UPDATE: You can read Mossack Fonseca’s big response here.
A lot of well-known rich people are in trouble or about to be, thanks to the 2.6 terabyte leak of information that reveals offshore accounts owned by over 214,000 companies (shell companies, to be specific) around the world. This is known as the Panama Papers, named so because the accounts were handled by Panamanian corporate service provider Mossack Fonseca.
HOW DID THESE ‘PANAMA PAPERS’ GET LEAKED?
Well, somebody (an anonymous source as of this post) revealed the files to German newspaper Süddeutsche Zeitung, which began back in August of last year. That newspaper then gave the ‘papers’ to the American-based International Consortium of Investigative Journalists (ICIJ). From there, the ICIJ then distributed this massive find to about 400 journalists from 107 media organisations in over 80 countries. The first public report on the Panama Papers came this past Sunday (3rd April).
SO, WHAT WAS FOUND IN THE PAPERS?
Simply put, something that we’ve all probably known about forever — sometimes, very rich people hide their money in places outside of their respective countries, mostly in an effort to 1.) avoid taxes and 2.) keep the sources of their money secret. Someone at Reddit was nice enough to break it down in children’s piggy bank lingo for better understanding.
Inside those documents (remember, 2.6 TERAbytes worth), analysers found the names of government leaders, government officials and those connected to the government (including family and friends) from some 45 countries, including the United Kingdom, Russia, Iceland, Pakistan, Ukraine….the list goes on and on (more details on specific ‘power players’ can be found here). Celebrities weren’t safe from the leak, either: Jackie Chan and Lionel Messi are among the many names as well. [UPDATE: You can now add El Chapo, Simon Cowell and the Duchess of York to the mix.]
SO, WHAT CAN BE DONE ABOUT IT?
The way it looks, not a whole lot. Things have been done before: last year, the EU managed to force Switzerland to change laws that made catching tax evaders easier, and other countries have been taken to task numerous times in the past as well. The problem is that, this isn’t really “tax evasion” by definition; what many of these rich people are doing is working with firms (like Mossack Fonseca) to dance about very legal world loopholes. We imagine that not every offshore account made transparent is tax-based, or legally-placed; a few of those may actually be in some real (like, prison real) trouble. Time will tell.