Record-breaking leak exposes offshore holdings of politicians and elites

Vladimir Putin [The Kremlin]

The hidden wealth of some of the world’s most prominent leaders, politicians and celebrities has been revealed by an unprecedented leak of millions of documents which show the myriad ways in which the rich can exploit secretive offshore tax regimes.

Journalists from more than 80 countries have been reviewing 11.5m files leaked from the database of Mossack Fonseca, the world’s fourth biggest offshore law firm. The offshore holdings of some 140 politicians from more than 50 countries are exposed in this biggest leak of all times.

The records, called “the Panama leaks”, were obtained from an anonymous source by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists with the Guardian and a number of other media across Europe and the world.

The document comes from the records of the firm, which was founded in 1977. The information is near live, with the most recent records dating from December 2015.

Three hundred and 70 reporters from 100 media organisations have spent a year analysing and verifying the documents.

The Panama records reveal:

  • Twelve national leaders are among 143 politicians, their families and close associates from around the world known to have been using offshore tax havens.
  • A $2bn trail leads all the way to Vladimir Putin. The Russian president’s best friend – a cellist named Sergei Roldugin – is at the centre of a scheme in which money from Russian state banks is hidden offshore. Some of it ends up in a ski resort, where in 2013, Putin’s daughter Katerina, was married.
  • Among national leaders with offshore wealth are Nawaz Sharif, Pakistan’s prime minister; Ayad Allawi, ex-interim prime minister and former vice-president of Iraq; Petro Poroshenko, president of Ukraine; Alaa Mubarak, the son of Egypt’s former president; and the prime minister of Iceland, Sigmundur Davíð Gunnlaugsson.
  • The families of at least eight current and former members of China’s supreme ruling body, the politburo, have been found to have hidden wealth offshore.
  • Twenty-three individuals who have had sanctions imposed on them for supporting the regimes in North Korea, Zimbabwe, Russia, Iran and Syria have been clients of Mossack Fonseca. Their companies were harboured by the Seychelles, the British Virgin Islands, Panama and other jurisdictions.

In the case of Vladimir Putin, though the Russian president’s name does not appear in any of the records, the data reveals a pattern – his friends have earned millions from deals which very likely could not have been secured without his patronage.

Multinational companies must pay taxes where they earn profits and stop using aggressive tax
optimisation schemes, the European Union's Economics Commissioner Pierre Moscovici said today (4 April).

Moscovi told French radio RTL that the EU had to put a stop to the way companies pay little or no tax in the countries in which they operate, by using subsidiaries in other countries set up specifically for tax reasons.

"It is vital that multinational companies pay their taxes where they generate profits," Moscovici said, adding that a draft directive on the taxation of multinationals was now with the EU's Council of Ministers.

Moscovici said the draft directive proposes an entry tax as well as an exit tax on corporate earnings being moved to low-tax countries, so that taxation levels are similar to the country in which the profit was earned.

"I want us to agree the entire fiscal package that is now with the Council of Ministers and I hope agreement can be found in the first half, under the Dutch presidency," Moscovici said.

Moscovi said Europe needs fiscal reporting country by country, so that authorities have access to tax and accounting data of multinational companies in all of the EU countries in which they operate.

He added citizens and the media should also have access to these data. "I am favour of total transparency for these accounting and fiscal data," he said.

The European Parliament estimates that tax avoidance by multinationals costs European Union countries some €70 billion per year in lost revenues. The current Dutch presidency of the EU has put tax issues at the top of its economic agenda.

EU officials have said this tax avoidance legally exploits loopholes in tax legislation that they now want to close.

Last month, EU finance ministers backed new rules under which their countries would exchange information on the tax affairs of multinationals, obliging these firms to disclose data on revenues, profits and taxes to the administrations of all EU countries where they operate. That data would then be exchanged between the 28 EU states.

The rules are expected to be formally adopted by June and will require the unanimous approval of all 28 EU states.

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