it from the world's
wealthy nations," the wire service writes. It adds:

"Panama cemented its status as a money laundering center in the 1980s, when
dictator Gen. Manuel Noriega rolled out the red carpet to Colombian drug
cartels. It has remained a magnet for illicit money, as well as for
legitimate funds, because its dollarized economy sits at the crossroad of
the Americas ...

"But Panama isn't alone in its permissive attitude toward shell companies,
which the British-based Tax Justice Network estimates hide $21 trillion to
$32 trillion in untaxed or lightly taxed financial wealth around the globe.
Panama ranks 13th on the watchdog group's financial secrecy index — better
than the U.S., which is at No. 3."
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