Panama to launch criminal probe into ‘Panama Papers’ revelations

PANAMA CITY, April 05: The state prosecutor’s office in Panama said Monday it will launch an investigation into revelations contained in a massive data leak of a law firm that created offshore companies for the world’s rich and powerful.
“The facts described in national and international communication media publicationsunder the term ‘Panama Papers’ will be the subject of criminal investigation,” the office said in a statement.The probe will aim to establish what crimes might have taken place and who committed them, as well as identifying possible financial damages, it said.The law firm involved, Mossack Fonseca, says the leak of 11.5 million documents from its servers was the result of a “limited hack,” suggesting it believed an outside party was responsible.
One of its founders, Ramon Fonseca, told AFP the leak was an attack on Panama itself, which is dependent on its financial services sector.
Panama’s president, Juan Carlos Varela, said his country would cooperate with “whatever government and whatever investigation” resulted from the scandal.
But he also vowed to “defend the image of our country,” which had been making progress in trying to lose a reputation as a hub for money laundering and other shady transactions.
Offshore entities, of themselves, are not illegal. But they can be used to launder money or hide assets from tax authorities in other countries.
The governments across the world began investigating possible financial wrongdoing by the rich and powerful on Monday after a leak of four decades of documents from a Panamanian law firm that specialized in setting up offshore companies.
The “Panama Papers” revealed financial arrangements of politicians and public figures including friends of Russian President Vladimir Putin, relatives of the prime ministers of Britain, Iceland and Pakistan, and the president of Ukraine.
The U.S. Department of Justice would determine whether there was evidence of corruption and other violations of U.S. law, a spokesman said. A White House spokesman said that “in spite of the lack of transparency that exists in many of these transactions,” there were U.S. experts who could find out whether they violated sanctions and laws.Financial prosecutors in France announced the opening of a preliminary investigation for aggravated tax fraud.
Germany would also “pick up the ball” in the case, a Finance Ministry spokesman said on Monday. Financial market watchdog Bafin is looking into the matter, said a source close to the regulator, which reports to the ministry.
Australia, Austria, Sweden and the Netherlands were among other countries that said they had begun investigating the allegations based on more than 11.5 million documents. Banks came under the spotlight over allegations they helped clients hide their wealth offshore.
In Argentina, political opposition parties demanded an explanation from center-right President Mauricio Macri because he served as a director of an offshore company in the Bahamas related to his wealthy father’s business in the past.
In Brazil, where a corruption crisis threatens President Dilma Rousseff’s administration, the O Estado de S.Paulo newspaper said politicians from seven parties were named as Mossack Fonseca clients. They did not include politicians from Rousseff’s Workers’ Party.
Brazil’s tax agency said it would verify information about offshore tax avoidance in the documents and could impose fines on undeclared assets in offshore accounts of up to 150 percent of their value.Pakistan denied any wrongdoing by the family of Prime Minister Nawaz Sharif after his daughter and son were linked to offshore companies.Ukrainian President Petro Poroshenko defended his commitment to transparency after lawmakers called for an investigation into allegations in the documents that he had used an offshore firm to avoid tax. Poroshenko purportedly moved his confectionery business, Roshen, to the British Virgin Islands in August 2014 as fighting between Ukraine and pro-Russian separatists peaked.
“I believe I might be the first top official in Ukraine who treats declaring of assets, paying taxes, conflict of interest issues seriously,” Poroshenko tweeted.Iceland’s prime minister, Sigmundur Gunnlaugsson, faced calls for his resignation after ICIJ said he and his wife were connected with a secretive company in an offshore haven. His political opposition filed a no-confidence motion.
Britain’s Guardian newspaper said the documents showed a network of secret offshore deals and loans worth $2 billion led to associates of Putin, including concert cellist Sergei Roldugin, a childhood friend of the president. -Reuters