Content area
Full Text
What the Panama Papers Leak Means for Business
Over the course of a year, an anonymous source working with the German newspaper Süddeutsche Zeitung and the International Consortium of Investigative Journalists (ICIJ) funneled 11.5 million private documents from Panama-based law firm Mossack Fonseca to the press. In April, coordinated coverage from dozens of news outlets unveiled the revelations in these "Panama Papers," shining a light on the questionable dealings of the firm, which specializes in offshore holdings, and its high-profile, extremely wealthy clients.
The Panama Papers represent the biggest data leak in history, encompassing 2.6 terabytes of data-more than 1,500 times larger than the 1.7 gigabytes of data released in Wikileaks. The 11.5 million documents date from 1977 through December 2015. Most are emails (4.8 million), but the documents also include PDFs, text files and images of contracts and passports.
The files detail the ways the wealthy can and do exploit offshore tax regimes to launder money, dodge sanctions and avoid taxes. Many of the documents identify the firm's customers and their respective shell corporations, including 400 politicians or their close associates, celebrities, more than 400 banks and, casting further light on an entity already mired in corruption problems, world soccer governing body FIFA. As the world's fourth-largest provider of offshore services, or as the ICIJ put it, "one of the world's five biggest wholesalers of offshore secrecy," Mossack Fonseca has more than 40 offices around the world, has managed more than 300,000 companies over the years and billed more than $42 million in 2013. The source of the leaks- who remains anonymous even to the journalists involved and whose connection to the firm has not been established-cited income inequality and the scale of social injustice detailed in the documents as the motivation for the breach.
While many of the offshore structures Mossack Fonseca created for its clients are legal, a number of them are highly suspect, whether because of the means used, the unclear sources of the funds, or the ultimate beneficiaries themselves. According to ICIJ, a 2015 audit found that Mossack Fonseca knew the identities of the beneficial owners of just ^^^ of 14,086 companies it had incorporated in one tax shelter alone, the Seychelles. The firm has repeatedly defended its conduct,...