World figures deny wrongdoing as Panama Papers turn spotlight on tax evasion

The building where the office of Panamanian law firm Mossack Fonseca is located in Panama City, Panama. Eleven million documents from Mossack Fonseca database were leaked allegedly exposing high profiShow more

PANAMA CITY // Governments across the world began investigating possible financial wrongdoing by the rich and powerful on Monday following a leak of documents from a Panamanian law firm which allegedly showed how clients avoided tax or laundered money.

The documents detailed schemes involving an array of figures from friends of Russian president Vladimir Putin to relatives of the prime ministers of Britain, Iceland and Pakistan and as well as the president of Ukraine, according to journalists who received the leaked documents.

While the Panama Papers detail complex financial arrangements benefitting the world's elite, they do not necessarily mean the schemes were all illegal.

The Kremlin said the documents contained “nothing concrete and nothing new” while a spokesman for British prime minister David Cameron said his late father’s reported links to an offshore company were a “private matter”.

Iceland’s prime minister Sigmundur Gunnlaugsson faced opposition calls for him to resign after the naming of his wife in connection with a secretive company in an offshore haven which brought.

Pakistan denied any wrongdoing by the family of prime minister Nawaz Sharif after his daughter and son were linked to offshore companies, while Ukrainian president Petro Poroshenko denied any wrongdoing after the documents showed him holding three offshore accounts that could be used as tax havens.

Opponents said Mr Poroshenko should be impeached for allegedly transferring his confectionary business to an offshore company in 2014, amid fierce fighting between Ukraine and pro-Russian separatists. A senior official from the General Prosecutor’s office said there was no evidence he had committed a crime.

Australia, New Zealand, India, France and Austria were among countries which said they had begun investigating the allegations, based on more than 11.5 million documents from law firm Mossack Fonseca, located in the tax haven of Panama. Banks as well as individual clients came under the spotlight.

The documents were leaked to the International Consortium of Investigative Journalists (ICIJ) and more than 100 other news organisations. Mossack Fonseca has denied any wrongdoing.

“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,” ICJC director Gerard Ryle said.

The material covers a period over almost 40 years, from 1977 until last December, and allegedly show that some companies domiciled in tax havens were being used for suspected money laundering, arms and drug deals, and tax evasion.

Britain’s Guardian newspaper said the documents showed a network of secret offshore deals and loans worth US$2 billion (Dh 7.35bn) led to close friends of Mr Putin, including concert cellist Sergie Rolddugin. Mr Putin’s spokesman dismissed the reports, saying they aimed to discredit him ahead of upcoming elections.

The publications contained “nothing concrete and nothing new” about Mr Putin, Kremlin spokesman Dmitry Peskov said.

The British government asked for a copy of the leaked data, which could be embarrassing for Mr Cameron, who has spoken out against tax evasion and tax avoidance.

His late father, Ian Cameron, is mentioned in the files, alongside some members of his Conservative Party in the upper house of parliament, former Conservative lawmakers and party donors, British media said.

Jennie Granger, director general of enforcement and compliance at HM Revenue and Customs, said the government had a great deal of information from a wide range of sources.

“We will closely examine this data and will act on it swiftly and appropriately,” she said.

The Norwegian government said Norwegian bank DNB must explain its policy of helping clients set up offshore companies in the Seychelles.

“DNB says this should not have happened and that the bank should not have participated,” Trade and Industry Minister Monica Maeland said.

DNB said it regretted assisting about 40 customers in setting up the firms between 2006 and 2010, and that the practice had ended.

Dutch authorities said they would investigate allegations related to the Netherlands.

Sweden’s Financial Supervisory Authority (FSA) has contacted authorities in Luxembourg to ask for information related to allegations that banking group Nordea helped some clients to set up accounts in offshore tax havens.

Tax authorities in Australia and New Zealand said they were probing local clients of Mossack Fonseca. The Australian tax office said it was investigating more than 800 wealthy clients and had linked more than 120 of them to an associate offshore service provider located in Hong Kong, which it did not name.

Panama is among the world’s most secretive off-shore financial centres, a group that includes territories such as the Cayman Islands, Bermuda and the British Virgin Islands.

It has declined to sign up to global transparency rules which international organisations have been pushing in a bid to fight tax evasion, money-laundering and other criminality.

* Reuters, with additional reporting from Agence France-Presse