The Panama Papers: ‘Biggest Data Leak In History’ Claims to Expose How the Powerful Hide Their Riches

A massive leak from Mossack Fonseca of 11.5 million tax documents exposes the secret offshore dealings of the world's wealthy
AFP / Rodrigo Arangua

The UK Guardian describes the trove of confidential data stolen from Mossack Fonseca, a Panama-based law firm that specializes in administering offshore accounts, as “the biggest data leak in history.”

This refers to both the size of the database given to the Guardian and the BBC – 11.5 million files totaling over 2.6 terabytes in size, covering 200,000 clients of the firm – and its significance. The Panama Papers are touted as blowing the lid off the extremely complex financial arrangements employed by world leaders to conceal their vast wealth, and shelter it from the very tax systems some of Mossack Fonseca’s clients preside over.

The Guardian says the Panama Papers leak is an order of magnitude larger than either the diplomatic cables exposed by WikiLeaks in 2010 or the trove of intelligence documents stolen by former NSA contractor Edward Snowden in 2013, two leaks that indisputably changed the political conversation around the world. Snowden himself chimed in on Twitter to agree that the Panama Papers are the “biggest leak in the history of data journalism.”

Journalists from over 80 countries are said to be analyzing this mountain of data, which was provided by an anonymous source last year.

Among the prominent political leaders with offshore tax havens managed by Mossack Fonseca is Russian president Vladimir Putin, who is portrayed as using his associates to siphon $2 billion from Russian banks into offshore accounts. Putin cronies named in the scheme include his best friend and godfather of his daughter, cellist Sergei Roldugin, and former Olympic ice dancing champion Tatiana Navka, the glamorous wife of Putin spokesman Dmitry Peskov. Everyone involved in helping Putin conceal his fortune in these offshore accounts grew very rich themselves, according to the Guardian.

The UK Daily Mail quotes Peskov denying the Panama Papers revelations, portraying the story as an attack by foreign intelligence services on Putin’s legitimacy “in the context of the coming parliamentary election.”

“Putinophobia has got so hot that a priori nobody can say anything good about Russia, they must say bad things and if there is nothing to say, one must make something up,” Peskov alleged.

The Daily Mail has Navka claiming she does not know anything about the offshore asset company she is listed as the beneficiary of, and implying that her passport, which was found among the company’s papers, might have been stolen and used without her knowledge.

“My wife never had any offshore company and does not have it now, she never opened it and, accordingly, she could not close it down,” declared Peskov, referring to the November 2015 liquidation of the offshore company.

According to the Daily Mail, there appears to be a Russian media blackout on the Panama Papers story in effect, even though it should be a huge story with the potential to shake up the government, because “Russian law forbids senior officials and their families from using foreign financial institutions and offshore vehicles.” Also, the Guardian observes that Putin has been publicly urging his citizens to bring money from abroad back home to Russia, which makes the discovery that Putin has been shuffling billions through secret offshore tax havens more than a little inconvenient.

NBC News spoke with several Russia experts who thought the scandal was more likely to embarrass Putin than severely damage him, noting that he is meticulous about keeping his own name away from the most incriminating documents. However, Eurasia Group President Ian Bremmer suggested Russia could “respond aggressively” to everyone involved in what it perceives as an attack on its presidency, including billionaire George Soros and his Open Society Foundation, which provided funding for the group of journalists that broke the Panama Papers story.

“I feel fairly confident that the Kremlin will be going after the U.S., Soros, the CIA and this is going to make Russian policy towards the U.S. actually much more sharp and antagonistic,” said Bremmer.

Other national leaders implicated in the scandal include Pakistani prime minister Nawaz Sharif, former Vice President of Iraq Ayad Allawi, Ukraine’s President Petro Poroshenko, Iceland’s Prime Minister Signundur Davio Gunnlaugsson, and one of former Egyptian President Hosni Mubarak’s sons, Alaa Mubarak.

Furthermore, according to the Guardian’s review of the data, six members of the British House of Lords and three former Conservative MPs had offshore assets, as did the families of at least eight current and former members of the Chinese Politburo.  23 of Mossack Fonseca’s clients were under international sanctions, including supporters of the regimes in North Korea, Iran, and Syria.

The Associated Press reports the Panama Papers leak has already caused a firestorm in Australia, where over 800 wealthy citizens are now under investigation by the Australian Taxation Office, in cooperation with the Australian Federal Police, Australian Crime Commission, and Austrac financial intelligence agency.

The Daily Mail observes that some of Mossack Fonseca’s clients appear to be “billionaire husbands” using the firm to “hide their fortunes from the wives they divorce,” including Russian oligarch Dmitri Rybolovlev, aviation tycoon Clive Joy, and late British billionaire Scot Young. In fact, internal emails from employees of the firm have them cracking jokes about how the offshore companies they helped create were used to protect assets “against the unpleasant results of a divorce.”

As just about every story on the Panama Papers concedes, there appears to be nothing illegal about the services Mossack Fonseca performed for its clients.

In a lengthy statement to the Guardian, the firm challenged the accuracy of some stories circulating around the data leak, and noted the leaked documents confirm that the company “routinely denies services to individuals who are compromised,” or who fail to provide the information needed to comply with regulations.

“It is legal and common for companies to establish commercial entities in different jurisdictions for a variety of legitimate reasons, including conducting cross-border mergers and acquisitions, bankruptcies, estate planning, personal safety, restructuring and pooling of investment capital from different jurisdictions in neutral legal and tax regimes that does not benefit or disadvantage any one investor,” Mossack Fonseca wrote.

“Our services are regulated on multiple levels, often by overlapping agencies, and we have a strong compliance record,” the firm continued. “In addition, we have always complied with international protocols… to assure as is reasonably possible, that the companies we incorporate are not being used for tax evasion, money laundering, terrorist finance or other illicit purposes.”

The firm also noted it does not manage its clients’ companies, does not take possession of their money, and does not “have anything to do with any of the direct financial aspects related to operating their businesses.”  

Mossack Fonseca took strong exception to the idea that “the primary function of the services we provide is to facilitate tax avoidance and/or evasion,” and said it was not responsible for the potential “misuse of companies that we incorporate, or the services we provide.”  The firm insisted it would never willingly help individuals associated with rogue regimes to violate international sanctions.

On the other hand, the firm charged that the Guardian was given “unauthorized access to proprietary documents and information taken from our company and have presented and interpreted them out of context,” and reminded the paper that “using information/documentation unlawfully obtained is a crime,” for which they would not hesitate to press charges.


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