Five things you need to know about the ‘Panama Papers’

CONFUSED by the Panama Papers link? Don’t worry, we’ve got you covered.

A MASSIVE data leak of files from Panama-based law firm Mossack Fonseca went online Sunday, in a collaboration by the German newspaper Suddeutsche Zeitung and the International Consortium of Investigative Journalists and more than 100 news outlets in 80 countries, exposing how the world’s ultra-rich manage their offshore accounts.

1. WHAT IS MOSSACK FONSECA?

The Panamanian law firm has offices worldwide, reportedly with 600 employees in 42 countries, and specialises in offshore financial services, such as setting up shell companies.

Among other tax havens, Mossack operates in Switzerland, Cyprus and the British Virgin Islands. The firm has reportedly acted for more than 300,000 companies, more than half of which are based in British-administered tax havens, such as Guernsey, the Isle of Man and the UK. The 40-year-old company has denied wrongdoing.

In an interview with Panama’s Channel 2 on Sunday, Mossack Fonseca co-founder Ramon Fonseca said: “We are not responsible for the actions of a corporation that we set up.”

2. WHAT WAS LEAKED?

More than 11.5 million files, an unauthorised data dump larger than 2010’s WikiLeaks release of US diplomatic messages and 2013’s secret spying revelations from Edward Snowden. Sueddeutsche Zeitung said the source wanted to remain anonymous, and asked for protection but no financial compensation.

The ICIJ said the files contain information about more than 214,000 offshore corporations, and its partner news organisations have been digging through the data for months.

“To our knowledge this is the biggest leak that journalists have ever worked on,” Sueddeutsche Zeitung reporter Bastian Obermayer told the Associated Press.

In some cases, the documents are said to show how the firm facilitates tax evasion and money laundering. References to bribery, corruption, violating business sanctions and criminal enterprises are mentioned in the files.

“It allows a never-before-seen view inside the offshore world — providing a day-to-day, decade-by-decade look at how dark money flows through the global financial system, breeding crime and stripping national treasuries of tax revenues,” the ICIJ said.

Mossack Fonseca has offices in 42 countries.

3. WHO SHOULD BE WORRIED?

The world’s “1 percenters.” The BBC reported 72 current and former heads of state are linked to the firm, including Russian President Vladimir Putin, as well as celebrities, business leaders and other public officials. Iceland Prime Minister Sigmundur Davîo Gunnlaugsson is already facing calls to resign after documents revealed he opened a shell company to allegedly hide money in the British Virgin Islands.

Other prominent names mentioned include Saudi Arabia’s King Salman, and family members and associates of British Prime Minister David Cameron, Chinese Premier Li Peng and Syrian President Bashar al-Assad.

“I think the leak will prove to be probably the biggest blow the offshore world has ever taken because of the extent of the documents,” ICIJ director Gerard Ryle told the BBC.

4. DID EVERYONE INVOLVED BREAK THE LAW?

Not necessarily. Keeping money in offshore accounts can be perfectly legal, and the practice can be preferable in some countries to keep the funds protected from criminals or taxes. However, it’s also a favoured method of criminals to launder money and corrupt politicians to hide funds.

5. WHAT’S NEXT?

Criminal investigations are sure to follow in dozens of countries, and more revelations are sure to emerge as the documents are poured over more thoroughly. As yet, no US politicians have been named, but as this tweet suggests, that may soon change:

No U.S. individuals in #PanamaPapers? "Just wait for what's coming next...," says editor of @SZ which got the leak https://t.co/tClDRsomHY

— Georgi Kantchev (@georgikantchev) April 3, 2016

This article originally appeared in The New York Post and was reproduced with permission