The Panama Leaks (Panama Papers) are 11.5 million leaked documents that detail financial and attorney–client information for more than 214,488 offshore entities. The leaked documents were created by Panamanian law firm and corporate service provider Mossack Fonseca; some date back to the 1970s.
The leaked documents contain personal financial information about wealthy individuals and public official which had previously been kept private. While offshore business entities are legal, reporters found that some of the Mossack Fonseca shell corporations were used for illegal purposes, including fraud, kleptocracy, tax evasion, and evading international sanctions.
Among the people named in the documents are prominent businesspeople and world leaders. The release of the papers even led to the resignation of Iceland’s Prime Minister due to enormous pressure by political parties and the citizens of the country alike. Similarly, an abundance of problems have arisen and allegations are being launched against Pakistan’s Prime Minster Mian Mohammad Nawaz Sharif after his son’s name was mentioned among those owning offshore companies.
Tax Evasion: Customers may open offshore accounts for any number of reasons, some of which are entirely legal but ethically questionable. A Canadian lawyer based in Dubai noted, for example, that businesses might wish to avoid falling under Islamic inheritance jurisprudence if an owner dies. Businesses in some countries may wish to hold some of their funds in dollars also, said a Brazilian lawyer.While no official definition exists, the The Economist and the International Monetary Fund describe an offshore financial center, or tax haven, as a jurisdiction whose banking infrastructure primarily provides services to people or businesses who don’t live there, requires little or no disclosure of information when doing business, and offers low taxes.
“The most obvious use of offshore financial centers is to avoid taxes”, The Economist added. Oxfam blamed tax havens in its 2016 annual report on income inequality for much of the widening gap between rich and poor. “Tax havens are at the core of a global system that allows large corporations and wealthy individuals to avoid paying their fair share,” said Raymond C. Offenheiser, president of Oxfam America, “depriving governments, rich and poor, of the resources they need to provide vital public services and tackle rising inequality.”
Many senior EU figures have been implicated in the Panama Papers scandal. The European Commissioner for Taxation, Pierre Moscovici, has said that the European Union as a whole had a “duty” to prevent the kind of tax avoidance uncovered in the Panama Papers scandal. Moscovici told reporters the use of offshore companies to hide what he called “shocking amounts” of financial assets from tax authorities was “unethical”. He estimated that the tax shelters resulted in an annual loss of some €1 trillion in public finances, adding that the European Commission has attempted to tighten tax rules across the union since November 2014 due to the “LuxLeaks” tax avoidance scandal, also revealed by the ICIJ, and that he hoped the extent of the Panama Papers revelations would spur countries to action.
In a 2013 letter, unearthed by the Financial Times to the then president of the European Council, Herman Van Rompuy, the then Prime Minister of the United Kingdom David Cameron said that offshore trusts should not automatically be subject to the same transparency requirements as shell companies
Main articles: Sigmundur DavíðGunnlaugsson, Ólafur Ragnar Grímsson, BjarniBenediktsson (born 1970), Jón ÁsgeirJóhannesson, DorritMoussaieff, and JúlíusVífillIngvarsson
Sigmundur DavíðGunnlaugsson, Prime Minister of Iceland, stepped aside on April 5, 2016.
Prime Minister Sigmundur DavíðGunnlaugsson, elected after the 2008 banking collapse in Iceland, had pledged to clean up corruption in the banking system. But when Sigmundur Davíð took his seat he did not disclose his 50% interest of Wintris, a company that owned bonds of one of the bankrupt banks nor divest himself of it until the day before a new law took effect on January 1, 2010 that would have required him to declare this conflict of interest. He sold his share to his wife, who owns the other half. The couple both come from wealthy families. When they bought Wintris he was working as a journalist and she is an anthropologist. Until his failure to disclose the asset, he apparently broke no laws. But the country remembers the 2008 financial crisis all too well and thought it had put it in the past. Since Sigmundur Davíð negotiated on behalf of Iceland with creditors of failed Icelandic banks, the discovery that Sigmundur Davíð’s wife is a bondholder caused so much outrage that 22,000-24,000 people attended an anti-government protest outside the parliament on April 4, 2016, almost 8% of the population. Sigmundur Davíð suggested a snap election, but the other members of the coalition government did not want elections, just his resignation. On April 5, 2016, Prime Minister of Iceland Sigmundur DavíðGunnlaugsson announced his resignation.
