Current Events –
Panama Papers Make Heads Roll
It’s being called the largest document leak in history: THE PANAMA PAPERS. This money laundering scheme involving a bevy of political leaders, entertainers and the wealthy elite, is poised to take down some of the world’s richest and most powerful citizens.
Current Events
According to the leaked documents, Panamanian law firm Mossack Fonseca has been helping people from around the globe set up shell companies and offshore accounts for the purpose of hiding their fortunes and exploiting offshore tax shelters. Although offshore companies are not illegal, they can be extremely embarrassing for those involved — particularly when it is a political leader of a nation.
So, why would anyone need to hide money in Panama?
The South American locale has a deep reputation as a tax haven which dates back more than a hundred years. Its regulatory reporting requirements are lax, compared with those of most other countries. Pretend companies are extremely simple to form, are not required to file tax returns or have their accounts audited, and in some cases can offer owners complete confidentiality. Panama also offers the great tax incentive of not requiring a company to pay taxes while doing business with other foreign companies. For anyone looking to protect their treasures, the draw is irresistible.
Laws established in the 1920s were refined to make Panama an easy place to launder money. For the millionaires and billionaires of the world, this is hugely attractive and global citizens have been taking full advantage of the convenience.
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“The ‘Panama Papers’ revelations have shone the light on Panama’s culture and practice of secrecy,” Angel Gurría, secretary-general of the OECD, said in a statement. “Panama is the last major holdout that continues to allow funds to be hidden offshore from tax and law enforcement authorities,” he added.
Well, it didn’t take long for heads to roll. Only 2 days after the release of the Panama Papers, the first victim fell.
Last week, Icelandic Prime Minister Sigmundur David Gunnlaugsson said he will step down, after the documents revealed his links to an offshore company. Certainly, the 20,000 protesters who gathered in the capital city of Reykjavik and demanded that Gunnlaugsson go was also a factor.
However, Gunnlaugsson was not the only political leader mentioned in the documents.
The papers also revealed a connection to British Prime Minister David Cameron, whose late father, Ian, used Mossack Fonseca to set up an offshore fund.
Mr. Cameron was forced to respond to the revelations, saying he owns “no shares, no offshore trusts, no offshore funds, nothing like that.” His office also issued a statement adding that “the prime minister, his wife and their children do not benefit from any offshore funds.”
Current Events
More names outside of the political spectrum were revealed.
Former American Idol judge and music tycoon Simon Cowell was discovered to be the sole shareholder of two British Virgin Islands (BVI) companies called Southstreet Limited, set up in February 2007, and Eaststreet Limited, set up in October 2007.
Actor Jackie Chan owns at least six offshore companies, also based in the BVI, including Jumbo Jaz Investment, Jackie Chan Ltd and Dragon Stream Ltd.
In 2007, American chess grandmaster Bobby Fischer received power of attorney over Kettering Consultants, Inc., which gave him the ability to control the Panama-based company.
Other notable names uncovered by the Panama Papers include Sarah Ferguson, the Duchess of York; Heather Mills, former wife of Beatles star Paul McCartney; the late film director, Stanley Kubrick; and Russian President Vladimir Putin.
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With scandals in Russia, China, UK, Iceland, Ukraine, and more, perhaps a new rule: if you’re in charge of a country, keep your money in it.
— Edward Snowden (@Snowden) April 5, 2016
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Now that the cat is out of the bag, Mossack Fonseca says that while it “may have been the victim of a data breach, nothing we’ve seen in this illegally obtained cache of documents suggests we’ve done anything illegal, and that’s very much in keeping with the global reputation we’ve built over the past 40 years of doing business the right way.”
Hmmm…
Although the offshore money game is more immoral than illegal, Panamanian President Juan Carlos Varela issued a statement to make it clear: he has zero tolerance for financial crimes.
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