release of the Panama Papers represents the single largest journalistic leak and, perhaps, achievement of investigative journalism in the digital age. The papers give a rare glimpse into the world of offshore shell corporations, and the many ways that they can be used nefariously, due to the lack of oversight that accompanies them. Because news is still coming out about the Panama Papers every single day, it can be difficult to keep track of what exactly this latest revelation means. To help in that understanding, here is a 3-part series that explains the Panama Papers and what we can expect to see from here...
Although tax evasion is the biggest use of shell corporations set up by firms like Mossack Fonseca, there is another highly unethical use for these offshore structures that is actually quite illegal. Many of the world’s criminal elite utilize these firms to launder money that is made from illicit means. These offshore business structures are the piggy bank that filters the profits made from drug trafficking, sex trafficking, and illegal weapons dealings, among other things. On top of filtering the money so that it can be put into assets in first class cities, such as a vast majority of London’s luxury real estate market, these entities allow businesses to do deals with countries and organizations that it is illegal to sell to or buy from. An example of this in the Panama Papers is how some companies used Mossack Fonseca to sell fuel to the Al Assad and the Syrian army, despite sanctions placed on them by the United Nations for using chemical weapons on their citizens.
World leaders affected
One of the most unsettling aspects of the Panama Papers is that there is a shocking (or, perhaps, not so shocking) number of world leaders who are tied to these offshore business structures. Shortly after the initial reports of the papers came out, it was revealed the prime minister of Iceland, Sigmundur Gunnlaugsson, held assets in foreign accounts, including in one of the Icelandic banks that were bailed out after the global recession. This represented a conflict of interest that led to his resignation only days later. From the $2 billion connection of assets to Vladimir Putin to the revelation that David Cameron’s own father used shell corporations to evade British taxes, dozens of world leaders have been implicated or tied to the documents, including 12 national leaders who directly used offshore tax havens.