Nawaz Sharif – Prime Minister of Pakistan
The Mossack Fonseca documents do not name either prime Minister Nawaz Sharif or his younger brother, Punjab chief minister Shebaz Sharif. They do however link in-laws of Shebaz Sharif and children of Nawaz Sharif to offshore companies.Mossack Fonseca records tie Nawaz daughter Maryam Nawaz and her brothers Hussein and Hassan to four offshore companies, Nescoll Limited, Nielson Holdings Limited, Coomber Group Inc., and Hangon Property Holdings Limited. The companies acquired luxury real estate in London during 2006–2007. The real estate was collateral for loans of up to $13.8 million according to the Panama Papers. The prime minister’s children say the money came from the sale of a family business in Saudi Arabia.
Maryam Nawaz tweeted denial of wrongdoing, adding that she did not own “any company/property abroad,” except as “a trustee” in a brother’s corporation, “which only entitles me to distribute assets to my brother Hussain’s family/children if needed.” The leaked documents name her the sole beneficial owner of Nescoll, created in 1993, and Nielson, first registered in 1994. The two companies subscribed to Mossack Fonseca services in July 2006. The Panama Papers name Maryam as the joint owner with her brother Hussain of Coomber Group. Mossack Fonseca was managing Nescoll, Nielsen Holdings, and Coomber Group when the three companies obtained a £7 million mortgage from the Swiss bank, Deutsche Bank (Suisse) SA and purchased four flats in Avenfield House, at 118 Park Lane in London. Hassan, the other brother, bought Hangon Holdings and its stock in 2007 for £5.5 million; Hangon then bought property, financed through the Bank of Scotland, at 1 Hyde Park Place in London. .
SaminaDurrani, mother of Shebaz Sharif’s second wife, and IlyasMehraj, brother of his first, also figure in the documents. Habib Waqas Group/IlyasMehraj is listed as a shareholder with 127,735 shares in Haylandale Limited, registered July 24, 2003 in the Bahamas. Mehraj has denied knowing anything about “any company whether incorporated in the Commonwealth of Bahamas or anywhere else under the name: Haylandale Ltd.” Rainbow Limited, the newest of the three offshore companies owned by SaminaDurrani, was registered September 29, 2010 in the British Virgin Islands (BVI). Armani River Limited, registered in the Bahamas on May 16, 2002, describes its assets as “property in London, which is not currently rented.” Assets of Star Precision Limited, registered in BVI May 21, 1997, were reported as “cash as the investment portfolio. We are also holding 1,165,238 shares in Orix Leasing Pakistan Limited.”
Hussain Nawaz said his family won’t hamper any investigation, and urged one of former president Pervez Musharraf as well. The government on April 15 announced an investigation by an inquiry commission of all Pakistanis named in the documents. Opposition politicians said a judge, not a retired judge, should investigate. Various judges have already recused themselves. In addition, on 19 April 2016 Army Chief General Raheel Sharif warned that across-the-board accountability is needed.
Pakistan Tehreek-e-Insaf (PTI) chairman Imran Khan called for an investigation of Sharif family finances and asked how well public figures who send their own money overseas could promote investment in Pakistan. Khan confirmed May 14, 2016 that he had owned an offshore company set up in 1983 to avoid British taxes on the sale of a London residence he bought through the company. Abdul Qayyum, a Pakistani senator and retired lieutenant-general, commented that Khan had made the disclosures a political issue before any investigation had been conducted, and that accountability should be enforced across the board.
The late Benazir Bhutto was also a Mossack Fonseca client. In 2001 the firm set up BVI company Petroline International Inc. for Bhutto, her nephew Hassan Ali Jaffery Bhutto, and her aide and head of security Rehman Malik, who later became a Senator and Interior Minister in the government of Yousaf Raza Gillani. Mossack Fonseca had deemed Bhutto’s first company, the similarly named Petrofine FZC, politically sensitive and “declined to accept Mrs Bhutto as a client.” A United Nations committee chaired by former US Federal Reserve head Paul Volcker had determined in a 2005 investigation into abuses of the oil-for-food program that Petrofine FZC paid US$2 million to the Iraqi government of Saddam Hussein to obtain US $115–145 million in oil contracts.
In 2006, the Pakistani National Accountability Bureau (NAB) accused Bhutto, Malik and Ali Jaffery of owning Petrofine, established since 2000 in Sharjah, United Arab Emirates. Bhutto and the Pakistan Peoples Party denied it. In April 2006 a NAB court froze assets owned in Pakistan and elsewhere by Bhutto and her husband Asif Ali Zardari, saying that the assets, totaling $1.5 billion, were the result of corrupt practices, and that Swiss charges of criminal money laundering filed in 1997 were still in litigation.
Accountability is the underpinning principal of civilized societies. For the stability of any society it is imperative that there is a compact system of accountability in place. Public Accountability has been regarded as an important prerequisite for the proper and effective delivery of public service by the Governments all over the globe. The overall progress of any country owes itself largely to accountability and transparency.